Firan Technology Group Corporation
TSX : FTG

Firan Technology Group Corporation

February 03, 2010 18:30 ET

Firan Technology Group (FTG) Announces Q4 and Full Year 2009 Financial Results

TORONTO, ONTARIO--(Marketwire - Feb. 3, 2010) - Firan Technology Group Corporation (TSX:FTG) today announced financial results for the fourth quarter and the fiscal year ended November 30, 2009.

  • Year-to-date sales decreased by 12.4 percent as compared to industry data as reported by IPC (i) showing over 23 percent decrease in the same period
  • Maintained R&D investments at over 6% of revenue to ensure continued growth in technology and capabilities to support new customer demands
  • Reduced accounts receivable from 84 days to 62 days outstanding
  • Increased inventory turns from 5.2 to 5.6 times
  • Reduced bank debt by $2.1M during the fourth quarter
  • Reduced bank debt by $3.4M during the full year

"We experienced significant market challenges as the demand for aerospace products dropped dramatically in the year. I am very proud of the way FTG reacted to the challenge and how everyone in the company pulled together to allow us to come through the downturn successfully. Our continued investment in technologies and Operational Excellence provides us with the tools to grow market share and exceed customer expectations going forward", stated Brad Bourne, President and Chief Executive Officer.

Fourth Quarter Results: (three months ended November 30, 2009 compared with three months ended November 30, 2008)

    Q4 2009   Q4 2008
 
Sales   $13,122,000   $17,376,000
 
Gross Margin 20.9%   28.9%
       
Operating (Loss) Earnings before: (ii) (352,000)   620,000
 
 One Time Severance Charges -   266,000
 Foreign Exchange 46,000   (137,000)
 Amortization of Intangible Assets 12,000   48,000
 
 Tax (Recovery) ($192,000)   0
Net (Loss)/Earnings ($218,000)   $443,000
 
(Loss)/Earnings per share      
  - basic ($0.01)   $0.02
  - diluted ($0.01)   $0.02

 

Fiscal Year 2009 Results (twelve months ended November 30, 2009 compared with twelve months ended November 30, 2008)
         
 
      FY 2009   FY 2008
 
Sales     $55,380,000   $63,180,000
 
Gross Margin   23.5%   25.1%
         
Operating Earnings (Loss) before: (ii) (279,000)   616,000
 
 One Time Severance Charges   231,000   591,000
 Filtran Restructuring and Losses -   472,000
 Foreign Exchange   721,000   (114,000)
 Amortization of Intangible Assets 47,000   48,000
Tax (Recovery)   (188,000)   (173,000)
Net Loss   ($1,090,000)   ($208,000)
 
Loss per share        
  - basic   ($0.06)   ($0.01)
  - diluted   ($0.06)   ($0.01)
  1. IPC was founded in 1957 as the Institute for Printed Circuits. As more electronics assembly companies became involved with the association, the name was changed to the Institute for Interconnecting and Packaging Electronic Circuits. In 1999, IPC changed its name from Institute for Interconnecting and Packaging Electronic Circuits to IPC.
  2. Operating Earnings (Loss) is not a measure recognized under Canadian generally accepted accounting principles ("GAAP"). Management believes that this measure is important to many of the Corporation's shareholders, creditors and other stakeholders. The Corporation's method of calculating Operating Earnings (Loss) may differ from other corporations and accordingly may not be comparable to measures used by other corporations.

 

Business Highlights

FTG accomplished many goals in 2009 that continue to improve the Corporation and position it for the future, including:

  • The renewal of multiyear contracts with Honeywell and Rockwell for both product groups
  • Qualification at Lockheed Martin for both Circuits' facilities
  • Qualified as a supplier to a third major business unit within GE
  • Strengthened the sales team with experienced sales staff in the U.S. North West and U.S. South West
  • Completion of qualification testing of the Lighting Power Supply at FTG Aerospace
  • Shipped over $500,000 of higher level assemblies at FTG Aerospace
  • Initiated production of rigid flex circuit boards in Toronto facility for high volume opportunities
  • Acquisition and commissioning of Laser Direct Imaging Technology in Circuits-Toronto
  • The hiring of Hardeep Heer as VP Engineering and CTO for both FTG Circuits businesses
  • Reduced operating costs through elimination of overtime, staff reductions, implementation of workshare program for both Toronto facilities and wage reductions for other staff
  • Renewed lease for FTG Circuits-Toronto facility with an average 15% savings over the next 5 years
  • Better inventory management and control across the Corporation to improve the cash cycle
  • Renewed U.S. $6M Revolving Credit Facility for three additional years
  • Completed investment in major green initiative in Circuits-Toronto facility to reduce water consumption by over 30 percent

For FTG overall, sales decreased by 12%, from $63.2M in 2008 to $55.4M in 2009 due to reduced demand across the customer base, particularly related to business and regional jet customers.

The Circuits Segment sales were down $5.6M or 11% in FY2009 versus FY2008. For the full year, sales were positively affected by the strength of the U.S. dollar and were negatively affected by lower customer demand. Overall military sales have been more stable while commercial aviation sales have declined.

For the Aerospace segment, sales in FY 2009 were down $2.2M or 17% compared to FY2008. During the year, this business captured some key new programs where the equipment being supplied includes higher end assemblies including both hardware and software development. This partially offset declines in demand, primarily from business and regional jet customers. Also during the year, activity progressed towards establishing FTG Aerospace – Tianjin in China with expenses totaling $120,000 incurred in 2009.

In FY 2009 compared to FY 2008, FTG net income dropped by only $0.8M as sales dropped $7.8M. This was due to the strengthening of the U.S. dollar, particularly in the first half of the year, U.S. dollar forward contracts for the full year, and cost reduction initiatives across the Corporation and with suppliers and no Filtran related integration costs in 2009. Key investments in R&D were maintained at over 6% of revenue for the full year.

As at November 30, 2009, the Corporation's primary source of liquidity included accounts receivable of $9.5M and inventory of $7.6M. Net working capital at November 30, 2009 was $9.6M. Bank debt decreased by $3.4M to $7.5M in 2009 due in part to the revaluation of U.S. dollar denominated debt and to an aggressive inventory and accounts receivable reduction plan across the Corporation.

The Corporation will host a live conference call on February 4, 2010 at 4:15 pm (EDT) to discuss the results of 2010.

Anyone wishing to participate in the call should dial 416-695-7848 or 1-800-355-4959 and identify that you are calling to participate in the FTG conference call. The Chairperson is Mr. Brad Bourne. A replay of the call will be available until February 18, 2009 and will be available on the FTG website at www.ftgcorp.com. The number to call for a rebroadcast is 416-695-5800 or 1-800-408-3053, pass code 4378104.

ABOUT FIRAN TECHNOLOGY GROUP CORPORATION

FTG is an aerospace and defense electronics product and subsystem supplier to the North American marketplace. FTG has two operating units:

FTG Circuits is a manufacturer of high technology/high reliability printed circuit boards. Our customers are leaders in the aviation, defense, and high technology industries. FTG Circuits has operations in Toronto, Ontario and Chatsworth, California.

FTG Aerospace manufactures illuminated cockpit panels, keyboards and sub-assemblies for original equipment manufacturers of avionics products as well as airframe manufacturers located in Toronto, Ontario.

The Corporation's shares are traded on the Toronto Stock Exchange under the symbol FTG.

FORWARD-LOOKING STATEMENTS

This news release contains certain forward-looking statements. These forward-looking statements are related to, but not limited to, FTG's operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains words such as "anticipate", "believe", "expect", "plan" or similar words suggesting future outcomes. Such statements are based on the current expectations of management of the Corporation and inherently involve numerous risks and uncertainties, known and unknown, including economic factors and the Corporation's industry, generally. The preceding list is not exhaustive of all possible factors. Such forward-looking statements are not guarantees of future performance and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Corporation. The reader is cautioned to consider these and other factors carefully when making decisions with respect to the Corporation and not place undue reliance on forward-looking statements. Other than as may be required by law, FTG disclaims any intention or obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

Additional information can be found at the Corporation's website www.ftgcorp.com

 

FIRAN TECHNOLOGY GROUP CORPORATION        
Consolidated Balance Sheets        
As at November 30, 2009 and 2008 (in thousands of dollars)   2009   2008
 
ASSETS        
 
CURRENT        
  Cash $ 20 $ 170
  Accounts receivable   9,490   14,711
  Taxes receivable   450   299
  Inventories   7,618   9,150
  Prepaid expenses   737   445
  Future income taxes   232   270
    18,547   25,045
 
CAPITAL ASSETS   6,099   7,329
GOODWILL   4,063   4,583
OTHER INTANGIBLE ASSETS   384   431
  $ 29,093 $ 37,388
 
LIABILITIES        
 
CURRENT        
  Bank indebtedness $ 157 $ 2,977
  Accounts payable and accrued liabilities   6,727   9,872
  Current portion of long-term debt   2,075   1,833
    8,959   14,682
LONG-TERM DEBT   5,219   6,104
    14,178   20,786
 
 
SHAREHOLDERS' EQUITY        
 
  Deficit   (7,782)   (6,692)
  Accumulated other comprehensive (loss) income   (351)   324
    (8,133)   (6,368)
  Share capital        
    Common shares   12,681   12,681
    Preferred shares   2,218   2,218
  Contributed surplus   8,149   8,071
    14,915   16,602
  $ 29,093 $ 37,388

 

FIRAN TECHNOLOGY GROUP CORPORATION        
Consolidated Statements of Loss        
Years ended November 30, 2009 and 2008        
(in thousands of dollars except per share amounts)   2009   2008
 
SALES $ 55,380  63,180
COST OF SALES   42,393   47,322
    12,987   15,858
 
EXPENSES        
  Selling, general and administrative   6,948   8,203
  Research and development costs   3,509   4,158
  Recovery of research and        
    development costs   (140)   -
  Amortization of capital assets   2,390   2,652
  Amortization of intangible assets   47   48
  Interest expense on long-term debt   468   521
  Interest expense on short-term debt   91   180
  Severance expenses   231   591
  Foreign Exchange loss (gain)   721   (114)
    14,265   16,239
 
LOSS BEFORE INCOME TAXES   (1,278)   (381)
 
RECOVERY OF INCOME TAXES   (188)   (173)
 
NET LOSS $ (1,090) (208)
 
NET LOSS PER SHARE        
  Basic $ (0.06) $   (0.01)
  Diluted $ (0.06) $   (0.01)

 

FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Shareholders' Equity and Comprehensive Loss
Years Ended November 30, 2009 and 2008 (in thousands of dollars)
          Accumulated  
          Other Total
  Common Preferred Contributed   Comprehensive Shareholders'
  Shares Shares Surplus Deficit Loss ("AOCL") Equity
 
Balance, November 30, 2008 $ 12,681 $ 2,218 $ 8,071 (6,692) 324 $ 16,602
 
Net loss       (1,090)   (1,090)
Other comprehensive loss:            
  Foreign currency translation            
  adjustments         (898) (898)
  Net unrealized gain on derivative            
  financial instruments designated            
  as cash flow hedges         223 223
Comprehensive loss           (1,765)
Stock based compensation     78     78
 
Balance, November 30, 2009 $ 12,681 $ 2,218 $ 8,149 $ (7,782) $ (351) $ 14,915
 
 
 
 
          Accumulated  
          Other Total
  Common Preferred Contributed   Comprehensive Shareholders'
  Shares Shares Surplus Deficit Income ("AOCI") Equity
 
Balance, November 30, 2007 $ 12,681 $ 2,218 $ 7,939 $ (6,484) $ (829) $ 15,525
 
  Net loss       (208)   (208)
Other comprehensive income:            
  Foreign currency translation            
    adjustments         1,153 1,153
Comprehensive income           945
Stock based compensation     132     132
 
Balance, November 30, 2008 $ 12,681 $ 2,218 $ 8,071 $ (6,692) $ 324 $ 16,602

 

FIRAN TECHNOLOGY GROUP CORPORATION        
Consolidated Statements of Cash Flows        
Years ended November 30, 2009 and 2008        
(in thousands of dollars)   2009   2008
NET (OUTFLOW) INFLOW OF CASH RELATED        
  TO THE FOLLOWING ACTIVITIES:        
 
    OPERATING        
      Net loss $ (1,090) $ (208)
      Items not affecting cash        
          Stock based compensation expense   78   132
          Future income taxes   -   (173)
          Effect of exchange rates on U.S. dollar        
              Canadian debt   (678)   902
          Amortization of capital assets   2,390   2,652
          Amortization of intangible assets   47   48
        Changes in non-cash operating working capital   2,538   (2,733)
    3,285   620
 
      INVESTING        
            Acquisition of Filtran Microcircuits Inc.   -   (1,462)
            Additions to capital assets   (1,548)   (666)
    (1,548)   (2,128)
 
      FINANCING        
            (Decrease) increase in bank indebtedness   (2,689)   2,268
            Proceeds from capital expenditure facility   2,217   501
            Repayments of long-term debt   (1,746)   (1,417)
    (2,218)   1,352
 
      Effects of foreign exchange rate changes on cash flow   331   92
 
NET CASH OUTFLOW   (150)   (64)
 
CASH, BEGINNING OF YEAR   170   234
 
CASH, END OF YEAR $ 20 $ 170
 
DISCLOSURE OF CASH PAYMENTS        
      Payments for interest $ 559 $ 701
      Payments for income taxes $ 4 $ 4
      Refund of income taxes $ - $ 73

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