Bestar Inc.

Bestar Inc.

February 29, 2008 12:21 ET

Bestar Inc.: Increased Sales in 2007 and Major Investments in 2008

LAC-MEGANTIC, QUEBEC--(Marketwire - Feb. 29, 2008) - Bestar Inc. (TSX:BES) -

Sales for the fiscal year ended December 31, 2007, were CA$43,433,000, a 30.4% increase over the CA$33,309,000 posted for fiscal year 2006.

Earnings before income taxes of CA$241,000 were recorded for fiscal 2007, compared to a loss of CA$1,405,000 for 2006. Net income was CA$250,000 or CA$0.02 per share in 2007, compared to a net loss of CA$967,000 or CA$(0.07) per share for fiscal year 2006.

In the fourth quarter of 2007, sales totaled CA$10,448,000, a 6.4% increase over the CA$9,817,000 posted for the same period in 2006. Net income for the fourth quarter of 2007 was CA$50,000 or CA$0.004 per share, compared to CA$127,000 or CA$0.010 per share for the same period in 2006.

"Development of the component market and significant sales growth in ready-to-assemble furniture led to an important increase in sales in 2007. However, in 2007, as in 2006, the fire at our primary supplier's facility continued to negatively affect the cost for raw materials. Insurance payments of CA$500,000 and CA$499,000 recorded in the fourth quarters of 2006 and 2007 helped offset the effect. The hike in the average exchange rate (CAD vs. USD) also adversely affected sales by nearly CA$1.5M in 2007, compared to 2006. This impact, however, was tempered by a CA$536,000 increase in the fair value of forward exchange contracts," commented Paulin Tardif, Bestar CEO.

"Despite the difficult environment, our 2007sales increase confirms the success of our strategy of diversifying and consolidating our position in our traditional market. Nevertheless, the results are also evidence that we must boost our competitiveness, particularly in the context of a stronger Canadian dollar. It is therefore clear that despite all our work to implement action plans in other areas, the company's future, even in the short term, depends on equipment modernization."

"As announced at the February 21, 2008 press conference, CA$3,500,000 will be invested in new equipment to increase our production capacity and operational flexibility while at the same time reducing production costs. This investment will be possible through financing of CA$1,400,000 from Investissement Quebec, CA$1,400,000 from the Laurentian Bank of Canada, and CA$500,000 from Canada Economic Development (CED). What's more, Ministere du Developpement economique, de l'Innovation et de l'Exportation and Fonds d'aide aux municipalites mono industrielles will contribute CA$75,000 to the project. In addition, Investissement Quebec and the Laurentian Bank of Canada, refinanced the existing CA$2,400,000 debt on a pari passu basis, and the Laurentian Bank of Canada is now the short term lender to the company," declared Mr. Tardif.

"The equipment modernization project, slated for completion at the second quarter of 2008, will enable us to meet our current customers' expectations in both the office furniture and component markets in an efficient and cost effective manner. It will also allow us to attract new customers and gain a foothold in new markets as we develop business alliances with various manufacturers (furniture, kitchen cabinets, storage furniture, etc.). We are confident that the measures aimed at boosting the company's efficiency and flexibility will result in greater profitability," concluded Paulin Tardif.

Results Summary

(Results in thousands of dollars, except earnings per share)

Q1 Q2 Q3 Q4 Total

Revenue 2005 9,948 9,055 10,277 9,392 38,672
2006 8,535 6,619 8,338 9,817 33,309
2007 11,279 11,093 10,613 10,448 43,433

Net earnings 2005 (52) 235 (163) 369 389
(loss)(i) 2006 3 (599) (498) 127 (967)
2007 104 79 17 50 250

Earnings (loss) 2005 (0.00) 0.02 (0.01) 0.03 0.03
per common share(i) 2006 0.00 (0.05) (0.04) 0.01 (0.07)
2007 0.01 0.01 0.00 0.00 0.02

Fully diluted 2005 (0.00) 0.02 (0.01) 0.03 0.03
earnings (loss) 2006 0.00 (0.05) (0.04) 0.01 (0.07)
per common share(i) 2007 0.01 0.01 0.00 0.00 0.02

Total Assets 2005 28,215 28,335 28,502 27,578 27,578
2006 25,916 24,076 24,640 24,409 24,409
2007 25,671 25,783 25,337 25,874 25,874

Total Liabilities 2005 14,281 14,153 14,470 13,160 13,160
2006 11,481 10,226 11,274 10,902 10,902
2007 12,123 12,089 11,586 12,104 12,104

Weighted average of 2005 13,038 13,038 13,038 13,038 13,038
outstanding shares 2006 13,038 13,038 13,038 13,038 13,038
(in thousands) 2007 13,038 13,038 13,038 13,038 13,038
(i) The Emerging Issues Committee (EIC) of Canadian Institute of Chartered
Accountants has issued a draft entitled "Stock-based Compensation for
retirement-Eligible Employees". These recommendations specify how to
recognize a stock-based award to an employee who can continue vesting
in an award without continuing to provide services to the company. In
this situation, the compensation cost of such an award should be
recognized on the grant date and not over the vesting period.

In the past years, the Company granted certain employees options with
modalities allowing them to continue vesting in these options in
situations where they no longer have to render services to the Company.
The Company decided to anticipate these EIC recommendations and
retroactively applied them, which resulted in a decrease of the net
loss for fiscal year ended December 31, 2006 by an amount of $215,128
(increase of net earnings of $215,128 in 2005). Furthermore, retained
earnings as at December 31, 2006 and 2005 were decreased by $268,872
and $484,000 respectively ($699,128 as at January 1, 2005), and in
counterpart the December 31, 2006 and 2005 contributed surplus was
increased by $268,872 and $484,000 respectively ($699,128 as at January
1, 2005).

Corporate Profile

Founded in 1948, Bestar Inc. designs, manufactures, and distributes a vast array of ready-to-assemble furnishings that meet customer needs in terms of quality, design, and functionality. During the last years Bestar has specialized in office furniture and distributes its products mainly in the United States and Canada. In order to offset a decrease in sales Bestar developed a new business plan in 2006 which includes the fabrication of components.

The company was incorporated in 1986 and operates from its plant in Lac-Megantic, Quebec, Canada.

Release Declaration

This press release may contain information and declarations on the future performance of the company that are, by nature, speculative. These declarations are based on suppositions, uncertainties and the best possible evaluation of future events by management. They are subject to certain risk factors such as exchange rates, the growing competition from emerging countries as well as fluctuating costs in raw material and shipping.

Shareholder Information

Shareholders may find this press release under the CCN news file at or on SEDAR at . The management report and comprehensive financial statements for the year ended December 31, 2007, as well as all other regulatory documents will be available, no later than March 31, 2008, through the SEDAR database at and on our website at

Contact Information

  • Bestar Inc.
    Paulin Tardif
    Chairman of the Board
    President and Chief Executive Officer