Bestar Inc.
TSX : BES

Bestar Inc.

November 08, 2006 18:12 ET

Bestar's Results for the Third Quarter of 2006

LAC-MEGANTIC, QUEBEC--(CCNMatthews - Nov. 8, 2006) - Gross revenue for the quarter ended September 30, 2006 totaled $8,338,000, a decrease of 18.9% compared with $10,277,000 for the same period last year. This decrease in sales brought about a loss before income tax of $725,000 for the third quarter of 2006, compared with a loss before income tax of $233,000 for the third quarter of 2005. Net loss for the quarter ended September 30, 2006 reached $498,000 or $(0.04) per share, compared with a net loss of $163,000 or $(0.01) per share, for the same quarter in 2005.

For the first nine months of 2006, gross revenue totaled $23,491,000 compared with $29,280,000 in 2005 and a net loss of $1,094,000 or $(0.08) $ per share was accounted for over the first three quarters of 2006 compared with net earnings of $20,000 for the same period in 2005.

"New sales in the components field occurred as we experienced a rapid increase in demand by one of our major customers, due to the introduction of a new collection. This sudden increase in sales coupled with critically low levels of finished products inventory - due to the difficulty in acquiring adequate supplies since mid April 2006 - have had a direct effect on deliveries and have caused delays in the pursuit and addition of yet more new customers in the fabrication of components field which explains the decrease of sales." comments Bestar's Chief Executive Officer, Mr. Jacques Hetu.

"On the other hand, substantial additional production costs such as extra costs for particle board, decreased production lots and the use of off-sized particle board had a significant contribution to second and third quarters losses." Explains Mr. Hetu.

"Concerning the substantial additional costs incurred, Bestar has insurance coverage up to help defray some of these extra costs and is presently undergoing discussions with our insurance company for compensation." Highlights Mr. Hetu.

On another note, Bestar was recently advised by the Toronto Stock Exchange ("TSX"), that a review of Bestar's eligibility to maintain trading its' ordinary shares on the exchange is underway and that Bestar has 120 days to satisfy the criteria to maintain its listing. More specifically, Bestar has been trading a total of ordinary shares valued at less than two million dollars for a period of more than 30 consecutive days.

"The company intends to present a case in the coming months to delay that review. However, if that request is not accepted, the company is now looking into the possibility of listing its ordinary shares on the TSX Venture Exchange. Presently Bestar meets the requirements to be listed as a Group 1 industry with the TSX Venture Exchange." Explained Mr. Hetu.

"The last few months have clearly shown a continued interest in our products and we now have a sales team in place to support and serve our customers in the fabrication of components field. Going forward, we must continue to increase our production capacity and productivity." Adds Mr. Hetu.

"We have taken several steps, in order to attain these goals. First, we have re-hired several employees. Second, the use of our new equipment for smaller lots is enabling us to increase our production lot sizes on our main production line. Finally, we have purchased another piece of equipment which should be operational by the end of this year. This new equipment will give us the capacity and flexibility required to better satisfy both furniture and component customer demands." Continues Mr. Hetu.

"All these steps taken coupled with improved access and cost of particle board allows us to expect increased sales and better results in the fourth quarter and 2007." Concludes Mr. Hetu.



Interim Results Summary

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

Q1 Q2 Q3 Q4 Total

Revenue 2004 11,403 9,895 12,760 9,670 43,728
2005 9,948 9,055 10,277 9,392 38,672
2006 8,535 6,619 8,338 - -

Net earnings (loss)(i) 2004 (246) (1,419) 1,384 (860) (1,141)
2005 (52) 235 (163) 372 392
2006 3 (599) (498) - -

Earnings (loss)
per common share(i) 2004 (0.02) (0.12) 0.11 (0.07) (0.09)
2005 (0.00) 0.02 (0.01) 0.03 0.03
2006 0.00 (0.05) (0.04) - -

Fully diluted
earnings (loss)
per common share(i) 2004 (0.02) (0.12) 0.11 (0.07) (0.09)
2005 (0.00) 0.02 (0.01) 0.03 0.03
2006 0.00 (0.05) (0.04) - -

Total Assets 2004 30,507 29,987 29,515 28,228 28,228
2005 28,215 28,335 28,502 27,578 27,578
2006 25,916 24,076 24,640 - -

Total Liabilities 2004 17,506 16,479 14,774 14,256 14,256
2005 14,281 14,153 14,470 13,160 13,160
2006 11,481 10,226 11,274 - -

Weighted average
of outstanding
shares (in thousands) 2004 11,088 11,738 13,038 13,038 12,231
2005 13,038 13,038 13,038 13,038 13,038
2006 13,038 13,038 13,038 - -
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(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 no
longer providing services to the entity. In this situation, the
compensation cost 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 the nine-month periods
ended September 30, 2006 and 2005 by an amount of $165,000 each.
Furthermore, retained earnings as at September 30, 2006 and
December 31, 2005 were decraesed by $319,000 and $484,000
respectively ($699,000 as at January 1, 2005), and in counterpart
the September 30,2006 and December 31, 2005 contributed surplus
was increased by $319,000 and $484,000 respectively ($699,000 as
at January 1, 2005).


Corporate Profile

Founded in 1948, Bestar Inc. designs, manufactures, and distributes a vast array of furniture and ready-to-assemble furnishings that meet customer needs in terms of quality, design, and functionality. Moreover, in the past months, Bestar has developed its new business plan 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 and 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 www.cdn-news.com or on SEDAR at www.sedar.com . The management report and comprehensive financial statements for the quarter ended September 30, 2006, as well as all other regulatory documents will be available, no later than November 15, 2006, through the SEDAR database at www.sedar.com and on our website at www.bestar.ca.

Contact Information

  • Bestar Inc.
    Jacques Hetu
    Chief Executive Officer
    819-583-1017, ext. 233