Coreco Inc.

Coreco Inc.

March 14, 2005 06:00 ET

Coreco Reports Fourth Quarter and Year End Results-EPS Double on Revenue Growth of 28% in Fiscal 2004


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: CORECO INC.

TSX SYMBOL: CRC

MARCH 14, 2005 - 06:00 ET

Coreco Reports Fourth Quarter and Year End Results-EPS
Double on Revenue Growth of 28% in Fiscal 2004

MONTREAL, QUEBEC--(CCNMatthews - March 14, 2005) - Coreco Inc. (TSX:CRC)
announces its results for the year ended December 31, 2004.

For the twelve-month period, revenues increased 28% to US$24,447,080
from US$19,025,777 a year earlier. The gross margin increased to 60% of
revenues and net earnings doubled to US$2,416,747 or US$0.34 per share
from US$1,184,254 or US$0.17 in 2003.

Fourth-quarter revenues increased 23% to US$6,119,356 on a
year-over-year basis. The gross margin amounted to 58% of revenues, and
net earnings of $723,967 or $0.10 per share were comparable to the
previous year.

At December 31, 2004, the Company held US$3,202,875 in cash and cash
equivalents, and had no long-term debt. Working capital remained
healthy, increasing to US$9,666,142 from US$7,876,685 at the 2003 year
end.

The Company's Canadian operations pay income tax based on earnings
measured in Canadian dollars. The decline in the U.S. dollar versus the
Canadian dollar resulted in a loss on exchange and a corresponding
reduction in income taxes for both 2004 and 2003. The effect of the tax
benefit in the fourth quarter of each year was US$0.04 per share.

Sales in all geographic regions showed strong growth in 2004. Revenues
from the U.S. rose by 33%, followed by Asia at 30%, Europe at 22% and
Canada at 13%. In 2004, Asia accounted for 24% of the Company's total
sales, Europe for 27%, the U.S. for 46% and Canada for the remainder,
comparable to the previous year.

By product category, sales of embedded products grew by 39%, frame
grabbers by 14% and software by 9%. Revenues from frame grabbers,
embedded products and software represented 47%, 41% and 5% of sales,
respectively. Revenues from end-user products, which almost tripled
over the previous year to reach their highest level to date, accounted
for 7% of revenues in 2004.

"With growth of 28% in revenues and 100% in net earnings, fiscal 2004
was an excellent year for Coreco," reported Keith Reuben, President and
CEO of Coreco Inc. "This strong performance reflects our continuing
success in providing the latest in machine vision technology to a
diversified customer base, which spans a wide range of industries
throughout the world."

"Both our IPD and OEM groups contributed to our success in the past
year," continued Mr. Reuben. "Our end-user applications accounted for
9% of total revenues in the fourth quarter, making this the best quarter
ever for our IPD group. In our OEM group, our products were selected
for design into 66 OEM applications compared with 56 last year. In
fiscal 2005, we look forward to realizing the full benefits of this
growing momentum."

Subsequent Event

On February 16, 2005, DALSA Corporation and Coreco Inc. announced that
they had entered into an arrangement agreement, pursuant to which DALSA
will acquire all of the issued and outstanding shares of Coreco, subject
to certain conditions, including regulatory approvals. The total
consideration paid by DALSA for Coreco is approximately C$72 million
representing C$10.00 per Coreco share. The transaction is expected to
close in April 2005.

About Coreco

Coreco Inc. is a leader in the design, development, manufacturing and
marketing of hardware and software that help enhance the productivity,
quality and cost-competitiveness of manufacturing processes. The
Company serves two target markets: Original Equipment Manufacturers
(OEMs) and End-users. The OEM group provides a full range of frame
grabbers, embedded products and accompanying software for integration in
high-performance machine vision applications in the industrial vision,
medical imaging, multimedia and surveillance markets. The Intelligent
Products group (IPD) specializes in providing user-friendly,
cost-effective vision appliances for task-specific factory floor
applications, such as gauging, high-precision alignment, inspection,
assembly verification and machine guidance. Coreco employs a staff of
140 people and has operations in Montreal (QC), Vancouver (BC), and
Boston (MA), with additional sales offices in Cleveland (OH), San Juan
Capistrano (CA) and Tokyo (Japan).

This press release contains statements that are forward-looking and
subject to a number of risks and uncertainties that could cause actual
results to differ materially from those anticipated. The Company has
no intention or obligation to update or revise any forward-looking
statements as a result of new information, future events or otherwise.

Webcast

The Company's fourth quarter conference call will be webcast on
coreco.com at 10 a.m. EST on Monday, March 14, 2005.



CONSOLIDATED BALANCE SHEETS

December 31, 2004 December 31, 2003
In US dollars (audited) (audited)
---------------------------------------------------------------------

Assets
Current assets:
Cash and cash equivalents $3,202,875 $3,520,879
Accounts receivable 3,270,461 2,834,561
Research tax credits receivable 2,441,789 670,164
Inventories 3,829,030 3,043,077
Prepaid expenses 369,910 321,086
Future income taxes 108,196 170,541
---------------------------------------------------------------------
13,222,261 10,560,308

Capital assets 589,327 610,671
Research tax credits 405,000 525,896
Future income taxes 1,432,562 818,886
Investment, at cost 987,888 987,888
Goodwill 2,694,122 2,694,122
Deferred financing fees - 20,246
---------------------------------------------------------------------
$19,331,160 $16,218,017
---------------------------------------------------------------------
---------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $2,032,658 $2,273,585
Income taxes payable 1,241,789 301,366
Future income taxes 215,000 42,000
Deferred revenues 66,672 66,672
---------------------------------------------------------------------
3,556,119 2,683,623

Long-term portion of deferred revenues 38,882 30,550
Future income taxes 125,000 168,000
---------------------------------------------------------------------
3,720,001 2,882,173

Shareholders' equity:
Share capital 10,527,360 10,503,902
Cumulative translation adjustment 115,663 115,663
Retained earnings 4,968,136 2,716,279
---------------------------------------------------------------------
15,611,159 13,335,844
---------------------------------------------------------------------
$19,331,160 $16,218,017
---------------------------------------------------------------------
---------------------------------------------------------------------



CORECO INC.
CONSOLIDATED STATEMENTS OF EARNINGS

Three months ended Twelve months ended
December 31 December 31
2004 2003 2004 2003
In US dollars (unaudited)(unaudited) (audited) (audited)
---------------------------------------------------------------------

Sales $6,119,356 $4,973,604 $24,447,080 $19,025,777
Cost of goods sold 2,561,982 1,927,338 9,722,161 7,798,882
---------------------------------------------------------------------
Gross profit 3,557,374 3,046,266 14,724,919 11,226,895

Expenses (income):
Research and
development
expenditures 1,315,276 1,220,514 4,861,602 4,360,233
Less research
tax credits (515,000) (468,000) (1,425,000) (1,300,000)
---------------------------------------------------------------------
800,276 752,514 3,436,602 3,060,233

Selling and
marketing 1,418,586 999,360 5,365,476 4,131,144
General and
administrative 694,973 654,666 2,501,100 2,382,036
Amortization
of capital assets 85,365 97,572 333,749 423,985
Financial, net (135,793) (57,942) (48,755) 41,243
---------------------------------------------------------------------
2,863,407 2,446,170 11,588,172 10,038,641
---------------------------------------------------------------------
Earnings before
income taxes 693,967 600,096 3,136,747 1,188,254
Income taxes (30,000) (102,000) 720,000 4,000
---------------------------------------------------------------------
Net earnings $723,967 $702,096 $2,416,747 $1,184,254
---------------------------------------------------------------------
---------------------------------------------------------------------

Earnings per share,

basic and fully diluted $0.10 $0.10 $0.34 $0.17

Weighted average number
of shares outstanding
Basic 7,003,757 7,039,014 7,022,135 7,073,132
Diluted 7,021,141 7,039,014 7,099,854 7,073,476



CORECO INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

Three months ended Twelve months ended
December 31 December 31
2004 2003 2004 2003
In US dollars (unaudited) (unaudited) (audited) (audited)
---------------------------------------------------------------------

Retained earnings,
beginning of
period $4,253,917 $2,053,134 $2,716,279 $1,655,101
Net earnings 723,967 702,096 2,416,747 1,184,254
Excess of purchase
price over book
value of common
shares (9,748) (38,951) (164,890) (123,076)
---------------------------------------------------------------------
Retained earnings,
end of period $4,968,136 $2,716,279 $4,968,136 $2,716,279
---------------------------------------------------------------------
---------------------------------------------------------------------



CORECO INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended Twelve months ended
December 31 December 31
2004 2003 2004 2003
In US dollars (unaudited) (unaudited) (audited) (audited)
---------------------------------------------------------------------

Cash flows from
operating
activities:
Net earnings $723,967 $702,096 $2,416,747 $1,184,254

Adjustments for:
Amortization of
capital assets 85,365 97,572 333,749 423,985
Amortization of
deferred
financing fees 5,061 5,061 20,246 20,245
Future income
taxes (348,203) (464,975) (421,331) (456,975)

Changes in
non-cash working
capital items:
Accounts
receivable 368,350 (114,730) (435,900) (118,862)
Research tax
credits
receivable (941,314) 1,046,311 (1,771,625) 190,920
Inventories 114,442 187,435 (785,953) 472,839
Prepaid expenses 79,272 (127,006) (48,824) (5,594)
Accounts payable
and accrued
liabilities (805,368) (11,515) (240,927) 148,980
Income taxes 127,832 301,366 940,423 207,461
Research tax
credits 220,000 (525,896) 120,896 (525,896)
Deferred revenues (16,667) 8,333 8,332 97,222
---------------------------------------------------------------------
(387,263) 1,104,052 135,833 1,638,579

Cash flows used
for financing
activities:
Repurchase of
shares (17,277) (87,700) (264,010) (256,876)
Proceeds from
issuance of
common shares - - 122,578 -
Repayment of
long-term debt - (343,750) - (1,781,250)
---------------------------------------------------------------------
(17,277) (431,450) (141,432) (2,038,126)

Cash flows from
investing
activities:
Purchase of
capital assets (75,150) (23,192) (312,405) (243,280)

---------------------------------------------------------------------
Increase (decrease)
in cash and cash
equivalents
during the
period (479,690) 649,410 (318,004) (642,827)

Cash and cash
equivalents,
beginning of
period 3,682,565 2,871,469 3,520,879 4,163,706

---------------------------------------------------------------------
Cash and cash
equivalents, end
of period $3,202,875 $3,520,879 $3,202,875 $3,520,879
---------------------------------------------------------------------
---------------------------------------------------------------------


-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Coreco Inc.
    Keith A. Reuben
    President and Chief Executive Officer
    (514) 333-1301
    (514) 333-1867 (FAX)
    http://www.coreco.com
    or
    Coreco Inc.
    Grace Pollock
    Investor and Media Relations
    (514) 940-3717
    investors@coreco.com