Firan Technology Group Corporation
TSX : FTG

Firan Technology Group Corporation

January 19, 2006 18:25 ET

Firan Technology Group Announces Third Consecutive Year of Double Digit Revenue Growth

TORONTO, ONTARIO--(CCNMatthews - Jan. 19, 2006) - Firan Technology Group Corporation (TSX:FTG) today announced the fourth quarter and full-year results for the period ending November 30, 2005.

The Company's revenue grew in 2005 to $52,801,000, an increase of $6,157,000 or 13% over 2004 and 104% growth over the past three years. This growth is the result of the corporate development activities over the past three years including the merger of FTG and Circuit World in 2003 and the acquisition of Young Electronics in December 2004.

Net sales for the fourth quarter of 2005 were $13,390,000, an increase of 28% compared with $10,467,000 for the fourth quarter of 2004 and a 1% increase over the third quarter of 2005. The strength in the Canadian dollar versus the prior year reduced reported sales for the quarter by approximately $700,000 and $3,600,000 for the full year.

The combined Circuits businesses' net sales for the quarter were $10,634,000, an increase of $2,776,000 or 35% over the prior year. The strength of the Canadian dollar compared to the prior year reduced sales by more than $500,000. Net sales recorded from the Chatsworth facility were $3,249,000 for the quarter. On a year-to-date basis, net sales for the Circuits segment were $43,294,000, an increase of $5,635,000 or 15% over the comparable period in 2004. The strength of the Canadian dollar has reduced reported sales for the Circuits' segment by approximately $3,000,000 versus the prior year.

Aerospace sales for the current quarter ended at $2,756,000 which increased 6% and were $147,000 higher than the same quarter last year and were 22% higher than the third quarter of 2005. On a year to date basis, net sales for Aerospace were $9,507,000 compared to $8,985,000 for the comparable period in 2004, an increase of 6%. The strength of the Canadian dollar reduced reported sales by approximately $600,000 for the full year.



Fourth Quarter Results (three months ended November 30, 2005
compared with three months ended
November 30, 2004)

Q4 2005 Q4 2004
----------- ------------

Sales $13,390,000 $10,467,000
Operating Earnings (Loss) Before Tax $124,000 ($235,000)
Net Earnings (Loss) $152,000 ($27,000)
Earnings per share - basic and diluted $0.01 $0.00


The Company had operating earnings before tax in the quarter of $124,000, an improvement from the pre-tax operating loss of $235,000 in the fourth quarter of 2004. Included in operating earnings for the quarter are charges of $123,000 and $42,000 respectively related to the sale of a property and final expenses received from its controlling shareholder related to the 2003 merger, offset by a $154,000 gain for FTG's portion of the gain on a sale of a property pursuant to an agreement with its controlling shareholder. The performance for the quarter resulted from substantially improved sales and margin in FTG Circuits Toronto compared to earlier in the year. FTG Aerospace continues to achieve positive performance.

Net income for the fourth quarter was $152,000 or earnings of $0.01 per share ($0.01 per diluted share) as compared with a net loss of $27,000 or $0.00 per share ($0.00 earnings per diluted share) in the same period in 2004.



Year to Date Results (twelve months ended November 30, 2005 compared
with twelve months ended November 30, 2004)

YTD 2005 YTD 2004
----------- ------------

Sales $52,801,000 $46,644,000
Operating Loss Before Tax ($348,000) ($399,000)
Net Loss ($893,000) ($191,000)
Loss per share - basic & diluted ($0.05) ($0.01)


Full year results were negatively impacted by performance in FTG Circuits - Toronto in the first quarter of the year. For the final nine months of the year, the Company achieved an operating profit of $944,000 and a net profit of $88,000. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the full year was $3,707,000, of which $3,615,000 was for the final nine months of the year.

As at November 30, 2005, the Company's primary source of liquidity included, accounts receivable of $8,518,000 and inventory of $6,409,000. Net working capital at November 30, 2005 was $4,283,000 as compared to $6,026,000 at November 30, 2004. In addition, the Company had a strong cash position at the end of the quarter with cash on hand of $2,051,000 and was undrawn on its' US and Canadian operating lines.

"Following the disappointing start to 2005, I am pleased at the progress the Company has made over the final nine months. FTG Circuits Chatsworth has been a great addition to the Company and their financial performance has exceeded our expectations. FTG Circuits Toronto has dramatically improved on production yields and on-time delivery since the first quarter. This is being recognized by our customer base as we continue to win new business. FTG Aerospace was impacted in the third quarter as we worked with a customer to overcome some technical challenges, but shipment levels recovered in the fourth quarter.", stated Mr. Brad Bourne, President and Chief Executive Officer.

Mr. Bourne added, "Our outlook for the future is positive as our customer base is forecasting continued growth and the operational performance levels across FTG are strong. The Company's external focus will continue to be in the aerospace and defense markets and on building leadership positions in the market segments in which we participate. Internally, the Company is focused on building the best possible team, exceeding our customers' expectations for quality, delivery and customer service, and executing on the critical metrics that drive profitability."

The Company will host a live conference call on Friday January 20, 2006 at 8:30am (EDT) to discuss the results of the fourth quarter of 2005.

Anyone wishing to participate in the call should dial 416-695-9722 or 1-888-333-4519 and identify that you are calling into the FTG conference call. The Chairperson is Mr. Brad Bourne. A replay of the call will be available until January 27, 2006. The number to call for a rebroadcast is 416-695-5275 or 1-888-509-0081.

ABOUT FIRAN TECHNOLOGY GROUP CORPORATION

FTG is an aerospace and defence 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, defence, 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.

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

This news release may contain certain forward-looking statements. Such statements are based on the current expectations of management of the Company and inherently involve numerous risks and uncertainties, known and unknown, including economic factors and the Company'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 Company. The reader is cautioned to consider these and other factors carefully when making decisions with respect to the Company and not place undue reliance on forward-looking statements. The Company does not undertake and has no specific intention to update any forward-looking statements, written or oral that may be made from time to time by or on its behalf whether as a result of new information, future events or otherwise.



FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Balance Sheets
November 30, 2005 and 2004
(in thousands of dollars)
---------------------------------------------------------------------
---------------------------------------------------------------------

2005 2004
------------ ---------
(unaudited) (audited)
ASSETS

CURRENT
Cash $ 2,051 $ 2,870
Accounts receivable 8,518 6,867
Inventories 6,409 4,363
Promissory note 133 1,500
Prepaid expenses 420 396
---------------------------------------------------------------------
17,531 15,996

DUE FROM RELATED PARTY 154 -
PLANT AND EQUIPMENT 7,168 9,923
FUTURE INCOME TAXES 3,724 3,684
GOODWILL 4,549 1,039
DEFERRED FINANCING FEES 171 177
---------------------------------------------------------------------

$ 33,297 $ 30,819
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES

CURRENT
Accounts payable and accrued
liabilities $ 6,768 $ 7,059
Accrued restructuring and severance 298 663
Current portion of long-term debt
and capital leases 5,833 2,248
Income taxes payable 349 -
---------------------------------------------------------------------
13,248 9,970
LONG-TERM DEBT AND CAPITAL LEASES - 2,756
---------------------------------------------------------------------
13,248 12,726
---------------------------------------------------------------------
---------------------------------------------------------------------
SHAREHOLDERS' EQUITY

Share capital
Common shares 12,681 10,347
Preferred shares 2,218 2,218
Contributed surplus 7,604 6,798
Cumulative translation adjustment (4) -
Deficit (2,450) (1,270)
---------------------------------------------------------------------
20,049 18,093
---------------------------------------------------------------------

$ 33,297 $ 30,819
---------------------------------------------------------------------
---------------------------------------------------------------------


FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Operations
Periods ended November 30, 2005 and 2004
(in thousands of dollars except per share amounts)
---------------------------------------------------------------------
---------------------------------------------------------------------

Three Months Ended Year to Date
November November November November
30 2005 30 2004 30 2005 30 2004
----------- ----------- ----------- ----------
(unaudited) (unaudited) (unaudited) (audited)

SALES $ 13,390 $ 10,467 $ 52,801 $ 46,644

COST OF SALES 10,911 8,301 42,224 35,507
---------------------------------------------------------------------
2,479 2,166 10,577 11,137
---------------------------------------------------------------------

EXPENSES

Selling, general
and administrative 1,345 1,630 6,233 7,010
Amortization of
plant and equipment 882 737 3,546 3,399
Interest expense on
long-term debt 159 34 509 240
---------------------------------------------------------------------
2,386 2,401 10,288 10,649
---------------------------------------------------------------------

OPERATING EARNINGS
(LOSS) BEFORE UNDERNOTED 93 (235) 289 488

RESTRUCTURING COSTS - - 7 (313)
SEVERANCE COSTS - - 661 1,200
GAIN ON SALE OF
LAND AND BUILDINGS (31) - (31) -
---------------------------------------------------------------------

OPERATING EARNINGS
(LOSS) BEFORE TAX 124 (235) (348) (399)

INCOME TAX (RECOVERY) (28) (208) 545 (208)
---------------------------------------------------------------------

NET EARNINGS (LOSS) $ 152 (27) $ (893) $ (191)
---------------------------------------------------------------------
---------------------------------------------------------------------

EARNINGS (LOSS) PER
SHARE
Basic and diluted $ 0.01 $ - $ (0.05) $ (0.01)
---------------------------------------------------------------------
---------------------------------------------------------------------


FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Deficit
Periods ended November 30, 2005 and 2004
(in thousands of dollars)
---------------------------------------------------------------------
---------------------------------------------------------------------
Three Months Ended Year to Date
2005 2004 2005 2004
----------- ----------- ----------- ----------
(unaudited) (unaudited) (unaudited) (audited)

Deficit, beginning
of period $ (2,602) $ (1,243) $ (1,270) $ (1,079)
Change in
accounting policy - - (287) -
---------------------------------------------------------------------
Deficit, beginning
of period,
as restated (2,602) (1,243) (1,557) (1,079)
Net earnings (loss)
for the period 152 (27) (893) (191)
---------------------------------------------------------------------

Deficit,
end of period $ (2,450) $ (1,270) $ (2,450) $ (1,270)
---------------------------------------------------------------------
---------------------------------------------------------------------


FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Cash Flows
Periods ended November 30, 2005 and 2004
(in thousands of dollars)
---------------------------------------------------------------------
---------------------------------------------------------------------

Three Months Ended Year to Date
November November November November
30 2005 30 2004 30 2005 30 2004
----------- ----------- ----------- ----------
(unaudited) (unaudited) (unaudited) (audited)


NET INFLOW (OUTFLOW)
OF CASH RELATED
TO THE FOLLOWING
ACTIVITIES

OPERATING
Net earnings (loss) $ 152 $ (27) $ (893) $ (191)
Items not affecting
cash
Stock based
compensation expense 26 - 142 -
Future income taxes (40) (169) (40) (169)
(Gain) loss on sale
of plant and
equipment (31) 20 (31) (293)
Amortization of
deferred financing
fees 9 9 41 115
Amortization of
plant and equipment 882 737 3,546 3,399
---------------------------------------------------------------------
998 570 2,765 2,861

Changes in non-cash
operating working
capital 798 334 (229) (531)
---------------------------------------------------------------------
1,796 904 2,536 2,330
---------------------------------------------------------------------

INVESTING
Increase in due
from related party (154) - (154) -
Acquisition of
Young Electronics - - (6,202) -
Proceeds from sale
of plant and
equipment 802 - 802 313
Additions to plant
and equipment (345) (242) (1,285) (1,100)
---------------------------------------------------------------------
303 (242) (6,839) (787)
---------------------------------------------------------------------

FINANCING
Issuance of shares
and warrants - - 2,709 -
Proceeds from
long term debt - - 3,153 8,793
Increase in deferred
financing fees - - (35) -
Payment of
long-term debt and
capital leases (1,999) (582) (2,308) (7,505)
---------------------------------------------------------------------
(1,999) (582) 3,519 1,288
---------------------------------------------------------------------

Effects of foreign
exchange rate
changes on cash flow 8 - (35) -
---------------------------------------------------------------------

NET CASH FLOW 108 80 (819) 2,831

CASH , BEGINNING
OF PERIOD 1,943 2,790 2,870 39
---------------------------------------------------------------------

CASH, END OF PERIOD $ 2,051 $ 2,870 $ 2,051 $ 2,870
---------------------------------------------------------------------
---------------------------------------------------------------------

DISCLOSURE OF CASH
PAYMENTS
Interest $ 167 $ 40 $ 514 $ 240
Income taxes $ 356 $ - $ 356 $ -


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