Firan Technology Group Corporation
TSX : FTG

Firan Technology Group Corporation

July 11, 2007 20:16 ET

Firan Technology Group Corporation (FTG) Announces Record Revenue in Second Quarter 2007

- Aerospace segment grows 24% - Aerospace and Circuits Segment both grow 10% sequentially - Margins improve to 23.9% - Net Earnings year-to-date up 41%, despite strong Canadian dollar

TORONTO, ONTARIO--(Marketwire - July 11, 2007) - Firan Technology Group Corporation (TSX:FTG) today announced the second quarter 2007 results for the period ending June 1, 2007.

FTG achieved $15,263,000 in revenue in the second quarter, an all-time record for the Corporation. Net earnings after tax for the second quarter of 2007 were $342,000.

Second Quarter Results: (three months ended June 1, 2007 compared with three months ended June 2, 2006)



Q2 2007 Q2 2006
------- -------

Sales $ 15,263,000 $ 14,764,000
Gross Margin 3,653,000 3,276,000
Operating Earnings Before Tax 759,000 310,000
Net Earnings After Tax $ 342,000 $ 408,000
Earnings per share - basic & diluted $ 0.02 $ 0.02

Year to Date Results (six months ended June 1, 2007 compared with six
months ended June 2, 2006)

YTD 2007 YTD 2006
-------- --------

Sales $ 29,174,000 $ 28,127,000
Gross Margin 6,774,000 6,123,000
Operating Earnings Before Tax $ 1,287,000 $ 521,000
Net Earnings After Tax $ 824,000 $ 586,000
Earnings per share - basic $ 0.05 $ 0.03
- diluted $ 0.04 $ 0.03


Net sales increased by $499,000 or 3.4%, from $14,764,000 in the second quarter of 2006 to $15,263,000 in the second quarter of 2007. The Circuits Segment was down $139,000 or 1.1% over the same period last year. Weak market conditions in printed circuit boards and the strengthening Canadian dollar drove the year over year change. The Circuits segment is outperforming the overall market, which is down approximately 10% in 2007 in North America, excluding any exchange rate impact. The Aerospace segment grew over the same quarter last year by $638,000 or 23.8% due to the investments made in 2006 to increase capacity and the ongoing lean manufacturing program which together with strong customer demand resulted in increased shipments. The record revenue for the Corporation was achieved in spite of the ongoing strengthening of the Canadian dollar.

Gross margin increased by $377,000 to $3,653,000 or 23.9% of sales for the second quarter of 2007 as compared with $3,276,000 or 22.3% of sales in the second quarter of 2006. The increase in gross margins is directly attributable to the higher revenue at FTG, particularly at FTG Aerospace with their higher average gross margins, offset by the slightly lower throughput in FTG Circuits and the ongoing margin squeeze due to the industry price pressures and material cost increases. The ongoing strengthening of the Canadian dollar continues to negatively impact overall gross margins. Also in the quarter FTG recorded a $ 554,000 recovery for Scientific Research and Experimental Development (SR&ED) in cost of sales which helped to offset the ongoing investment in research and development costs incurred by the Corporation.

Net earnings for the second quarter of 2007 were $341,000 or $0.02 per share ($0.02 per diluted share) as compared with $408,000 or $0.02 per share ($0.02 per diluted share) in the second quarter of 2006.

"We are pleased with the continued revenue growth for the Corporation and are excited to exceed $15 million in revenue in a quarter for the first time ever. Our focus on the aerospace and defence market continues to prove to be a good decision, as this market has been robust and looks strong into the future," commented Brad Bourne, President and CEO, FTG Corporation. He added, "our strong sales team continues to position FTG favourably on a number of key new accounts and programs."

Operating Business Update

FTG Aerospace has performed well in all aspects of the business from new customer wins, through revenue growth, profit growth, new product development, and operational performance. FTG Aerospace will move into a new facility in the coming months, a key step in ensuring capacity requirements to support continued future growth. FTG Aerospace will also benefit from a move to a new end-to end integrated business system in the third quarter that is another key element of enhancing infrastructure to support growth.

FTG Circuits - Chatsworth has turned the corner and realized strong bookings and shipments in the quarter. Key additions in Operations management have further strengthened the business unit, as it is meeting many new customer qualifications and making great progress in penetrating the rigid flex market. With the installation and commissioning of the equipment and systems purchased for that site over the past year, capabilities and capacity are growing.

FTG Circuits - Toronto continued to see strong demand for very high technology products for next generation aircraft. The site is well positioned on many of the new aircraft being developed including the new air transport aircraft at Airbus and Boeing. The technology level continues to stretch the capability of the facility in the short term and has caused a significant increase in outsourcing costs for a few key processes. These costs will start to decrease in the third quarter as new equipment has been ordered and will enable the processes to be done internally. This, combined with improving yields on the new products should result in improving financial performance.

"To continue to improve our financial performance, FTG remains focused on achieving Operational Excellence. Our customers demand high quality products, on time delivery and outstanding customer service. We focus on improving our performance in all of these areas every day. The results of some of our efforts were recently recognized by Rockwell when they awarded FTG Aerospace their Lean Initiative Supplier of the Year" said Mr. Joseph Ricci, Vice President and CFO, FTG Corporation.

Conference Call

The Company will host a live conference call on July 12, 2007 at 8:30am (EDT) to discuss the results of the second quarter of 2007.

Anyone wishing to participate in the call should dial 416-641-6112 or 1-866-226-1798 and identify that you are calling into the FTG conference call. The Chairperson is Bradley Bourne. A replay of the call will be available until July 19, 2007. The number to call for a rebroadcast is 416-695-5800 or 1-800-408-3053 and the verbal password for the rebroadcast is 3227754#. The replay will also be available on the FTG website at www.ftgcorp.com

Second Quarter Results: (three months ended June 1, 2007 compared with three months ended June 2, 2006)



Reconciliation of EBITDA (1): Q2 2007 Q2 2006
------- -------

Net earnings $ 342,000 $ 408,000
Add:
Income taxes / (recovery) $ 417,000 $ (98,000)
Interest expense $ 135,000 $ 114,000
Amortization of machinery and equipment $ 697,000 $ 761,000
Other amortization $ 58,000 $ 102,000
----------- -----------

EBITDA $ 1,649,000 $ 1,287,000
----------- -----------

Year to Date Results (six months ended June 1, 2007 compared with
six months ended June 2, 2006)

YTD 2007 YTD 2006
-------- --------

Net earnings $ 824,000 $ 586,000
Add:
Income taxes / (recovery) $ 463,000 $ (65,000)
Interest expense $ 273,000 $ 219,000
Amortization of machinery and equipment $ 1,487,000 $ 1,561,000
Other amortization $ 122,000 $ 216,000
----------- -----------

EBITDA $ 3,169,000 $ 2,517,000
----------- -----------


(1) EBITDA is not a measure recognized under Canadian generally accepted accounting principles ("GAAP"). EBITDA is calculated as earnings before provision for income taxes, interest expense, amortization of machinery and equipment and amortization of other assets. Management believes that many of the Company's shareholders, creditors, other stakeholders and analysts prefer to assess the Company's performance using EBITDA in addition to the GAAP measures. The Company's method of calculating EBITDA may differ from other companies and accordingly may not be comparable to measures used by other companies.

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.

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

This news release contains 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.

Additional information can be found at the Company's web site www.ftgcorp.com.



FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Balance Sheets
(in thousands of dollars)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

November 30, June 2,
June 1, 2007 2006 2006
(unaudited) (audited) (unaudited)
------------- ------------ ------------
ASSETS

CURRENT
Cash $ 580 $ 2,348 $ 947
Accounts receivable 11,155 10,432 9,965
Income taxes recoverable 146 254 -
Inventories 8,944 7,622 6,422
Prepaid expenses 402 329 534
--------------------------------------------------------------------------
21,227 20,985 17,868

DUE FROM RELATED PARTY 154 154 154
MACHINERY AND EQUIPMENT 7,186 6,969 6,921
FUTURE INCOME TAXES (Note 4) 4,803 4,350 3,724
GOODWILL (Note 6) 4,080 4,549 4,549
OTHER ASSETS 129 162 40
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$ 37,579 $ 37,169 $ 33,256
--------------------------------------------------------------------------
--------------------------------------------------------------------------

LIABILITIES

CURRENT
Accounts payable and accrued
liabilities $ 8,518 $ 8,567 $ 7,787
Current portion of long-term debt
and capital leases 1,097 990 4,721
--------------------------------------------------------------------------
9,615 9,557 12,508
LONG-TERM DEBT AND CAPITAL LEASES 5,553 5,561 -
--------------------------------------------------------------------------
15,168 15,118 12,508
--------------------------------------------------------------------------

SHAREHOLDERS' EQUITY

Share capital
Common shares 12,681 12,681 12,681
Preferred shares 2,218 2,218 2,218
Contributed surplus (Note 3(a)) 7,893 7,804 7,700
Retained earnings (deficit) 171 (653) (1,864)
Accumulated other comprehensive
income (Note 2) (552) 1 13
--------------------------------------------------------------------------
22,411 22,051 20,748
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$ 37,579 $ 37,169 $ 33,256
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--------------------------------------------------------------------------

See accompanying notes.



FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Earnings
(in thousands of dollars except per share amounts)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Three Months Ended Six Months Ended
------------------------- ------------------------
June 1, June 2, June 1, June 2,
2007 2006 2007 2006
(unaudited) (unaudited) (unaudited) (unaudited)
------------ ------------ ----------- ------------

SALES $ 15,263 $ 14,764 $ 29,174 $ 28,127
COST OF SALES (Note 4) 11,610 $ 11,488 22,400 22,004
---------------------------------------------------------------------------
3,653 3,276 6,774 6,123
---------------------------------------------------------------------------

EXPENSES
Selling, general and
administrative 2,062 $ 2,091 3,727 3,822
Amortization of machinery
and equipment 697 $ 761 1,487 1,561
Interest expense on
long-term debt 135 $ 114 273 219
---------------------------------------------------------------------------
2,894 2,966 5,487 5,602
---------------------------------------------------------------------------

OPERATING EARNINGS BEFORE
INCOME TAXES 759 310 1,287 521

INCOME TAXES (RECOVERY)
(Note 4) 417 $ (98) 463 (65)
---------------------------------------------------------------------------

NET EARNINGS $ 342 $ 408 $ 824 $ 586
---------------------------------------------------------------------------
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NET EARNINGS PER SHARE
Basic (Note 3(b)) $ 0.02 $ 0.02 $ 0.05 $ 0.03
Diluted (Note 3(b)) $ 0.02 $ 0.02 $ 0.04 $ 0.03
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See accompanying notes.



FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Changes in Shareholders' Equity
(in thousands of dollars) (unaudited)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Accum-
ulated Total
Other (Deficit)
Compre- Retained Total
Pref- Contri- (Deficit) hensive Earnings Share-
Common erred Total buted Retained Income and holders'
Shares Shares Capital Surplus Earnings ("AOCI") AOCI Equity
-----------------------------------------------------------------

Balance,
Nove-
mber 30,
2006 12,681 2,218 14,899 7,804 (653) 1 (652) 22,051
Other
compre-
hensive
income:
Net
earnings 824 - 824 824
Foreign
curr-
ency
transl-
ation
adjust-
ments
(Note 6) - (553) (553) (553)
-------------------------------
Other
compre-
hensive
income 824 (553) 271 271
Stock
based
compen-
sation 89 89

-----------------------------------------------------------------
Balance,
June 1,
2007 12,681 2,218 14,899 7,893 171 (552) (381) 22,411
-----------------------------------------------------------------



Accum-
ulated
Other
Compre- Total Total
Pref- Contri- hensive Deficit Share-
Common erred Total buted Income and holders'
Shares Shares Capital Surplus (Deficit) ("AOCI") AOCI Equity
-----------------------------------------------------------------

Balance,
November
30, 2005 12,681 2,218 14,899 7,604 (2,450) (4) (2,454) 20,049
Other
compre-
hensive
income:
Net
earnings 586 - 586 586
Foreign
currency
trans-
lation
adjust-
ments 17 17 17
-----------------------------------
Other
compre-
hensive
income 586 17 603 603
Stock
based
compen-
sation 96 96
-----------------------------------------------------------------
Balance,
June 2,
2006 12,681 2,218 14,899 7,700 (1,864) 13 (1,851) 20,748
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See accompanying notes.



FIRAN TECHNOLOGY GROUP
CORPORATION
Consolidated Statements of Cash Flows
(in thousands of dollars)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Three Months Ended Six Months Ended
---------------------- ---------------------
June 1, June 2, June 1, June 2,
2007 2006 2007 2006
(un- (un- (un- (un-
audited) audited) audited) audited)
---------- --------- ---------- ----------
NET INFLOW (OUTFLOW) OF CASH
RELATED TO THE FOLLOWING
ACTIVITIES:

OPERATING
Net earnings $ 342 $ 408 $ 824 $ 586
Items not affecting cash
Stock based compensation
expense 42 48 89 96
Future income taxes (Note 4) 358 - 361 -
Scientific research and
experimental development
tax credits (Note 4) (419) - (814) -
Amortization of other assets 16 54 33 120
Amortization of machinery
and equipment 697 761 1,487 1,561
Effect of exchange rates on
U.S. dollar Canadian debt (281) (203) (218) (134)
Changes in non-cash operating
working capital items (1,176) (185) (2,305) (1,201)
---------------------------------------------------------------------------
(421) 883 (543) 1,028
---------------------------------------------------------------------------

INVESTING
Additions to machinery
and equipment (961) (461) (1,821) (1,293)
---------------------------------------------------------------------------

FINANCING
Payment of long-term debt and
capital leases (226) (254) (492) (828)
Proceeds from capital
expenditure facility 1,061 - 1,061 -
---------------------------------------------------------------------------
835 (254) 569 (828)
---------------------------------------------------------------------------

Effects of foreign exchange
rate changes on cash flow 54 (46) 27 (11)
---------------------------------------------------------------------------

NET CASH FLOW (493) 122 (1,768) (1,104)

CASH, BEGINNING OF PERIOD 1,073 825 2,348 2,051
---------------------------------------------------------------------------

CASH, END OF PERIOD $ 580 $ 947 $ 580 $ 947
---------------------------------------------------------------------------
---------------------------------------------------------------------------

DISCLOSURE OF CASH PAYMENTS
Interest $ 123 $ 131 $ 261 $ 229
Income taxes $ - $ - $ - $ 343

See accompanying notes.



FIRAN TECHNOLOGY GROUP CORPORATION
Notes to the Interim Consolidated Financial Statements
(Unaudited)(in thousands of dollars except per share amounts)
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1. BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles on a basis consistent with those followed in the November 30, 2006 audited consolidated financial statements of Firan Technology Group Corporation and are presented in Canadian dollars. These unaudited interim consolidated financial statements do not include all the information and note disclosures required by Canadian generally accepted accounting principles for annual financial statements and therefore should be read in conjunction with the said November 30, 2006 audited consolidated financial statements and the notes below.

In the opinion of management, the unaudited interim consolidated financial statements include all adjustments (consisting of normal recurring accruals) considered necessary by management to present a fair statement of the results of operations, financial position and cash flows. The unaudited interim consolidated financial statements were prepared using the same accounting policies and methods as those used in the Corporation's audited financial statements for the year ended November 30, 2006, except as explained in Note 2.

The unaudited interim consolidated financial statements include the accounts of Firan Technology Group Corporation (the "Corporation") and its 100% owned subsidiaries, FTG Circuits Inc. ("FTG Circuits - Chatsworth") and Firan Technology Group (USA) Corporation.

2. CHANGES IN ACCOUNTING POLICY

Effective December 1, 2006, the Corporation adopted CICA Handbook Section 1530, Comprehensive Income, CICA Handbook Section 3855, Financial Instruments - Recognition and Measurement and CICA Handbook Section 3865, Hedges. These new Handbook Sections provide comprehensive requirements for the recognition and measurement of financial instruments, as well as standards on when and how hedge accounting may be applied. Handbook Section 1530 also introduces a new component of equity referred to as other comprehensive income.

In accordance with the provisions of these new standards, the Corporation reflected the following adjustments as of December 1, 2006:

- A presentational reclassification of amounts previously recorded in "Cumulative translation adjustment" to "Accumulated other comprehensive income."

The adoption of these standards had no impact on the Corporation's interim consolidated statement of earnings. The unrealized gains and losses included in "Accumulated other comprehensive income" were recorded net of taxes, which were nil.



The Company's financial assets and liabilities are recorded and measured as
follows:

Asset / Liability Category Measurement
----------------- -------- -----------

Cash Held-for-trading Fair value
Accounts receivable Loans and receivables Amortized cost
Due from related party Loans and receivables Amortized cost
Accounts payable and
accrued liabilities Other liabilities Amortized cost
Long-term debt Other liabilities Amortized cost


Other balance sheet accounts, such as inventories, prepaid expenses, current and future income taxes, other assets, goodwill, capital assets are not within the scope of the new accounting standards as they are not financial instruments.

Embedded derivatives are required to be separated and measured at fair values if certain criteria are met. Embedded derivates include elements of contracts whose cash flows move independently from the host contract. Management reviewed contracts and determined that the Company does not currently have any embedded derivatives in these contracts that require separate accounting and disclosure.

3. SHARE CAPITAL

(a) Stock based compensation to employees

The Corporation recognized stock based compensation expense in the interim consolidated statement of earnings of $42 for the second quarter of 2007 and $89 for the year to date period. Of the year to date amount, approximately $12 relates to 150,000 options granted on January 23, 2007 and $0.4 relates to 10,000 options granted on April 3, 2007. The 150,000 options granted have an expiry date of January 23, 2013, an option price of $1.35 and a vesting period of 3 years. The 10,000 options granted have an expiry date of April 3, 2013, an option price of $1.65 and a vesting period of 3 years. The remainder of the expense relates to options previously granted. The total was expensed in the current period and credited to contributed surplus. The fair value of options granted were estimated at the date of the grant using the Black-Scholes valuation model with the following assumptions: risk-free rate of 6%; expected life of three years; volatility of 55% and a dividend yield of nil.

(b) Earnings per share

The Corporation has 1,775,000 voting convertible preferred shares outstanding. While the convertible preferred shares have the same voting rights as common shares they are not considered in calculating basic earnings per share but are included in calculating diluted earnings per share and will receive no dividends. The first and second quarter of 2006 and 2007 weighted average number of shares used in calculating basic and diluted earnings per share were 17,800,227 and 19,575,227 respectively.

4. INCOME TAXES

The Corporation accounts for income taxes under the liability method. Under the liability method, a future tax asset would be recorded only to the extent that based on available evidence, it is more likely than not that a future tax asset would be realized. The valuation allowance is reviewed and adjusted for each reporting period. Should management estimates of taxable income change in future periods, it may be necessary to adjust the valuation allowance, which could affect the results of operations in the period such a determination was made.

Recorded in cost of sales for the second quarter of 2007 is $419 and $814 on a year to date basis relating to non cash, federal government Scientific Research & Experimental Development ("SR&ED") tax credits resulting from the increased certainty that these tax credits will be utilized. Similarily, there were $135 of cash, provincial government SR&ED tax credits recorded in the second quarter. There were no federal or provincial SR&ED tax credits recorded in the first or second quarter of 2006.

The income tax expense for the second quarter of 2007 consists of a Canadian operations future tax provision of $358 at a 34.0% income tax rate and a U.S. subsidiary current tax provision of $59 at a 45.4% income tax rate. Included in the second quarter Canadian operations future tax provision was a $134 provision relating to earnings in the first quarter of 2007. This compares to a $98 U.S. subsidiary tax recovery at a 45.4% income tax rate for the second quarter of 2006.

On a year to date basis for 2007, the income tax expense consists of a Canadian operations future tax provision of $361 at a 34.0% income tax rate and a U.S. subsidiary current tax provision of $102 at a 45.4% income tax rate. This compares to a $65 U.S. subsidiary tax recovery at a 45.4% income tax rate for the first and second quarter of 2006.

5. LONG TERM DEBT & CAPITAL LEASES

At the end of the second quarter of 2007, the Corporation had drawn U.S. $1,000 of the available U.S. $2,500 facility for capital expenditures. Principal payments begin August 1, 2007 in the amounts of U.S. $17 plus interest at a LIBOR rate of 7.86% for a period of 60 months. Proceeds of the loan were used to fund capital expenditures.

6. TRANSLATION OF FOREIGN CURRENCIES

FTG Circuits - Chatsworth and Firan Technology Group (USA) Corporation are considered self-sustaining subsidiaries. Accordingly, their assets and liabilities are translated at exchange rates in effect at the balance sheet date. Revenues and expenses are translated at average exchange rates prevailing during each month. The resulting translation adjustments are included in the accumulated other comprehensive income section of shareholders' equity until there is a realized reduction in the net investment.

At the end of the second quarter of 2007, the goodwill relating to the self sustaining operations was reduced by $469 as a result of the impact of the strengthening Canadian dollar. The offset was included in the accumulated other comprehensive income amount of $553.

7. SEGMENTED INFORMATION

The Corporation operates in two operating segments, FTG Circuits and FTG Aerospace. FTG Circuits is a leading manufacturer of high technology/high reliability printed circuit boards within the North American marketplace. FTG Aerospace is a manufacturer of illuminated cockpit panels, keyboards, bezels and sub assemblies for original equipment manufacturers of avionic products and airframe manufacturers. FTG Circuits and FTG Aerospace financial information is shown below:



Three Months Ended June 1, 2007 June 2, 2006
-------------------------------------------- ------------------------------
Circuits Aerospace Total Circuits Aerospace Total
---------- --------- -------- -------- --------- ----------

Sales $ 11,946 $ 3,317 $ 15,263 $ 12,085 $ 2,679 $ 14,764
Amortization
of machinery
and equipment 670 $ 27 697 708 53 761
Operating
earnings
before
interest
and taxes 537 $ 357 894 211 213 424
Interest
expense on
long-term debt 135 $ - 135 114 - 114
Income taxes
(recovery) 295 $ 122 417 (98) - (98)
----------------------------- ------------------------------
Net earnings 107 235 342 195 213 408
----------------------------- ------------------------------
----------------------------- ------------------------------

Segment assets 29,659 7,920 37,579 26,892 6,364 33,256
Goodwill 4,080 - 4,080 4,549 - 4,549
Additions to
machinery and
equipment 772 189 961 449 12 461
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Six Months Ended June 1, 2007 June 2, 2006
-------------------------------------------- ------------------------------
Circuits Aerospace Total Circuits Aerospace Total
---------- --------- -------- -------- --------- ----------

Sales $ 22,828 $ 6,346 $ 29,174 $ 23,219 $ 4,908 $ 28,127
Amortization
of machinery
and equipment 1,398 89 1,487 1,455 106 1,561
Operating
earnings
before
interest
and taxes 1,002 558 1,560 484 256 740
Interest
expense on
long-term debt 273 - 273 219 - 219
Income taxes
(recovery) 273 190 463 (65) - (65)
----------------------------- ------------------------------
Net earnings 456 368 824 330 256 586
----------------------------- ------------------------------
----------------------------- ------------------------------

Segment assets 29,659 7,920 37,579 26,892 6,364 33,256
Goodwill 4,080 - 4,080 4,549 - 4,549
Additions to
machinery
and equipment 1,492 329 1,821 1,262 31 1,293
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Geographic location
Three Months Ended June 1, 2007 June 2, 2006
----------------------------------------------- ---------------------------
United United
Canada States Total Canada States Total
-------- --------- -------- -------- --------- -----------
Sales (by
location of
customer) $ 2,334 $ 12,929 $ 15,263 $ 1,878 $ 12,886 $ 14,764
Goodwill (by
location of
division) 1,039 3,041 4,080 1,039 3,510 4,549
Capital assets
(by location
of division) 5,527 1,659 7,186 6,687 234 6,921
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Geographic location
Six Months Ended June 1, 2007 June 2, 2006
----------------------------------------------- ---------------------------
United United
Canada States Total Canada States Total
-------- --------- -------- -------- --------- -----------

Sales (by
location of
customer) $ 4,513 $ 24,661 $ 29,174 $ 3,462 $ 24,665 $ 28,127
Goodwill (by
location of
division) 1,039 3,041 4,080 1,039 3,510 4,549
Capital assets
(by location
of division) 5,527 1,659 7,186 6,687 234 6,921
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8. FOREIGN CURRENCY RISK

As at June 1, 2007, the Corporation had entered into U.S. dollar forward sales contracts maturing in the third quarter of 2007 of U.S. $2,000 at rates between $1.1278 and $1.0732. The unrealized gain on the contracts was $67 and was recorded in the interim consolidated statement of earnings as a decrease in selling, general and administrative costs and on the balance sheet as accounts payable and accrued liabilities.

9. OPERATING LEASES

During the second quarter of 2007, the Corporation signed a new 10 year facility lease for the FTG Aerospace Canadian operations. Monthly lease rent payments are $16 for the first 5 years and $17 for the second five years. Provided that the Corporation is in good standing, the landlord will grant a new lease for 2 further terms of 5 years subject to the same covenants and conditions as the original lease.

10. COMPARATIVE FIGURES

Certain of the comparative figures in the interim consolidated statements of cash flows have been reclassified to conform with the current periods presentation.

Contact Information