Firan Technology Group Corporation
TSX : FTG

Firan Technology Group Corporation

February 01, 2012 18:37 ET

Firan Technology Group (FTG) Announces Full Year and Fourth Quarter 2011 Financial Results

TORONTO, ONTARIO--(Marketwire - Feb. 1, 2012) - Firan Technology Group Corporation (TSX:FTG) today announced financial results for the full year and fourth quarter 2011.

  • Grew sales by 9% over full year 2010
  • Improved bottom line by $4.4M over 2010 and returned to profitability for the full year 2011
  • Invested over $5.0M in Capital Equipment and R&D (net) in 2011 compared to $3.3M in 2010
  • Reduced net debt by $2.5M in 2011 to lowest level in a decade.

"FTG closed 2011 with another strong quarter making the full year very successful for the company. We achieved our objectives for the year including growing the company, returning to profitability and strengthening the balance sheet. All of this was done while continuing to invest in technology across the company and investing in a new facility in Tianjin China for our cockpit product business. We are demonstrating that our focus on the aerospace and defence market has positioned us to succeed now and in the future", stated Brad Bourne, President and Chief Executive Officer.

Full Year 2011 Results: (twelve months ended November 30, 2011 compared with twelve months ended November 30, 2010)

2011 2010
Sales $ 53,730,000 $ 49,260,000
Operating Earnings(1): 3,382,000 2,932,000
Net R&D Investment 2,567,000 2,950,000
Severance 43,000 386,000
Goodwill Impairment - 2,941,000
Income Tax (Recovery) (706,000 ) (436,000 )
Net Earnings/(Loss) $ 1,478,000 $ (2,909,000 )
Earnings/(Loss) per share
- basic & diluted $ 0.08 $ (0.16 )
(1) Operating Earnings (Loss) is not a measure recognized under Canadian generally accepted accounting principles ("GAAP"). Management believes that this measure is important to many of the Corporation's shareholders, creditors and other stakeholders. The Corporation's method of calculating Operating Earnings (Loss) may differ from other corporations and accordingly may not be comparable to measures used by other corporations.

Fourth Quarter Results: (three months ended November 30, 2011 compared with three months ended November 30, 2010)

Q4 2011 Q4 2010
Sales $ 13,981,000 $ 14,052,000
Operating Earnings (1): 608,000 1,287,000
Net R&D Investment 358,000 871,000
Severance 43,000 -
Goodwill impairment - 2,941,000
Taxes (Recovery) (708,000 ) (438,000 )
Net Earnings / (Loss) $ 915,000 $ (2,087,000 )
Earnings / (Loss) per share
- basic & diluted $ 0.05 $ (0.11 )

Business Highlights

FTG accomplished many goals in 2011 that continue to improve the Corporation and position it for the future, including:

  • Achieved 9% year-over-year sales growth, despite further deterioration in the value of the US dollar relative to the Canadian dollar.
  • Received next increment of Ontario Government AMIS loan of $1M
  • Reduced inventories through the year by $0.8M while growing revenues
  • Commissioned equipment valued at over $2M across FTG. The equipment included:
    • Laser Direct Imaging Systems in FTG Circuits-Chatsworth and FTG Circuits-Toronto
    • Post-Etch-Punch (PEP) for FTG Circuits-Toronto
    • Improved test equipment in FTG Aerospace-Toronto
    • Leasehold improvements in FTG Aerospace-Tianjin
  • Began implementation of new ERP system for FTG Aerospace locations
  • Successfully completed AS9100C audit for FTG Circuits - Toronto and FTG Aerospace-Toronto
  • Renewed NADCAP certifications at both Circuits facilities including high density accreditation
  • Negotiated a 3 year contract with our represented staff in FTG Circuits - Toronto on terms that give the company more flexibility to react to the marketplace.
  • Achieved Grand opening for our FTG Aerospace-Tianjin facility in China.

For FTG overall sales increased by $4.5M (9%), from $49.3M in 2010 to $53.7M in 2011. Excluding the impact of the decline in the value of the U.S. dollar, year-over year sales increased by $6.6M (13%).

The Circuits Segment sales were up $3.4M or 9% in 2011 versus 2010.

For the Aerospace segment, sales in 2011 were up $1.1M or 10% to $12.1M compared to 2010.

Net earnings at FTG in 2011 were $1.5M compared to net loss of $2.9M in 2010. Gross margin increased by $0.6M or 4% due to higher activity, improved yields, offset by unfavourable U.S. to Canadian exchange rates and higher input costs. For the year net R&D costs were marginally lower, primarily in Circuits-Toronto.

The Circuits segment net earnings before corporate, interest and tax costs was $2.3M in 2011 compared to a loss of $1.5M in 2010. Both facilities improved over 2010. The improvement was due to higher activity, improved operational performance, and no goodwill impairment in 2011, offset by higher commodity prices, higher labour costs and a weaker US dollar.

The Aerospace net earnings before corporate and interest costs was $1.1M in 2011 versus $1.0M in 2010. The improved results are the result of higher activity, offset by higher labour costs and a weaker US dollar.

For FTG Aerospace-Tianjin, the investment expensed in 2011 totaled $0.2M as activity ramped up towards becoming operational. A total of $0.6M has been invested in China for the project since its inception, the majority of which is in fixed assets or cash.

As at November 30, 2011, the Corporation's primary source of liquidity included accounts receivable of $9.6M and inventory of $8.0M. While activity across the company has increased, inventories are down $0.8M from last year end, due to a continued focus on lean manufacturing and cash management. Net working capital at November 30, 2011 was $ 9.9M.

The Corporation will host a live conference call on February 2, 2012 at 8:30 am (EST) to discuss the results of FY 2011.

Anyone wishing to participate in the call should dial 416-340-2216 or 1-866-226-1792 and identify that you are calling to participate in the FTG conference call. The Chairperson is Mr. Brad Bourne. A replay of the call will be available until February 16, 2012 and will be available on the FTG website at www.ftgcorp.com. The number to call for a rebroadcast is 905-694-9451 or 1-800-408-3053, pass code 3105714.

ABOUT FIRAN TECHNOLOGY GROUP CORPORATION

FTG is an aerospace and defense electronics product and subsystem supplier to customers around the globe. 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 aerospace and defense equipment. FTG Aerospace has operations in Toronto, Ontario and Tianjin, China.

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

FORWARD-LOOKING STATEMENTS

This news release contains certain forward-looking statements. These forward-looking statements are related to, but not limited to, FTG's operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains words such as "anticipate", "believe", "expect", "plan" or similar words suggesting future outcomes. Such statements are based on the current expectations of management of the Corporation and inherently involve numerous risks and uncertainties, known and unknown, including economic factors and the Corporation'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 Corporation. The reader is cautioned to consider these and other factors carefully when making decisions with respect to the Corporation and not place undue reliance on forward-looking statements. Other than as may be required by law, FTG disclaims any intention or obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

Additional information can be found at the Corporation's website www.ftgcorp.com.

FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Balance Sheets
As at November 30, 2011 and 2010 (in thousands of dollars) 2011 2010
ASSETS
CURRENT
Cash $ 1,944 $ 305
Accounts receivable 9,592 9,332
Taxes receivable 378 448
Inventories 7,973 8,726
Prepaid expenses 349 669
Future income taxes 458 667
20,694 20,147
PLANT AND EQUIPMENT 4,474 4,024
GOODWILL 1,039 1,039
FUTURE INCOME TAXES 917 -
INTANGIBLE ASSETS 293 336
$ 27,417 $ 25,546
LIABILITIES
CURRENT
Bank indebtedness $ - $ 109
Accounts payable and accrued liabilities 8,608 7,964
Unearned revenue 714 152
Current portion of long-term bank debt 1,458 3,059
10,780 11,284
LONG-TERM LIABILITIES
Subordinated loan 2,444 1,746
Government assistance 1,065 914
14,289 13,944
SHAREHOLDERS' EQUITY
Accumulated deficit $ (9,213 ) $ (10,691 )
Accumulated other comprehensive loss (789 ) (801 )
(10,002 ) (11,492 )
Share capital
Common shares 12,681 12,681
Preferred shares 2,218 2,218
Contributed surplus 8,231 8,195
13,128 11,602
$ 27,417 $ 25,546
FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Earnings
Years ended November 30, 2011 and 2010
(in thousands of dollars except per share amounts) 2011 2010
SALES $ 53,730 $ 49,260
COST OF SALES 39,620 35,723
14,110 13,537
EXPENSES
Selling, general and administrative 8,224 7,467
Research and development costs 2,915 3,359
Recovery of research and
development costs (348) (409)
Amortization of plant and equipment 1,895 2,182
Amortization of intangible assets 48 48
Goodwill impairment - 2,941
Loss on disposal of plant and equipment 25 148
Interest expense on short-term debt 168 106
Interest expense on long-term debt 229 345
Severance 43 386
Foreign exchange loss 139 309
13,338 16,882
EARNINGS (LOSS) BEFORE INCOME TAXES 772 (3,345)
CURRENT INCOME TAX EXPENSE 2 2
FUTURE INCOME TAX (RECOVERY) (708) (438)
NET EARNINGS (LOSS) $ 1,478 $ (2,909)
NET EARNINGS (LOSS) PER SHARE
Basic $ 0.08 $ (0.16)
Diluted $ 0.08 $ (0.16)
FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Shareholders' Equity and Accumulated Other Comprehensive Loss
Years Ended November 30, 2011 and 2010 (in thousands of dollars)
Accumulated
Other Total
Common Preferred Contributed Comprehensive Shareholders'
Shares Shares Surplus Deficit Loss Equity
Balance, November 30, 2010 $ 12,681 $ 2,218 $ 8,195 $ (10,691) $ (801) $ 11,602
Net profit 1,478 1,478
Other comprehensive loss:
Foreign currency translation
adjustments 12 12
Comprehensive income - - - 1,478 12 1,490
Stock based compensation 36 36
Balance, November 30, 2011 $ 12,681 $ 2,218 $ 8,231 $ (9,213) $ (789) $ 13,128
Balance, November 30, 2009 $ 12,681 $ 2,218 $ 8,149 $ (7,782) $ (351) $ 14,915
Net loss (2,909) (2,909)
Other comprehensive loss:
Foreign currency translation
adjustments (450) (450)
Comprehensive loss - - - (2,909) (450) (3,359)
Stock based compensation 46 46
Balance, November 30, 2010 $ 12,681 $ 2,218 $ 8,195 $ (10,691) $ (801) $ 11,602
FIRAN TECHNOLOGY GROUP CORPORATION
Consolidated Statements of Cash Flows
Years ended November 30, 2011 and 2010
(in thousands of dollars) 2011 2010
NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES:
OPERATING
Net earnings (loss) $ 1,478 $ (2,909 )
Items not affecting cash:
Stock based compensation expense 36 46
Loss from disposal of plant and equipment 25 148
Effect of exchange rates on U.S.- dollar Canadian debt (47 ) 68
Amortization of plant and equipment 1,895 2,182
Amortization of intangible assets 48 48
Recovery of future income taxes (708 ) (438 )
Goodwill impairment - 2,941
AMIS interest accretion 150 48
Amortization of government assistance (261 ) (48 )
Changes in non-cash operating working capital 1,808 513
4,424 2,599
INVESTING
Proceeds from sales of plant and equipment 56 32
Changes in deposit placed for plant and equipment 194 (194 )
Additions to plant and equipment (2,433 ) (325 )
Additions to intangible assets (5 ) -
(2,188 ) (487 )
FINANCING
Decrease in bank indebtedness, net (137 ) (37 )
Proceeds from capital expenditure facility - -
Proceeds from subordinated loan 960 2,660
Repayments of long-term debt (1,532 ) (4,127 )
(709 ) (1,504 )
Effects of foreign exchange rate changes on cash flow 112 (303 )
NET CASH FLOW 1,639 305
CASH, BEGINNING OF PERIOD 305 -
CASH, END OF PERIOD $ 1,944 $ 305
DISCLOSURE OF CASH PAYMENTS (RECEIPTS)
Payments for interest $ 247 $ 403
Payments for income taxes $ 2 $ 6
Refund of income taxes $ - $ (182 )

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