March 31, 2011
VANCOUVER: Avcorp (AVP on the Toronto Stock Exchange) today announced its financial
results for the year ended December 31, 2010.
During the year ended December 31, 2010, the Company recorded a net loss of $7,606,000 on
$77,258,000 revenue, as compared to a $8,410,000 net loss on $69,202,000 revenue for the
The Company has realized revenue growth in 2010 from full rate production of certain programs
which were in start-up phase for the Company in 2009. Additionally, the Company has
experienced an increase in revenue during 2010 relative to 2009 arising from rate increases on
mature programs, while customer demand for non-original equipment manufacturer’s products
and services has fallen.
Gross profit (revenue less cost of sales) for the year ended December 31, 2010 was 12.1% of
revenue as compared to 6.7% of revenue for the year ended December 31, 2009. During 2010
gross margin has improved by $4,722,000 over 2009. Gross profit has increased significantly
during 2010 relative to the preceding year as a result of increased revenues and improved
Although customer demand for the Company’s products has increased from the previous year,
there remains within its operations significant levels of unutilized plant capacity. The Company
has expensed $4,125,000 of overhead costs during the current year (December 31, 2009:
$4,667,000) in respect of unutilized plant capacity. As at December 31, 2010, the Company
recorded a one-time non-cash charge against income in the amount of $1,482,000 for the full
write-down of the carrying amount of intangible assets which arose on the 2007 acquisition of its
subsidiary Comtek Advanced Structures Ltd. Concurrently, the associated future income tax
liability amounting to $858,000 has been recovered in its entirety.
It should be noted that the current year loss includes a $43,000 foreign exchange loss, while the
loss for the year ended December 31, 2009 was mitigated by a $4,412,000 foreign exchange gain
which occurred as a result of holding foreign-currency-denominated receivables, payables and
Cash flows from operating activities during the current year utilized $2,694,000 of cash, as
compared to utilizing $1,493,000 of cash during the year ended December 31, 2009. The
Company has a working capital surplus of $1,316,000 as at December 31, 2010 (December 31,
2009: $820,000 surplus) and an accumulated deficit of $73,741,000 at December 31, 2010
(December 31, 2009: $65,379,000).
There were 195,505,323 common shares issued as at December 31, 2010. The book value of
common shares issued and outstanding as at December 31, 2010 was $76,042,000 (December
31, 2009: $74,601,000).
The Company is currently engaged with several of its financial stakeholders in the re-financing of
certain financial arrangements.
As at December 31, 2010, the Company was not in compliance with financial covenants
associated with its operating lines of credit. In the absence of obtaining a waiver of such breach,
the lender is entitled to demand immediate payment.
Also, as at December 31, 2010, the Company was not in compliance with a financial covenant
associated with the convertible debenture held by Export Development Canada. The Company
has obtained a waiver from the debenture holder for this non-compliance. Principal and interest
on this loan are due March 31, 2011.
On July 1, 2011, the Company’s preferred shares and all accrued and unpaid dividends will be
redeemable at the option of the holder.