Avcorp announces 2013 Third Quarter Financial Results

VANCOUVER, Nov. 12, 2013 /PRNewswire/ - Avcorp Industries Inc. (TSX: AVP) (the "Company" or "Avcorp") today announced its consolidated financial results for the quarter ended September 30, 2013.

During the quarter ended September 30, 2013, the Company generated $19,767,000 revenue as compared to $19,324,000 revenue for the quarter ended September 30, 2012. Current quarter revenues have remained relatively stable from the same quarter in the preceding year, primarily as the wind-down of Cessna Aircraft Company ("Cessna") programs has been offset by an increase in F-35 Outboard Wing program revenues.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was positive $514,000 for the quarter ended September 30, 2013 compared to a negative EBITDA of $1,205,000 for the quarter ended September 30, 2012.  The increase in EBITDA was primarily as a result of increased gross profit, as well as reduced administrative and general expenses.

On September 5, 2013 the Company entered into a settlement agreement, from a court directed mediation with Cessna, which settled all outstanding litigation between the Company and Cessna. The settlement required payment by Cessna of US$27,964,000 in satisfaction of the US$28,464,000 judgement entered against Cessna by the United States District Court for the District of Kansas (the "District Court") on May 8, 2013 which judgement was under appeal to the United States Court of Appeals for the Tenth Circuit. The settlement funds were received in full by the Company on September 6, 2013.  The acceptance by the Company of a settlement amount less than that awarded by the District Court in a previous quarter has resulted in the Company reducing a previously recorded gain by $525,000 during the current quarter.  The settlement satisfies the judgement and has resulted in the dismissal of the outstanding appeal.

A restructuring provision amounting to approximately $224,000 has been recorded during the current quarter to reflect severance costs associated with employees laid-off during the current quarter.

In addition to the above-noted charges against income, the current quarter $1,139,000 loss (September 30, 2012: $2,729,000 loss) includes a $644,000 foreign exchange loss resulting from holding foreign currency denominated cash, accounts receivable and payable; while the loss for the quarter ended September 30, 2012 included a $300,000 foreign exchange loss.

Cash flows from operating activities, before consideration of changes in non-cash working capital utilized $4,063,000 of cash for the quarter ended September 30, 2013 compared to utilizing $2,866,000 of cash during the same quarter in the previous year.  The increase in cash utilization in 2013 from 2012 is primarily attributable to recognition of revenues which were funded in previous periods. The Company has a working capital surplus of $30,103,000 as at September 30, 2013 which has decreased from the December 31, 2012 $34,819,000 surplus, as a result of repaying bank indebtedness from settlement proceeds.  The Company's accumulated deficit as at September 30, 2013 is $54,810,000 (December 31, 2012: $55,375,000).

About Avcorp

Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including BAE Systems, Boeing, and Bombardier. With more than 50 years of experience, over 400 skilled employees and 354,000 square feet of facilities in Delta BC and Burlington ON, Avcorp offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower‐cost, light weight, strong, reliable structures. Our Comtek subsidiary also offers composite repairs for commercial aircraft out of their Burlington location. Avcorp is a Canadian public company traded on the Toronto Stock Exchange (TSX:AVP).

(signed)

MARK VAN ROOIJ
PRESIDENT and CHIEF EXECUTIVE OFFICER

Forward-Looking Statements

This release should be read in conjunction with the Company's unaudited financial statements contained in the Company's Annual Report and with the quarterly financial statements and accompanying notes filed with Sedar (www.sedar.com).

Certain statements in this release and other oral and written statements made by the Company from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or projected revenues, income, returns or other financial measures.  These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following:  (a) the extent to which the Company is able to achieve savings from its restructuring plans; (b) uncertainty in estimating the amount and timing of restructuring charges and related costs; (c) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (d) the occurrence of work stoppages and strikes at key facilities of the Company or the Company's customers or suppliers; (e) government funding and program approvals affecting products being developed or sold under government programs; (f) cost and delivery performance under various program and development contracts; (g) the adequacy of cost estimates for various customer care programs including servicing warranties; (h) the ability to control costs and successful implementation of various cost reduction programs; (i) the timing of certifications of new aircraft products; (j) the occurrence of further downturns in customer markets to which the Company products are sold or supplied or where the Company offers financing; (k) changes in aircraft delivery schedules or cancellation of orders; (l) the Company's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (m) the availability and cost of insurance; (n) the Company's ability to maintain portfolio credit quality; (o) the Company's access to debt financing at competitive rates; and (p) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars)

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares and per share amounts)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares)

SOURCE Avcorp Industries Inc.