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Avcorp Industries Inc. (the “Company” or “Avcorp”) has announced its financial results for the year ended Dec. 31, 2013.
Revenue for the year ended Dec. 31, 2013 was $77,364,000 as compared to $89,337,000 for the year ended Dec. 31, 2012. Current year revenues have decreased relative to the previous year primarily as a result of the wind-down of Cessna programs, offset by increased deliveries for the F-35 CV-OBW program.
During the year ended Dec. 31, 2013, the Company recorded a loss from operations of $2,015,000 on $77,364,000 revenue, as compared to $24,002,000 operating income on $89,337,000 revenue for the preceding year; and a net loss for the current year of $1,802,000 as compared to net income of $20,641,000 for the year ended Dec. 31, 2012.
On Nov.16, 2012, the Company received the determination of an appointed arbitration panel constituted to adjudicate outstanding issues relating to cost reimbursements and compensation payable to the Company in connection with the transition of Cessna Aircraft Company (“Cessna”) production work back to Cessna and other suppliers. The quantum of damages was assessed by the arbitration panel in 2012 at US$27,391,000.
On Sept. 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 ($29,380,000) in satisfaction of the judgement entered against Cessna from the arbitration award made on Nov. 16, 2012, resulting in US$573,000 ($604,000) recorded as additional award settlement for 2013. The settlement funds were received in full by the Company on Sept. 6, 2013. This settlement satisfies the judgement and has resulted in the dismissal of the outstanding appeal.
Cash flows from operating activities during the year ended Dec. 31, 2013 provided $23,849,000 of cash as compared to providing $6,109,000 of cash during the year ended Dec. 31, 2012. The primary source of cash from operations during the current year is from the Cessna award settlement. The Company utilized the funds received from the Cessna award settlement to repay $6,660,000 of bank indebtedness, a $4,045,000 convertible debenture, and $11,803,000 preferred shares and accrued dividends leaving $6,872,000 of cash from the Cessna award settlement for funding operations. As at Dec. 31, 2013 the Company had $7,012,000 cash on hand.
During fiscal 2013 and 2012 the Company has repaid in excess of $26 million of debt and has cash reserves on hand as at Dec. 31, 2013 amounting to $7,012,000 (Dec. 31, 2012: $2,597,000).
The Company has a working capital surplus of $14,213,000 as at Dec. 31, 2013 which has decreased from the Dec. 31, 2012 $16,759,000 surplus, as a result of repaying bank indebtedness from Cessna award settlement proceeds. The Company’s accumulated deficit as at Dec. 31, 2013 is $57,723,000 (Dec. 31, 2012: $55,921,000).
During 2013 the Company added $53 million to its order backlog due to increases in the production rates and contract renewals for various existing programs, as well as recently awarded statements of work.
The Company has amended its accounting with respect to the classification of deferred program revenues in its 2013 financial statements. Previously, all of the Company’s deferred program revenues were classified as non-current. Deferred program revenues will now be classified as current or non-current based on the estimated timing of when the related revenue will be recognized. As a result, deferred program revenues as at Dec. 31, 2012 in the amount of $17,514,000 has been reclassified from non-current to current. The impact as of Jan. 1, 2012 has not been estimated as it is impracticable to determine what management would have estimated as of Jan. 1, 2012 without undue application of hindsight.
As a result of the reclassification of deferred program revenues, 2012 cash inflows of $9,712,000 have been reclassified from financing activities to operating activities, to reflect the nature of the deferred revenue balance which has generated the cash flows.
access to debt financing at competitive rates; and (p) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.
