Firan Technology Group Announces Financial Results For The Third Quarter 2009


Firan Technology Group Announces Financial Results For The Third Quarter 2009

Toronto, October 7, 2009 – Firan Technology Group Corporation (TSX:FTG) (the “Company”) today announced financial results for the third quarter and nine months ended August 28, 2009.

-Year-to-date sales decreased by 8 percent as compared to industry
data as reported by IPC (2) showing over 27 percent decrease in the
same period
-Gross Margin increased 1.3 percent in Q3 and 0.5 percent YTD compared
to the same period last year
-Backlog remained above $14,000,000
-Reduced net bank debt by $453,000 in Q3 and $2,157,000 YTD

Q3 2009 Results: (three months ended August 28, 2009 compared with three months ended August 29, 2008)

Q3 2009:

Sales: $12,930,000
Gross Margin: 23.9%
Operating (Loss) Earnings before: (1) ($112,000)
One Time Severance Charges: $0
Filtran Restructuring and Losses: $0
Foreign Exchange: $142,000
Amortization of Intangible Assets: $11,000
Tax Expense (Recovery): $0
Net (Loss)/Earnings: ($265,000)

(Loss)/Earnings per share – basic: ($0.01)
(Loss)/Earnings per share – diluted: ($0.01)

Q3 2008:

Sales: $15,748,000
Gross Margin: 22.6%
Operating (Loss) Earnings before: (1) $376,000
One Time Severance Charges: $0
Filtran Restructuring and Losses: $246,000
Foreign Exchange: ($21,000)
Amortization of Intangible Assets: $0
Tax Expense (Recovery): ($39,000)
Net (Loss)/Earnings: $190,000
(Loss)/Earnings per share – basic: $0.01
(Loss)/Earnings per share – diluted: $0.01

Year-To-Date 2009 Results: (nine months ended August 28, 2009 compared with nine months ended August 29, 2008)

Year-To-Date 2009:

Sales: $42,258,000
Gross Margin: 24.2%
Operating Earnings (Loss) before: (1) $73,000
One Time Severance Charges: $231,000
Filtran Restructuring and Losses: $0
Foreign Exchange: $675,000
Amortization of Intangible Assets: $35,000
Tax Expense/(Recovery): $4,000
Net Loss: ($872,000)

Loss per share – basic: ($0.04)
Loss per share – diluted: ($0.04)

Year-To-Date 2008:

Sales: $45,804,000
Gross Margin: 23.7%
Operating Earnings (Loss) before: (1) ($4,000)
One Time Severance Charges: $0
Filtran Restructuring and Losses: $797,000
Foreign Exchange: $23,000
Amortization of Intangible Assets: $0
Tax Expense/(Recovery): ($173,000)
Net Loss: ($651,000)
Loss Per Share – basic: ($0.04)
Loss Per Share – diluted: ($0.04)

(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 Company’s shareholders, creditors and other stakeholders. The Company’s method of calculating Operating Earnings (Loss) may differ from other corporations and accordingly may not be comparable to measures used by other corporations.

(2) IPC was founded in 1957 as the Institute for Printed Circuits. As more electronics assembly companies became involved with the association, the name was changed to the Institute for Interconnecting and Packaging Electronic Circuits. In 1999, IPC changed its name from Institute for Interconnecting and Packaging Electronic Circuits to IPC.

“While we continued to see soft demand from commercial aerospace customers in our third quarter, we have taken many steps to mitigate this impact through a series of cost reduction initiatives. Every person at FTG has been impacted by our actions and I have been proud of how we have pulled together to maintain the financial wellbeing of the Company,” stated Mr. Brad Bourne, President and Chief Executive Officer. “We have not let the short term challenges sway us from our long term commitment to invest in new technologies and capture new business. In our third quarter, we invested 6.6 percent of revenue in R&D across the Company.”

“During these challenging times we have intensified our focus on managing our balance sheet and we have reduced our net debt to equity ratio by approximately 10 percent, to 0.55:1. This has resulted from improved collection of accounts receivable and lowering inventories,” noted Joe Ricci, Chief Financial Officer.

FTG had many accomplishments in Q3 2009 that continue to improve the Company and position it for the future, including:
-Renewed U.S. $6M Revolving Credit Facility for three additional years
-Reduced net debt by $0.5M in the quarter
-Reduced Accounts Receivable days outstanding from 71 days to 66 days
-Added new Sales Reps in Southwestern and Midwestern U.S. to expand
our penetration of these regions
-Negotiated a contract with Canada’s largest contract manufacturer
-Qualified as a supplier to a third major business unit within GE
-Initiated production of rigid flex circuit board technology in Toronto
facility to support high volume opportunities
-Captured a second customer for FTG’s Lighting Power Supply
-Renewed cockpit product contract with Rockwell for three additional
years with increased part numbers
-Sales of higher level assemblies at FTG Aerospace were 9 percent of
revenue in Q3, the highest ever, continuing our efforts to increase
our value add for customers
-Selected for the supply of cockpit panels for Bombardier’s C Series
-Began investment in major green initiative in Circuits Toronto
facility to reduce water consumption by over 30 percent
-Completed move and installation of equipment into expanded facility
in Chatsworth, California

The Company’s sales in Q3 2009 were $12,930,000, a decrease of 18 percent over Q3 2008. Sales in the Circuits business declined 16 percent and at Aerospace 25 percent. Sales in Canada remained flat as new customers were added while sales in the U.S. and Asia declined due to lower demand.

On a year-to-date basis, sales were down 8 percent to $42,258,000. Sales were positively affected by the strengthening U.S. dollar and were negatively affected by lower customer demand. In the Circuits business, sales were down 6 percent while FTG Aerospace sales were down 16 percent. Overall military sales have been more stable while commercial aviation sales have declined.

Gross margins at FTG grew 1.3 percent in Q3 to 23.9 percent compared to the same period last year. The increase is due to cost cutting initiatives within the Company as well as with suppliers, offset by lower overall sales.

Net loss for the third quarter was $265,000 compared to net earnings of $190,000 in the comparable quarter in 2008. The Q3 2009 loss resulted from reduced demand and costs related to revaluing certain balance sheet items to the closing exchange rate for the U.S. dollar. The benefit of the strong U.S. dollar earlier this year was much reduced in Q3 2009. The loss also includes $21,000 of costs incurred in the establishment of FTG Aerospace-Tianjin.

The net loss for the first nine months of 2009 was $872,000 versus $651,000 for the same period last year. The results this year have been impacted by the items noted above as well as severance costs from earlier this year to adjust the workforce level in line with demand. Last year was primarily impacted by the cost of integrating the Filtran business into FTG.

Across FTG, total bookings in the quarter were $12,158,305. The book-to-bill for the Corporation was 0.94:1 in the quarter and 1.1:1 in the month of August 2009. Bookings were generally stable for defence customers, down slightly from large Air Transport customers and down significantly from customers in the business jet markets. The lower orders from existing programs and customers were somewhat offset by the capture of new programs and new customers. Total backlog of orders at the end of Q3 2009 were $14,068,823.

During the quarter, FTG’s net bank debt decreased $453,000. The improvements are due in part to the revaluation of U.S. dollar denominated debt and to an aggressive inventory reduction plan across the Company.

The Company will host a live conference call on Thursday, October 8, 2009 at 8:30am (EDT) to discuss the results of Q3 2009.

Anyone wishing to participate in the call should dial 416-340-8018 or 1-866-223-7781 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 October 22, 2009 and will be available on the FTG website at The number to call for a rebroadcast is 416-695-5800 or 1-800-408-3053, pass code 4815246.


FTG is an aerospace and defence 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, defence, 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 located in Toronto, Ontario.

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


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.

Link To Spreadsheet

For further information please contact:

Bradley C. Bourne,
President and CEO
Tel: (416) 299-4000 x 314
Firan Technology Group Corporation

Joseph R. Ricci,
Vice President and CFO
Tel: (416) 299-4000 x 309
Firan Technology Group Corporation

Ali Mahdavi, Partner
Tel: (416) 962-3300 x 225
Spinnaker Capital Markets Inc.

Additional information can be found at the Corporation’s website