Coretec Announces Second Quarter 2005 Results Second Quarter Sequential Revenue Growth of 2%.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- Coretec Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :CYY) today reported its financial results for the second quarter ended June June: see month. 30, 2005. The Company recorded sales from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $19.7 million in the quarter, a 6% decrease over sales of $21.0 million in the second quarter of 2004, although a 2% increase sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen from the first quarter of 2005. Gross profit for the quarter was $4.3 million or 22% of sales compared to $6.2 million or 30% of sales in the second quarter of 2004. Sequentially, gross profit increased 4% from gross profit of $4.1 million or 21% of sales in the first quarter of 2005. The Company recorded a loss per share in the quarter of $0.07 compared to earnings per share of $0.04 in the second quarter of 2004 and sequentially, compared to a loss of $0.05 per share in the first quarter of 2005. In the second quarter of 2005 the Company recorded a charge of $0.5 million or $0.03 per share representing the costs associated with the abandoned merger transaction with Unicircuit, Inc. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
adj. 1. Almost exact or correct: the approximate time of the accident. 2. nil in the quarter, compared to positive free cash flow of $2.0 million in the second quarter of 2004 and sequentially, an improvement of $0.5 million from negative free cash flow of $0.5 million in the first quarter of 2005. "While abandoning the proposed merger with Unicircuit Inc. was the right decision for the Company, we still believe in the underlying principles which fostered the proposed transaction. Those principles include capacity consolidation, the alignment Alignment is the adjustment of an object in relation with other objects, or a static orientation of some object or set of objects in relation to others.
instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. , high reliability and time expedited products and the expansion of our technology platform and expertise. We have focused the activities of Coretec on these key principles and will continue to do so going forward. We continue to focus on prudent financial management of our resources during the current tough market conditions and believe that recent and upcoming competitor closures will serve to stabilize stabilize See peg. the industry and allow us to improve our financial performance. Ensuring that we are optimized in terms of productivity, cost, and technology will enable us to continue to increase market share," said Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. Langston Langston is the name of two places in the United States:
"As part of our consolidation focus, we have put our Lawrence Lawrence. 1 City (1990 pop. 26,763), Marion co., central Ind., a residential suburb of Indianapolis, on the West Fork of the White River. It has light manufacturing. 2 City (1990 pop. 65,608), seat of Douglas co., NE Kans. facility up for sale with the intention of transferring the remaining production processes at this facility to our two other Toronto sites. We have signed a conditional Subject to change; dependent upon or granted based on the occurrence of a future, uncertain event. A conditional payment is the payment of a debt or obligation contingent upon the performance of a certain specified act. purchase and sale agreement to sell the facility's real estate in the amount of $2.1 million and anticipate the transaction to close in the fourth quarter of this year. The contemplated transaction will also provide us with a period of up to 18 months after closing in which to vacate To annul, set aside, or render void; to surrender possession or occupancy. The term vacate has two common usages in the law. With respect to real property, to vacate the premises means to give up possession of the property and leave the area totally devoid of contents. the building. If completed, we will receive approximately 50% of the proceeds by closing and receive the remainder in an interest bearing 30-month vendor take-back note with an optional early redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. to be paid twelve months after we vacate the facility. Although there can be no assurance given that this particular transaction will be completed, it is our ongoing intention to relocate re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. the production activities in this facility and ultimately sell the real estate asset," continued Mr. Langston. "Although we are seeing positive results as a result of our focus, market conditions in the first half of 2005 remained volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. and weak, precipitating pre·cip·i·tate v. pre·cip·i·tat·ed, pre·cip·i·tat·ing, pre·cip·i·tates v.tr. 1. To throw from or as if from a great height; hurl downward: further price compression Price compression The limitation of the price appreciation potential for a callable bond in a declining interest rate environment, based on the expectation that the bond will be redeemed at the call price. across virtually all products and services. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. IPC (1) (InterProcess Communication) The exchange of data between one program and another either within the same computer or over a network. It implies a protocol that guarantees a response to a request. , shipments of PCBs in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. declined 6.4% for the six months ending June 2005 as compared to the same period in 2004. Demand softness in the defense and aerospace sectors has been particularly disappointing as has an absence of quick turn requirements in that same sector. To offset these declines in activity, we have aggressively stepped up our pursuit of commercial prototypes and time sensitive production. Our focus continues to be on accelerated cycle times, optimized sales and operations planning, and continuous improvements in process control, staying true to our game plan," said Mr. Langston. Coretec is one of the leading designers and fabricators of printed circuit boards for the prototype Prototype A first or original model of hardware or software. Prototyping involves the production of functionally useful and trustworthy systems through experimentation with evolving systems. and quick turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. production segments of the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. and European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. markets. Coretec distinguishes itself from its competitors by providing complete printed circuit board solutions, including design, advanced prototyping and quick turnaround production across an outstanding range of product technologies. This news release may include statements about future expectations, plans and prospects that may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Please be cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties. Actual results or developments may vary materially from those projected or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in the forward-looking statements as a result of any number of factors, including currency exchange rate fluctuations; variability of operating results; dependence on certain industries; management of growth and expansion; integration of operations; ability to attract and retain key personnel; nature of sales; product complexity and product defects; international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. ; material cost fluctuations and limited availability When customers of the PSTN make telephone calls, they commonly make use of a telecommunications network called a switched-circuit network. In a switched-circuit network, devices known as switches are used to connect the caller to the callee. of raw materials; potential loss of customers; competition; industry contraction contraction, in physics contraction, in physics: see expansion. contraction, in grammar contraction, in writing: see abbreviation. contraction - reduction and slow economic growth; technological change and process development; environmental liability; need for additional financing; product liability; pricing pressure; ability to reduce costs; and other risks listed in Coretec's public disclosure documents and other filings with securities regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities found at www.sedar.com. Additional information about Coretec Inc. is available at www.coretec-inc.com. TO THE SHAREHOLDERS OF CORETEC INC. The consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. of Coretec Inc. as at June 30, 2005, and the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of operations, deficits and cash flows for the period then ended have not been reviewed by the company's auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together , Ernst & Young LLP LLP - Lower Layer Protocol . These financial statements are the responsibility of management and have been reviewed and approved by the company's audit committee.
CONSOLIDATED BALANCE SHEETS
(in thousands - unaudited)
June 30, December 31,
2005 2004
$ $
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ASSETS
Current
Cash 82 354
Accounts receivable 12,521 13,903
Inventories 4,987 5,002
Income taxes recoverable - 631
Prepaid expenses 1,170 1,752
Note receivable from
discontinued operations 146 1,524
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Total current assets 18,906 23,166
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Long-lived assets held for sale 2,129 -
Property, plant and equipment, net 26,900 30,193
Other assets 217 386
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48,152 53,745
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness 808 1,608
Accounts payable and accrued liabilities 7,739 9,969
Current portion of long-term debt 4,710 5,044
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Total current liabilities 13,257 16,621
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Long-term debt 3,140 3,406
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Total liabilities 16,397 20,027
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Shareholders' equity
Share capital 61,007 60,992
Contributed surplus 549 340
Deficit (29,801) (27,614)
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Total shareholders' equity 31,755 33,718
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48,152 53,745
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CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands - unaudited)
Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
$ $ $ $
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Sales 19,718 20,969 39,067 39,402
Cost of sales 15,443 14,737 30,698 27,886
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Gross profit 4,275 6,232 8,369 11,516
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Expenses
Selling, general and
administrative 3,126 3,336 6,468 6,182
Depreciation and amortization 1,498 1,722 3,025 3,334
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4,624 5,058 9,493 9,516
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Income (loss) from continuing
operations (349) 1,174 (1,124) 2,000
Terminated merger costs 534 - 534 -
Interest and other expenses 259 222 507 378
Foreign exchange loss (gain) 223 106 143 (18)
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Income (loss) before income
taxes (1,365) 846 (2,308) 1,640
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Provision for income taxes - 20 - 20
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Income (loss) from continuing
operations (1,365) 826 (2,308) 1,620
Income (loss) from
discontinued operations 5 (196) (121) (417)
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Net income (loss) for the year (1,370) 630 (2,187) 1,203
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Earnings (loss) per share:
From continuing operations,
basic and diluted $(0.07) $0.04 $(0.12) $0.09
Net income (loss) per share,
basic and diluted $(0.07) $0.03 $(0.12) $0.06
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CONSOLIDATED STATEMENTS OF DEFICIT
(in thousands - unaudited)
Quarters ended June 30
2005 2004
$ $
---------------------------------------------------------------------
---------------------------------------------------------------------
Deficit, beginning of year (27,614) (25,832)
Net income (loss) for the period (2,187) 1,203
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Deficit, end of period (29,801) (24,629)
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands - unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2005 2004 2005 2004
$ $ $ $
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OPERATING ACTIVITIES
Income (loss) for the year
from continuing operations (1,365) 826 (2,308) 1,620
Non-cash items
Depreciation 1,498 1,722 3,025 3,334
Stock-based compensation 103 61 209 122
Unrealized foreign exchange loss 242 25 527 91
Amortization of deferred
finance charges 54 39 107 57
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532 2,673 1,560 5,224
Net change in non-cash working
capital balances
related to operations 1,507 (1,176) (86) (1,869)
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Cash provided by operating
activities 2,039 1,497 1,474 3,355
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FINANCING ACTIVITES
Increase of long-term debt - - - 4,454
Repayment of long-term debt (353) (427) (699) (1,530)
Decrease in bank indebtedness (2,106) (475) (800) (474)
Increase in share capital 15 14 15 14
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Cash (used in) provided by
financing activities (2,444) (888) (1,454) 2,464
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INVESTING ACTIVITIES
Purchase of capital assets (703) (619) (1,861) (950)
Increase (decrease) in other
assets (8) (156) 62 (284)
Advance to Proto Circuit - - - (3,798)
Acquisition of Proto Circuit - - - (236)
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Cash used in investing activities (711) (775) (1,799) (5,268)
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Effect of exchange rate
changes on cash 21 (1) 7 6
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Net increase (decrease) in
cash during the period (1,095) (167) (1,771) 557
Change in cash from
discontinued operations (5) (199) 1,499 (555)
Cash, beginning of period 1,182 1,278 354 910
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Cash, end of period 82 912 82 912
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Supplemental cash flow information
Interest paid 159 186 354 336
Income taxes paid 63 144 63 144
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Coretec Inc.
Selected financial Information (000's)
%
% Change
Q2/05 Q2/04 Change Q1/05 Q2/Q1 YTD05 YTD04
-------------- ------ --------------
Continuing
operations:
Revenue 19,718 20,969 -6% 19,349 2% 39,067 39,402
Gross Profit 4,275 6,232 -31% 4,095 4% 8,369 11,516
Income (loss) (1,365) 826 -265% (942) 45% (2,308) 1,620
Reconciliation of EBITDA from continuing operations
%
% Change
Q2/05 Q2/04 Change Q1/05 Q2/Q1 YTD05 YTD04
-------------- ------
Income (loss)
for the period
from continuing
operations (1,365) 826 (942) (2,308) 1,620
Add/(Deduct):
Interest 259 222 248 507 378
Depreciation
and
amortization 1,498 1,722 1,527 3,025 3,334
Provision for
income tax - 20 - - 20
Abandoned
merger costs 534 - - 534 -
-------------- ------ --------------
EBITDA from
continuing
operations 926 2,790 -67% 833 11% 1,758 5,352
Reconciliation of Free Cash Flow from continuing operations
%
% Change
Q2/05 Q2/04 Change Q1/05 Q2/Q1 YTD05 YTD04
-------------- ------
Income (loss)
for the period
from continuing
operations (1,365) 826 (942) (2,308) 1,620
Add:
Depreciation
and
amortization 1,498 1,722 1,527 3,025 3,334
Amortization of
deferred
finance charges 54 39 53 107 57
Abandoned
merger costs 534 - - 534 -
-------------- ------ --------------
721 2,587 638 1,358 5,011
Deduct:
Capital
expenditures (703) (619) (1,158) (1,861) (950)
-------------- ------ --------------
Free Cash Flow
from continuing
operations 18 1,968 -99% (520) 103% (503) 4,061
- EBITDA and free cash flow are not measures recognized under Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ").EBITDA is calculated as earnings before interest and certain other expenses, provision for income taxes, depreciation and amortization and impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) .Free cash flow is calculated as net income plus depreciation and amortization and impairment of capital assets less capital expenditures.Management believe that many of the Company's shareholders, creditors, other stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. and analysts prefer to assess the Company's performance using EBITDA and free cash flow in addition to the GAAP measures.The Company's method of calculating EBITDA and free cash flow may differ from other companies and accordingly may not be comparable to measures used by other companies. Coretec Inc. (TSX:CYY) |
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