CALGARY, Aug. 6 /CNW/ -
Results
Circa Enterprises Inc. (CTO-TSX), a manufacturer of surge protection equipment and related devices for the telecom and construction industry, reports the unaudited results of Circa's operations for the three months ended June 30, 2004. Circa reports consolidated second quarter net income of $349,000 or $0.04 per share, compared to a 2003 second quarter loss of $99,000 or $0.01 per share. Increases in sales to the U.S. market and from Circa's metal fabrication operations were the prime contributors to this improvement. Retirement costs in the second quarter were partially offset by a foreign currency translation gain. On a 2004 year-to-date basis, Circa's net income of $578,000 or $0.06 per share compares to a loss of $205,000 or $0.02 per share for the six months ended June 30, 2003.
2004 second quarter sales were $4,693,000, an 11% increase over 2003 of $4,231,000. Sales to the U.S. market for the second quarter in U.S. dollars exceeded 2003 by 8.5%, while the Company's metal fabrication operation achieved a significant increase in sales over the 2003 second quarter. Sales for the six months ended June 30, 2004 also reflect this trend, being up 3.5% over 2003 on a year-to-date consolidated basis.
Circa's gross margin was solid during the second quarter of 2004 and cash flow was strong, with funds generated from operations of $535,000 representing an 83% increase over 2003. Circa ended the second quarter with working capital of $6,930,000, including cash and cash equivalents and marketable securities of $2,757,000, and limited bank debt.
Acquisition
On August 6, 2004, the Company's wholly owned subsidiary, Circa Metals Inc., acquired the metal fabrication and sales business of Hydel Enterprises, Inc. ("Hydel"), effective July 30, 2004. The acquisition was effected through the purchase by Circa Metals of substantially all of the operating assets of Hydel. The acquired business is well established and produces enclosures and other products for the electrical utility industry, from manufacturing and warehousing facilities located in Scarborough and Welland, Ontario.
The purchase price for the Hydel assets was $4.9 million, which was paid by Circa Metals Inc. in cash from internally generated funds of $2.7 million and a bank term loan of $2.2 million.
Management of Circa believes that the Hydel business is complementary to the existing Circa Metals operation, in that it allows for an expansion of the capabilities of Circa Metals Inc. Hydel's 90,000 sq. feet of production space will allow for Circa Metals to continue prototype manufacturing, and provides the opportunity to undertake larger scale projects. Hydel has reported profits for several years and the acquisition is expected to provide Circa with an additional Canadian consolidated revenue source to balance its U.S. revenue, which is expected to act as a natural hedge against currency fluctuations. Circa welcomes Hydel's customers and employees to the Circa family and anticipates a mutually beneficial relationship for all stakeholders into the future.
CIRCA ENTERPRISES INC.
Consolidated Statements of Earnings and Retained Earnings
(Unaudited)
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Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
$ $ $ $
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SALES 4,692,715 4,230,944 8,537,904 8,244,726
COST OF SALES 2,809,798 2,690,695 5,137,335 5,133,870
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1,882,917 1,540,249 3,400,569 3,110,856
ROYALTIES, INTEREST AND
OTHER INCOME 74,714 43,475 125,369 141,875
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1,957,631 1,583,724 3,525,938 3,252,731
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EXPENSES
General and
administrative 729,542 793,354 1,457,925 1,634,543
Marketing and selling 423,997 385,566 760,997 803,853
Engineering 58,803 57,805 93,193 209,703
Depreciation and
amortization 136,268 121,946 251,628 254,633
Interest - current 337 12,223 894 27,746
Interest on long-term
debt 3,824 5,842 8,329 10,840
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1,352,771 1,376,736 2,572,966 2,941,318
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EARNINGS BEFORE OTHER
ITEMS 604,860 206,988 952,972 311,413
Retirement-related costs 160,000 - 160,000 -
Foreign currency
translation (gain) loss (114,024) 342,164 (132,949) 763,911
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EARNINGS (LOSS) BEFORE
INCOME TAXES 558,884 (135,176) 925,921 (452,498)
PROVISION FOR (RECOVERY OF)
INCOME TAXES
Current 194,102 (121,664) 270,125 (198,133)
Future 15,862 85,735 77,598 (49,585)
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209,964 (35,929) 347,723 (247,718)
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NET EARNINGS (LOSS) 348,920 (99,247) 578,198 (204,780)
RETAINED EARNINGS,
BEGINNING OF PERIOD 6,461,199 6,904,652 6,704,854 7,017,985
DIVIDENDS - - (472,933) (7,800)
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RETAINED EARNINGS, END
OF PERIOD 6,810,119 6,805,405 6,810,119 6,805,405
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EARNINGS (LOSS) PER SHARE
Basic and diluted 0.04 (0.01) 0.06 (0.02)
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CIRCA ENTERPRISES INC.
Consolidated Balance Sheets
(Unaudited)
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June 30, 2004 December 31, 2003
$ $
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ASSETS
Current
Cash 2,104,881 1,613,044
Marketable securities 652,541 787,516
Accounts receivable 2,399,472 1,943,594
Income taxes recoverable 367,519 586,881
Inventory 2,492,143 2,929,262
Prepaid expenses 218,213 121,720
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8,234,769 7,982,017
Property, plant and equipment 1,694,502 1,853,114
Intangible assets and goodwill 1,063,479 1,058,111
Future income taxes 121,495 199,093
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11,114,245 11,092,335
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LIABILITIES
Current
Accounts payable and accrued liabilities 1,171,678 1,158,261
Current portion of long-term debt 125,000 125,000
Current portion of obligation under
capital lease 8,266 7,510
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1,304,944 1,290,771
Long-term debt 156,250 218,750
Obligation under capital lease 19,336 22,903
Deferred gain 175,656 207,117
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1,656,186 1,739,541
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SHAREHOLDERS' EQUITY
Share capital 2,647,940 2,647,940
Retained earnings 6,810,119 6,704,854
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9,458,059 9,352,794
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11,114,245 11,092,335
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Circa Enterprises Inc. is a public company with offices in Alberta,
Ontario and Florida, trading on the Toronto Stock Exchange under the ticker
symbol CTO. The Toronto Stock Exchange has neither approved nor disapproved
the information contained herein.
/For further information: Mr. Ivan Smith, President and CEO, Circa Enterprises Inc., (403) 258-2011; Mr. Rick Schmidt, VP Finance and CFO, Circa Enterprises Inc., (403) 258-2011; E-Mail: investor(at)circaent.com; Website: www.circatel.com; To request a free copy of this organization's annual report, please go to http://www.newswire.ca and click on reports(at)cnw./
