RICHMOND, B.C., Oct. 30, 2008 (GLOBE NEWSWIRE) -- CON-SPACE Communications Ltd. (TSX-V:CCB), a world leader in specialized voice communication products, technical search, surveillance and inspection systems, today announced the results for its forth quarter and year-end financials ended June 30, 2008.
"There's no doubt that the economy has taken its toll on the Company's performance over this past year, and although our performance remains lower than originally expected management is very encouraged with future prospects," said Jim Swanson, CFO and Chairman of Con-Space Communications Ltd.
Fourth Quarter Results
A fourth quarter year-over-year comparison of sales results reveals total corporate sales have decreased by 10% to $2.3M for the fourth quarter of 2008 compared to $2.5M for the fourth quarter of 2007.
The Company had a 12.2% decrease in gross profit (as a percent of sales) for the fourth quarter giving a gross profit of $984,000 for this years 4th quarter compared to $1,390,000 last year.
There was a 17.4% increase in operating expenses (not including impairment of goodwill, product research and enhancement costs, and interest on long-term debt) bringing the total to $1.1M or $159,000 over 2007's fourth quarter of $930,000. The resulting operating profit (loss) was ($105,000) for this years 4th quarter down from a fourth quarter profit of $460,000 in 2007.
Annual Results
Sales for the fiscal year 2008 totaled $9,282,564 representing a 27.9% increase over sales for fiscal 2007 of $7,255,501.
Although total revenues increased 27.9% to $9.3M, this gain was due to the acquisition of Search Systems Inc. and results were not comparable on a year-over-year basis. Search Systems, Inc., a manufacturer and distributor of video and acoustic listening devices, contributed a full 12 months of revenue in 2008 worth $4.1M, compared to just 3 months of revenue contribution in 2007, worth $1.0M.
Cost of goods sold as a percent of sales increased 0.3% to 54.2% during 2008 versus 53.9% in 2007, which occurred due to the more accurate allocation of sales expenses to the cost of goods sold within Search Systems that had not been done previously. This resulted in a decrease in gross profit of 0.3% as a percent of sales to $4,248,000 or 45.8% of sales for this year compared to $3,346,000 or 46.1% for 2007.
Operating expenses excluding amortization, impairment of goodwill, product research and development costs, and interest on long-term debt increased 0.8% year-over-year as a percent of sales. In actual dollars the increase was $742,000 bringing the total to $3.1M over 2007 equivalent expenses of $2.4M. Note that these expenses include Search Systems, Inc. expenses for only the 4th quarter of 2007 and all of 2008 which contributed to the extra $742,000 expenditure.
Income from operations before amortization, impairment of goodwill, product research and enhancement costs, and interest on long-term debt for the period was $1,122,000 compared to a profit of $963,000 for 2007, an increase of 16.5% year-over-year.
Management concluded that it was prudent to adjust downward a number of assets causing the amortization, impairment of goodwill, product research and development costs, to rise sharply and that along with the extra interest on long-term debt increased operating expenses by $5,891,496. Therefore, the annual net return after the inclusion of amortization, impairment of goodwill, product research and enhancement costs, interest on long-term debt, and taxes netted a loss for 2008 of $4,205,000 versus a net profit of $214,000 for the prior year.
Loss per share ended at $0.28 per share while earnings per share in 2007 were $0.02.
As of this date the Company is in negotiations with its secured lenders to revise the terms of its secured loans. The negotiations are not sufficiently advanced to date to disclose proposed terms. Although there is no certainty an arrangement will be reached, management anticipates a favourable outcome and that the Company will be able to restructure the loans and continue as a going concern.
"It's indeed been a tough year but the markets for our products are not diminishing. We continue to be contacted by new customers with new uses for our products. Our design team has an exciting list of new product developments. We're not sitting or taking breather, we're working harder to meet the growing requirements for our products. As we proceed into 2009 we are seeing the positive signs of our new initiatives and we are convinced that we will succeed," concluded Swanson.
About CON-SPACE
CON-SPACE Communications Ltd., and its subsidiary, Search Systems, Inc. are recognized as leading designers and manufacturers of specialized voice communication equipment, video/audio systems, technical search, surveillance and inspection systems. Their equipment is sold throughout the world to police, fire, rescue, government agencies, militaries, municipalities and general industry under the CON-SPACE and Search Systems labels and under private labels through OEMs. CON-SPACE products are used in confined spaces, hazardous atmospheres, rescue applications and security situations. With headquarters located in Richmond, BC, the Company has manufacturing facilities in Bakersfield, CA, Blaine, WA; Lincoln, NE; and Newark, England. CON-SPACE also has independent distributors throughout North America, Great Britain, Europe, Australia, Asia, South America and other countries around the world.
This press release is available on the company's official on-line investor relations site for investor commentary, feedback and questions. Investors are asked to visit http://www.agoracom.com and view the CON-SPACE Investor Contact & Information Centre. Alternatively, investors may e-mail questions and correspondence to CCB@Agoracom.com or tim@calibercap.ca.
DISCLAIMER
This news release contains forward-looking statements which reflect management's current expectations regarding the Company's objectives, plans, goals, strategies, future growth, results of operations, performance and business prospects and opportunities. These forward-looking statements are not guarantees, but only predictions. Although the Company believes that these statements are based on information and assumptions which are current, reasonable and complete, these statements are necessarily subject to a number of factors that could cause actual results to vary significantly from current expectations. These factors and other risks and uncertainties are discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time, as identified in the Company's disclosure record on www.sedar.com. The forward-looking statements included in this news release are made only as of the date of this news release and the Company does not undertake to publicly update these forward-looking statements to reflect new information, future events or otherwise.