Bestar: Second Quarter Ended June 30, 2008 Results: Financial News

Bestar: Second Quarter Ended June 30, 2008 Results
Thursday August 14, 2008 12:07 pm ET

LAC-MEGANTIC, QUEBEC--(MARKET WIRE)--Aug 14, 2008 -- Bestar Inc. (Toronto:BES.TO - News)

Gross revenue for the quarter ending June 30, 2008 totaled CA$9,569,000, a decrease of 13.7% compared with CA$11,093,000 for the same period last year. For the first six months of 2008, gross revenue totaled CA$20,519,000, a decrease of 8.3% compared to the CA$22,372,000 of the first six months of 2007.

"We actually have more customers carrying more products then at the same period in 2007. Although, with the current economic situation, these increases were not sufficient to offset the decrease in sales we experience with many of our customers. The increased strength of the Canadian dollar also had a negative impact of more than CA$400,000 on our US sales compared to last year." explained Mr. Paulin Tardif, Bestar's president and CEO.

A loss before income taxes of CA$365,000 was recorded for the second quarter of 2008 compared to earnings before income taxes of CA$123,000 for the same period last year. For the first six months, losses before income taxes stand at CA$514,000 compared to earnings before taxes of CA$267,000 for the same period in 2007. Net losses stand at CA$277,000 or (CA$0.02) per share, for the second quarter of 2008, compared to a net profit of CA$79,000 or CA$0.01 per share for the same quarter in 2007 while a net loss for the first six months of 2008 stands at CA$380,000 compared to a net profit of CA$183,000 for the same period in 2007.

"A decline in sales combined with a decrease in foreign exchange gains and forward exchange contract gains explain the difference between 2008 and 2007 " commented Mr. Tardif.

"Furthermore, under the credit agreements, the Company must comply with certain restrictive covenants, including the requirement to maintain certain financial ratios. At the end of the second quarter of 2008, the Company was not in compliance with one of these ratios. Subsequently and as required by the Canadian Institute of Chartered Accountants Emerging Issues Committee (Abstract EIC-59), the Company reclassified a long-term portion of the term debt, amounting to $1,865,000, to current liability, even though no accelerated repayment has been demanded by the lender. The Company is currently discussing amendments to its loan covenants with the lender and certain measures are being implemented to re-establish the situation." declared Mr. Tardif.

"Of course, these are less than satisfactory results for Bestar. We continue to invest to diversify our product line and in the added-value of our products. We strongly believe we have chosen the best avenues for continued success, which will enable us to maintain our place in both the furniture and components industries." added Mr. Tardif.

"We are still negotiating to take over an important part of the fabrication of a client's production. Other associations will be reviewed and new partnerships could arise. These could have a direct and positive impact on our sales for the coming years." continued Mr. Tardif.

"We are more optimistic in regards to the second half of 2008.The installation of recently purchased new equipment will be finalized around the end of September. This will enable us to respond more efficiently to the industry's demands thus allowing us to seize new opportunities that will help increase our sales, whether with new products or new clients." concluded Mr. Tardif.

Results Summary

 

(Results in thousands of dollars, except earnings per share)

                                     Q1       Q2       Q3       Q4   Total
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Revenue                   2006    8,535    6,619    8,338    9,817  33,309
                          2007   11,279   11,093   10,613   10,448  43,433
                          2008   10,950    9,569        -        -  20,519

Net earnings (loss)       2006        3     (599)    (498)     127    (967)
                          2007      104       79       17       50     250
                          2008     (103)    (277)       -        -    (380)

Earnings (loss) per
 common share             2006     0.00    (0.05)   (0.04)    0.01   (0.07)
                          2007     0.01     0.01     0.00     0.00    0.02
                          2008    (0.01)   (0.02)       -        -   (0.03)

Fully diluted
 earnings (loss) per
 common share             2006     0.00    (0.05)   (0.04)    0.01   (0.07)
                          2007     0.01     0.01     0.00     0.00    0.02
                          2008    (0.01)   (0.02)       -        -   (0.03)

Total Assets              2006   25,916   24,076   24,640   24,409  24,409
                          2007   25,671   25,783   25,337   25,874  25,874
                          2008   26,390   28,751        -        -       -

Total Liabilities         2006   11,481   10,226   11,274   10,902  10,902
                          2007   12,123   12,089   11,586   12,104  12,104
                          2008   12,723   15,361        -        -       -

Weighted average of
 outstanding shares
 (in thousands)           2006   13,038   13,038   13,038   13,038  13,038
                          2007   13,038   13,038   13,038   13,038  13,038
                          2008   13,038   13,038        -        -       -
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Corporate Profile

Founded in 1948, Bestar Inc. designs, manufactures, and distributes a vast array of ready-to-assemble furnishings that meet customer needs in terms of quality, design, and functionality. During the last years Bestar has specialized in office furniture and distributes its products mainly in the United States and Canada. In order to offset a decrease in sales Bestar developed a new business plan in 2006 which includes the fabrication of components.

The company was incorporated in 1986 and operates from its plant in Lac-Megantic, Quebec, Canada.

Release Declaration

This press release may contain information and declarations on the future performance of the company that are, by nature, speculative. These declarations are based on suppositions, uncertainties and the best possible evaluation of future events by management. They are subject to certain risk factors such as exchange rates, the growing competition from emerging countries as well as fluctuating costs in raw material and shipping.

Shareholder Information

Shareholders may find this press release under the CCN news file at www.marketwire.com or on SEDAR at www.sedar.com . The management report and comprehensive financial statements for the quarter ended June 30, 2008 , as well as all other regulatory documents will be available, no later than August 15, 2008, through the SEDAR database at www.sedar.com and on our website at www.bestar.ca.