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FTG - News and Events
For Immediate Release: July 11, 2007
Firan Technology Group Corporation (FTG) Announces Record Revenue in Second Quarter 2007
Aerospace segment grows 24%
Aerospace and Circuits Segment both grow 10% sequentially
Margins improve to 23.9%
Net Earnings year-to-date up 41%, despite strong Canadian dollar


Toronto, July 11, 2007 Firan Technology Group Corporation (TSX:FTG) today announced the second quarter 2007 results for the period ending June 1, 2007.

FTG achieved $15,263,000 in revenue in the second quarter, an all-time record for the Corporation. Net earnings after tax for the second quarter of 2007 were $342,000.

Second Quarter Results: (three months ended June 1, 2007 compared with three months ended June 2, 2006)

Q2 2007

Sales: $15,263,000
Gross Margin: $3,653,000
Operating Earnings Before Tax: $759,000
Net Earnings After Tax: $342,000
Earnings per share - basic & diluted: $0.02

Q2 2006

Sales: $14,764,000
Gross Margin: $3,276,000
Operating Earnings Before Tax: $310,000
Net Earnings After Tax: $408,000
Earnings per share - basic & diluted: $0.02

Year to Date Results (six months ended June 1, 2007 compared with six months ended June 2, 2006)

YTD 2007

Sales: $29,174,000
Gross Margin: $6,774,000
Operating Earnings Before Tax: $1,287,000
Net Earnings After Tax: $824,000
Earnings per share
- basic $0.05
- diluted $0.04

YTD 2006

Sales: $28,127,000
Gross Margin: $6,123,000
Operating Earnings Before Tax: $521,000
Net Earnings After Tax: $586,000
Earnings per share
- basic $0.03
- diluted $0.03

Net sales increased by $499,000 or 3.4%, from $14,764,000 in the second quarter of 2006 to $15,263,000 in the second quarter of 2007. The Circuits Segment was down $139,000 or 1.1% over the same period last year. Weak market conditions in printed circuit boards and the strengthening Canadian dollar drove the year over year change. The Circuits segment is outperforming the overall market, which is down approximately 10% in 2007 in North America, excluding any exchange rate impact. The Aerospace segment grew over the same quarter last year by $638,000 or 23.8% due to the investments made in 2006 to increase capacity and the ongoing lean manufacturing program which together with strong customer demand resulted in increased shipments. The record revenue for the Corporation was achieved in spite of the ongoing strengthening of the Canadian dollar.

Gross margin increased by $377,000 to $3,653,000 or 23.9% of sales for the second quarter of 2007 as compared with $3,276,000 or 22.3% of sales in the second quarter of 2006. The increase in gross margins is directly attributable to the higher revenue at FTG, particularly at FTG Aerospace with their higher average gross margins, offset by the slightly lower throughput in FTG Circuits and the ongoing margin squeeze due to the industry price pressures and material cost increases. The ongoing strengthening of the Canadian dollar continues to negatively impact overall gross margins. Also in the quarter FTG recorded a $ 554,000 recovery for Scientific Research and Experimental Development (SR&ED) in cost of sales which helped to offset the ongoing investment in research and development costs incurred by the Corporation.

Net earnings for the second quarter of 2007 were $341,000 or $0.02 per share ($0.02 per diluted share) as compared with $408,000 or $0.02 per share ($0.02 per diluted share) in the second quarter of 2006.

We are pleased with the continued revenue growth for the Corporation and are excited to exceed $15 million in revenue in a quarter for the first time ever. Our focus on the aerospace and defence market continues to prove to be a good decision, as this market has been robust and looks strong into the future, commented Brad Bourne, President and CEO, FTG Corporation. He added, our strong sales team continues to position FTG favourably on a number of key new accounts and programs.

Operating Business Update

FTG Aerospace has performed well in all aspects of the business from new customer wins, through revenue growth, profit growth, new product development, and operational performance. FTG Aerospace will move into a new facility in the coming months, a key step in ensuring capacity requirements to support continued future growth. FTG Aerospace will also benefit from a move to a new end-to end integrated business system in the third quarter that is another key element of enhancing infrastructure to support growth.

FTG Circuits Chatsworth has turned the corner and realized strong bookings and shipments in the quarter. Key additions in Operations management have further strengthened the business unit, as it is meeting many new customer qualifications and making great progress in penetrating the rigid flex market. With the installation and commissioning of the equipment and systems purchased for that site over the past year, capabilities and capacity are growing.

FTG Circuits Toronto continued to see strong demand for very high technology products for next generation aircraft. The site is well positioned on many of the new aircraft being developed including the new air transport aircraft at Airbus and Boeing. The technology level continues to stretch the capability of the facility in the short term and has caused a significant increase in outsourcing costs for a few key processes. These costs will start to decrease in the third quarter as new equipment has been ordered and will enable the processes to be done internally. This, combined with improving yields on the new products should result in improving financial performance.

To continue to improve our financial performance, FTG remains focused on achieving Operational Excellence. Our customers demand high quality products, on time delivery and outstanding customer service. We focus on improving our performance in all of these areas every day. The results of some of our efforts were recently recognized by Rockwell when they awarded FTG Aerospace their Lean Initiative Supplier of the Year said Mr. Joseph Ricci, Vice President and CFO, FTG Corporation.

Conference Call

The Company will host a live conference call on July 12, 2007 at 8:30am (EDT) to discuss the results of the second quarter of 2007.

Anyone wishing to participate in the call should dial 416-641-6112 or 1-866-226-1798 and identify that you are calling into the FTG conference call. The Chairperson is Bradley Bourne. A replay of the call will be available until July 19, 2007. The number to call for a rebroadcast is 416-695-5800 or 1-800-408-3053 and the verbal password for the rebroadcast is 3227754#. The replay will also be available on the FTG website at www.ftgcorp.com

Second Quarter Results: (three months ended June 1, 2007 compared with three months ended June 2, 2006)

Reconciliation of EBITDA (1):

Q2 2007

Net earnings: $342,000
Add:
Income taxes / (recovery): $417,000
Interest expense: $135,000
Amortization of machinery and equipment: $697,000
Other amortization: $58,000
EBITDA: $1,649,000

Q2 2006

Net earnings: $408,000
Add:
Income taxes / (recovery): ($98,000)
Interest expense: $114,000
Amortization of machinery and equipment: $761,000
Other amortization: $102,000
EBITDA: $1,287,000

Year to Date Results (six months ended June 1, 2007 compared with six months ended June 2, 2006)

YTD 2007

Net earnings: $824,000
Add:
Income taxes / (recovery): $463,000
Interest expense $273,000
Amortization of machinery and equipment: $1,487,000
Other amortization: $122,000
EBITDA: $3,169,000

YTD 2006

Net earnings: $586,000
Add:
Income taxes / (recovery): ($65,000)
Interest expense: $219,000
Amortization of machinery and equipment: $1,561,000
Other amortization: $216,000
EBITDA: $2,517,000

(1) EBITDA is not a measure recognized under Canadian generally accepted accounting principles (GAAP). EBITDA is calculated as earnings before provision for income taxes, interest expense, amortization of machinery and equipment and amortization of other assets. Management believes that many of the Companys shareholders, creditors, other stakeholders and analysts prefer to assess the Companys performance using EBITDA in addition to the GAAP measures. The Companys method of calculating EBITDA may differ from other companies and accordingly may not be comparable to measures used by other companies.

ABOUT FIRAN TECHNOLOGY GROUP CORPORATION

FTG is an aerospace and defense 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, defense, 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.

The Company's shares are traded on the Toronto Stock Exchange under the symbol FTG.

This news release contains certain forward-looking statements. Such statements are based on the current expectations of management of the Company and inherently involve numerous risks and uncertainties, known and unknown, including economic factors and the Companys 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 Company. The reader is cautioned to consider these and other factors carefully when making decisions with respect to the Company and not place undue reliance on forward-looking statements.

For further information please contact:

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

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

Additional information can be found at the Companys web site www.ftgcorp.com


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