circa enterprises inc. 2009 annual report enterprises inc. 2009 annual report 3 management’s...
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Corporate Profile
Circa’s operations consist of two distinct business lines – the first being the provision of
surge protection and related products and the second being metal fabrication (through
the Company’s subsidiary, Circa Metals). The surge protection business consists of the
design, manufacture, marketing and sale of surge protection products, which provide
primary protection to telephone systems and data transmission equipment against
voltage surges. Circa Metals provides custom metal fabrication services to Circa
Enterprises itself and to third parties. Circa Metals also designs, manufactures, markets
and sells fabricated enclosures, pole line hardware and other products to the Canadian
electrical industry through its Hydel product line.
Circa is headquartered in Calgary, Alberta and this location also houses design,
engineering and manufacturing functions for the surge protection line. Sales and
marketing for the surge protection business are handled out of Tampa, Florida, and it
contracts assembly services in China. Circa’s metal fabrication business operates in
Vaughan, Ontario.
Circa is listed on the TSX Venture Exchange under the trading symbol CTO.
1 Message to Shareholders 2 Management’s Discussion and Analysis
13 Management Report13 Audit Report
14 Consolidated Financial Statements and Notes 28 Five Year Summary
IBC Corporate Information
Table of Contents
12009 Annual ReportCirca Enterprises Inc.
The fiscal year ended December 31, 2009 was a year of significant
changes for Circa as the Company underwent a restructuring
which set the stage for a return to profitability. Sales for the year
were down considerably over the prior years in both the surge
protection business and the Circa Metals division as the Company
felt the effects of the struggling North American economy.
Despite these challenges, the Company was able to improve its
gross profit as the benefits of moving the production of some of
the Company’s products offshore was realized. This, combined
with targeted price increases, streamlining operations and aggres-
sive cost cutting, improved the gross margins.
Management also reduced selling, general and administrative per-
sonnel and eliminated non-essential spending in order to boost
profitability. The Company eliminated many of the activities relat-
ed to marketing as it believes Circa and Hydel brands have a
strong, recognizable presence in their respective markets. The
Company focused its efforts on customer service through timely
delivery, more efficient production and purchasing and working
with customers to address their unique requirements.
The Company also took on various other activities to improve prof-
itability, such as consolidating business activities, reducing sales
commissions and discounts and implementing favourable tax
strategies and initiatives.
RESTRUCTURING ACTIVITIES
To combat the downturn in the Company’s sales, management
embarked on a restructuring program that included a significant
reduction in staff across both business lines and functional areas of
the Company. Approximately 57 employees, representing 29% of
the beginning of the year headcount were laid off throughout the
year. This reduction has substantially reduced the cost structure
of the organization and not resulted in any loss of production
capabilities or significant deficiencies in service, functionality or
internal controls.
The Ontario operations were consolidated as the Welland facility
was closed and integrated into Circa Metals’ Vaughan location.
The Welland land and building were listed for sale and are
currently on the market. The distribution in the surge protection
business was integrated into the Calgary facility through the use
of a third party distribution hub and the Tampa, Florida warehouse
ceased operations.
In addition to the foregoing, the Company began a program to
analyze the profitability of its product offerings. Based on this
analysis, unprofitable products were identified and steps were
taken, such as price increases, to ensure gross margin targets were
achieved. The Company has also focused in on its purchasing
function and is taking steps to improve its efficiency of operations,
timeliness of product delivery and availability. The benefit of these
steps is beginning to show and management will continue to
pursue these initiatives.
OUTLOOK
The future looks promising for the Company in 2010 as we expect
to see a slow improvement in the market for all of its products.
With the improved gross margins and reduced cost structure of the
business, management is optimistic about the future profitability of
the Company.
Circa’s 2010 business plan includes focusing on refining the opera-
tions of the Company and looking at opportunities to increase
sales. The Company will continue to explore opportunities to grow
business through acquisitions and exploit its strengths through new
product offerings. Opportunities to continue to reduce costs and
improve margins through offshore manufacturing will continue to
be explored.
I would like to take the opportunity to recognize the efforts of all
the Circa staff across North America and thank those employees
who were laid off during the year for their contributions to the
Company. It has been a challenging year and the management and
employees of Circa have risen to the challenge. The dedication and
commitment shown in 2009 will be key to the success of Circa’s
turnaround in 2010 and beyond.
On behalf of the Board,
Ivan W. Smith
President and Chief Executive Officer
March 18, 2010
Message to Shareholders
22009 Annual ReportCirca Enterprises Inc.
AS AT AND FOR THE YEAR ENDED DECEMBER 31, 2009
The following Management's Discussion and Analysis (“MD&A”) of the financial condition and results of operations of Circa Enterprises Inc. (“Circa”or the “Company”) has been prepared taking into consideration information available to March 18, 2010 and should be read in conjunction withthe audited consolidated financial statements of the Company as at and for the year ended December 31, 2009. References in this MD&A to theCompany's financial position or results of operations are presented on a consolidated basis and include the accounts of the Company and its whol-ly-owned subsidiaries, Circa Telecom (USA), Inc. (“Circa USA”) and Circa Metals Inc. (“Circa Metals”). The Company and such wholly-owned sub-sidiaries are sometimes hereinafter referred to as the “Circa Group”. The consolidated financial statements of the Company (and the financial infor-mation presented in this MD&A) have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”) and arereported in Canadian dollars. Additional information, including the Company's Annual Information Form, is available on SEDAR at www.sedar.com.
FORWARD-LOOKING STATEMENTSCertain information set out in this MD&A constitutes forward looking information, including: (i) expectations concerning the effect of reduced sell-ing, general and administrative costs of the Company in future years and expectations with respect to the recurrence of certain costs in future peri-ods (as set out under the heading “Consolidated Statement of Comprehensive Loss and Retained Earnings – Expenses”; (ii) expectations concern-ing the amount of capital expenditures anticipated in 2010 and the funding of such capital expenditures (as set out under the heading“Consolidated Balance Sheets”); (iii) expectations concerning the timing of completion of certain components of the Company's IFRS transition planand the elements of that plan (as set out under the heading “Changes in Accounting Policies – IFRS Conversion Project”); (iv) expectations con-cerning the continued refinement of operations in 2010 and consideration of initiatives to increase topline sales (as set out under the heading“Outlook”); (v) expectations concerning improvements in the markets for products distributed by members of the Circa Group in 2010 (as set outunder the heading “Outlook”); (vi) expectations concerning the Company's positioning to benefit from any increase in residential and commercialconstruction activity (as set out under the heading “Outlook”); and (vii) expectations concerning the focus of sales and marketing efforts in 2010(as set out under the heading “Outlook”).
Readers should review the cautionary statement respecting forward-looking information that appears below.
Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “hope”, “plan”, “continue”,“estimate”, “expect”, “may”, “will”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. Forward-looking statements arebased upon the opinions, expectations and estimates of management as at the date the statements are made and, in some cases, informationreceived from or disseminated by third parties, and are subject to a variety of risks and uncertainties and other factors that could cause actual eventsor outcomes to differ materially from those anticipated or implied by such forward-looking statements.
In respect of expectations concerning the effect of reduced selling, general and administrative costs of the Company in future years and expecta-tions with respect to the recurrence of certain costs in future periods, those risks, uncertainties and factors include, but are not limited to, suchthings as the ability of the Company to manage its operations with the current employee headcount, the ability to control spending and the gen-eral inflationary pressure placed on the Company. In respect of expectations concerning the amount of capital expenditures anticipated in 2010and the funding of such capital expenditures, those risks, uncertainties and factors include, but are not limited to, such things as the necessity toincur capital spending if other outsourcing alternatives are more economical, the ability to control capital spending in line with management’s esti-mates and the ability to generate cash flow or utilize bank financing for capital expenditures. In respect of expectations concerning the timing ofcompletion of certain components of the Company's IFRS transition plan and the elements of that plan, those risks, uncertainties and factorsinclude, but are not limited to, such things as the availability of required expertise expected to assist with the transition to IFRS, management’straining in IFRS and the ability of the accounting staff to implement the changes in accordance with the prescribed timelines. In respect of expec-tations concerning the continued refinement of operations in 2010 and consideration of initiatives to increase topline sales, those risks, uncertain-ties and factors include, but are not limited to, such things as the intensification of competition within the product markets, the continuation orintensification (or both) of the current economic slowdown, which has affected both commercial and residential construction, the emergence ofnew technologies and the ability of the Company’s employees to improve operations. In respect of expectations concerning improvements in themarkets for products distributed by members of the Circa Group in 2010, those risks, uncertainties and factors include, but are not limited to, suchthings as the intensification of competition within the product markets, the continuation or intensification (or both) of the current economic slow-
Management’s Discussion and Analysis
32009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
down and the emergence of new technologies. In respect of expectations concerning the Company's positioning to benefit from any increase inresidential and commercial construction activity, those risks, uncertainties and factors include, but are not limited to, such things as the ability ofthe Company to maintain its current staff and operating performance if sales increase. In respect of expectations concerning the focus of sales andmarketing efforts in 2010, those risks, uncertainties and factors include, but are not limited to, such things as the ability of the sales personnel tocarry out those efforts and management’s assessment of the need to continue to pursue these efforts. Accordingly, readers should not place unduereliance upon forward-looking information contained herein.
Forward-looking information respecting:
(i) the effect of reduced selling, general and administrative costs of the Company in future years and expectations with respect to the recurrenceof certain costs in future periods, is based upon management’s estimate of the personnel, resources and costs to carry out operations based oncurrent sales and operations;
(ii) the amount of capital expenditures anticipated in 2010 and the funding of such capital expenditures, is based upon management’s estimateof the anticipated volume of business, required capital resources and anticipated cash flows in 2010;
(iii) the timing of completion of certain components of the Company's IFRS transition plan and the elements of that plan is based upon the expect-ed time to complete each phase, the expected timing of the training and work required to complete the analysis and the availability of exter-nal resources required to assist with the transition;
(iv) the continued refinement of operations in 2010 and consideration of initiatives to increase topline sales, is based upon management’s assess-ment of the product markets, the current economic slowdown and management’s expectations of the ability of the Company’s employees toimprove operations;
(v) improvements in the markets for products distributed by members of the Circa Group in 2010, is based upon management’s assessment of theproduct markets;
(vi) the Company's positioning to benefit from any increase in residential and commercial construction activity, is based upon the ability of theCompany to retain customers and management’s assessment of the recovery of the economy; and
(vii) the focus of sales and marketing efforts in 2010, is based upon management’s assessment of the areas to focus on to increase sales.
Although Circa believes that the assumptions underlying such forward looking statements are reasonable, and information received or dissemi-nated by third parties is reliable, it can give no assurance that the expectations reflected in such forward-looking statements will prove to havebeen correct. Circa does not assume responsibility for the accuracy and completeness of the forward-looking statements and such forward-lookingstatements should not be taken as guarantees of future outcomes. Subject to applicable securities laws, the Company does not undertake any obli-gation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. The forward-looking statements of theCompany contained in this MD&A are expressly qualified, in their entirety, by this cautionary statement.
GENERAL AND OVERVIEW
Circa's operations consist of two distinct business lines – the first being surge protection and related products, sold primarily to the United
States market (through Circa Telecom (USA) Inc., a wholly-owned subsidiary of the Company) and the second being metal fabrication and
electrical product sales (through Circa Metals). The surge protection business consists of the design, manufacture, marketing and sale of
surge protection products, which provide primary protection to telephone systems and data transmission equipment against voltage surges.
Demand for these products is driven primarily by the installation of telecommunications infrastructure, which, in turn, is strongly influenced
by commercial construction activity. Circa Metals provides custom metal fabrication services to the Company and arms' length third parties
and supplies fabricated enclosures, pole line hardware and other products to the Canadian electrical industry through its Hydel Enterprises
(“Hydel”) operation.
In 2009, Circa recorded a net loss of $1.2 million, compared to a loss of $1.9 million in 2008. The Company experienced a significant decline
in sales in its most recently completed financial year – from $34.4 million in 2008 to $26.3 million in 2009. Despite this drop in sales, the
Company was able to increase its gross profit in 2009, as compared to 2008. In addition, the Company reduced its selling, general and admin-
istrative expenses, as compared to the year ended December 31, 2008. The Company did not record any impairment charge on its assets dur-
ing the 2009 financial year; however, it recorded a valuation allowance against its future tax asset of $0.2 million. In 2008, Circa recorded a
pre-tax impairment charge of $2.4 million on its deferred charges and property, plant and equipment.
42009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
The Company improved its gross profit and dramatically cut its expenses during 2009 and implemented various changes in its operations,
which were intended to increase net income (or reduce the net loss) and operating cash flow. These restructuring activities helped the
Company improve its operating results, as compared to 2008. The costs related to restructuring initiatives included employee severance costs,
moving costs and other expenses incurred to make modifications to the Company’s operations.
Selected Financial Information($000’s except per share figures) 2009 2008 2007
Sales 26,302 34,417 31,486
Net loss (1,231) (1,916) (1,636)
Basic and diluted loss per share (0.13) (0.20) (0.17)
Total assets 12,409 15,452 15,059
Long-term liabilities 38 53 190
In 2009, sales volumes in the surge protection business were significantly lower than 2008 as a result of the ongoing economic slow-
down in North America, which reduced overall demand for the products sold by the Company and its subsidiaries. In addition, the
Company incurred restructuring expenses associated with the implementation of cost reduction initiatives, which included cost reduc-
tions in production (cost of sales) and reductions in selling, general and administrative expenses. To accomplish these cost reductions,
the Company and its subsidiaries reduced their employee headcounts during the year ended December 31, 2009 and reduced the scale
of their respective operations through the consolidation of activities and facilities. This included the closure of the Welland facility
operated by Circa Metals and consolidation of distribution activities in the surge protection business. The net effect of the non-recur-
ring costs associated with these changes is disclosed in the Consolidated Statement of Loss as Restructuring Costs.
Sales and Net Earnings The following table sets out selected sales and net earnings (loss) information for the periods indicated.
($000’s except per share figures) 2009 2008
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Sales 6,420 6,978 6,885 6,019 8,193 8,744 8,805 8,675
Net (loss) earnings before after tax
impairment charge and foreign
currency translation gain/loss (99) 166 (94) (688) (425) (205) (263) 40
After tax impairment charge - - - - (1,770) - - -
Foreign currency translation gain (loss) (62) (251) (244) 41 547 19 106 35
Net (loss) earnings (161) (85) (338) (647) (1,648) (186) (157) 75
Basic and diluted (loss) earnings per share (0.02) (0.01) (0.04) (0.06) (0.17) (0.02) (0.02) 0.01
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS AND RETAINED EARNINGS
SalesProduct sales, primarily in the surge protection and Hydel businesses, have historically tended to peak in the summer months with the
commercial construction cycle, while sales under supply agreements and custom fabrication sales can occur throughout the year.
Stronger sales are generally expected in the second and third quarters of the year as evidenced by sales patterns over the past sever-
al years.
Sales for the three month period ended December 31, 2009 were down considerably from $8.2 million in Q4 2008 to $6.4 million in
Q4 2009. Decreases in sales were experienced in both the surge protection and Circa Metals segments. For the year ended December
31, 2009, sales decreased to $26.3 million from $34.4 million in 2008, a reduction of 24%. Again, sales declined in both segments, with
the largest decrease recorded in the surge protection business.
52009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
Sales in the surge protection business decreased from $17.5 million in 2008 to $11.4 million in 2009. Decreases in sales were experi-
enced across product classes and throughout the customer base and are attributable to the economic slowdown in North America as
building construction declined in 2009. Within this category, sales of surge protection components under a third party agreement
decreased from $7.1 million for 2008 to $3.5 million for the year ended December 31, 2009.
Sales generated by Circa Metals decreased to $14.9 million for the year compared to $16.9 million in 2008. The decrease in this seg-
ment was attributable to the economic slowdown in Canada, which resulted in lower demand for Hydel branded products. The cus-
tom metals fabrication business remained strong and posted higher sales compared to 2008, with sales increasing from $3.2 million in
2008 to $3.5 million in 2009.
The geographic sales market ratio between Canada and the United States changed during the most recently completed financial year.
For 2009, 60% of sales were made to Canadian customers as compared to 52% in 2008. The decline in sales was greater in the surge
protection business, which is more heavily weighted to the United States.
Sales by Geographic MarketThe following table sets out additional information relating to sales by geographic market for the years indicated.
($000’s) 2009 % 2008 % 2007 %
United States 10,483 40 16,393 48 13,700 44
Canada 15,819 60 18,024 52 17,786 56
26,302 100 34,417 100 31,486 100
Gross ProfitThe Company's gross profit increased in 2009 over the prior year despite the significant decrease in sales. Gross profit, defined as sales
less cost of sales, increased from $5.6 million in 2008 to $5.8 million in 2009. The improvement in margins was attributable to increas-
es in product prices on low margin products, combined with cost decreases for certain materials and overhead reductions associated
with ongoing efforts to reduce costs.
During 2009, the Company took various steps to reduce its labour, materials and overhead costs. This was achieved by consolidating
operations (through the closure of the Circa Metals’ Welland facility), the negotiation of reduced purchasing costs for certain key raw
materials, changes in production methods and the rationalization of certain labour costs. In addition, cost savings were realized as a
result of steps taken in prior years to outsource the manufacture of low margin products and components to offshore suppliers in both
the surge protection and Circa Metals businesses. These changes resulted in a gross profit of 22% of sales in 2009 versus a gross prof-
it of 16% of sales in 2008.
ExpensesOperating expenses experienced a downward trend from 2008 to 2009 as the Company implemented aggressive cost cutting initia-
tives and undertook restructuring activities in order to reduce expenses and improve operating results.
Selling, general and administrative expenses, net of depreciation and amortization, totaled $4.7 million for the year ended December
31, 2009, compared to $6.4 million in 2008. These costs decreased as a result of the restructuring activities undertaken throughout
2009, which included reductions in the number of employees of the Company and its subsidiaries. The consolidated employee head-
count decreased from 195 at the beginning of the year to 140 at December 31, 2009. This significantly reduced payroll, which
decreased cost of sales and selling, general and administrative expenses. In addition, the Company reduced and eliminated discre-
tionary spending where possible to offset lower sales.
In addition to employee reductions, the operations of Circa Metals were rationalized with the closure of the Welland facility and the
integration of operations at the Vaughan location. This reduced selling, general and administrative costs of the Company for the year
and is expected to have a positive effect going forward. The Company also consolidated surge protection warehousing and distribu-
tion into its Calgary location and eliminated shipping from the Tampa location. The costs associated with both of these changes are
62009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
reported under restructuring costs on the Consolidated Statement of Loss and are not expected to recur in future periods.
The $516,000 foreign currency translation loss incurred during the year ended December 31, 2009, was the result of the continued
strengthening of the Canadian dollar relative to the U.S. dollar.
Net LossCirca reported a net loss for the quarter ended December 31, 2009 of $0.2 million, compared to a net loss of $1.6 million in the fourth
quarter of 2008. The loss is a result of tax adjustments recorded during the quarter as the Company adjusted its balance sheet for prior
years’ taxes recoverable and recognized a valuation allowance of $0.2 million against the future tax asset. The Company is uncertain
if it will be able to generate sufficient taxable income to utilize the asset based on historical profitability and, as such, provided a val-
uation allowance on this asset during the quarter. The valuation allowance relates to future tax asset recorded in the Circa Metals seg-
ment.
In Q4 2008, the Company recorded an impairment charge on its property, plant and equipment of $2.2 million and an impairment
charge on its deferred charges of $0.3 million related to the Circa Metals business. The non-monetary charge was the result of the car-
rying value of these assets exceeding management’s estimates of future cash flows. Consequently, the assets were written down to the
estimated discounted cash flows in 2008.
Outstanding Share InformationAuthorized
Unlimited number of voting common shares
Unlimited number of first preferred shares, issuable in series
Unlimited number of second preferred shares, issuable in series
Issued and Outstanding
9,588,650 common shares
Under a share acquisition plan approved by the shareholders on June 11, 2007 (the “Acquisition Plan”), each director of the Company
was entitled to purchase common shares utilizing all or a portion of the annual retainer otherwise payable to the director. Common
shares acquired by a director under the Acquisition Plan could be issued from the treasury of the Company or purchased in the mar-
ket by the administrator appointed under the Acquisition Plan. The maximum number of common shares reserved for issuance under
the Acquisition Plan was set at 100,000.
During 2009, 84,900 common shares (2008 – 15,100) were issued under the Acquisition Plan for total consideration of $10,672 or $0.13
per share. The sale price of the common shares issued under the Acquisition Plan was established in accordance with the terms of such
plan and represented the weighted average trading price of the common shares at each date of payment. The issuance of these shares
resulted in the maximum number of shares issuable under the Acquisition Plan being reached and no additional shares are available
for issuance under the Acquisition Plan as at the date hereof.
Under the amended and restated stock option plan approved by the shareholders on June 11, 2007 (the “Option Plan”), the Company
may grant options to its officers, directors, employees and consultants. Options granted under the Option Plan have a maximum term
of ten years, with vesting terms and conditions determined by the board of directors at the time of grant. The price at which common
shares may be acquired upon the exercise of options granted under the Option Plan may not be less than the market price of the com-
mon shares at the date of grant. At December 31, 2009, 958,865 common shares remained reserved under the Option Plan.
No options were granted during the year ended December 31, 2009 and all 20,000 options outstanding as at December 31, 2008 were
terminated during 2009.
72009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
CONSOLIDATED BALANCE SHEETS
At December 31, 2009, the Company's working capital, defined as current assets less current liabilities, stood at $4.3 million. The reduc-
tion in net working capital from the December 31, 2008 balance of $4.6 million was primarily the result of a significant reduction in
inventory, which was partially offset by a reduction in bank indebtedness and accounts payable. During the year, the Company reduced
its inventory through changes in its purchasing and production methods and consolidation of its distribution functions. This reduction
in inventory allowed the Company to free up cash flow that was used to reduce bank indebtedness and accounts payable.
Accounts receivable was relatively unchanged from a balance of $3.9 million at December 31, 2008 to $3.6 million at December 31,
2009, despite lower sales. During 2009, the Company and its subsidiaries eliminated many of the early payment discounts previously
offered to customers, which resulted in longer payment terms and slower collections. Accounts payable decreased from $3.7 million
to $2.4 million during 2009, which was principally attributable to lower sales and production activity.
The Company's bank indebtedness at December 31, 2009 was $3.4 million – a decrease in the operating line of credit of $0.5 million from
the balance outstanding as of December 31, 2008. $1.0 million of such bank indebtedness was attributable to the repayment, in 2007, of
the balance then owing on the Company's term loan facility. The repayment of that balance enabled Circa to consolidate its borrowings
under one facility and eliminated the requirement for fixed repayment terms. The decrease in bank indebtedness during Q4 2009
(September 30, 2009 balance of $3.6 million) resulted from the generation of positive cash from operations during the quarter.
Circa maintains access to capital through its line of credit, which is available to meet short term operating and capital requirements.
In addition, the Company relies upon cash from its operating activities in order to meet its obligations and fund working capital and
investment objectives. At times, the Company has relied upon its operating line of credit to fund its operating losses and meet its obli-
gations as they become due.
In 2010, the Company plans on investing $154,000 in capital expenditures related to property, plant and equipment. It is expected that
these expenditures will be funded with operating cash flow.
Contractual ObligationsAt December 31, 2009, the Company had entered into contractual obligations as detailed below.
($000’s) Payments Due by Period
Less than 1 year 1–3 years 4–5 years After 5 years Total
Operating Leases 1,523 3,569 1,959 326 7,377
During 2009, the Company incurred capital expenditures of $47,000 (2008 – $453,000) for property, plant and equipment. At December 31,
2009, there were no outstanding commitments to purchase property, plant and equipment.
CONSOLIDATED STATEMENTS OF CASH FLOWS
The net inflow from operating activities for Q4 2009 was $0.3 million, compared to a cash outflow of $0.1 million in Q4 2008. This
inflow was largely attributable to the generation of positive cash from operating activities, as the Company experienced improved
operating margins and significantly reduced costs as compared to the prior year.
Cash outflows from operating activities for the year ended December 31, 2009 totaled $0.2 million, as the Company incurred significant
operating losses in Q1 2009, but recovered a significant portion of those cash losses in the remaining three quarters. Poor sales, com-
bined with a high cost structure resulted in a cash deficit from operations of $0.8 million at March 31, 2009. This shortfall was covered
by working capital and the Company’s operating line of credit. Management responded by implementing aggressive restructuring activ-
ities designed to reduce the Company’s expenses, increase gross profit and streamline operations. As a result of initiatives implement-
ed subsequent to Q1 2009, the Company was able to generate positive cash from operations in the subsequent three quarters.
82009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
For the year ended December 31, 2009, inventory decreased by $1.6 million. The decrease resulted from reduced production in
response to lower activity levels and more effective production processes. Accounts receivable balances decreased $0.2 million as sales
were lower; however, this was offset by a slower receivables cycle as customers extended their payment terms in response to the reduc-
tion and elimination of early payment discounts offered by the Company and its subsidiaries.
The Company maintains access to a credit facility of up to $6.0 million, which is subject to borrowing base requirements and report-
ing and general covenants that may act to restrict the amount the Company can borrow at any given time. At December 31, 2009, the
amount available under this facility was approximately $5.1 million, of which $3.4 million was drawn.
There were no material financing activities undertaken in 2009.
The net outflow of funds for investing activities was the result of the purchase of property, plant and equipment along with an addi-
tion to deferred charges for new product development. The cash outflow from these activities was $21,000 in the quarter ended
December 31, 2009 and $101,000 the year ended December 31, 2009.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no outstanding off-balance sheet arrangements.
RELATED PARTY TRANSACTIONS
The Company did not undertake any material related party transactions during the fourth quarter of 2009 or the year ended
December 31, 2009.
CHANGES IN ACCOUNTING POLICIES
Changes in the current yearGoodwill and Intangible Assets
Effective January 1, 2009, the Company adopted CICA Handbook Section 3064 “Goodwill and Intangible Assets” which incorporates
guidance to clarify the recognition of intangible assets and address the recognition and measurement of internally developed intan-
gible assets. The adoption of Section 3064 has not affected the Company’s financial statements.
Emerging Issues Committee (“EIC”)-173 “Credit Risk and the Fair Value of Financial Assets and Financial Liabilities”
Effective January 1, 2009, the Company adopted EIC-173, which was issued on January 20, 2009. EIC-173 requires that the Company’s
own credit risk and the credit risk of its counterparties be taken into account in determining the fair value of a financial instrument.
The adoption of EIC-173 has not affected the Company’s financial statements.
Financial Instruments
Effective September 30, 2009, the Company adopted the amendments to CICA Handbook Section 3862 “Financial Instruments –
Disclosures”. These amendments, in some circumstances, include additional disclosure requirements concerning the fair value meas-
urement of financial instruments and enhancements of liquidity risk disclosures. The adoption of Section 3862 has not affected the
Company’s financial statements.
Future changes
International Financial Reporting Standards
In October 2009, the Accounting Standards Board (“AcSB”) issued a third and final International Financial Reporting Standards (“IFRS”)
Omnibus Exposure Draft confirming that publicly accountable enterprises will be required to apply IFRS, in full and without modifica-
tion, commencing on January 1, 2011. The adoption date of January 1, 2011 will require the restatement, for comparative purposes,
of amounts reported by the Company for its year ending December 31, 2010, including the opening balance sheet as at January 1,
2010. The AcSB proposes that CICA Handbook Section 1506 “Accounting Changes”, which requires an entity to disclose information
92009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
relating to a new primary source of GAAP, not be applied with respect to the IFRS Omnibus Exposure Draft. Consequently, the
Company does not intend to disclose the full impact of the transition to IFRS in publicly available financial statements prior to 2011.
The Company is continuing to assess the financial reporting effects of adopting IFRS in 2010.
The Company does not expect to derecognize amounts previously recorded as impairment charges, nor does it expect to change the
manner in which it will measure and recognize property, plant and equipment, deferred charges and intangible assets. The Company
does anticipate a significant increase in financial statement disclosure resulting from the adoption of IFRS and is continuing to assess
the level of disclosure required as well as systems changes that may be necessary to gather the required information.
IFRS Conversion Project
The Company’s IFRS conversion consists of three phases: Preliminary Impact Assessment, Detailed Analysis and Implementation.
Phase One: Preliminary Impact Assessment, which involved project planning and identification of differences between GAAP and IFRS,
has been completed. The assessment identified the following areas of accounting differences that are expected to have the greatest
effect on the Company based on existing IFRS, being: impairment of assets; componentization of property, plant and equipment; for-
eign subsidiary currency translation; first time adoption and deferred taxes.
a) Impairment of assets – Under IFRS, determining impairment of assets is a one-step approach for testing and measuring asset
impairment, with asset carrying values being compared to the higher of value in use and fair value less costs to sell. Value in use
is defined as the present value of future cash flows expected to be derived from the asset in its current state. In the absence of an
active market, fair value less costs to sell may also be determined using discounted cash flows. The use of discounted cash flows
under IFRS to test and measure asset impairment differs from GAAP, which features a two-step process whereby undiscounted
future cash flows are first used to compare against the asset’s carrying value to determine if impairment exists. This may result in
more frequent write-downs in the carrying value of assets under IFRS since asset carrying values that were previously supported
under GAAP based on undiscounted cash flows may not be supported on a discounted cash flow basis under IFRS. However, under
IFRS, with the exception of goodwill, previous impairment losses may be reversed where circumstances change such that the
impairment has reduced. This differs from GAAP, which prohibits the reversal of previously recognized impairment losses. The
Company has not determined whether this will affect previously recorded impairment losses.
b) Property, plant and equipment – IFRS and GAAP contain the same basic principles of accounting for property, plant and equip-
ment; however, differences in application exist. The Company expects there may be changes in accounting as IFRS requires the
Company to allocate the amount initially recognized in respect of property, plant and equipment to its significant parts and to
depreciate each such part separately. This method of componentization may result in an increase in the number of component
parts and a change in the amount of depreciation expense.
c) Foreign subsidiary currency translation – IFRS requires that when the results of a foreign operation are converted from a func-
tional currency into a different presentation currency, assets and liabilities be translated at the closing rate on the reporting date;
income and expenses be translated at exchange rates at the dates of transactions and all resulting differences be recognized in
other comprehensive income. Under GAAP, the Company uses the temporal method for its foreign subsidiary in which all mone-
tary assets and liabilities denominated in foreign currency are translated into Canadian dollars at the rate of exchange in effect
at the balance sheet date. Non-monetary assets and liabilities are translated at historic exchange rates. Revenue and expense
items, excluding depreciation and amortization, are translated at the average rate of exchange for the period. This method may
change the translation adjustment.
d) First-time adoption – IFRS provides a framework for the first time adoption of IFRS and specifies that, in general, an entity shall
apply the principles under IFRS retrospectively. IFRS 1 also specifies that the adjustments that arise on retrospective conversion to
IFRS from other GAAP should be directly recognized in retained earnings. Certain optional exemptions and mandatory exceptions
to retrospective application are provided for under IFRS. The Company has not completed an analysis of the first time adoption
of IFRS and the exemptions that will be applicable to the Company.
102009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
e) Deferred taxes – IFRS requires that an entity account for the tax consequences of transactions and other events in the same way
that it accounts for the transactions and other events themselves. Therefore, where transactions and other events are recognized
in earnings, the recognition of deferred tax assets or liabilities that arise from those transactions should also be recorded in earn-
ings. For transactions that are recognized outside of the statement of earnings, either in other comprehensive income or directly
in equity, any related tax effects should also be recognized outside the statement of earnings.
The affect on the Company of accounting for the tax consequences of transactions and other events under IFRS versus GAAP can-
not be determined at this time as many of the changes will depend on the accounting policy decisions made under other standards.
Phase Two: Detailed Analysis, involves more detailed analysis of the impact of each IFRS standard. This includes analyzing the impact
of differences, preparing position papers, drafting either pro-forma or mock financial statements and identifying the effect of IFRS on
systems and processes. The Company has recently begun this phase and expects to complete the phase by September 30, 2010.
The Company expects to use internal human resources to complete much of the detailed work involved in Phase Two and has begun
training for key personnel involved in the implementation of IFRS. In addition, management expects to engage an external account-
ing firm to assist with this phase.
Phase Three: Implementation, involves the preparation of an opening balance sheet as at January 1, 2010 and comparative financial
statements for the interim and annual periods in 2011, beginning with the three month period ended March 31, 2011.
The Company will continue to analyze the impact of IFRS on its accounting policies and internal controls, including its information sys-
tems and human resources.
RISKS AND UNCERTAINTIES
Ongoing business risks and uncertainties that may have an affect on the Company's business include the following.
Foreign Currency ExchangeCirca is exposed to foreign currency risk due to its export of Canadian manufactured goods. The timing of foreign exchange rate fluc-
tuations can have a significant effect on Circa's operating results, the effect and magnitude of which depend on the product mix of
sales and materials purchased. During the year ended December 31, 2009, the Canadian/U.S. dollar exchange rate fluctuated between
$0.77 and $0.97 as compared to an average of $0.94 in 2008. Movement in the U.S. dollar can affect sales reported in Canadian dol-
lars and resulting gross profits. As well, Circa must translate the accounts of Circa USA to Canadian dollars for financial reporting pur-
poses. The significant non-monetary foreign currency translation gains and losses recorded in 2007, 2008 and 2009 illustrates the expo-
sure to this particular risk.
Economic ClimateCirca's surge protection business in the U.S. is substantially driven by economic conditions and any downturn in the U.S. economy has
historically represented a business risk for Circa. The current ongoing weakness in the U.S. economy is an example of a situation having
a significant negative effect on Circa's marketing and sales efforts. Continued weakness in the North American economy in general, the
U.S. residential and commercial construction sectors in particular and the impact of changing lending rates affecting construction activ-
ity are expected to have an adverse effect on sales of surge protection equipment to U.S. markets and that effect may be material.
Additional Capital RequirementsCirca may be required to raise additional capital in the future to fund operations or acquisitions. The availability of future borrowings
and access to capital markets depends on prevailing market conditions and the acceptability of financing terms offered to Circa. There
can be no assurance that future borrowings or equity financing will be available to Circa, or available on acceptable terms, in amounts
sufficient to fund its needs.
112009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
Customer Concentration and Customer CreditThe wide range of customers that purchase products from members of the Circa Group has helped to mitigate the Circa Group's expo-
sure to any one customer or small group of customers. Nonetheless, the top five customers of the Circa Group accounted for 49% of
consolidated sales in 2009. Economic weakness may adversely affect the financial condition of certain Circa Group customers, which,
in turn, could create uncertainty with respect to the collection of receivables.
Raw MaterialsThe price of raw materials, in particular plastic, steel and copper, represent a significant portion of the manufacturing costs incurred
by members of the Circa Group. There is considerable volatility in the price of these products, which is outside the control of the
Company and its subsidiaries. Significant price volatility or raw materials disruptions or shortages would be detrimental to the opera-
tions of the Circa Group, and the effect could be material.
Product MarketSales of surge protection equipment and related devices continue to be a significant contributor to overall consolidated sales and net
earnings. Electrical codes in Canada and the United States require the use of the types of products supplied by the Company and its
subsidiaries and, while other forms of communication transmission, such as voice over internet, wireless and fiber optic cable, may not
require the installation of surge protection equipment. Changes in building codes or the widespread adoption of forms of communi-
cation transmission that do not entail the use of surge protection equipment could materially adversely affect the volumes of surge
protection products sold by members of the Circa Group and could materially adversely affect the financial condition, liquidity and
results of operations of the Company.
Although many applications continue to rely upon copper-based solutions, a significant shift to communication transmission systems
that do not use copper infrastructure could have a material adverse effect on the business of the Company.
Reliance on Telecommunications IndustryThe Company's core surge protection business is dependent on the North American telecommunications industry and sales are influ-
enced by economic and other factors affecting that industry. In particular, demand for telecom products is driven primarily by the
installation of telecommunications infrastructure, which in turn is strongly influenced by commercial construction activity. Accordingly,
the strength of the North American economy, job growth, the level of consumer confidence, availability of consumer credit, fluctua-
tions in interest rates, demographics and migration of populations all have an indirect affect on the Company's operations. The cur-
rent ongoing economic slowdown has had, and the continuation or intensification of that slowdown will have, an adverse effect on
commercial building activity, particularly in the United States. Any sustained slowdown in commercial building activity will adversely
affect the Company's business, financial condition, liquidity and results of operations and the effect may be material.
CompetitionThe markets for products manufactured and distributed by members of the Circa Group is highly competitive, and a number of com-
petitors in those markets have longer operating histories, greater name recognition, larger customer bases and greater financial, tech-
nical, engineering, product development and marketing resources than members of the Circa Group. These resources may allow them
to respond more quickly than members of the Circa Group to new or emerging technologies and to changes in customer requirements.
It also allows them to devote greater resources to the development, promotion and sale of their products. An inability to compete
with other suppliers in the markets in which members of the Circa Group are active will adversely affect the Company's business, finan-
cial condition, liquidity and results of operations and the effect may be material.
Reliance on Manufacturing FacilitiesMembers of the Circa Group manufacture a significant percentage of the products sold by them at facilities owned by the Company
and Circa Metals. The manufacturing operations of Circa Group members use certain equipment, which, if damaged or otherwise ren-
dered inoperable or unavailable, could result in a material disruption in those operations. Any interruption of operations at a manu-
facturing facility could have a material adverse effect on Circa's consolidated financial condition, liquidity and results of operations.
122009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
Members of the Circa Group utilize certain contract manufacturers in China to manufacture products. While Circa maintains contact
with alternative manufacturers in China that could produce products for members of the Circa Group, if any of the current contract
manufacturers were rendered inoperable or otherwise became unable to supply Circa with product, this could represent a significant
disruption to product availability and could disrupt relationships between members of the Circa Group and their customers and have
an adverse affect on the Circa Group's reputation as a reliable supplier.
Further risks are disclosed in the Company's Annual Information Form which is available on SEDAR at www.sedar.com.
OUTLOOK
Although the North American economy has started to show signs of recovery, the Company continues to face challenges in both its
surge protection and Circa Metals businesses. Throughout 2009, the Company made efforts to cut its costs by reducing staff levels, con-
solidating locations and streamlining activities, with a view to improving operating results and mitigating the effects of the North
American economic slowdown. The major initiatives identified by management in 2009 were completed prior to year-end and have
had a positive effect on the Company's results of operations. The Company expects to continue to refine operations in 2010 and con-
sider initiatives to increase topline sales.
Management believes the market for the products distributed by members of the Circa Group will slowly improve during 2010 and
that cost reduction initiatives implemented during 2009 have positioned the Company to benefit from any increase in residential and
commercial construction activity associated with improvement in the North American economy. The Company continues to evaluate
opportunities to leverage its existing capabilities and distribution networks in an effort to generate further sales and new opportuni-
ties. The sales and marketing efforts in 2010 will include a focus on increasing sales by expanding into new markets.
132009 Annual ReportCirca Enterprises Inc.
Management’s Statement of ResponsibilityTo the shareholders of Circa Enterprises Inc. (“Circa”):
The management of Circa is responsible for the preparation and presentation of the accompanying consolidated financial statements,including responsibility for significant accounting judgements and estimates in accordance with Canadian generally accepted accountingprinciples. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the meas-urement of transactions in which objective judgement is required.
In discharging its responsibilities for the integrity and fairness of the consolidated financial statements, management designs and maintainsnecessary accounting systems and related internal controls to provide reasonable assurance that transactions are authorized, assets are safe-guarded and financial records are properly maintained to provide reliable information for the preparation of financial statements.
The Board of Directors and the Audit Committee are composed primarily of Directors who are neither management or employees of theCompany. The Board is responsible for overseeing management in the performance of its financial reporting responsibilities, and forapproving the financial information included in the annual report. The Audit Committee has the responsibility of meeting with manage-ment and external auditors to discuss the internal controls over the financial reporting process, auditing matters and financial reportingissues. The Board is also responsible for recommending the appointment of the Company’s external auditors.
Meyers Norris Penny LLP, an independent firm of Chartered Accountants, is appointed by the shareholders to audit the consolidated finan-cial statements and report directly to them; their report follows. The external auditors have full and free access to, and meet periodicallyand separately with, both the Audit Committee and management to discuss their audit findings.
Ivan W. Smith Cory TamagiPresident and Chief Executive Officer Vice-President, Finance and Chief Financial Officer
March 18, 2010 March 18, 2010
Management Report
To the Shareholders of Circa Enterprises Inc.: We have audited the consolidated balance sheet of Circa Enterprises Inc. as at December 31, 2009 and the consolidated statements ofloss, comprehensive loss and retained earnings and cash flows for the year then ended. These consolidated financial statements are theresponsibility of the company’s management. Our responsibility is to express an opinion on these consolidated financial statementsbased on our audit.
We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan andperform an audit to obtain reasonable assurance whether the consolidated financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. Anaudit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating theoverall consolidated financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the company asat December 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance with Canadian gener-ally accepted accounting principles.
The consolidated financial statements as at December 31, 2008 and for the year then ended were audited by other auditors whoexpressed an opinion without reservation on those financial statements in their reported dated March 24, 2009.
Calgary, ABMarch 17, 2010 Chartered Accountants
Audit Report
142009 Annual ReportCirca Enterprises Inc.
(000’s of Canadian dollars)
2009 2008
As at December 31 $ $
ASSETS
Current
Cash 350 520
Accounts receivable 3,588 3,874
Income taxes recoverable 58 176
Inventory (Note 4) 5,842 7,413
Prepaid expenses 295 280
10,133 12,263
Property, plant and equipment (Note 5) 1,086 1,545
Assets held for sale (Note 18) 105 -
Deferred charges (Note 6) 286 334
Intangible assets (Note 7) 17 5
Future income taxes (Note 9) 782 1,305
12,409 15,452
LIABILITIESCurrent
Bank indebtedness (Note 8) 3,391 3,930
Accounts payable and accrued liabilities 2,476 3,745
5,867 7,675
Future income taxes (Note 9) 38 53
5,905 7,728
SHAREHOLDERS’ EQUITYShare capital (Note 10) 2,710 2,699
Contributed surplus 2 2
Retained earnings 3,792 5,023
6,504 7,724
12,409 15,452
Commitments (Note 12)
See accompanying notes to the consolidated financial statements
Approved by the Board
Ivan W. Smith, Director Warren White, Director
March 18, 2010 March 18, 2010
Consolidated Balance Sheets
152009 Annual ReportCirca Enterprises Inc.
(000’s of Canadian dollars, except per share amounts)
2009 2008
Years ended December 31 $ $
SALES 26,302 34,417
COST OF SALES
Direct costs 20,373 28,334
Depreciation and amortization 168 533
5,761 5,550
EXPENSES
Selling, general and administrative 4,720 6,353
Depreciation and amortization 264 331
Restructuring costs (Note 17) 734 -
Interest 103 168
Property, plant and equipment impairment charge (Note 5) - 2,152
Deferred charges impairment charge (Note 6) - 273
Loss on disposal of assets 53 13
Foreign currency translation loss (gain) 516 (707)
6,390 8,583
LOSS BEFORE INCOME TAXES (629) (3,033)
PROVISION FOR (RECOVERY OF) INCOME TAXES (Note 9)
Current 94 245
Future 508 (1,362)
602 (1,117)
NET LOSS AND COMPREHENSIVE LOSS (1,231) (1,916)
RETAINED EARNINGS, BEGINNING OF YEAR 5,023 6,939
RETAINED EARNINGS, END OF YEAR 3,792 5,023
LOSS PER SHARE (Note 11)
Basic and diluted (0.13) (0.20)
See accompanying notes to the consolidated financial statements
Consolidated Statements of Loss and Comprehensive Loss and Retained Earnings
162009 Annual ReportCirca Enterprises Inc.
(000’s of Canadian dollars)
2009 2008
Years ended December 31 $ $
CASH FLOWS RELATED TO THE FOLLOWING ACTIVITIES:
OPERATING
Net loss (1,231) (1,916)
Adjustments for:
Depreciation and amortization 432 864
Loss on disposal of assets 53 13
Property, plant and equipment impairment charge (Note 5) - 2,152
Deferred charges impairment charge (Note 6) - 273
Stock compensation expense - 2
Future income taxes 508 (1,362)
(238) 26
Changes in non-cash working capital (Note 14) 715 (1,510)
477 (1,484)
FINANCING
Proceeds from issuance of share capital (Note 10) 11 10
(Decrease) increase in bank indebtedness (539) 2,307
(528) 2,317
INVESTING
Purchase of property, plant and equipment (Note 5) (47) (453)
Proceeds from sale of property, plant and equipment 6 1
Additions to deferred charges (40) (110)
Additions to intangible assets (14) -
Changes in non-cash working capital (Note 14) (24) 51
(119) (511)
NET (DECREASE) INCREASE IN CASH (170) 322
CASH, BEGINNING OF YEAR 520 198
CASH, END OF YEAR 350 520
See accompanying notes to the consolidated financial statements
Supplementary cash flow information (Note 14)
Consolidated Statements of Cash Flows
172009 Annual ReportCirca Enterprises Inc.
(Tabular amounts expressed in 000’s of Canadian dollars)Years ended December 31, 2009 and 2008
1. DESCRIPTION OF BUSINESS
Circa Enterprises Inc. (the “Company” or “Circa”) was incorporated under the Business Corporations Act of the province of Alberta. TheCompany’s operations consist of two distinct business lines. The first being the provision of surge protection and related products, pri-marily to the United States market, the second business line being metal fabrication through its Ontario based subsidiary, Circa MetalsInc. (“Circa Metals”). The surge protection business consists of the design, manufacturing, marketing and sale of surge protection prod-ucts which provide primary protection to telephone systems and data transmission against voltage surges. Circa Metals provides custommetal fabrication services as well as fabricated enclosures, pole line hardware and other products to the Canadian electrical industry.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of presentationThese consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles andinclude the accounts of the Company and its wholly-owned subsidiaries, Circa Telecom (U.S.A.), Inc. (“Circa U.S.A.”) and Circa Metals.Certain comparative figures have been reclassified to conform to the current year presentation. All intercompany transactions are elim-inated on consolidation.
Measurement uncertaintyThe valuation of accounts receivable, inventory, property, plant and equipment, intangible assets, and deferred charges is based uponmanagement’s best estimate of the future recoverability of these assets. The amounts recorded for amortization of the property, plantand equipment, intangible assets, and deferred charges are based upon management’s best estimate of the remaining useful life, peri-od of future benefit of the related assets, future profitability and salvage value.
The amounts recorded for future income taxes are based on estimates of the Company’s ability to utilize un-deducted tax pools and losscarry-forwards.
By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of future changes insuch estimates could be material.
Foreign currency translationThe Company’s foreign subsidiary, Circa U.S.A., is considered financially and operationally dependent on the parent Company and, assuch, is accounted for as an integrated operation whereby its accounts are translated into Canadian dollars using the temporal method.
All monetary assets and liabilities denominated in United States (“U.S.”) currency are translated into Canadian dollars at the rate ofexchange in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historic exchange rates. Revenue andexpense items, excluding depreciation and amortization, are translated at the average rate of exchange for the period.
Depreciation and amortization is translated at the same rates as the related assets. Translation exchange gains and losses are reflected inoperations.
CashCash represents cash on hand, and balances with banks.
InventoryRaw materials are valued at the lower of standard cost, which approximates actual cost, and net realizable value. Finished goods andwork in process are valued at the lower of standard cost and net realizable value. Standard cost, which approximates actual cost, includesraw material, labour, and manufacturing overhead.
Notes to the Consolidated Financial Statements
182009 Annual ReportCirca Enterprises Inc.
Notes to the Consolidated Financial Statements
The Company reverses previously recorded write-downs to realizable value when there is clear evidence that net realizable value has increased.
Property, plant and equipmentProperty, plant and equipment are initially stated at cost. Depreciation and amortization of these assets has been calculated over the esti-mated useful lives on the basis and rates indicated below:
Basis RateEquipment Declining-balance and straight-line 6-20% or 3-17 yearsOffice equipment Declining-balance and straight-line 20-30% or 3-5 yearsLeasehold improvements Straight-line Over the term of the lease
The Company evaluates the carrying value of property, plant and equipment whenever events or changes in circumstances indicate thatthe carrying value may not be recoverable. An impairment loss is recognized when the carrying amount of property, plant and equip-ment exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition, and is measured as theamount by which the carrying amount exceeds its fair value.
Asset retirement obligationThe Company records the fair value of an asset retirement obligation as a liability in the period in which it incurred a legal obligationassociated with the retirement of tangible long-lived assets that result from the acquisition, construction, development, and/or normaluse of the assets and when a reasonable estimate of the fair value can be made. The obligation will be measured initially at fair valueusing present value methodology, and the resulting costs capitalized into the carrying amount of the related asset. In subsequent peri-ods, the liability will be adjusted for any changes in the amount or timing of the underlying future cash flows.
Capitalized asset retirement costs will be depreciated on the same basis as the related asset and any discount accretion of the liability isincluded in determining the results of future operations.
The Company has obligations with respect to the retirement of leasehold improvements at maturity of facility leases and the restorationof facilities to their original state at the end of the lease term. Accruals are made based on management’s estimates of current marketrestoration costs and represent fair value. The obligations are not significant to the financial statements and have been grouped withaccounts payable and accrued liabilities.
Deferred chargesDeferred charges are expensed in the period incurred unless the Company believes the development project meets Canadian generallyaccepted accounting criteria for deferral and amortization. In evaluating these criteria the Company considers among other factors tech-nological feasibility and evidence to support clearly defined market prospects.
Deferred costs not yet commercialized are not amortized. Costs which are deferred and have been commercialized are amortized on astraight-line basis over the product’s estimated economic life.
Deferred development costs are reduced by related government grants and investment tax credits available on qualifying scientificresearch and experimental development expenditures. Investment tax credits are recorded when realized.
The carrying value and corresponding amortization period of deferred charges are reviewed annually, or more frequently wheneverevents or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment loss is recognized whenthe carrying amount of patents and product certification costs exceeds the sum of the undiscounted cash flows expected to result fromits use and eventual disposition, and is measured as the amount by which the carrying amount exceeds its fair value.
Intangible assetsThe Company amortizes patents and product certification costs over 5 to 17 years on a straight-line basis, relating to the life of thepatents and product certifications.
The carrying value and corresponding amortization period of intangible assets are reviewed annually, or more frequently wheneverevents or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment loss is recognized whenthe carrying amount of patents and product certification costs exceeds the sum of the undiscounted cash flows expected to result fromits use and eventual disposition, and is measured as the amount by which the carrying amount exceeds its fair value.
Revenue recognitionThe Company recognizes revenue when the product is shipped and ownership is transferred to the customer and the price charged tocustomers is fixed and determinable and collectability is reasonably assured.
192009 Annual ReportCirca Enterprises Inc.
Notes to the Consolidated Financial Statements
Transfer pricingThe Company has conducted a study of its internal policies with respect to cross-border transfer pricing on surge protection sales betweenCanada and the United States. The consolidated income tax provision provided herein has been based on management’s best estimateof the pricing as documented in its transfer pricing study.
All other intersegment sales are recorded at the exchange amount which approximates amounts charged to or by unrelated parties.
Income taxesThe Company follows the asset and liability method of accounting for income taxes. Under this method the Company records futureincome taxes based on differences between the accounting and income tax basis of an asset or liability. The effect of a change in incometax rates on future income tax liabilities and assets is recognized in operations in the period that the change occurs. A valuation allowanceis established to reduce future income tax assets if, on the basis of available evidence, it is more likely than not that all or a portion ofany future tax asset will not be realized.
Stock-based compensation plansStock options granted to directors, officers, employees and consultants are accounted for using the fair value method. Under this method,the fair value of the stock option is estimated at the grant date and the total fair value of the options is amortized over the vesting peri-od as compensation expense with an offset to contributed surplus. When options are exercised, contributed surplus is reversed and theamounts for the shares issued are credited to share capital.
Share acquisition planUnder the terms of the share acquisition plan, common shares may be issued at fair value from the treasury of the Company or may bepurchased in the market by a plan administrator under the direction of the board of directors. If the shares are issued from treasury, thefair value is calculated as the weighted average trading price per share for the common shares for the 10 consecutive trading days pre-ceding the date the director provides notification to the Company in accordance with the plan.
Earnings (loss) per shareBasic earnings (loss) per share is calculated based on the weighted average number of common shares outstanding during the year.Diluted earnings per share is calculated based on the treasury stock method which takes into consideration the dilutive effect of thepotential exercise of stock options as though they occurred at the beginning of the year.
Comprehensive IncomeComprehensive Income is comprised of net earnings and other comprehensive income (“OCI”), which represents changes in retainedearnings during a period arising from transactions and other events with non-owner sources. OCI generally would include unrealizedgains and losses on financial assets classified as available-for-sale, unrealized foreign currency translation adjustments arising from self-sustaining foreign operations and changes in the fair value of the effective portion of cash flow hedging instruments. For the years endedDecember 31, 2009 and 2008, there were no other comprehensive income items.
Financial instrumentsAll financial instruments must initially be recognized at fair value on the balance sheet. The Corporation has classified each financialinstrument into the following categories:
Financial assets and financial liabilities held for trading;Loans or receivables;Held to maturity;Financial assets available for sale; andOther financial liabilities.
Subsequent measurement of the financial instruments is based on their classification. Financial assets and financial liabilities held for trad-ing are measured at fair value and changes in those fair values are recognized in operations. Financial assets available for sale are measured at fair value, with changes in those fair values recorded directly in OCI. Loans or receivables and other financial liabilities aremeasured at amortized cost using the effective interest rate method of amortization. The Company has classified all financial assets asloans or receivables, with the exception of cash which has been classified as held-for-trading and buildings which are held as availablefor sale. The Company has classified all financial liabilities as other financial liabilities.
202009 Annual ReportCirca Enterprises Inc.
Notes to the Consolidated Financial Statements
3. CHANGES IN ACCOUNTING POLICIES
Changes in the current yearGoodwill and Intangible AssetsEffective January 1, 2009, the Company adopted CICA Handbook Section 3064 “Goodwill and Intangible Assets” which incorporates guid-ance to clarify the recognition of intangible assets and address the recognition and measurement of internally developed intangibleassets. The adoption of Section 3064 has not impacted the Company’s financial statements.
Emerging Issues Committee (“EIC”)-173 “Credit Risk and the Fair Value of Financial Assets and Financial Liabilities”Effective January 1, 2009, the Company adopted the new EIC-173, which was issued on January 20, 2009. EIC-173 requires that theCompany’s own credit risk and the credit risk of its counterparties be taken into account in determining the fair value of a financial instru-ment. There was no effect on the Company’s financial statements as result of adopting EIC-173.
Financial InstrumentsEffective September 30, 2009 the Company adopted the amendments to CICA Handbook Section 3862 “Financial Instruments –Disclosures”. These amendments, in some circumstances, include additional disclosure requirements about the fair value measurement offinancial instruments and enhancements of liquidity risk disclosures. There was no effect on the Company’s financial statements as a resultof adopting the amendments to Section 3862.
Future changesInternational Financial Reporting StandardsIn October 2009, the Accounting Standards Board (“AcSB”) issued a third and final International Financial Reporting Standards (“IFRS”)Omnibus Exposure Draft confirming that publicly accountable enterprises will be required to apply IFRS, in full and without modification,on January 1, 2011. The adoption date of January 1, 2011 will require the restatement, for comparative purposes, of amounts reportedby the Company for its year ended December 31, 2010, including the opening balance sheet as at January 1, 2010. The AcSB proposesthat CICA Handbook Section 1506 “Accounting Changes”, which would require an entity to disclose information relating to a new pri-mary source of GAAP that has been issued but is not yet effective and that the entity has not applied, not be applied with respect to theIFRS Omnibus Exposure Draft. Consequently, the Company does not intend to disclose the full impact of the transition to IFRS in publiclyavailable financial statements prior to 2011. The Company is continuing to assess the financial reporting impacts of adopting IFRS in 2010.
The Company does not expect to derecognize amounts previously recorded as impairment charges, nor does it expect to change themanner in which it will measure and recognized property, plant and equipment, deferred charges and intangible assets. The Companydoes anticipate a significant increase in disclosure resulting from the adoption of IFRS and is continuing to assess the level of disclosurerequired as well as systems changes that may be necessary to gather the required information.
4. INVENTORY
2009 2008$ $
Raw materials 2,625 2,585Work in process 243 468Finished goods 2,974 4,360
5,842 7,413
During the year, the Company expensed $20.4 million (2008 - $28.3 million) of inventory which is included in cost of sales.
212009 Annual ReportCirca Enterprises Inc.
Notes to the Consolidated Financial Statements
5. PROPERTY, PLANT AND EQUIPMENT
December 31, 2009AccumulatedDepreciation Net Book
Cost and Amortization Value$ $ $
Equipment 4,434 3,592 842Office equipment 1,544 1,417 127Leasehold improvements 1,000 883 117
6,978 5,892 1,086
December 31, 2008AccumulatedDepreciation Net Book
Cost and Amortization Value$ $ $
Land and building 157 45 112Equipment 5,394 4,353 1,041Office equipment 1,691 1,459 232Leasehold improvements 1,000 840 160
8,242 6,697 1,545
Depreciation amounted to $342,265 (2008 - $705,949), of which $168,041 (2008 - $417,440) is included in cost of sales.
In 2008, a non-cash impairment charge of $2,151,523 was recorded which reduced the book value of property, plant and equipment asmanagement concluded that the carrying value of property, plant and equipment exceeded its fair value.
6. DEFERRED CHARGES
December 31, 2009Accumulated Net Book
Cost Amortization Value$ $ $
Deferred development costs 1,040 754 286
December 31, 2008Accumulated Net Book
Cost Amortization Value$ $ $
Deferred development costs 1,000 666 334
Amortization of the deferred development costs for the year amounted to $87,974 (2008 - $155,757), of which $nil (2008 - $116,007) isincluded in cost of sales. During the year, $39,736 (2008 - $110,051) of internal engineering wages and overhead costs were capitalizedas deferred development costs. At December 31, 2009 the amount of deferred development costs that were not subject to amortizationas the related project was not yet commercialized was $105,356 (2008 - $280,377).
In 2008, a non-cash impairment charge of $273,477 was recorded which reduced the book value of pre-operating costs, a component ofdeferred charges related to the Circa Metals’ division, as management concluded that the carrying value of the pre-operating costsexceeded its fair value.
222009 Annual ReportCirca Enterprises Inc.
Notes to the Consolidated Financial Statements
7. INTANGIBLE ASSETS
December 31, 2009Accumulated Net Book
Cost Amortization Value$ $ $
Patents and product certification costs 149 132 17
December 31, 2008Accumulated Net Book
Cost Amortization Value$ $ $
Patents and product certification costs 135 130 5
Amortization for the year amounted to $1,394 (2008 - $2,611).
8. BANK INDEBTEDNESS
The Company has a Canadian currency revolving credit facility from a Canadian chartered bank of up to $6,000,000 (or the equivalent inU.S. currency). The credit facility is secured by a general security agreement covering all assets of the Company, a guarantee and subor-dination agreement in the amount of $6,100,000 signed by Circa USA, a guarantee and postponement of claim in the amount of$6,100,000 signed by Circa Metals, and a general security agreement covering all assets of Circa USA and Circa Metals. At December 31,2009 the Company was in compliance with all covenants related to this credit facility.
The aggregate borrowings outstanding under this facility, in excess of $1,000,000, are subject to borrowing base provisions supported byeligible accounts receivable and inventory that is available for prime-based loans and/or letters of credit/guarantee and/or bankers’acceptances. At December 31, 2009, the amount available under this facility was approximately $5,140,000. The credit facility bears inter-est at prime plus 0.25% (2.50% at December 31, 2009 and 3.75% at December 31, 2008).
The drawings against this facility as at December 31, 2009 were $3,275,000 (December 31, 2008 - $3,665,000). In addition, on December 31,2009 the Company reclassified, on a net basis, negative Canadian cash balances of $116,000 (December 31, 2008 - $265,000) to bank indebtedness.
9. INCOME TAXES
The provision for income taxes differs from the amounts that would have resulted from the combined federal and provincial statutorytax rates. The main differences are as follows:
2009 2008$ $
Loss before income taxes (629) (3,033)
Expected tax recovery at combined federal and provincial rate of 31.0% (2008 - 31.5%) (195) (955)Increase (decrease) resulting from:
Effect of differential U.S. federal and state income tax on earnings of wholly-owned subsidiary (73) 55Adjustment for difference in estimated future tax rate (23) 137Non-deductible foreign currency translation losses and gains 471 (389)Adjustments for prior year loss filed 160 -Valuation allowance 203 -Other 59 35
Provision for income taxes 602 (1,117)
232009 Annual ReportCirca Enterprises Inc.
Notes to the Consolidated Financial Statements
2009 2008$ $
Future income taxes consist of the following temporary differences:Property, plant and equipment 86 265Deferred charges (72) (83)Intangible assets 17 22Non-capital loss carry-forwards 969 1,051Valuation allowance (203) -Other (53) (3)
744 1,252
The Company has federal non-capital loss carry-forwards totalling $3,952,000 that it may use to offset future taxable income in the CircaEnterprises Inc. and Circa Metals Inc. entities. These losses expire in 2026 to 2029.
Geographical breakdown of future income taxes:Canada 782 1,305USA (38) (53)
744 1,252
10. SHARE CAPITAL
AuthorizedUnlimited number of voting common sharesUnlimited number of first preferred shares, issuable in seriesUnlimited number of second preferred shares, issuable in series
Issued common shares2009 2008
Number Amount Number Amountof shares $ of shares $
Balance, beginning of year 9,504 2,699 9,489 2,689Issued during the year 85 11 15 10Balance, end of year 9,589 2,710 9,504 2,699
Under a share acquisition plan, each director of the Company may acquire common shares of the Company utilizing the proceeds of theannual retainer payable to the director. The common shares acquired by a director under this plan may be issued from the treasury ofthe Company or may be purchased in the market by the plan’s administrator. The maximum number of common shares issuable underthe plan is 100,000.
During the year, the Company issued 84,900 common shares (2008 - 15,100) under the share acquisition plan for total consideration of$10,672 (2008 - $10,890).
Under a stock option plan, the Company may grant options to its officers, directors, employees and consultants. Options granted underthe plan have a maximum term of ten years, with vesting terms and conditions determined by the board of directors when granted. The exercise price of each option shall be no less than the market price of the Company’s shares at the grant date of the options. AtDecember 31, 2009, there were 958,865 common shares reserved for this purpose representing 10% of the issued and outstanding common shares of the Company.
There were no options issued in the year and the Company terminated all 20,000 outstanding options issued during the year endedDecember 31, 2009.
11. LOSS PER SHARE
Basic and diluted loss per share have been calculated using the weighted average number of common shares outstanding during the year,which was 9,541,040 for the year ended December 31, 2009 (2008 - 9,498,307).
242009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
12. COMMITMENTS
The Company is committed to long-term office and manufacturing premises lease payments through 2016. Annual payments requiredfor each of the next five years and thereafter are as follows:
$2010 1,5232011 1,3772012 1,1542013 1,0382014 9792015 and thereafter 1,305
7,376
13. SEGMENTED DISCLOSURES
The Company has business operations in Canada and the U.S.A. engaged in the sale of its surge protection product line (“SurgeProtection”). These operations are reported as one segment. The Company has another reportable segment operating in Canadaengaged in custom metal fabrication and the manufacture of fabricated enclosures, pole line hardware and other products for theCanadian electrical industry (“Metals”). The Company evaluates the segments’ performance based on gross profit.
Year ended December 31, 2009Surge Protection Metals
Canada U.S. Total (Canada) Consolidated$ $ $ $ $
Segment sales 6,032 10,734 16,766 16,148 32,914Intersegment sales 5,106 251 5,357 1,255 6,612Sales 926 10,483 11,409 14,893 26,302Direct costs 7,532 12,841 20,373Depreciation and amortization 123 45 168Gross profit 3,754 2,007 5,761
Total assets 3,224 2,321 5,545 6,864 12,409
Property, plant and equipment 326 88 414 672 1,086
Expenditures on property, plant and equipment
and deferred charges 64 6 70 31 101
Year ended December 31, 2008Surge Protection Metals
Canada U.S. Total (Canada) Consolidated$ $ $ $ $
Segment sales 6,824 16,529 23,353 18,120 41,473Intersegment sales 5,710 136 5,846 1,210 7,056Sales 1,114 16,393 17,507 16,910 34,417Direct costs 13,157 15,177 28,334Depreciation and amortization 109 424 533Gross profit 4,241 1,309 5,550
Total assets 2,642 4,711 7,353 8,099 15,452
Property, plant and equipment 512 196 708 837 1,545
Expenditures on property, plant and equipment
and deferred charges 283 135 418 145 563
Net book value of property, plant and equipment located in Canada and the U.S. amounts to $1,103,250 (2008 - $1,349,184) and $87,531(2008 - $196,424), respectively.
Two customers represented $7,698,000 of total sales during the year (2008 - one customer represented $7,018,000 of total sales).
252009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
14. SUPPLEMENTARY CASH FLOW INFORMATION
2009 2008$ $
Changes in non-cash working capital - operating:Accounts receivable 286 (994)Income taxes recoverable 118 304Inventory 1,571 (987)Prepaid expenses (15) 91Accounts payable and accrued liabilities (1,245) 76
715 (1,510)
Changes in non-cash working capital - investing:Accounts payable related to property, plant and equipment, and deferred charges (24) 51
Interest paid 103 168Income taxes paid 34 201
15. F INANCIAL INSTRUMENTS
Fair valuesThe fair values of financial assets and liabilities included in the consolidated balance sheet are as follows:
2009 2008$ $
Held for trading:Cash 350 520
Loans and receivables:Accounts receivable 3,588 3,874
Other liabilities:Bank indebtedness 3,391 3,930Accounts payable and accrued liabilities 2,476 3,745
The Company has determined that the fair value of its short-term financial assets and liabilities approximate their respective carryingamounts as at the balance sheet dates due to the short-term nature of these instruments.
Credit riskThe Company’s credit risk is primarily related to its trade receivables. The amounts disclosed in the balance sheet are net of allowancesfor bad debts, estimated by the Company’s management based on prior experience and their assessment of the current economic envi-ronment. The Company believes that the credit risk of accounts receivable is limited due to the following reasons:
• The Company has established a comprehensive credit policy. This includes the establishment of credit terms with new customers andthe continued monitoring of credit terms of existing customers.
• The strong historical collection record of the Company’s customer base located throughout North America.
The following table sets forth details of accounts receivable and the related allowance for doubtful accounts:
262009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
2009 2008$ $
Total Accounts receivable 3,596 3,881Less: Allowance for doubtful accounts (8) (7)Total Accounts receivable reported on the Balance Sheet 3,588 3,874
Accounts receivable based on 30 day repayment terms:Current and under 30 days past due 1,739 2,195Over 30 days past due 1,857 1,686Less: Allowance for doubtful accounts (8) (7)Total Accounts receivable reported on the Balance Sheet 3,588 3,874
At December 31, 2009 one Circa USA customer has an outstanding accounts receivable balance of $395,000 (2008 - $517,000) and oneCirca Metals customer had a balance of $533,000 (2008 - $467,000), both representing over 10% of the total accounts receivable balance.
Liquidity riskThe Company maintains a revolving credit facility to ensure it has sufficient funds available to meet its current and foreseeable financialrequirements at reasonable costs.
The balance sheet includes $2,434,000 (2008 - $3,745,000) in accounts payable and accrued liabilities all due within one year or less andbank indebtedness of $3,275,000 (2008 - $3,665,000) payable on demand.
Interest rate riskThe Company is exposed to interest rate risk to the extent that any bank indebtedness under the existing credit facility bears interestbased on prime rates. Based on the bank indebtedness outstanding as of December 31, 2009 a 1% movement in the prime rate wouldchange annual interest expense by approximately $32,750.
Foreign currency exchange riskForeign currency exchange risk is the risk that a variation in exchange rates between the Canadian dollar and foreign currencies willaffect the Company’s operating and financial results. The Company is exposed to foreign currency exchange risk arising from the trans-lation of the U.S. dollar denominated monetary assets and liabilities into Canadian dollars. At December 31, 2009 the Company had U.S.dollar denominated accounts receivable of $1,241,000 (2008 - $1,110,000) and accounts payable and accrued liabilities of $386,000 (2008- $972,000). At December 31, 2009, with other variables unchanged, a $0.01 movement in the Canadian dollar against the U.S. dollarwould change income by approximately $13,000.
16. CAPITAL DISCLOSURES
The Company’s objectives when managing capital are:
• To maintain sufficient liquidity to pursue its growth strategy
• To provide an adequate return to shareholders
• To maintain financial flexibility in order to have access to capital in the event of future requirements.
The Company’s net capital is comprised of interest bearing debt and shareholders equity net of cash.
The Company manages its capital structure and makes adjustments to it in accordance with the objectives stated above, as well as in lightof changes in economic conditions and the risk characteristics of the underlying assets.
272009 Annual ReportCirca Enterprises Inc.
Management’s Discussion and Analysis
The primary measure used by the Company to monitor its financial leverage is its ratio of net debt to capital employed. Net debt andtotal capital employed is as follows:
2009 2008$ $
Bank indebtedness 3,391 3,930Less: Cash (350) (520)Net debt 3,041 3,410
Bank indebtedness 3,391 3,930Shareholders’ equity 6,504 7,724Less: Cash (350) (520)Total capital employed 9,545 11,134
Net debt to total capital employed 0.32:1 0.31:1
17. RESTRUCTURING COSTS
The Company has undergone significant changes in the extent of its operations in the year ended December 31, 2009, related to chang-ing its sales strategy, reducing workflow and streamlining its operations. These costs are recognized as restructuring costs in the finan-cial statements as realized.
The Company’s restructuring actions include consolidating business activities, integrating its operating facilities and reducing the work-force. Throughout the year, the Company incurred significant employee severance costs along with relocation costs related to these activ-ities. The employees terminated during the year were in production, sales and administration.
There were no restructuring costs incurred in 2008.
Year endedDecember 31, 2009
$Restructuring costs:
Production employee termination 302Selling, general and administrative employee termination 334Moving and relocation costs 98
734
18. ASSETS HELD FOR SALE
Assets held for sale is the land and building of Circa Metals’ previously operated Welland, Ontario location. During the year, the Companymoved the operations and equipment of this facility into the Vaughan, Ontario location as part of its restructuring efforts. As a result,the Welland facility was closed and listed for sale with a real estate agent. No further amortization on this property is being recordedand management estimates the expected proceeds on sale, net of selling costs, will exceed its carrying value.
19. COMPARATIVE F IGURES
Certain comparative figures have been reclassified to conform to the current period’s presentation.
282009 Annual ReportCirca Enterprises Inc.
($000’s, except where indicated) 2009 2008 2007 2006 2005
Sales 26,302 34,417 31,486 36,789 29,388
Gross profit 5,761 5,550 5,580 8,440 7,556
Operating expense (including foreign currency translation) 6,390 6,158 7,091 6,618 6,039
Goodwill impairment charge - - 292 - -
Asset impairment charge - 2,425 - - -
Net (loss) earnings (1,231) (1,916) (1,636) 1,131 853
(Loss) earnings per share (0.13) (0.20) (0.17) 0.12 0.09
Net book value per share 0.68 0.81 1.01 1.19 1.07
Shares outstanding at year end 9,588,650 9,503,750 9,488,650 9,488,650 9,458,650
Common shareholders’ equity 6,504 7,724 9,628 11,264 10,092
Long-term debt to equity 0% 0% 0% 8% 15%
Working capital 4,266 4,588 5,114 6,665 7,623
Current ratio 1.7 1.6 2.0 2.6 2.8
Capital assets 1,191 1,545 3,964 4,389 3,120
Total assets 12,409 15,452 15,059 16,387 15,857
Five Year Summary
BOARD OF DIRECTORSIvan W. SmithChairmanCalgary, AB
Peter BourgeoisMississauga, ON
Robert JohnstonIsle of Palms, SC, USA
Brice SweattMt. Pleasant, SC, USA
Warren WhiteDollard des Ormeaux, QC
EXECUTIVE MANAGEMENTIvan W. SmithPresident & CEO
Cory TamagiVice President Finance & CFO
AUDITORSMeyers Norris Penny LLPChartered AccountantsCalgary, AB
BANKERSRoyal Bank of CanadaCalgary, AB
LEGAL COUNSELBennett Jones LLPCalgary, AB
TRANSFER AGENTComputershare TrustCompany of CanadaCalgary, AB
STOCK EXCHANGELISTINGTSX Venture ExchangeSymbol: CTO
For more information,contact Mr. Cory Tamagitel: (403) 258-2011
OFFICES
Circa Enterprises Inc.2050, 2600 Portland Street SECalgary, AB, Canada T2G 4M6tel: (403) 258-2011fax: (403) 255-2595web: www.circaent.com
Circa Telecom USA Inc.6293 W. Linebaugh Ave.Tampa, FL, USA 33625tel: 1-800-783-6556fax: (727) 863-8876
Circa Metals Inc.206 Great Gulf DriveVaughan, ON, Canada L4K 5W1tel: (905) 669-5511tel: 1-800-263-4579fax: (905) 669-3529
Annual and Special Meeting
Circa shareholders are invited toattend the Annual and SpecialMeeting at 1:30pm on Monday,June 14, 2010, at Bennett Jones LLP,4500 Bankers Hall East, Calgary,Alberta. If unable to attend, we ask shareholders to fill in theirform of proxy and return it toComputershare Trust Company ofCanada.
Corporate Information
Circa Enterprises Inc.2050, 2600 Portland Street SECalgary, AB, Canada T2G 4M6tel: (403) 258-2011fax: (403) 255-2595web: www.circaent.com
Circa Telecom USA Inc.6293 W. Linebaugh Ave.Tampa, FL, USA 33625tel: 1-800-783-6556fax: (727) 863-8876
Circa Metals Inc.206 Great Gulf DriveVaughan, ON, Canada L4K 5W1tel: (905) 669-5511tel: 1-800-263-4579fax: (905) 669-3529