Azure Dynamics Reports Record 2010 4th Quarter and Full Year Revenues

OAK PARK, Michigan, March 23, 2011 /PRNewswire/ -- Azure Dynamics Corporation (TSX: AZD)(OTC: AZDDF), a world leader in the development and production of hybrid electric and electric components and powertrain systems for commercial vehicles, today announced its financial results for the three and twelve months ended December 31, 2010. The Company also provided an update on corporate and product development activities during the year.

Revenue for the fourth quarter of 2010 increased 205% to $13.4 million compared to $4.4 million in the fourth quarter of 2009. For the year ended December 31, 2010 revenue increased 133% to $21.9 million compared to $9.4 million in 2009. Net loss for the fourth quarter of 2010 totaled $10.8 million, or $(0.02) per share compared to a loss of $8.0 million or $(0.02) per share in the fourth quarter of 2009. For the year ended December 31, 2010, the Company's net loss was $28.1 million, or $(0.05) per share, compared to a net loss of $27.8 million, or $(0.07) per share in 2009.

"We are very pleased with our record fourth quarter and full year revenues, which met our expectations despite a sluggish, but improving commercial truck market," said Scott Harrison, CEO of Azure Dynamics. "During the fourth quarter, we shipped a record 381 vehicles, including 30 Transit Connect Electric vehicles, which were more than our entire 2009 vehicles shipments of 335 units and demonstrates the strength of our business model. We are winning with new and repeat customers and showing it with significant revenue growth - growth that we expect to be even more dramatic in 2011."

Before contributions, the Company's engineering, research and development ("R&D") expenses in the fourth quarter totaled $7.5 million (including $4.0 million in product development costs), compared to $5.2 million for the same period in 2009 (including $2.9 million in product development costs). For the year ended December 31, 2010, the Company's engineering and R&D expenses totaled $24.9 million (including $13.6 million in product development costs) compared to $15.7 million in 2009 (including $6.1 million in product development costs).

"Our most notable accomplishment in 2010 was the development and initial deliveries of the innovative Transit Connect Electric," Harrison said. "Just 13 months after the program was officially announced, 30 Transit Connect Electric vans were shipped to LEAD customers and to European constituencies. This incredibly short product development time highlights our technological know-how and product flexibility and bodes well for our future in a dynamic industry."

As of December 31, 2010, the Company's cash and cash equivalents totaled $11.8 million and working capital totaled $9.6 million. Additionally, in October, 2010, the Company obtained a $4 million credit facility to provide an additional source to help fund working capital requirements.

Subsequent to year-end, on February 8, 2011, the Company closed on the sale of 61.0 million common shares which resulted in $20.1 million of gross proceeds to fund its ongoing product development and commercialization efforts as well as general corporate purposes.

"With our stronger balance sheet and the added financial flexibility, we believe Azure is well positioned to capitalize on the increasing demand for our products and on the opportunities to integrate our technology onto additional market leading commercial vehicles," Harrison concluded. "Additionally, with the threat of continued higher fuel prices, the growing concern for the environment and continued government incentive programs, Azure's outlook is promising."

2010 and Year-To-Date Highlights

- On February 8, 2011, Azure announced agreements with 76 additional dealerships to represent Azure's innovative products including the Transit Connect Electric and the Balance(TM) Hybrid Electric in key markets across North America bringing the total number of dealerships in the Azure program to 103.

- On January 18, 2011, Azure announced that it has received an order for 50 Balance(TM) Hybrid Electric units from a world leading logistics organization. The customer also previously submitted Azure's single largest Transit Connect Electric order of 30 units.

- On January 17, 2011, Azure announced that Purolator had placed an order for 600 units - the single largest order for Azure technology. 200 units will be delivered in 2011 with an additional 200 units scheduled in both 2012 and 2013, subject to annual authorizations by Purolator. The initial 200 units will be built and delivered primarily in the third and fourth quarters of 2011.

- On December 16, Azure announced closing of the LEAD customer program after achieving its objective of identifying ten premiere vehicle fleets to place early units in 2010 with volume orders for fulfillment in 2011. Those ten LEAD customers accounted for nearly 150 Transit Connect Electric vehicles.

- On December 7, Azure, in collaboration with Ford Motor Company and AM General, announced the early production and first deliveries of the Transit Connect Electric vans just 13 months after the collaboration to develop the zero-emission vehicle was first announced.

- On October 22, Azure announced the appointment of John Formisano to its Board of Directors. Formisano recently retired from Federal Express Corporation where he served as Vice President - Global Vehicles. Formisano is also Chairman of the Board of CALSTART, the leading catalyst organization for the global clean transportation technology industry.

- On October 5th, Azure Dynamics secured a $4 million credit facility from Silicon Valley Bank to support the company's growth strategy and provide financial flexibility.

- On September 22, a wholly-owned Canadian subsidiary of Johnson Controls Inc. purchased approximately 21,080,000 common shares and Azure received gross proceeds of $6,324,000. Johnson Controls is also a Transit Connect Electric LEAD customer.

- On May 26, 2010, Cintas Corporation purchased 100 Balance(TM) Hybrid Electric Walk in Vans for deployment at its California facilities and therefore qualify for the state's Hybrid Voucher Incentive Program funding with incentives of $25,000 per unit.

- On May 18, AM General was selected to upfit the base Ford Transit Connect with the Azure Force Drive(TM) electric drive train components. The final assembly will be completed at an AM General Engineering and Product Development Center in Livonia, Michigan.

- On May 3, Azure and Ford Motor Company announced plans to expand the Transit Connect Electric program to the European market capitalizing on the Transit Connect's successful history in Europe.

- On February 10, the Transit Connect Electric made its debut at the Chicago Auto Show. Azure collaborated with Ford Motor Company to introduce the Transit Connect Electric, a pure electric powered version of the 2010 North American Truck of the Year.

- During the fourth quarter of 2010, Azure shipped 381 units, a 114% increase over the 178 units shipped in the same period a year ago. 2010 shipments total 832 units, a 148% increase over the 335 units sold during 2009. 2010 marquis customers include Purolator, Cintas Corporation, Schwans, Illinois Department of Transportation, King County, WA Federal Transit Administration, TruGreen and the North Central Texas Council of Governments.

2011 FINANCIAL OUTLOOK

The global light and medium duty commercial truck markets are expected to continue their gradual recovery during 2011. The Transit Connect Electric has been successfully introduced in North America and in Europe with the manufacturing launch scheduled for April and June, respectively. Based on the Company's current backlog and future order expectations, 2011 revenues are expected to be in a range of $52 million to $68 million. The Company expects 2011 results to be significantly stronger in the second half of the year due to the launch of Transit Connect Electric, as well as the first and second quarters being typically the slowest due to the seasonality of order flow. Unit volume for 2011 is expected to be in the range of 1,300 to 1,500 units, consisting of approximately 700 to 800 Balance(TM) Hybrid Electric drive-trains and LEEP systems and 600 to 700 Force Drive(TM) Electric drive-trains for the Transit Connect Electric.

The Company's complete fiscal 2010 audited year-end financial statements and MD&A are available at http://www.sedar.com or on the Company's website at http://www.azuredynamics.com.

Azure will host a conference call to discuss 2010 earnings today, Wednesday, March 23 at 5:00 p.m. eastern daylight time. Interested listeners can access the call toll free at 1-888-227-6699 and should call in at least fifteen minutes before the scheduled start time. Interested participants from outside North America can participate in the call by dialing [phone].

About Azure Dynamics Azure Dynamics Corporation (TSX: AZD)(OTC: AZDDF) is a world leader in the development and production of hybrid electric and electric components and powertrain systems for commercial vehicles. Azure is strategically targeting the commercial delivery vehicle and shuttle bus markets and is currently working internationally with a variety of partners and customers. The Company is committed to providing customers and partners with innovative, cost-efficient, and environmentally-friendly energy management solutions. For more information please visit http://www.azuredynamics.com.

The TSX Exchange does not accept responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements Advisory

Certain information included in this press release constitutes forward-looking statements and information and future-oriented financial information under applicable securities legislation and is provided for the purpose of expressing management's current expectations and plans for the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions.

More particularly, this press release contains statements concerning Azure's anticipated: business development strategy, customer orders, product deliveries, sales, revenue and revenue growth. The forward-looking statements are based on a number of key expectations and assumptions made by Azure, including expectations and assumptions concerning achievement of current timetables for development programs and sales, target market acceptance of Azure's products, current and new product performance, availability and cost of labor and expertise, and evolving markets for power for transportation vehicles. Although Azure believes that the expectations and assumptions used to develop the forward-looking statements are reasonable, undue reliance should not be placed on the forward-looking statements because Azure can give no assurance that they will prove to be correct.

Since forward-looking statements address future events and conditions, by their very nature they involve numerous risks and uncertainties that contribute to the possibility that the projections and forecasts in the forward-looking statements will not occur and that actual performance or results could differ materially from those anticipated in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks associated with Azure's stage of development, history of losses and lack of historical product revenues, uncertainty as to product development and sales milestones being met, product defect and performance risks, competition for capital and market share, uncertainty as to target markets, dependence upon third parties, changes in environmental laws or policies, uncertainty as to patent and proprietary rights, availability and retention of management and key personnel, exchange rate and currency fluctuations, uncertainties relating to potential delays or changes in plans with respect to product development or capital expenditures, the ability of Azure to access sufficient capital on acceptable terms, and environmental and safety risks. This is not an exhaustive list and additional information on these risks and other factors that could affect Azure's operations and financial results are included in reports on file with the Canadian securities regulatory authorities and can be accessed through the SEDAR website at http://www.sedar.com.

The forward-looking statements contained in this press release are made as of the date hereof and Azure undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. Additionally, Azure undertakes no obligation to comment on the expectations of, or statements made by, third parties about Azure.

     
    Azure Dynamics Corporation
    Consolidated Balance Sheets
    (Stated in thousands of Canadian dollars, except per share amounts and 
    number of shares)
 
                                                   December         December
                                                         31               31
    As at                                              2010             2009
                                                          $                $
    ASSETS
 
    Current
    Cash and cash equivalents                        11,838           33,588
    Accounts receivable                              10,043            2,632
    Inventory (Note 5)                                5,523            5,215
    Prepaid expenses                                    802              974
                                                     28,206           42,409
 
    Restricted cash (Note 4)                            796            1,041
    Property and equipment (Note 6)                   5,740            5,277
    Other assets                                        114                -
    Intangible assets (Note 7)                        5,590            6,755
    Goodwill                                          2,932            2,932
 
                                                     43,378           58,414

 
    LIABILITIES AND SHAREHOLDERS' EQUITY
 
    Current
    Accounts payable and accrued liabilities         16,494            9,837
    Customer deposits & deferred revenue 
     (Note 8)                                           118              746
    Current portion of notes payable (Note 3)         1,945               66
    Current portion of obligations under 
     capital leases (Note 9)                             82               99
                                                     18,639           10,748
    Long-term
    Obligations under capital leases (Note 9)            96              117
    Customer deposits & deferred revenue 
     (Note 8)                                           577              644
    Notes payable (Note 3)                                -            2,055
                                                     19,312           13,564
    Shareholders' equity
    Share capital (Note 11)                         208,570          202,250
    Contributed surplus (Note 11)                     8,161            7,139
    Deficit                                        (192,665)        (164,539)
                                                     24,066           44,850
 
                                                     43,378           58,414
 

Nature of operations and going concern (Note 1)

Commitments (Note 9 and 17)

Subsequent events (Note 20)

Approved on behalf of the Board:

"signed D. Campbell Deacon" Director

D. Campbell Deacon

"signed James C. Gouin" Director

James C. Gouin

      
 
                                                   Azure Dynamics Corporation
       Consolidated Statements of Operations, Comprehensive Loss, and Deficit
       (Stated in thousands of Canadian dollars, except per share amounts and 
                                                            number of shares)
 
                             For the three months      For the twelve months
                                            ended                      ended
                                      December 31                December 31

                                   2010         2009        2010        2009
                                      $            $           $           $
 
    Revenues                     13,368        4,434      21,913       9,403
 
    Cost of sales                13,072        7,311      21,624      14,349
 
    Gross margin                    296       (2,877)        289      (4,946)
 
    Expenses
    Engineering, research, 
     development and related
    costs, net (Note 14)          7,508        1,343      17,028      11,852
    Selling and marketing         1,143          884       2,784       2,388
    General and administrative    2,744        3,129       9,329       9,134
    Total expenses               11,395        5,356      29,141      23,374
 
    Loss from operations        (11,099)      (8,233)    (28,852)    (28,320)
 
    Interest and other income, net  147          123         555         546
    Interest expense                (22)         (25)        (95)       (110)
    Other income/(expense)            -            8           -        (586)
    Foreign currency gains          214           94         266         662
 
    Net loss and comprehensive 
     loss                       (10,760)      (8,033)    (28,126)    (27,808)
 
    Deficit, beginning of 
     period                    (181,905)    (156,506)   (164,539)   (136,731)
 
    Deficit, end of period     (192,665)    (164,539)   (192,665)   (164,539)
 
    Loss per share - basic and 
     diluted                      (0.02)       (0.02)      (0.05)      (0.07)
 
    Weighted average number of 
     shares - basic and     626,878,734  454,698,412 616,823,270 406,148,487
    diluted
 

 
                                                   Azure Dynamics Corporation
                                        Consolidated Statements of Cash Flows
       (Stated in thousands of Canadian dollars, except per share amounts and 
                                                            number of shares)
 
                                             For the years ended December 31
                                                      2010              2009
                                                         $                 $
 
    Cash flows from operating activities
    Net loss for the period                        (28,126)          (27,808)
    Adjustments for:
    Amortization of property and equipment           1,057             1,048
    Amortization of intangible assets                1,311             1,460
    Amortization of other assets                        16                 -
    Unrealized foreign currency (gains)/losses        (366)             (448)
    Stock option compensation expense                  799               400
    Deferred share units compensation expense          242               244
                                                   (25,067)          (25,104)
 
    Changes in non-cash working capital items 
     (Note 18)                                      (1,327)            8,032
    Total cash flows from operating activities     (26,394)          (17,072)
 
    Cash flows from financing activities
    Issuance of common shares (net of costs)         6,301            37,238
    Principal repayments on notes payable              (65)              (69)
    Repayment of obligations under capital lease      (158)             (160)
    Other assets                                      (129)                -
    Total cash flows from financing activities       5,949            37,009
 
    Cash flows from investing activities
    Acquisition of property and equipment           (1,394)             (141)
    Acquisition of intangible assets                  (146)             (203)
    Sale of property and equipment                       -                35
    Changes in restricted cash                         196               211
    Total cash flows from investing activities      (1,344)              (98)
 
    Increase/(Decrease) in cash and cash 
     equivalents                                   (21,789)           19,839
 
    Exchange impact on cash held in foreign currency    39               (54)
 
    Cash and cash equivalents, beginning of year    33,588            13,803
 
    Cash and cash equivalents, end of year          11,838            33,588
 
    Supplemental cash flow information
 
    Cash paid for interest                              95               110
    Cash paid for taxes                                 13                 -
    Non cash investing and financing activities:
    Vehicles and equipment acquired under capital 
     lease                                             126                24
 

For further information:

Juris Pagrabs, Vice President, Investor Relations, [phone] ext 7570 Email: [e-mail]

Pat Liebler, Liebler Group, [phone] Email: [e-mail]

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