N@N

Firan Technology Group Corporation: Firan Technology Group Corporation Announces Financial Results for the Second Quarter 2009

TORONTO, ONTARIO--(Marketwire - July 8, 2009) - Firan Technology Group Corporation (TSX:FTG) today announced financial results for the second quarter and six months ended May 29, 2009.

- Year-to-date sales decreased by 2% as compared to industry data as reported by IPC showing over 30% decrease in same period

- Backlog remained above $15,000,000

- Reduced net bank debt by $1,467,000

Q2 2009 Results: (three months ended May 29, 2009 compared with three months ended May 30, 2008)

 Q2 2009 Q2 2008
 ------- -------

Sales $14,634,000 $16,458,000

Operating Earnings before:(1) 9,000 280,000
 ----- -------

 One Time Severance Charges 231,000 -
 Filtran Restructuring and Losses - 190,000
 Foreign Exchange 304,000 (5,000)
 Amortization of Intangible Assets 12,000 -
 Tax Expense (Recovery) 2,000 (111,000)
 ----- -------
Net (Loss)/Earnings ($540,000) $206,000
 -------- --------

(Loss)/Earnings per share
 - basic ($0.03) $0.01
 - diluted ($0.03) $0.01

Year-To-Date 2009 Results: (six months ended May 29, 2009 compared with six
months ended May 30, 2008)

 Year-To-Date 2009 Year-To-Date 2008
 ----------------- ------------------

Sales $29,328,000 $30,056,000

Operating Earnings (Loss) before:(1) 185,000 (459,000)
 ------- -------

 One Time Severance Charges 231,000 -
 Filtran Restructuring and Losses - 472,000
 Foreign Exchange 533,000 44,000
 Amortization of Intangible Assets 24,000 -
Tax Expense/(Recovery) 4,000 (134,000)
 ----- -------
Net Loss ($607,000) ($841,000)
 -------- --------

Loss per share
 - basic ($0.03) ($0.05)
 - diluted ($0.03) ($0.05)

(1) Operating Earnings (Loss) is not a measure recognized under Canadian
generally accepted accounting principles ("GAAP"). Management believes that
this measure is important to many of the Company's shareholders, creditors
and other stakeholders. The Company's method of calculating Operating
Earnings (Loss) may differ from other corporations and accordingly may not
be comparable to measures used by other corporations.

"Our second quarter saw some significant challenges for FTG as a result of lower demand and the fluctuations in the U.S. dollar exchange rates. I am proud of the way everyone at FTG pulled together to overcome these obstacles and I sincerely appreciate the efforts made by everyone at the Corporation", stated Mr. Brad Bourne, President and Chief Executive Officer. "In response to the slowdown in demand caused by global economic conditions, we have taken several actions, including staff reductions and new inventory management processes, which will improve our cost structure going forward. We remain focused on our strategy of Operational Excellence to further improve our internal performance, as well as continuing to invest in R&D to improve our technological capabilities to grow the business", he added.

FTG had many accomplishments in Q2 2009 that continue to improve the Corporation and position it for the future, including:

- The hiring of Hardeep Heer as VP Engineering and CTO for FTG's Circuits
businesses
- The hiring of a new QC Manager for FTG Circuits Toronto
- The continued strengthening of FTG's technical capabilities through key
engineering additions at all three sites
- Strengthening of the sales team through the hiring of experienced sales
staff for the U.S. North West and U.S. South West
- Reduced operating costs through elimination of overtime, staff reductions,
implementation of workshare program for both Toronto facilities and wage
reductions for other staff not impacted by the above actions
- Renewed lease for FTG Circuits-Toronto facility with an average 15%
savings over the next 5 years
- Completion of qualification testing of the Lighting Power Supply at FTG
Aerospace
- Shipment of first assemblies from FTG Aerospace incorporating higher
level hardware and software designs
- Strong improvements in production yields at the Circuits facilities
- Better inventory management and control across the Corporation to improve
the cash cycle
- Continued higher technology activity across both Circuits sites

The Corporation's sales in Q2 2009 were $14,634,000, a decrease of $1,824,000 or 11% over Q2 2008. Sales were flat sequentially from Q1 to Q2 2009. Compared to last year, sales were positively impacted by the strength of the U.S. dollar, which offset a decline in activity across both businesses. Last years' acquisition of Filtran increased revenues by $1,341,000 in the quarter. Notwithstanding the drop in sales year-over-year due to reduced customer demand on existing business, there were record levels of activity in new part numbers and new customers. Across FTG, the backlog in engineering has increased substantially over last year. This bodes well for future sales when the base business returns to more normal levels.

On a year-to-date basis, sales were down $728,000 or 2% to $29,328,000. Again, sales were positively affected by the strengthening U.S. dollar and were negatively affected by lower customer demand.

Q2 2009 sales for the Circuits segment were $11,715,000, a decrease of $1,032,000 or 8% compared to Q2 2008. For the Aerospace segment, sales in the second quarter were $2,919,000 compared to $3,711,000 in Q2 2008, a decrease of $792,000 or 21%.

FTG had operating earnings before severance, restructuring, foreign exchange, amortization of intangible assets and tax for Q2 of 2009 of $9,000, compared to $280,000 in Q2 2008. There were no Filtran restructuring and losses in Q2 2009 versus $190,000 in Q2 2008. In Q2 2009, FTG incurred $231,000 in severance costs related to staff reductions to align headcount to the lower level of activity. The total workforce at FTG was reduced by approximately 30 people or 8% with reductions happening at all three sites. Finally, given the significant weakening of the U.S. dollar over the second quarter of 2009, a $304,000 foreign exchange charge was made to the income statement compared to a negligible amount in Q2 2008.

Net loss for the second quarter was $540,000 compared to a net earnings of $206,000 in the comparable quarter in 2008. The Q2 2009 loss includes the items mentioned above as well as $38,000 of costs incurred in the establishment of FTG Aerospace-Tianjin.

The net loss for the first half of 2009 was $607,000 versus $841,000 for the same period last year. The improvement is due to the elimination of Filtran related restructuring and other costs in 2009, a benefit from the year-over-year impact of the stronger U.S. dollar, offset by lower activity, severance costs and costs related to revaluing certain balance sheet items to the closing exchange rate for the U.S. dollar.

Across FTG, total bookings in the quarter were $12,700,000. The book-to-bill for the Corporation was 0.87:1 and 0.92:1 for the Circuits business. Bookings were generally stable for defence customers, down slightly from large Air Transport customers and down significantly from customers in the business jet markets. The lower orders from existing programs and customers were somewhat offset by the capture of new programs and new customers. Total backlog of orders at the end of Q2 2009 were $15,000,000.

During the quarter, FTG's total bank debt decreased $1,244,000 and cash increased $223,000. The improvements are due in part to the revaluation of U.S. dollar denominated debt and to an aggressive inventory reduction plan across the Corporation that resulted in a $1,816,000 drop in raw materials, work-in-progress, and finished goods across the Corporation.

The Corporation will host a live conference call on July 9, 2009 at 8:30am (EDT) to discuss the results of Q2 2009.

Anyone wishing to participate in the call should dial 416-340-8018 or 1-866-223-7781 and identify that you are calling to participate in the FTG conference call. The Chairperson is Mr. Brad Bourne. A replay of the call will be available until July 23, 2009 and will be available on the FTG website at [ www.ftgcorp.com ]. The number to call for a rebroadcast is 416-695-5800 or 1-800-408-3053, pass code 3133576.

ABOUT FIRAN TECHNOLOGY GROUP CORPORATION

FTG is an aerospace and defence electronics product and subsystem supplier to the North American marketplace. FTG has two operating units:

FTG Circuits is a manufacturer of high technology/high reliability printed circuit boards. Our customers are leaders in the aviation, defence, and high technology industries. FTG Circuits has operations in Toronto, Ontario and Chatsworth, California.

FTG Aerospace manufactures illuminated cockpit panels, keyboards and sub-assemblies for original equipment manufacturers of avionics products as well as airframe manufacturers located in Toronto, Ontario.

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

FORWARD-LOOKING STATEMENTS

This news release contains certain forward-looking statements. These forward-looking statements are related to, but not limited to, FTG's operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains words such as "anticipate", "believe", "expect", "plan" or similar words suggesting future outcomes. Such statements are based on the current expectations of management of the Corporation and inherently involve numerous risks and uncertainties, known and unknown, including economic factors and the Corporation's industry, generally. The preceding list is not exhaustive of all possible factors. Such forward-looking statements are not guarantees of future performance and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Corporation. The reader is cautioned to consider these and other factors carefully when making decisions with respect to the Corporation and not place undue reliance on forward-looking statements. Other than as may be required by law, FTG disclaims any intention or obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

Additional information can be found at the Corporation's website [ www.ftgcorp.com ].

FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Balance Sheets
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 May 29, 2009 November 30, 2008
(in thousands of dollars) (unaudited) (audited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

ASSETS

CURRENT
 Cash $ 527 $ 170
 Accounts receivable 10,735 14,711
 Taxes receivable 299 299
 Inventories (Note 5) 7,963 9,150
 Prepaid expenses 1,105 445
 Future income taxes 240 270
----------------------------------------------------------------------------
 20,869 25,045

CAPITAL ASSETS 6,963 7,329
GOODWILL (Note 10) 4,167 4,583
OTHER INTANGIBLE ASSETS 407 431
----------------------------------------------------------------------------
 $ 32,406 $ 37,388
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES

CURRENT
 Bank indebtedness (Note 6) $ 1,747 $ 2,977
 Accounts payable and accrued liabilities 6,822 9,872
 Current portion of long-term debt (Note 6) 1,816 1,833
----------------------------------------------------------------------------
 10,385 14,682
LONG-TERM DEBT (Note 6) 6,004 6,104
----------------------------------------------------------------------------
 16,389 20,786
----------------------------------------------------------------------------

SHAREHOLDERS' EQUITY

 Share capital
 Common shares 12,681 12,681
 Preferred shares 2,218 2,218
 Contributed surplus 8,107 8,071
 Deficit (7,299) (6,692)
 Accumulated other comprehensive income 310 324
----------------------------------------------------------------------------
 16,017 16,602
----------------------------------------------------------------------------
 $ 32,406 $ 37,388
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.


FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Loss
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 Three Months Ended Six Months Ended
 ----------------------------- ---------------------------
 ----------------------------- ---------------------------
(in thousands of
 dollars except
 per share May 29, 2009 May 30, 2008 May 29, 2009 May 30, 2008
 amounts) (unaudited) (unaudited) (unaudited) (unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

SALES $ 14,634 $ 16,458 $ 29,328 $ 30,056
COST OF SALES 11,284 12,070 22,177 22,771
----------------------------------------------------------------------------
 3,350 4,388 7,151 7,285
----------------------------------------------------------------------------

EXPENSES
 Selling, general
 and administrative 1,850 2,107 3,610 4,072
 Research and
 development costs 736 1,334 1,860 2,197
 Recovery of
 research and
 development costs - - (50) -
 Amortization of
 capital assets 617 681 1,261 1,381
 Amortization of
 intangible assets 12 - 24 -
 Interest expense
 on long-term debt 111 124 233 263
 Interest expense
 on short-term debt 27 52 52 95
 Severance and
 restructuring
 costs 231 - 231 208
 Foreign exchange
 loss (gain) (Note
 9 (b)) 304 (5) 533 44
----------------------------------------------------------------------------
 3,888 4,293 7,754 8,260
----------------------------------------------------------------------------

(LOSS) EARNINGS
 BEFORE INCOME
 TAXES (538) 95 (603) (975)

PROVISION FOR
 (RECOVERY OF)
 INCOME TAXES 2 (111) 4 (134)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

NET (LOSS)
 EARNINGS $ (540) $ 206 $ (607) $ (841)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

NET (LOSS)
 EARNINGS PER SHARE
 Basic $ (0.03) $ 0.01 $ (0.03) $ (0.05)
 Diluted $ (0.03) $ 0.01 $ (0.03) $ (0.05)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

See accompanying notes.


FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Shareholders' Equity
(in thousands of dollars) (unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 Accumulat-
 ed Other Total
 Common Preferred Comprehens- Share-
 Share Share Contributed ive Income holders'
 Capital Capital Surplus Deficit ("AOCI") Equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Balance,
 November 30,
 2008 $12,681 $ 2,218 $ 8,071 $ (6,692) $ 324 $ 16,602
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Net loss - - - (607) - (607)
Other
 comprehensive
 loss:
 Foreign
 currency
 translation
 adjustments
 (Note 10) - - - - (702) (702)
 Net unrealized
 gain on
 derivative
 financial
 instruments
 designated
 as cash flow
 hedges (Note 
 9 (c)) - - - - 688 688
 ------
 ------
Comprehensive
 loss (621)

Stock based
 compensation - - 36 - - 36

----------------------------------------------------------------------------
Balance, May
 29, 2009 $12,681 $ 2,218 $ 8,107 $ (7,299) $ 310 $ 16,017
----------------------------------------------------------------------------
----------------------------------------------------------------------------


----------------------------------------------------------------------------
----------------------------------------------------------------------------
 Accumulat-
 ed Other Total
 Common Preferred Comprehens- Share-
 Share Shares Contributed ive Loss holders'
 Capital Capital Surplus Deficit ("AOCL") Equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Balance,
 November 30,
 2007 $12,681 $ 2,218 $ 7,939 $ (6,484) $ (829) $ 15,525
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Net loss - - - (841) - (841)
Other
 comprehensive
 loss:
 Foreign
 currency
 translation
 adjustments
 (Note 10) - - - - (34) (34)
 ------
Comprehensive
 loss (875)

Stock based
 compensation - - 64 - - 64

----------------------------------------------------------------------------
Balance, May
 30, 2008 $12,681 $ 2,218 $ 8,003 $ (7,325) $ (863) $ 14,714
----------------------------------------------------------------------------
----------------------------------------------------------------------------

See accompanying notes.


FIRAN TECHNOLOGY GROUP CORPORATION
Interim Consolidated Statements of Cash Flows
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 Three Months Ended Six Months Ended
 --------------------------- ---------------------------
(in thousands of May 29, 2009 May 30, 2008 May 29, 2009 May 30, 2008
 dollars) (unaudited) (unaudited) (unaudited) (unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
NET (OUTFLOW) INFLOW
 OF CASH RELATED
 TO THE FOLLOWING
 ACTIVITIES:

 OPERATING
 Net (loss) earnings $ (540) $ 206 $ (607) $ (841)
 Items not affecting
 cash
 Stock based
 compensation
 expense 2 35 36 64
 Effect of exchange
 rates on U.S.
 dollar Canadian
 debt (621) 29 (501) (28)
 Amortization of
 capital assets 617 681 1,261 1,381
 Amortization of
 intangible assets 12 - 24 -
 Changes in non-
 cash operating
 working capital 197 (273) 1,103 (1,358)
----------------------------------------------------------------------------
 (333) 678 1,316 (782)
----------------------------------------------------------------------------

 INVESTING
 Acquisition of
 Filtran
 Microcircuits Inc. - - - (1,462)
 Additions to
 capital assets (295) (295) (1,211) (396)
----------------------------------------------------------------------------
 (295) (295) (1,211) (1,858)
----------------------------------------------------------------------------

 FINANCING
 (Decrease) increase
 in bank
 indebtedness (1,090) (826) (999) 2,667
 Proceeds from
 capital
 expenditure
 facility 1,667 501 1,667 501
 Repayments of
 long-term debt (459) (319) (925) (637)
----------------------------------------------------------------------------
 118 (644) (257) 2,531
----------------------------------------------------------------------------

 Effects of foreign
 exchange rate
 changes on cash flow 733 59 509 58
----------------------------------------------------------------------------

NET CASH FLOW 223 (202) 357 (51)

CASH, BEGINNING OF
 PERIOD 304 385 170 234
----------------------------------------------------------------------------

CASH, END OF PERIOD $ 527 $ 183 $ 527 $ 183
----------------------------------------------------------------------------

DISCLOSURE OF CASH
 PAYMENTS
 Payments for
 interest $ 138 $ 179 $ 285 $ 358
 Payments for income
 taxes $ 2 $ - $ 4 $ 2
 Refund of income
 taxes $ - $ 73 $ - $ 73
----------------------------------------------------------------------------

See accompanying notes.


FIRAN TECHNOLOGY GROUP CORPORATION 
Notes to the Interim Consolidated Financial Statements
(In thousands of dollars except per share amounts)(Unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

1. BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements have been prepared on a going concern basis in accordance with Canadian generally accepted accounting principles on a basis consistent with those followed in the November 30, 2008 audited consolidated financial statements of Firan Technology Group Corporation and are presented in Canadian dollars. These unaudited interim consolidated financial statements do not include all of the information and note disclosures required by Canadian generally accepted accounting principles for annual financial statements and therefore should be read in conjunction with the said November 30, 2008 audited consolidated financial statements and the Notes below.

In the opinion of management, the unaudited interim consolidated financial statements include all adjustments (consisting of normal recurring accruals) considered necessary by management to present a fair statement of the results of operations, financial position and cash flows. The unaudited interim consolidated financial statements were prepared using the same accounting policies and methods as those used in the Corporation's audited financial statements for the year ended November 30, 2008, except as explained in Note 2.

In light of the current economic environment, demand has softened as some of our customers have reduced existing inventory levels. While the current environment remains challenging, the Corporation is in a strong position to continue to serve its customer base and focus on key opportunities.

The unaudited interim consolidated financial statements include the accounts of Firan Technology Group Corporation (the "Corporation") and its 100% owned subsidiaries, FTG Circuits Inc. ("FTG Circuits - Chatsworth") and Firan Technology Group (USA) Corporation.

4. SIGNIFICANT ACCOUNTING POLICIES

Measurement uncertainty

The preparation of the Corporation's financial statements, in accordance with Canadian generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in making such estimates, actual results reported in future periods could differ from those estimates. Estimates include provisions for accounts receivable, inventory obsolescence, warranty and amortization based on useful life of capital assets and valuation of investment tax credits, future income tax assets, intangibles and goodwill.

Derivative financial instruments

The Corporation has elected to apply hedge accounting for certain forward foreign exchange contracts used to manage foreign currency exposure on anticipated sales and has designated these as cash flow hedges. Changes in the fair value of these derivatives are recorded as prepaid assets when they are in an asset position or in accounts payable and accrued liabilities when in a liability position. Gains or losses arising from hedging items are reported in the same caption on the consolidated statements of operations as those of the hedged items.

The effective portions of the change in fair value of the derivative are initially recorded in other comprehensive income on the balance sheets and are reclassified to the consolidated statements of operations when the hedged items are realized. Hedge accounting is discontinued prospectively when it is determined that the derivative is not effective as a hedge or the derivative is terminated or sold, or upon sale or early termination of the hedged item.

5. INVENTORIES

The Corporation's inventories are valued at the lower of cost and net realizable value. Cost is determined on the first-in, first-out basis. Direct labour and an allocation of fixed and variable overheads are included in the determination of work-in-process and finished goods amounts. Net realizable value represents the estimated selling price for inventories less costs necessary to make the sale.

The adoption of CICA 3031 constitutes a change in accounting policy from valuing inventory at the lower of cost and market to the lower of cost and net realizable value, as defined under the new standard. The Corporation's valuation of inventory for November 30, 2008 is consistent with CICA 3031 and no retroactive restatement is required. The book value of inventories is as follows:

 May 29, 2009 November 30, 2008
----------------------------------------------------------------------------
Raw materials & spares $ 2,856 $ 3,227
Work in process 2,866 3,306
Finished goods 2,241 2,617
----------------------------------------------------------------------------
Net inventories $ 7,963 $ 9,150
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The cost of inventories recognized as an expense during the quarter ended May 29, 2009 was $11,284 (May 30, 2008 - $12,070) including write-downs of inventories recognized in cost of sales of $55 (May 30, 2008 - $96).

6. BANK INDEBTEDNESS AND LONG-TERM DEBT

Long - term debt consists of:

 May November
 29, 2009 30, 2008
 -------- --------

5 year U.S. $6,000 term loan (of which U.S. $3,000
 relates to the U.S. subsidiary), amortized over 7
 years, repayable in equal monthly payments of U.S.
 $72 plus interest at a fixed rate of 8.19%. Term 
 loan is secured by a first charge over all of the
 property and assets of the Corporation and matures
 on July 14, 2011. Principal at May 29, 2009 U.S.
 $3,571 (November 30, 2008 - U.S. $4,000). $ 3,899 $ 4,948

5 year U.S. $2,500 capital expenditure facility (of
 which $1,000 U.S. relates to the U.S. subsidiary),
 amortized over 5 years, repayable in equal monthly
 payments of U.S. $33 plus interest at 30-day LIBOR
 rate plus a margin, matures July 14, 2012. Principal
 at May 29, 2009 U.S. $2,091 (November 30, 
 2008 - $2,417). 2,283 2,989

5 year U.S. $2,000 capital expenditure facility,
 repayable in equal monthly payments of U.S. $31 plus
 interest at 30-day LIBOR rate plus a margin, matures
 on December 31, 2013. Principal at May 29, 2009 U.S.
 $1,500 (2008-nil). 1,638 -

----------------------------------------------------------------------------
 7,820 7,937
Less amounts due within one year 1,816 1,833
----------------------------------------------------------------------------

 $ 6,004 $ 6,104
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Estimated principal repayments of long-term debt are as follows:

 within 12 $ 1,816
 13 to 24 months 2,055
 25 to 36 months 3,146
 37 to 48 months 564
 49 to 60 months 239
 --------
 $ 7,820
 --------
 --------

The Corporation has available a 3-year committed revolving credit facility of U.S. $6,000 subject to certain borrowing base requirements, maturing March 31, 2012. The revolving facilities are available by way of Prime Rate Loans, USBR Loans, BA Rate Loans and / or Libor Loans; plus an applicable margin. Applicable margins are: Canadian Prime Rate loans plus 50 basis points, U.S. Prime Rate loans nil basis points, USBR Loans plus 250 basis points, BA Rate Loans plus 250 basic points and Libor Loans plus 250 basis points. Libor is subject to a floor rate of 1.5% per annum.

The U.S. subsidiary utilized U.S. $1,600 or Cdn. $1,747 of the revolving facility at May 29, 2009 (2008 - U.S. $1,500 or Cdn. $1,855 at November 30, 2008). The Canadian operations utilized Cdn. $nil (2008 - Cdn. $1,122) during the same period. The revolving credit facility is secured by a first charge on all of the property and assets of the Corporation.

The Corporation was in compliance with all of its bank covenants as at May 29, 2009 and has sufficient liquidity and capital resources to meet its obligations for the foreseeable future. Specifically, management is confident that it has sufficient liquidity to fund current operations, meet its debt maturity and capital expenditure plans.

9. FINANCIAL INSTRUMENTS

The Corporation has adopted the requirements of the CICA Handbook Section 3862 - Financial Instruments Disclosures, and CICA Handbook Section 3863 - Financial Instruments Presentation which requires disclosure to enable users to evaluate the significance of financial instruments on the entity's financial position and performance, and the nature and extent of an entity's exposure to risks arising from financial instruments including how the entity manages those risks.

(a) Financial instruments - carrying values

The carrying values of financial assets and liabilities included in the consolidated balance sheet are as follows:

 May 29, 2009 November 30, 2008
---------------------------------------------------------------------------
Financial assets
Held for trading financial assets:
 Cash $ 527 $ 170
 Forward foreign exchange contracts 688 -
Loans and receivables:
 Accounts receivable - trade 10,427 14,511
 Accounts receivable - other 308 200

Financial Liabilities
Held for trading financial liabilities:
 Forward foreign exchange contracts - 247
Other financial liabilities:
 Accounts payable and accrued liabilities 6,822 9,625
 Long-term debt -
 bearing interest at variable rates 3,921 2,989
 Bank indebtedness 1,747 2,977
 Long-term debt -
 bearing interest at fixed rates 3,899 4,948
---------------------------------------------------------------------------
---------------------------------------------------------------------------

The Corporation has determined that the fair value of its short-term financial assets and liabilities approximates their respective carrying amounts as at the balance sheet dates because of the short-term maturity of those instruments. The fair value of forward foreign exchange contracts was determined using quoted market values. The fair value of the long-term debt bearing interest at variable rates approximates carry values as interest charges fluctuate with changes in the prime rates. The fair value of long-term debt bearing interest at fixed rates approximates its carrying value.

(b) Foreign exchange loss

 Three Months Ended
 ------------------
 May 29, 2009 May 30, 2008
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(Loss) gain relating to financial assets
 and liabilities, excluding forward foreign
 exchange contracts ($207) $ 74
Realized (loss) relating to forward
 foreign exchange contracts (97) (38)
Unrealized (loss) relating to
 forward foreign exchange contracts,
 including changes in fair value of open
 positions - (31)
---------------------------------------------------------------------------
Foreign exchange (loss) gain ($304) $ 5
---------------------------------------------------------------------------
---------------------------------------------------------------------------

 Six Months Ended
 ----------------
 May 29, 2009 May 30, 2008
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(Loss) gain relating to financial assets
 and liabilities, excluding forward foreign
 exchange contracts ($445) $ 19
Realized (loss) relating to forward
 foreign exchange contracts (88) (32)
Unrealized (loss) relating to
 forward foreign exchange contracts,
 including changes in fair value of open
 positions - (31)
---------------------------------------------------------------------------
Foreign exchange loss ($533) $ (44)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Foreign currency risk arises because of fluctuations in exchange rates. The Corporation conducts a significant portion of its business activities in foreign currencies, primarily United States dollars. The assets, liabilities, revenue and expenses that are denominated in foreign currencies will be affected by changes in the exchange rate between the Canadian dollar and these foreign currencies. The Corporation's long-term debt and most of the manufacturing materials are sourced in U.S. dollars, providing a natural economic hedge for a portion of the Corporation's currency exposure.

(c) Derivative financial instruments and hedge accounting

Foreign exchange contracts are transacted with a financial institution to hedge foreign currency denominated anticipated sales of products. The following table summarizes the Corporation's commitments to buy and sell foreign currency under foreign currency forward contracts, all of which have a maturity date of less than one year as at May 29, 2009.

---------------------------------------------------------------------------
 Notional amount Weighted
Currency sold Currency bought sold average rate
---------------------------------------------------------------------------

U.S. dollars Canadian dollars $ 5,250 $ 1.2217

---------------------------------------------------------------------------
---------------------------------------------------------------------------

Management estimates that a gain of $682 would be realized if these contracts were terminated on May 29, 2009. All of these forward contracts are designated as cash flow hedges and have an unrealized gain of $688, all of which is recognized in the accumulated other comprehensive income ("AOCI") section of shareholders equity. This unrealized gain in AOCI at May 29, 2009 is expected to be reclassified to earnings over the next twelve months when the sales are recorded.

All hedging relationships are formally documented, including the risk management objective and strategy. On a quarterly basis, an assessment will be made as to whether the designated derivative financial instruments have been and continue to be effective in offsetting changes in cash flows of the hedged transactions.

10. TRANSLATION OF FOREIGN CURRENCIES

FTG Circuits - Chatsworth and Firan Technology Group (USA) Corporation are considered self-sustaining subsidiaries. Accordingly, their assets (including goodwill) and liabilities are translated at exchange rates in effect at the balance sheet date. Sales and expenses are translated at average exchange rates prevailing during each month. The resulting current half year translation loss of $702 (2008 loss of $34) is included in the accumulated other comprehensive income section of shareholders' equity until there is a realized reduction in the net investment. Goodwill for FTG Circuits - Chatsworth is translated at exchange rates in effect at the balance sheet dates. The resulting half year loss of $416 on the translation of the goodwill is included in the AOCI section of shareholders equity.

11. SEGMENTED INFORMATION

The Corporation operates in two operating segments: FTG Circuits and FTG Aerospace. FTG Circuits is a leading manufacturer of high technology / high reliability printed circuit boards within the North American marketplace. FTG Aerospace is a manufacturer of illuminated cockpit panels, keyboards, bezels and sub assemblies for original equipment manufacturers of avionic products and airframe manufacturers. FTG Circuits and FTG Aerospace financial information is shown below:

 Three Months Ended May 29, 2009
 -------------------------------------
 Corporate
 Circuits Aerospace Office Total
 -------- --------- --------- -----

Sales $ 11,715 $ 2,919 $ - $ 14,634
Costs and SG&A expenses 10,320 2,267 547 13,134
Amortization of capital assets 544 73 - 617
Amortization of intangibles 12 - - 12
Research and development costs 581 155 - 736
Foreign exchange loss on conversion
 of balance sheet assets and
 liabilities 48 256 - 304
Severance and restructuring costs 223 8 231
 -------------------------------------
(Loss) earnings before interest and
 taxes (13) 160 (547) (400)
Interest expense on long-term and
 short-term debt 138 - - 138
Provision of income taxes 2 - - 2
 -------------------------------------
Net (loss) earnings $ (153) $ 160 $ (547) $ (540)
 -------------------------------------
 -------------------------------------

Segment assets $ 22,971 $ 9,435 $ - $ 32,406
Goodwill 4,167 - - 4,167
Intangibles 407 - - 407
Additions to capital assets 231 64 - 295
---------------------------------------------------------------------------
---------------------------------------------------------------------------


 Three Months Ended May 30, 2008
 -------------------------------------
 Corporate
 Circuits Aerospace Office Total
 -------- --------- --------- -----

Sales $ 12,747 $ 3,711 $ - $ 16,458
Costs and SG&A expenses 10,575 3,054 548 14,177
Amortization of capital assets 585 96 - 681
Research and development costs 1,291 43 - 1,334
Foreign exchange (gain) loss
 on conversion of balance sheet
 assets and liabilities 5 (10) - (5)
 -------------------------------------
Earnings (loss) before interest
 and taxes 291 528 (548) 271
Interest expense on long-term and
 short-term debt 176 - - 176
Income taxes (recovery) (111) - - (111)
 -------------------------------------
Net earnings (loss) $ 226 $ 528 $ (548) $ 206
 -------------------------------------
 -------------------------------------

Segment assets $ 25,488 $ 8,362 $ - $ 33,850
Goodwill and intangibles 4,291 - - 4,291
Additions to capital assets 262 33 - 295
---------------------------------------------------------------------------
---------------------------------------------------------------------------


Geographic location
---------------------------------------------------------------------------
(in thousands of dollars) Three Months Ended May 29, 2009
---------------------------------------------------------------------------
 United
 Canada States Asia Europe Other Total
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Sales (by location 
 of customer) $ 2,646 $ 11,460 $ 398 $ 71 $ 59 $ 14,634
Goodwill
 (by location of division) 1,039 3,128 - - - 4,167
Intangibles
 (by location of division) 407 - - - - 407
Capital assets
 (by location of division) 4,619 2,344 - - - 6,963
---------------------------------------------------------------------------
---------------------------------------------------------------------------

---------------------------------------------------------------------------

---------------------------------------------------------------------------
---------------------------------------------------------------------------
 Three Months Ended May 30, 2008
---------------------------------------------------------------------------
 United
 Canada States Asia Europe Other Total
---------------------------------------------------------------------------
Sales (by location
 of customer) $ 3,516 $ 12,093 $ 727 $ 122 $ - $ 16,458
Goodwill and intangibles
 (by location of division) 1,446 2,845 - - - 4,291
Capital assets
 (by location of division) 6,648 1,258 - - - 7,906
---------------------------------------------------------------------------
---------------------------------------------------------------------------


 Six Months Ended May 29, 2009
 -------------------------------------
 Corporate
 Circuits Aerospace Office Total
 -------- --------- --------- -----

Sales $ 23,201 $ 6,127 $ - $ 29,328
Costs and SG&A expenses 19,986 4,743 1,058 25,787
Amortization of capital assets 1,097 164 - 1,261
Amortization of intangibles 24 - - 24
Research and development costs 1,604 256 - 1,860
Recovery of research and
 development costs (50) - - (50)
Foreign exchange loss on
 conversion of balance sheet assets
 and liabilities 276 257 - 533
Severance and restructuring costs 223 8 231
 -------------------------------------
Earnings (loss) before interest
 and taxes 41 699 (1,058) (318)
Interest expense on long-term and
 short-term debt 285 - - 285
Provision of income taxes 4 - - 4
 -------------------------------------
Net (loss) earnings $ (248) $ 699 $ (1,058) $ (607)
 -------------------------------------
 -------------------------------------

Segment assets $ 22,971 $ 9,435 $ - $ 32,406
Goodwill 4,167 - - 4,167
Intangibles 407 - - 407
Additions to capital assets 1,133 78 - 1,211
---------------------------------------------------------------------------
---------------------------------------------------------------------------


 Six Months Ended May 30, 2008
 -------------------------------------
 Corporate
 Circuits Aerospace Office Total
 -------- --------- --------- -----

Sales $ 23,316 $ 6,740 $ - $ 30,056
Costs and SG&A expenses 19,958 5,746 1,139 26,843
Amortization of capital assets 1,244 137 - 1,381
Research and development costs 2,079 118 - 2,197
Foreign exchange (gain) loss on
 conversion of balance sheet assets
 and liabilities 17 27 - 44
Severance and restructuring costs 208 - - 208
 -------------------------------------
(Loss) earnings before interest and
 taxes (190) 712 (1,139) (617)
Interest expense on long-term and
 short-term debt 358 - - 358
Income taxes (recovery) (134) - - (134)
 -------------------------------------
Net (loss) earnings $ (414) $ 712 $ (1,139) $ (841)
 -------------------------------------
 -------------------------------------

Segment assets $ 25,488 $ 8,362 $ - $ 33,850
Goodwill and intangibles 4,291 - - 4,291
Additions to capital assets 363 33 - 396
---------------------------------------------------------------------------
---------------------------------------------------------------------------


Geographic location
---------------------------------------------------------------------------
(in thousands of dollars) Six Months Ended May 29, 2009
---------------------------------------------------------------------------
 United
 Canada States Asia Europe Other Total
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Sales (by location of
 customer) $ 5,153 $ 22,709 $ 1,149 $ 224 $ 93 $ 29,328
Goodwill
 (by location of division) 1,039 3,128 - - - 4,167
Intangibles
 (by location of division) 407 - - - - 407
Capital assets
 (by location of division) 4,619 2,344 - - - 6,963
---------------------------------------------------------------------------
---------------------------------------------------------------------------

---------------------------------------------------------------------------

---------------------------------------------------------------------------
---------------------------------------------------------------------------
 Six Months Ended May 30, 2008
---------------------------------------------------------------------------
 United
 Canada States Asia Europe Other Total
---------------------------------------------------------------------------
Sales (by location of
 customer) $ 5,784 $ 22,501 $ 1,467 $ 304 $ - $ 30,056
Goodwill and intangibles
 (by location of division) 1,426 2,865 - - - 4,291
Capital assets
 (by location of division) 6,648 1,258 - - - 7,906
---------------------------------------------------------------------------
---------------------------------------------------------------------------