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Azcar Hit by Deferred Capital Spending

MARKHAM, ONTARIO: Azcar, the Canadian systems integrator, is feeling the pinch of the contracted broadcast industry, itself eviscerated by diminished auto industry spending. Azcar reported second quarter revenues of $14.5 million versus $19.2 million last year during the same quarter. Net loss came in at $590,000 versus net income of $10,000 a year ago. Gross margin did rise, from 17.4 percent last year to 19.3 percent his year.

"Despite taking further cost control measures in the second quarter, operating expenses ended up higher in both the quarter and year to date due to the under utilization of our professional staff associated with capital project delays," Azcar's earnings release stated.

Year to date, the company recorded a net loss of $1.8 million compared to a profit of $314,000 in the previous year. The decrease in net income was attributed to global market conditions and "the deferral of capital projects by our customers." However, two significant purchase orders came in late in the second quarter that will generate results in the third, the company said.

Among its projects, Azcar has contracts to provide digital ENG training to 900 U.S. TV stations through 2009. Future business is expected to come from continued file-based facility conversions and upgrades for HDTV-capable systems. The company's U.S. operations are based in Canonsburg, Pa., outside of Pittsburgh.

Azcar had cash and short-term investments of nearly $1.6 million and long-term debt of $119,000 at the end of 2Q09, compared to $3.2 million cash and equivalents and $179,000 in long-term debt at the end of 1Q09.

Azcar trades on the Toronto Stock Exchange under the symbol AZZ; shares were around 12 cents Canadian in early morning trading.

-- Deborah D. McAdams