General Donlee Income Fund Reports Second Consecutive Year of Record Results in 2007



    Fourth Quarter of 2007 continues strong performance

    TORONTO, March 10 /CNW/ - General Donlee Income Fund (the "Fund" or
"General Donlee") (TSX: GDI.UN) today announced results for the fourth quarter
and the fiscal year ended December 31, 2007, reporting growth resulting from
its operational improvements and the ongoing strength of the aerospace
industry. 2007 was the second consecutive year in which the Fund's year-end
results set new record highs.
    General Donlee's fourth quarter 2007 results reflected its continuing
solid performance:

    
    -   Sales were $12.9 million, down slightly from the Q4 2006 sales level
        of $13.5 million
    -   Sales order backlog remains strong at $57.4 million
    -   Net income was $2.5 million or $0.315 per Unit
    -   Distributable cash was $2.9 million or $0.367 per Unit
    -   Distributions rose by 17%, with $2.1 million or $0.27 per Unit paid
        to Unitholders
    -   The Fund repurchased $5.1 million in trust Units through a Normal
        Course Issuer Bid
    -   The Fund maintained a strong balance sheet, with $29.6 million of
        cash and marketable securities
    

    In keeping with its ongoing objective to enhance Unitholder value, the
Fund repurchased 527,424 Units at prevailing market prices in the fourth
quarter of 2007. With these transactions complete, the Fund satisfied its
Normal Course Issuer Bid, having repurchased and cancelled 844,406 Units
during 2007. In January 2008, the fund announced a Normal Course Issuer Bid to
repurchase $5.0 million of its 2014 unsecured subordinated debentures. In
February 2008, the Fund announced a substantial issuer bid for cancellation of
up to 1,171,253 of its outstanding units at a price of $8.75 per unit.
    While the Fund's net income in the fourth quarter of 2007 was lower than
the comparable period in 2006, comparative results for the fourth quarter of
2007 over the fourth quarter of 2006 should be considered in the context of
General Donlee's quarterly business operations which may fluctuate with the
timing of shipments to customers.
    Overall in 2007, net income increased by 6% despite the impact of the
strengthening Canadian dollar. The Fund's performance during the year led to
significantly increased returns to Unitholders; in fact, the continuing growth
of General Donlee's business enabled the Fund to increase monthly
distributions to Unitholders twice during 2007 alone. The Fund's current
monthly distribution is $0.09 per Unit.

    Financial Highlights

    The following summary of financial data presents the consolidated results
of operations of the Fund for the three-month and twelve-month periods ended
December 31, 2007, including comparative results for the same periods in 2006.

    
    ($ millions,
     except Unit and         Three Months Ended        Twelve Months Ended
     per Unit amounts,    ------------------------- -------------------------
     unaudited)            Dec. 31/07   Dec. 31/06   Dec. 31/07   Dec. 31/06
                          ------------ ------------ ------------ ------------

    Operations
    ----------
    Sales                      12.9         13.5         52.1         45.7
    Gross profit                3.9          4.5         14.7         13.3
    Net income                  2.5          3.0          9.5          9.0
    Basic income per Unit   $ 0.315(d)   $ 0.340(b)   $ 1.124(c)   $ 1.009(a)

    Distributions
    -------------
    Distributable cash(1)       2.9          3.2          9.9          8.7
    Distributable cash
     per Unit(1)            $ 0.367(d)   $ 0.360(b)   $ 1.171(c)   $ 0.981(a)
    Cash distributions
     paid                       2.1          1.8          8.7          6.5
    Cash distributions
     paid per Unit          $ 0.270(d)   $ 0.210(b)   $ 1.030(c)   $ 0.735(a)

    (1) Distributable cash is not a defined term under Canadian generally
        accepted accounting principles ("GAAP"), but is determined by the
        Fund as cash flow provided by operating activities (adjusted to
        remove changes in non-cash working capital items), less the reserve
        for maintenance capital expenditures, for which Management included
        $1.25 million for 2007 and $2.0 million for 2006. See reconciliation
        of distributable cash below. Management believes that this liquidity
        measure is a useful supplemental measure of performance, as it
        provides investors with an indication of the amount of cash available
        for distribution to Unitholders. Investors are cautioned, however,
        that distributable cash should not be construed as an alternative to
        using net earnings as a measure of profitability, or to using the
        statements of cash flows. Further, the Fund's method of calculating
        distributable cash may not be comparable to measures used by other
        companies or trusts. For details of distributable cash, see the table
        below.
    (a) Based on weighted average of 8,914,044 Units outstanding for the
        year 2006.
    (b) Based on weighted average of 8,816,251 Units outstanding for the
        fourth quarter of 2006.
    (c) Based on weighted average of 8,447,284 Units outstanding for the
        year 2007.
    (d) Based on weighted average of 8,020,916 Units outstanding for the
        fourth quarter of 2007.
    

    Overall Financial Performance for 2007

    In 2007, General Donlee delivered a second consecutive year of record
consolidated financial results. Overall, sales reached $52.1 million, up by
$6.4 million or 14% above the sales level achieved in 2006. The aerospace and
power generation division delivered sales of $34.5 million, reflecting an
increase of $6.4 million, or 23%, over 2006, due mostly to higher shipments of
commercial aerospace products resulting from the ongoing strength of the
aerospace industry. General Donlee's industrial products division produced
2007 sales worth $17.6 million, on par with the prior year despite the impact
on their US sales caused by the weakened U.S. dollar in the latter half of
2007. On the whole, General Donlee's improved sales led to increases in gross
profit, net earnings and cash flows from operations in 2007 as compared to
2006.
    The Fund achieved net income of $9.5 million for the twelve months ended
December 31, 2007, reflecting a 6% increase compared to the same period in
2006, when its net income was $9.0 million. The improved net income in 2007
helped to generate distributable cash(1) of $9.9 million or $1.171 per Unit,
an increase of 14% over the $8.7 million or $0.981 per Unit in distributable
cash(1) in the comparable period in 2006. In 2007, cash distributions paid
grew by 34%, at $8.7 million or $1.030 per Unit, compared to $6.5 million or
$0.735 per Unit in 2006.
    The Fund's balance sheet continues to grow stronger, and at December 31,
2007, showed an increase in working capital to $43.7 million. The Trustees and
Management believe the Fund's balance sheet to be sufficient to support the
Company's on-going business operations and the current level of distributions.
The consolidated net debt to equity ratio of the Fund at December 31, 2007 is
conservative at 1.15:1.00.
    The Trustees and Management believe that with its strong overall
financial position, the Fund has some flexibility to make investments in both
acquisitions and organic growth for General Donlee. The combination of the
enhancements General Donlee has made to productivity and the continued
strength in the aerospace industry has led to a significant order backlog -
and there is even further demand in the industry. The Fund is currently
considering investments in capital equipment that would allow General Donlee
to further increase capacity, enabling it to capitalize on the opportunities
that exist in the market more fully.

    Distributable Cash(1)

    The growth in General Donlee's business in 2007 allowed it to increase
cash distributions to Unitholders by 34% in 2007 over 2006. The Fund increased
monthly distributions to Unitholders twice during the year - to $0.08 per Unit
in February 2007, and again to $0.09 per Unit in May 2007. "We are pleased to
report that our Unit price increased by 25% in 2007 alone, for a total annual
return to Unitholders, including distributions, of 40% during the year," said
Ken Chalmers, Executive Chairman of the Fund.
    For the year ended December 31, 2007, distributable cash(1) was
$9.9 million, or $1.171 per Unit, as compared to the year ended December 31,
2006, when distributable cash(1) was $8.7 million, or $0.981 per Unit.
    The following table shows the calculation of distributable cash(1).

    
                                 Three Months Ended      Twelve Months Ended
    ($000, except                Dec. 31     Dec. 31     Dec. 31     Dec. 31
     per Unit amounts)             2007        2006        2007        2006
                               ----------  ----------  ----------  ----------

    Cash provided by
     operating activities          $(574)     $3,776      $6,562      $9,784
    Adjust for net changes
     in non-cash working
     capital balances
     related to operations         3,829        (102)      4,576         964
                               ----------------------------------------------
    Cash provided by
     operating activities
     before changes in non-cash
     working capital balances      3,255       3,674      11,138      10,748
    Reserve for maintenance
     capital expenditures           (312)       (500)     (1,250)     (2,000)
                               ----------------------------------------------
    Distributable cash(1)         $2,943      $3,174      $9,888      $8,748

    Cash distributions paid
     to Unitholders               $2,149      $1,842      $8,652      $6,539
                               ----------------------------------------------

    Basic income per Unit         $0.315      $0.340      $1.124      $1.009

    Distributable cash(1)
     per Unit                     $0.367      $0.360      $1.171      $0.981

    Cash distributions paid
     per Unit                     $0.270      $0.210      $1.030      $0.735
    

    Outlook

    With two consecutive years of record results added to General Donlee's
growing track record, the Trustees and Management expect that its business
strategies will continue to lead the Fund to success in the year ahead. The
$57.4 million sales order backlog is a solid indication of the growing demand
for General Donlee's products. With the operational improvements and
investments in equipment that the Fund has prudently made in recent years
General Donlee will be well-positioned to seize further opportunities.
    The $50.0 million in convertible unsecured subordinated debentures the
Fund issued in 2007 positions General Donlee to take further advantage of the
anticipated growth in the aerospace industry, as it strengthens the Fund's
balance sheet, providing General Donlee better resources with which to
capitalize on strategic opportunities to build further Unitholder value.
    Given all of these factors, General Donlee's outlook for 2008 is
positive. The Company's operational efficiency continues to improve and its
production capacity is increasing, the upswing in the aerospace industry is
expected to continue, and General Donlee's balance sheet is strong. "We are
enthusiastic about our prospects, and look forward to leveraging these
advantages to deliver continued profitable growth for our Unitholders in the
years ahead," said Mr. Chalmers.

    Company Profile

    The Fund is a trust established to hold the securities of General Donlee
Limited, a leading diversified manufacturer of precision-machined products for
the military, commercial and general aerospace industries, and a specialist in
the manufacture of precision-machined products for the industrial products and
power generation industries. General Donlee's operating strategy focuses on
targeting niche markets for products that are aligned with its sophisticated
manufacturing capabilities and skilled workforce.

    SEDAR Filings

    Today the Fund filed its annual audited Consolidated Financial Statements
(including the notes thereto) and Management's Discussion and Analysis for the
year ended December 31, 2007 with SEDAR at www.sedar.com. These documents are
also available on the Fund's website at www.generaldonlee.com on the Financial
Reports page.
    In addition to these documents, the Fund also files its Annual
Information Form, its Notice of Annual Meeting and Management Information
Circular, and its interim financial statements with SEDAR.

    Forward-Looking Information

    As with all forward-looking statements, caution must be exercised to
ensure that appropriate interpretation is made. Certain forward-looking
statements are based on information currently available to Management, but are
subject to a number of uncertainties and risks that could cause actual results
to differ materially from the results discussed in the forward-looking
statements. These uncertainties and risks include, but are not limited to:
dependence on commercial aircraft sales and defence procurement; dependence on
power generation sales and sales to the industrial sector; production rates;
shipping schedules and timing of deliveries; dependence on key customers;
dependence on third party suppliers and manufacturers; raw material costs;
competition; satisfying product specifications; product liability and warranty
claims; environmental and other government regulation; quality certification
requirements; hedging effects; interest and foreign exchange rates; leverage
and restrictive debt covenants; continued availability of credit facilities;
regulatory requirements; reliance on key personnel and our skilled workforce;
changes in accounting policies; the ability to obtain orders, contract awards
and terminations; input costs; possible changes to the tax laws affecting
income trusts; and domestic and international economic conditions. In
addition, these forward-looking statements relate to the date on which they
are made. Although the forward-looking statements contained herein are based
upon what Management believes to be reasonable assumptions, the Fund cannot
assure Unitholders that actual results will be consistent with these
forward-looking statements, and the Fund disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In formulating the forward-looking
statements herein, Management has assumed that business and economic
conditions affecting it will continue substantially in the ordinary course,
including without limitation with respect to industry conditions, general
levels of economic activity, regulation, taxes, foreign exchange rates and
interest rates, that there will be no material changes in its facilities,
equipment, customer and employee relations, credit arrangements or credit and
collections experience, and that the integration of new equipment will proceed
relatively smoothly. Further information can be found in the disclosure
documents filed by General Donlee Income Fund with the securities regulatory
authorities, available at www.sedar.com or through the Fund's website at
www.generaldonlee.com.

    %SEDAR: 00017571E




For further information:

For further information: Gerald Thain, Chief Financial Officer,
Telephone: (416) 743-4417, E-mail: gthain@donleeprecision.com, Web site:
www.generaldonlee.com

Organization Profile

GENERAL DONLEE INCOME FUND

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