Northstar Aerospace Inc. Reports 2006 Fourth Quarter and Full Year Results



    LISTED: TSX
    SYMBOL: NAS

    CHICAGO, IL, March 9 /CNW/ - (All amounts within this news release are
stated in U.S. dollars) Northstar Aerospace Inc. (the "Company") today
reported revenue totaling $34.1 million for the three months ended
December 31, 2006 compared to $30.9 million in 2005, a increase of $3.2
million. For the year ended December 31, 2006, revenue increased to $144.1
million in 2006 from $137.6 million in 2005.
    The quarter included several one-off factors including an $8.1 million
charge for additional remediation costs related to the previously disclosed
environmental issues at the Company's Canadian operations. The increase to the
provision reflects a revised, longer groundwater remediation plan with more
extensive testing, as required by Province of Ontario environmental agencies.
The additional environmental provision contributed to the management's
decision to fully reserve for the remaining net future income tax asset of
$4.5 million related to the Company's Canadian operations.
    A change in revenue recognition method on a specific customer contract
was made in the quarter from percentage of completion, under which revenue and
margin are recognized based on work completed to date, to completed contract,
under which revenue and margin are recognized only upon shipment. This change
resulted in reducing revenue by $3.2 million and margin by $1.1 million for
the quarter.
    Margins as a percentage of revenue were 20.3% in the three months ended
December 31, 2006 compared to 20.0% in the same period of 2005. For the year
ended December 31, 2006, margins as a percentage of revenue were 21.6%
compared to 21.4% for 2005.
    Earnings before interest, taxes, depreciation, amortization, foreign
exchange and unusual items ("EBITDA") were $4.2 million for the fourth quarter
of 2006 compared to $3.8 million for the fourth quarter of 2004. For the
twelve months of 2006, EBITDA was $19.1 million; $0.4 million lower than 2005
    The net loss for the three months ended December 31, 2006 was
$12.8 million or $0.43 per share compared to a net loss of $4.7 million or
$0.16 per share for the same period in the 2005.
    Backlog increased to $222 million at December 31, 2006 from $204 million
at December 31, 2006, an increase of 9% in the past 12 months. The majority of
the backlog relates to the CH-47 program.

    Mark Emery, President and Chief Executive Officer stated:

    
        "The underlying results of operations before the impact of one-off
        adjustments demonstrate a strengthening of the business and in
        particular revenues on the CH-47 program moved to record levels.
        During the quarter, production was boosted by the implementation of
        the initial phase of new capital equipment and cell-based
        manufacturing. Margins are expected to benefit from improved pricing,
        making the CH-47 the key driver of Northstar's profitable growth in
        the year ahead.

        The revisions to the environmental remediation requested by
        government authorities have significantly increased costs. While
        unexpected and disappointing, Northstar has placed the needs of the
        community as a high priority to ensure the Company is acting in a
        socially responsible manner. The community's understanding and
        support are major reasons for the considerable accomplishments to
        date."
    

    A more detailed discussion of the Company's financial results for the
three and twelve months ended December 31, 2006 is contained in Management's
Discussion and Analysis, including comments on the comparability of results
between the current and prior year.

    Northstar Aerospace Inc. (www.nsaero.com) is North America's leading
independent manufacturer of flight critical gears and transmissions. Northstar
Aerospace is a public company (TSX:NAS) with operating subsidiaries in the
United States and Canada. Its principal products include helicopter gears and
transmissions, accessory gearbox assemblies, rotorcraft drive systems and
other machined and fabricated parts. It also provides maintenance, repair and
overhaul of helicopter engines and transmissions. The Company's executive
offices are located in Chicago, Illinois. Its plants are located in Chicago,
Illinois; Phoenix, Arizona; Stroud, Oklahoma; Anderson, Indiana; and Milton
and Windsor, Ontario.

    Forward Looking Statements
    This press release includes "forward-looking statements" that are subject
to risk and uncertainty. All statements other than statements of historical
facts included in this report, including, without limitation, those regarding
the Company's financial position, business strategy, projected costs and
plans, projected revenues, objectives of management for future operations, and
certain other items discussed above may be or include forward-looking
statements. There is uncertainty over the impact of terrorist activity on the
North American economy and the Company's revenues and earnings for 2005 and
beyond. There is also uncertainty as a result of the downturn in the
commercial aerospace market, the impact of lower world wide commercial
passenger air travel, air freight traffic and the impact of the level of
future U.S. military expenditures. Forward-looking information contained
herein is based upon a number of assumptions regarding the Canadian, U.S. and
global economic environment and local and foreign government policies and
actions. Actual future results of the Company may differ materially depending
on a variety of factors, including production rates, timing of product
deliveries, Canadian, U.S. and foreign government activities, volatility of
the market for the Company's products and services, worldwide political
stability, factors that result in significant and prolonged disruption to
commercial air travel worldwide, worldwide political stability, domestic and
international economic conditions, and other political and economic risks and
uncertainties. Although the Company believes that the expectations reflected
in such forward-looking statements are reasonable, there can be no assurance
that such expectations will prove to have been correct. Important factors that
could cause actual results to differ materially from the Company's
expectations ("Cautionary Statements"), are included in the Company's Annual
Report for the Years Ended December 31, 2005 and 2004 - Management's
Discussion and Analysis - Risks and Uncertainties, and in the Company's Annual
Information Form filed on March 31, 2006, under the heading of Risks and
Uncertainties. All information contained in this report and subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on behalf of the Company are expressly qualified in their entirety by
the Cautionary Statements.
    The Company disclaims any intentions or obligation to update or revise
any forward looking statements or comments as a result of any new information,
future event or otherwise, unless such disclosure is required by law.

    Non-GAAP Measures
    The Company defines adjusted income before taxes, comparable basis, as
income from operations before income taxes, unusual items, and non-recurring
items. The Company defines EBITDA as earnings from operations before interest,
income taxes, foreign exchange, depreciation and amortization, unusual items,
and other non-recurring items. The Company has included information concerning
EBITDA because it believes this measure is used by certain investors as a
measure of continuing financial performance. EBITDA is not a measure of
financial performance under GAAP. As well, this measure has no standardized
meaning prescribed under GAAP and is unlikely to be comparable to similarly
titled measures used by other companies. EBITDA should not be construed as an
alternative to cash flow from operations or earnings from operations as
determined in accordance with GAAP as measures of liquidity or earnings.
    For a detailed reconciliation of EBITDA to income from continuing
operations, please see Management's Discussion and Analysis available on the
Company's website and on SEDAR.



    
    NORTHSTAR AEROSPACE INC.
    FINANCIAL HIGHLIGHTS
    For the three months ended December 31, 2006
    prepared in accordance with Canadian GAAP
    UNAUDITED
    ---------
    (millions of U.S. dollars except per share amounts)
     -------------------------------------------------

    Summary of Quarterly Information

             Q4 2006 Q3 2006 Q2 2006 Q1 2006 Q4 2005 Q3 2005 Q2 2005 Q1 2005

    Revenues  $ 34.1  $ 36.9  $ 36.8  $ 36.3  $ 30.9  $ 37.7  $ 33.2  $ 35.8

    Unusual
     loss
     (gain)      8.1       -     0.6       -     5.5    (0.6)      -    (6.7)

    Net
     income
     (loss)
     continuing
     opera-
     tions     (12.8)    0.7     0.1     0.3    (4.9)    0.4     1.1     8.0

    Net
     income
     (loss)    (12.8)    0.7     0.9     0.5    (4.7)    0.5     1.3     8.3

    Income
     (loss)
     per
     share,
     continuing
     opera-
     tions:
     basic     (0.43)   0.02       -    0.01   (0.17)   0.01    0.04    0.27
    fully
     diluted   (0.43)   0.02       -    0.01   (0.17)   0.01    0.04    0.26

    Income
     (loss)
     per
     share:
     basic     (0.43)   0.02    0.03    0.02   (0.16)   0.02    0.04    0.28
    fully
     diluted   (0.43)   0.02    0.03    0.02   (0.16)   0.02    0.04    0.27


    Summary Balance Sheet Information

                           December 31, 2006               December 31, 2005

    Working capital,
     continuing operations             $47.7                          $ 36.2

    Total assets                      $152.9                          $147.5

    Total debt                         $66.1                          $ 53.3

    Shareholders' equity               $35.6                          $ 45.5
    

    The unaudited Consolidated Financial Statements for the Three and Twelve
Months ended December 31, 2006 and related MD&A are available on our website
at: www.nsaero.com and on SEDAR.

    %SEDAR: 00002555E




For further information:

For further information: Tom Connerty, Chief Financial Officer; Craig
Yuen, Corporate Controller, (708) 728-2000

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