General Donlee Income Fund Delivers Solid First Quarter 2009 Results

    TORONTO, May 7 /CNW/ - General Donlee Income Fund (the "Fund" or "General
Donlee") (TSX: GDI.UN) today announced results for the first quarter ended
March 31, 2009. The Fund continued to generate positive results despite the
current economic slowdown.
    General Donlee`s first quarter 2009 results reflected its continuing
steady performance:

    -   Sales were $13.8 million, up 11% from the Q1 2008 sales level of
        $12.4 million
    -   Net Income was $2.9 million, up 61% from Q1 2008
    -   Distributable cash(1) was $2.6 million or $0.464 per Unit, as
        compared to $2.3 million or $0.295 per Unit in the same period last
        year, a per Unit increase of 57%
    -   Distributions paid to Unitholders for the quarter were $0.270 per
        Unit which represented a 58% payout ratio(2)
    -   The Fund repurchased 64,300 in trust Units through a Normal Course
        Issuer Bid

    The Fund's net income of $2.9 million in the first quarter of 2009 was
61% higher than the $1.8 million in the comparable period in 2008, reflecting
the increased sales levels and the impact of the rising U.S. Dollar ("USD") in
both divisions.
    Cash flow from operating activities also increased during the first
quarter. Overall, the Fund's operating performance during the quarter enabled
the Fund to continue to pay monthly regular distributions to Unitholders at
the current rate of $0.090 per Unit.
    The Fund's repurchase of 64,300 Units at prevailing market prices in the
first quarter of 2009 reflected its continuing strategy to further enhance
Unitholder value. The Fund also repurchased and cancelled $1,028,000 in
principal amount of convertible debentures under a normal course issuer bid,
resulting in a gain of $0.2 million.
    On April 2, 2009, General Donlee announced that it owned 782,900 units of
Drive Products Income Fund (DPI.UN), representing 11.36% of the total
outstanding units of DPI.

    Financial Highlights

    The following summary of financial data presents the consolidated results
of operations of the Fund for the three-month period ended March 31, 2009,
including comparative results for the same period in 2008.

    ($ millions, except Unit and                        Three Months Ended
    per Unit amounts, unaudited)                        ------------------
                                                     Mar. 31/09   Mar. 31/08
                                                     -----------  -----------
    Sales                                                13.8         12.4
    Gross profit                                          4.4          3.7
    Net income                                            2.9          1.8
    Basic income per Unit                            $  0.530(a)  $  0.234(b)

    Distributable cash(1)                                 2.6          2.3
    Distributable cash per Unit(1)                   $  0.464(a)  $  0.295(b)
    Distributions paid                                    1.5          2.1
    Distributions paid per Unit                      $  0.270     $  0.270

    (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 repayment of
        long-term bank debt and less the pro-rated reserve for maintenance
        capital expenditures, for which Management estimates $1.25 million
        for 2009. 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 5,508,326 Units outstanding for the
            first quarter of 2009.
        (b) Based on weighted average of 7,808,354 Units outstanding for the
            first quarter of 2008.

    Overall Financial Performance

    In the quarter ended March 31, 2009, General Donlee delivered sales of
$13.8 million, up by $1.4 million or 11% above the sales level in the first
quarter of 2008. The Company's aerospace and power generation products
division delivered sales of $9.0 million, an increase of $0.9 million, or 11%,
over 2008, mostly due to higher power generation sales, military aerospace
sales and rising the USD, offset by a decrease in commercial aerospace.
General Donlee's industrial products division produced first-quarter 2009
sales of $4.8 million, an increase of $0.5 million or 12% over the same period
last year, due to the commercial aerospace landing gear contract obtained in
late 2007.
    The Fund achieved net income of $2.9 million for the three months ended
March 31, 2009, compared to $1.8 million in the same period last year. This
increase in net income for the first quarter of 2009 was the result of the
additional sales revenue and the rising USD. The increased net income in 2009
contributed to higher distributable cash(1) of $2.6 million, or $0.464 per
Unit, an increase per Unit of 57% over the $2.3 million or $0.295 per Unit in
the comparable period in 2008. In the first quarter, distributions paid were
$1.5 million or $0.270 per Unit, compared to $2.1 million or $0.270 per Unit
in 2008.
    General Donlee continues to maintain adequate working capital to support
its current operations, as well as additional credit facilities to support any
continued growth. At March 31, 2009, General Donlee had working capital of
$20.1 million and a current ratio of 3.5:1. The working capital level was up
slightly from the $19.9 million reported at December 31, 2008.
    General Donlee has continued to invest in new equipment that will further
increase production capacity, allowing it to capture a greater share of the
market when the economy rebounds.

    Distributable Cash(1)

    Distributable cash(1) for the quarter was $2.6 million, or $0.464 per
Unit, as compared to the three months ended March 31, 2008, when distributable
cash(1) was $2.3 million, or $0.295 per Unit.
    The increase in the per Unit value of distributable cash for 2009 also
reflects the positive results of the issuer bids that had been completed as of
March 31, 2009.
    Regular distributions paid to Unitholders were $0.270 per Unit for the
three months ended March 31, 2009, unchanged from the same period in 2008.
    The following table shows the calculation of distributable cash(1).

                                                        Three Months Ended
    ($000, except per Unit amounts)                    Mar. 31      Mar. 31
                                                        2009           2008
                                                     -----------  -----------

    Cash provided by operating activities            $    2,014   $    2,017
    Adjust for net changes in non-cash working
     capital balances related to operations               1,092          603
    Cash provided by operating activities before
     changes in non-cash working capital balances         3,106        2,620
    Repayment of long-term bank debt                       (239)           0
    Reserve for maintenance capital expenditures           (313)        (313)
    Distributable cash(1)                            $    2,554   $    2,307

    Distributions paid to Unitholders                $    1,484   $    2,108

    Basic income per Unit                            $    0.530   $    0.234

    Distributable cash(1) per Unit                   $    0.464   $    0.295

    Distributions paid per Unit                      $    0.270   $    0.270
    Payout ratio(2)                                          58%          91%

    (2) Payout ratio is not a defined term under Canadian GAAP, but is
        determined as actual distributions divided by distributable cash. The
        Fund's method of calculating its payout ratio may not be comparable
        to measures used by other companies or trusts.


    While both the industrial and the aerospace industries are expected to
decline in the coming months, General Donlee is hopeful that its diverse
platform of products and wide customer base will help mitigate any material
negative impacts.
    Trustees and Management were pleased with the positive results of the
first quarter of 2009, and anticipate that the current upheaval in the economy
will test the Company's strategies in the year ahead. Although the remaining
quarters in 2009 are not expected to be as strong as the first quarter,
General Donlee's $42.3 million sales order backlog remains a good indication
of the ongoing continuing demand for its products. With the operational
improvements and equipment investments the Fund has prudently made in recent
years, General Donlee believes it is better-positioned to ride out the current
    General Donlee will continue to work toward an ongoing profitable
performance for its Unitholders in the quarters to come.

    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 interim Consolidated Financial Statements
(including the notes thereto) and Management's Discussion and Analysis for the
three months ended March 31, 2009 with SEDAR at These documents
are also available on the Fund's website at on the
Financial Reports page.
    In addition to these documents, the Fund also files its Annual Report,
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; ability to fund pension deficits, interest and
foreign exchange rates; leverage and restrictive debt covenants; continued
availability of credit facilities; regulatory requirements; reliance on key
personnel and the Company's 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; economic growth and
fluctuations (including the global credit crisis, and pension performance,
funding and expenses); 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 or through the Fund's website at

    %SEDAR: 00017571E

For further information:

For further information: Gerald Thain, Chief Financial Officer,
Telephone: (416) 743-4417, E-mail:, Web site:

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