New Flyer Announces Record Operating Results for the Second Quarter of 2007 Fiscal Year

      -  2007 Q2 Consolidated Adjusted EBITDA of $25.0 million increases by
         237% compared to 2006 Q2.
      -  2007 Q2 bus manufacturing operations Adjusted EBITDA of $21.7
         million increases 312% over 2006 Q2 due to completion of ramp-up of
         bus production and negative impact of strike on 2006 Q2 Adjusted
      -  Continued growth of aftermarket operations results in 2007 Q2
         revenue and Adjusted EBITDA increase of 33% and 27%, respectively,
         compared to 2006 Q2.
      -  2007 Q2 Distributable Cash of C$19.8 million results in excess of
         C$7.5 million over distributions declared in 2007 Q2.
      -  2007 YTD Payout Ratio of 71% and a 52 weeks ended July 1, 2007
         Payout Ratio of 72%.
      -  Total order backlog of $2.25 billion (representing 6,165 equivalent
         units) increased by 22.2% compared to December 31, 2006 total order
         backlog of $1.8 billion (representing 5,313 equivalent units).

    WINNIPEG, Aug. 10 /CNW/ - New Flyer Industries Inc. (TSX:NFI.UN), the
leading manufacturer of heavy-duty transit buses in Canada and the United
States, today announced its results and those of its subsidiary, New Flyer
Holdings, Inc. ("New Flyer" or the "Company") for the 13-week period ("2007
Q2") and for the 26-week period ("2007 YTD") ended July 1, 2007. Full
financial statements and Management's Discussion and Analysis (the "MD&A") are
available at the Company's web site at: Unless otherwise indicated all
monetary amounts in this press release are expressed in U.S. dollars.
    For the third consecutive quarter the Company realized both revenue and
Adjusted EBITDA that were the highest reported quarterly results in the
Company's history. Consolidated revenue for 2007 Q2 of $229.7 million
increased by 68.0% compared to consolidated revenue for the second quarter of
2006 ("2006 Q2") of $136.7 million. Bus manufacturing revenue in 2007 Q2 of
$208.7 million increased by 72.6% compared to bus manufacturing revenue of
$120.9 million in 2006 Q2. This increase in delivery volumes is due to the
significant improvement in firm order position throughout 2006 and 2007, which
resulted in the Company increasing production rates. In addition, a strike at
the Winnipeg production facility significantly negatively impacted deliveries
and revenue in 2006 Q2. 2007 Q2 aftermarket operations revenue of $20.9
million increased by 32.5% compared to $15.8 million in 2006 Q2. The after
market operation was not impacted by the strike in 2006.
    Consolidated Adjusted EBITDA for 2007 Q2 totaled $25.0 million. The
reported consolidated Adjusted EBITDA is a result of the improved backlog
position, sustaining the higher production and delivery levels attained in the
first quarter of 2007, favourable bus manufacturing operations sales mix and
continued growth of the Company's aftermarket operation. 2007 Q2 consolidated
Adjusted EBITDA represents an increase of 236.9% compared to consolidated
Adjusted EBITDA for 2006 Q2 of $7.4 million. 2007 Q2 aftermarket Adjusted
EBITDA of $4.3 million increased by 26.7% compared to $3.4 million in 2006 Q2,
which is consistent with the increase in aftermarket sales. As reported in the
Company's 2006 Q2 financial report, the 2006 Q2 consolidated Adjusted EBITDA
was impacted by an estimated $10.8 million due to a strike. 2007 Q2 bus
manufacturing operations Adjusted EBITDA of $21.7 million increased by $16.4
million compared to bus manufacturing operations Adjusted EBITDA of $5.3
million in the corresponding period of 2006. After normalizing 2006 Q2 results
to remove the impact of the strike, 2007 Q2 Adjusted EBITDA from bus
manufacturing operations improved by $5.6 million which represents an increase
of 34.8% over the normalized 2006 Q2 Adjusted EBITDA. Unallocated Adjusted
EBITDA is comprised primarily of realized foreign exchange losses. In 2007 Q2,
a realized loss of $1.0 million was recorded compared to a loss of $1.2
million in 2006 Q2.
    The Company reported a net loss of $84.9 million in 2007 Q2 and net
earnings of $7.2 million in 2006 Q2. With 2007 Q2 earnings from operations
increasing by $19.9 million and interest costs remaining stable, the decrease
in net earnings is attributable to non-cash charges to earnings and increased
income tax provisions. A fair value increase to other liabilities, Class B and
Class C common shares of $69.2 million has been charged to earnings during
2007 Q2 compared to a gain of $20.0 million in 2006 Q2. The 2007 Q2 charge to
other liabilities for Class B and Class C common shares reflects the increase
in the value of the underlying shares, which has risen together with the value
of the Issuer's IDSs. An unrealized foreign exchange loss of $12.7 million has
been recorded in 2007 Q2 compared to an unrealized foreign exchange loss of
$6.3 million in 2006 Q2. The 2007 Q2 unrealized foreign exchange loss relates
primarily to losses on translation of long-term debt which matures August 2020
and losses on forward foreign exchange contracts which were entered into to
hedge anticipated Canadian dollar cash inflows. The Company expects to
generate a net Canadian dollar cash inflow from operations throughout the
remainder of 2007, which is anticipated to offset any realized gain or loss on
settlement of forward contracts.
    During 2007 Q2 the Company generated Distributable Cash of C$19.8 million
and declared total distributions of C$12.3 million resulting in Distributable
Cash exceeding total distributions by C$7.5 million. This equates to a 2007
YTD Payout Ratio of 70.9% and a 52-week period ended July 1, 2007 Payout ratio
of 72.5%.
    As a result of the Company's positive cash flow from operations, the
Company's liquidity position as at July 1, 2007 totaled $75.6 million
comprised of cash balances of $35.6 million and a $40 million revolving credit
facility, which was undrawn as at July 1, 2007. In comparison, the Company
began the current fiscal year with total liquidity of $44.0 million.
    During 2007 Q2 the Issuer announced that the boards of directors had
approved an increase in the annual rate of distributions by C$0.04 per IDS
effective the July 2007 distribution that is payable August 15, 2007. The
annual distributions are now expected to be C$1.17 per IDS. This is the
Issuer's second distribution increase since the completion of its initial
public offering in August 2005. This distribution increase was made as a
result of the Company's improved operating performance, its completion of the
ramp-up in production and the substantial build-up in the order backlog and
firm bus orders.
    The total order backlog of approximately $2.25 billion (representing
6,165 equivalent units) as at July 1, 2007 increased by 22.2% compared to the
total order backlog of approximately $1.8 billion (representing 5,313
equivalent units) as at December 31, 2006. Based on the significant increase
in order activity in 2006 and 2007, and the current strong bid activity in the
U.S. heavy-duty transit bus market, management believes that the U.S. market
demand is continuing to improve following a period of reduced demand from 2004
to early 2006.
    During 2007 Q2 our customers awarded New Flyer firm orders of $308.2
million (2007 YTD - $409.3 million) compared to 2006 Q2 awarded firm orders of
$161.4 million (2006 YTD - $390.2 million), which represents an increase of
90.9% (YTD increase of 4.9%). Included in 2007 Q2 total firm bus orders are
exercised options of $239.7 million compared to exercised options of $107.4
million in 2006 Q2. As a result of new order activity and deliveries during
2007 Q2, the firm order backlog is $891.8 million as of July 1, 2007, which
represents 39.7% of the total backlog. The firm order backlog, which
represents 2,275 equivalent units of production, provides the order visibility
to allow the Company to efficiently plan the production schedule, thereby
minimizing expenses and working capital requirements.
    On July 12, 2007, the Issuer closed the sale of 9,410,000 Income Deposit
Securities (IDS) sold at a price of C$11.70 per IDS for gross proceeds of     
C$110.1 million. Accordingly, 9,410,000 common shares of NFI and C$52,037
aggregate principal amount of new subordinated notes of NFI ULC were issued to
constitute such IDSs. Each IDS consists of one common share of the Company and
C$5.53 principal amount of subordinated notes of NFI ULC.
    The net proceeds of the offering were ultimately used to purchase for
cancellation 10,490,293 Class C common shares of NFL Holdings. After giving
effect to the issuance of IDSs and purchase for cancellation of such Class C
common shares, NFI holds an approximate 55.3% economic and voting interest in
NFL Holdings, while management and non-management holders of Class B and Class
C common shares of NFL Holdings hold in aggregate an approximate 44.7%
economic and voting interest. Management expects this change in the
outstanding capital to have a neutral impact on the after-tax cash flow of the

    Conference Call
    A conference call for analysts and interested listeners will be held
Monday, August 13th, at 9:00 a.m. (ET). The call-in number for listeners is
866-250-4892. A live audio feed of the call will also be available at:
    A replay of the call will be available from 1:00 p.m. (ET) on August 13,
2007 until 11:59 p.m. (ET) on August 20, 2007. To access the replay, call
416-640-1917 or 877-289-8525, enter pass code number 21242823, and then press
the pound sign. The replay will also be available on the Company's web site at

    Non-GAAP Measures
    Adjusted EBITDA consists of earnings before interest, income taxes,
depreciation, amortization and other non-cash charges, adjusted for IPO
related costs and certain other non-recurring charges as set out in the MD&A.
Management believes Adjusted EBITDA and Distributable Cash (as defined below)
are useful measures in evaluating the performance of the Company.
Specifically, management believes that Adjusted EBITDA is the appropriate
measure from which to make adjustments to determine "Distributable Cash"
(being Adjusted EBITDA increased for proceeds on sale of redundant assets and
decreased for maintenance capital expenditures, principal payments on capital
leases, interest on the Company's credit facility and capital leases, interest
on New Flyer Industries Canada ULC's subordinated notes (not forming part of
IDSs) and current income tax expense). Adjusted EBITDA and Distributable Cash
are not earnings measures recognized under GAAP and do not have standardized
meanings as prescribed by GAAP. Therefore, Adjusted EBITDA and Distributable
Cash may not be comparable to similar measures presented by other entities.
Investors are cautioned that Adjusted EBITDA and Distributable Cash should not
be construed as an alternative to net income or loss determined in accordance
with GAAP as an indicator of New Flyer's performance or to cash flows from
operating, investing and financing activities as measures of liquidity and
cash flows.

    About New Flyer
    New Flyer is the leading manufacturer of heavy-duty transit buses in
Canada and the United States. The Company's three facilities - in Winnipeg,
MB, St. Cloud, MN and Crookston, MN - are all ISO 9001, ISO 14001 and OHSAS
18001 certified. With a skilled workforce of approximately 2,100 employees,
New Flyer is a technology leader in the heavy-duty transit market, offering
the broadest product line in the industry, including drive systems powered by
clean diesel, LNG, CNG and electric trolley, as well as energy-efficient
gasoline-electric and diesel-electric hybrid vehicles. All of New Flyer's
products are supported by an industry-leading, comprehensive parts and service
network. New Flyer's Income Deposit Securities are listed on the Toronto Stock
Exchange under the symbol NFI.UN.

    Forward-Looking Statements
    Certain statements in this press release are "forward-looking
statements", which reflect the expectations of management regarding New Flyer
Industries Inc.'s and the Company's future growth, results of operations,
performance and business prospects and opportunities. The words "believes",
"anticipates", "plans", "expects", "intends", "projects", "estimates" and
similar expressions are intended to identify forward-looking statements. These
forward-looking statements reflect management's current expectations regarding
future events and operating performance and speak only as of the date of this
press release. Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future performance or
results, and will not necessarily be accurate indications of whether or not or
the times at or by which such performance or results will be achieved. A
number of factors could cause actual results to differ materially from the
results discussed in the forward-looking statements. Such differences may be
caused by factors which include, but are not limited to, competition in the
heavy-duty transit bus industry, availability of funding to the Company's
customers at current levels or at all, material losses and costs may be
incurred as a result of product warranty issues, material losses and costs may
be incurred as a result of product liability claims, changes in Canadian or
United States tax legislation, the Company's success depends on a limited
number of key executives who the Company may not be able to adequately replace
in the event that they leave the Company, the absence of fixed term customer
contracts and the termination of contracts by customers for convenience, the
current "Buy-America" legislation may change and/or become more onerous,
production delays may result in liquidated damages under the Company's
contracts with its customers, currency fluctuations could adversely affect the
Company's financial results or competitive position in the industry, the
Company may not be able to maintain performance bonds or letters of credit
required by its contracts, third party debt service obligations may have
important consequences to the Company, interest rates could change
substantially and materially impact the Company's profitability, the
dependence on limited sources of supply, the Company's profitability and
performance can be adversely affected by increases in raw material and
component costs, and the availability of labour could have an impact on
production levels. The Company cautions that this list of factors is not
exhaustive. These factors and other risks and uncertainties are discussed in
the Company's materials filed with the Canadian securities regulatory
authorities and are available on SEDAR at
    Although the forward-looking statements contained in this press release
are based upon what management believes to be reasonable assumptions,
investors cannot be assured that actual results will be consistent with these
forward-looking statements, and the differences may be material. These
forward-looking statements are made as of the date of this press release and
neither New Flyer Industries Inc. nor the Company assumes any obligation to
update or revise them to reflect new events or circumstances.

    %SEDAR: 00022397E

For further information:

For further information: Glenn Asham, Chief Financial Officer, Tel:
(204) 224-1251, E-mail:

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