New Flyer Announces Required Restatement of 2007 Third Quarter Financial Statements


    -   Consolidated assets and liabilities to be adjusted to reflect fair
        value as at July 12, 2007 as a result of the repurchase of Class C
        shares in connection with the public offering completed on that date
    -   Consolidated net income to be adjusted to reflect impact of fair
        value adjustments on third quarter and year-to-date earnings;
        expected to result in a material reduction of reported consolidated
        net income due to the expected write up of net assets
    -   No adjustment anticipated to previously reported cash from operating
        activities, financing activities, and investing activities
    -   No adjustment anticipated to previously reported Adjusted EBITDA,
        Distributable Cash or Distributions
    -   No adverse effect on compliance with financial covenants in the
        senior credit agreement and note indenture as fair value adjustments
        are excluded from compliance ratios

    WINNIPEG, Jan. 29 /CNW/ - New Flyer Industries Inc. (TSX:NFI.UN) ("New
Flyer" or the "Company"), the leading manufacturer of heavy-duty transit buses
in Canada and the United States, today announced that the consolidated
financial statements for the 13-week period ("2007 Q3") and for the 39-week
period ("2007 YTD") ended September 30, 2007 previously released on
November 12, 2007 require restatement to record a fair value adjustment to the
assets and liabilities reported in the Company's consolidated financial
statements. Full financial statements and Management's Discussion and Analysis
(the "MD&A") will be restated and released upon completion of management's
preliminary determination of the fair value of these assets and liabilities.
Management expects to complete the preliminary determination of the fair value
of assets and liabilities and the restatement of financial statements by no
later than February 6, 2008.
    As disclosed in note 1 to the Company's September 30, 2007 Interim
Consolidated Financial Statements issued on November 12, 2007, management
determined that the Company became the primary beneficiary of the Company's
subsidiary, New Flyer Holdings, Inc. ("NFL Holdings"), on July 12, 2007 in
accordance with CICA Accounting Guideline 15 as a result of the repurchase of
Class C shares of NFL Holdings in connection with the public offering on
July 12, 2007. Accordingly, the Company began to consolidate the assets,
liabilities and the results of operations of NFL Holdings effective
July 12, 2007. However, the Company consolidated the assets and liabilities of
NFL Holdings as of that date based on their book value rather than the fair
value as required under CICA Accounting Guideline 15. Recording these assets
at fair value on July 12, 2007 will result in a restatement of assets and
liabilities reported on New Flyer's consolidated balance sheet as at
September 30, 2007 and a restatement of net income for 2007 Q3 and 2007 YTD.
Management expects that this revaluation will materially reduce the previously
reported net income figures due to the expected write-up of the value of net
assets as of July 12, 2007. However, management anticipates that the aggregate
cash flow from operating, financing, and investing activities will not require
restatement as the fair value adjustments to assets and liabilities and the
impact of the fair value adjustments on net income are non-cash adjustments.
Similarly, management anticipates that these changes will not impact
previously reported Adjusted EBITDA Distributable Cash or Distributions as
previously reported in the MD&A issued on November 12, 2007. As described
above, these changes result from the application of technical accounting
rules, not changes relating to the Company's operational performance.
    Management believes that New Flyer's compliance with the financial
covenants under the Company's senior credit agreement and note indenture
governing subordinated notes represented by IDSs and the separate subordinated
notes will not be adversely affected as these covenants do not include the
impact of fair value adjustments to assets and liabilities.

    Conference Call

    A conference call for analysts and interested listeners will be held
today, Tuesday, January 29, 2008 at 1:00 p.m. (Toronto time). The call-in
number for listeners is 800-732-1073. A live audio feed of the call will also
be available at:
    A replay of the call will be available from 3:00 p.m. (ET) on
January 29, 2008 to 11:59 p.m. (ET) on February 5, 2008. To access the replay,
call 416-640-1917 or 877-289-8525, enter pass code number 21261477, 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.
"Distributable Cash" means cash flows from operations adjusted for changes in
non-cash working capital items, and effect of foreign currency rate on cash
and cash equivalents and increased for withholding taxes, defined benefit
funding, distributions on Class B and Class C common shares, follow-on
offering related costs, fair market value adjustment to inventory, fair market
value adjustment to prepaid expenses, proceeds on sale of redundant assets,
and interest on subordinated notes forming part of IDSs and decreased for
defined benefit expense, maintenance capital expenditures, and principal
payments on capital leases. 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
2,200 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 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
the Company assumes no obligation to update or revise them to reflect new
events or circumstances.

For further information:

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

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