New Flyer Issues Restated 2007 Third Quarter Financial Statements

    -   Consolidated assets and liabilities 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 for both the third quarter and year-to-date
        reduced by $6.4 million to reflect impact of writing up the net
        identifiable assets to fair value as at July 12, 2007
    -   No adjustment to previously reported cash from operating activities,
        financing activities, and investing activities
    -   No adjustment 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, Feb. 6 /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 the restatement of the
consolidated financial statements for the 13-week period ("2007 Q3") and for
the 39-week period ("2007 YTD") ended September 30, 2007 to give effect to a
fair value adjustment to the assets and liabilities reported in the Company's
consolidated financial statements. Full restated consolidated financial
statements and Management's Discussion and Analysis (the "MD&A") are available
at the Company's web site at: and on
SEDAR at Unless otherwise indicated all monetary amounts in
this press release are expressed in U.S. dollars.
    As disclosed in note 1 to the Company's Restated September 30, 2007
Interim Consolidated Financial Statements 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. The Company has now
consolidated the assets and liabilities of NFL Holdings based on the estimated
fair value of the assets and liabilities effective July 12, 2007 as required
under CICA Accounting Guideline 15. This has resulted in an increase to
identifiable assets of $87.3 million and an increase to liabilities of
$44.3 million with an offsetting decrease to the value assigned to goodwill of
$43.0 million as at July 12, 2007. As a result of the fair value adjustment,
New Flyer has restated the interim consolidated balance sheet as at September
30, 2007 and restated net income resulting in a reduction in net income of
$6.4 million for both 2007 Q3 and 2007 YTD. Management expects to obtain
additional information in 2008, including independent valuations, which may
require additional adjustments to property, plant and equipment, intangible
assets, and future tax assets and liabilities. These potential adjustments may
be material and, if required, will be recorded in the period that such final
valuations are completed, in accordance with CICA Emerging Issues Committee
Abstract 14 - Adjustments to Purchase Equation Subsequent to Acquisition Date
("EIC-14"). The aggregate cash flow from operating, financing, and investing
activities did not require restatement as the fair value adjustments to assets
and liabilities and the impact of these fair value adjustments on net income
are non-cash adjustments. Similarly, these changes did not impact previously
reported Adjusted EBITDA, Distributable Cash or Distributions for 2007 Q3 and
2007 YTD. Future adjustments, if any, made in accordance with EIC-14 will not
impact cash flows, Adjusted EBITDA, Distributable Cash or Distributions
reported for 2007 Q3 and 2007 YTD. As described above, these changes result
from the application of technical accounting rules, not changes relating to
the Company's operational performance.
    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 was not adversely
affected as these covenants do not include the impact of fair value
adjustments to assets and liabilities.

    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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