Northstar Aerospace Inc. reports increased revenue, achieves longer-term financial milestones

    SYMBOL: NAS                 Common Shares

    CHICAGO, Aug. 6 /CNW/ - (All amounts within this news release are stated
in U.S. dollars unless otherwise stated) Northstar Aerospace, Inc. (the
"Company") today reported revenue from continuing operations for the three
months ended June 30, 2009 of $46.9 million compared to $43.2 million in the
same period in 2008, an increase of $3.7 million or 8.6%.
    Defense revenue was $35.9 million for the three months ended June 30,
2009 compared to $31.4 million in 2008, due to increases in activity on the
CH-47 and Apache programs. Commercial revenue in the three months ended June
30, 2009 was $11.0 million or $0.8 million lower than the $11.8 million in
2008. Certain commercial customers have delayed the deliveries on some orders.
    Margins as a percentage of revenue were 19.6% in the three months ended
June 30, 2009, consistent with the same period of 2008. Defense margins as a
percentage of revenue decreased to 21.7% in the three months ended June 30,
2009 from 22.2% in the same period of 2008 attributed to the mix of product
deliveries. Commercial margins as a percentage of revenue increased to 12.8%
in the three months ended June 30, 2009 compared to 12.4% in 2008.
    Selling, general and administrative ("SG&A") expenses were $4.9 million
(10.4% of revenue) for the three months ended June 30, 2009 compared to $4.3
million (9.9% of revenue) in the same period in 2008. The year-on-year
increase in total dollars resulted from the addition of depth to the
management team to accommodate the increase in revenue.
    During the three months ended June 30, 2009, the Company entered into a
previously announced settlement agreement of an environmental class action
claim relating to a former operating location at the Company's Canadian
subsidiary. With this agreement in place, the Company has recorded a provision
of $4.1 million (CDN $5.1 million) as an unusual item in the interim
consolidated statement of operations.
    The loss from continuing operations for the three months ended June 30,
2009 was $4.0 million or $0.13 per share, compared to income of $0.3 million
or $0.01 per share in the same period in 2008. Included in the net loss per
share for the three months ended June 30, 2009 is a $4.1 million provision for
the settlement agreement noted above.
    In May 2009, the Company completed an agreement to sell the net assets of
Northstar Aerospace Turbine Engine Service Group, its engine repair and
overhaul business, for gross proceeds of $9.4 million including $1.4 million
in an estimated working capital adjustment. Based on these proceeds, the
Company has reported a loss of sale of $1.3 million, net of an income tax
benefit of $0.7 million. The proceeds from this sale were sufficient to
satisfy the Company's remaining $7.5 million bank repayment requirement due by
July 31, 2009. The Company has no additional repayment requirements prior to
the maturity of the credit facility in October 2010.
    The net loss for the three months ended June 30, 2009 was $5.2 million or
$0.17 per share, including the settlement agreement noted above and $0.04 loss
per share from the discontinued operations, compared to income of $0.6 million
or $0.02 per share in the same period in 2008, including $0.01 per share from
the discontinued operations.
    The Company's backlog was $434 million at June 30, 2009 compared to $479
million at December 31, 2008.
    Glenn Hess, President and Chief Executive Officer, stated:

      "This past quarter, we realized growth in year-on-year revenue and
      operational earnings as we continued to ramp-up production on our
      defense business. We also strengthened our business by divesting our
      engine repair and overhaul business to further our strategy of focusing
      on our core gear and transmission business. While there is still much
      work remaining to achieve our potential, we are encouraged by these

    A more detailed discussion of the Company's financial results for the
three months ended March 31, 2009 is contained in Management's Discussion and
Analysis, including comments on the comparability of results between the
current and prior year and is available on and on the Company's
website at
    Northstar Aerospace, Inc. ( 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; Anderson, Indiana; and Milton and Windsor,

    Forward Looking Statements

    This press release contains forward-looking statements that are subject
to risks and uncertainty. All statements, other than statements of historical
facts included in this press release, 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 may be or include forward-looking statements.
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, U.S. military
activity, domestic and international economic conditions, and other political
and economic risks, including currency 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 Consolidated Financial Statements
for the Years Ended December 31, 2008 and 2007 - Management's Discussion and
Analysis - Risks and Uncertainties, and in the Company's Annual Information
Form filed on March 31, 2009, under the heading of Risks and Uncertainties.
All information contained in this press release 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 net income, comparable basis as income from
operations before income taxes and unusual items. The Company defines EBITDA
as earnings from continuing operations before interest, income taxes, foreign
exchange, depreciation and amortization, unusual items, impairments of
long-lived assets and goodwill, loss on interest rate swap contracts and other
non-recurring items. EBITDA and adjusted net income are used by management to
evaluate the Company's performance as compared to other companies in the
industry that have different financing and capital structures and/or tax
    Furthermore, the Company has included information concerning EBITDA and
adjusted net income (loss) before taxes because it believes these measures are
used by certain investors as measures of continuing financial performance.
These measures are not measures of financial performance under Canadian
generally accepted accounting principles (GAAP). As well, these measures have
no standardized meaning prescribed under GAAP and are unlikely to be
comparable to similarly titled measures used by other companies. These
measures 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.
    The Company's provision for legal settlements, environmental liabilities
and restructuring and severance costs are included as an adjusting item to
arrive at EBITDA and adjusted net income (loss) before taxes as these matters
are not recurring by nature. The environmental provision is related to a
specific concern at the Company's Canadian facilities. Estimates related to
the provision are based on a number of assumptions which are inherently
difficult to determine and no assurances can be given that environmental test
results, changes in laws or enforcement policies or other factors could not
result in costs that differ from the estimates contained therein. As a result
of the complexity of this matter, there have been changes in various estimates
that resulted in multiple year impacts. The provision for restructuring and
severance costs is related to certain plans that require implementation over a
period of time. The need for these plans is in response to the increasing
costs at the Company's Canadian operations, principally driven by the
strengthening of the Canadian dollar. Management does not consider these
matters to be recurring in nature or part of the on-going business of the
Company. 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.

    For the three months ended June 30, 2009
    prepared in accordance with Canadian GAAP
    (thousands of U.S. dollars except per share amounts)

    Summary of Quarterly Information

                   Q2      Q1      Q4      Q3      Q2      Q1      Q4      Q3
                 2009    2009    2008    2008    2008    2008    2007    2007

    Revenues  $46,871 $45,233 $51,626 $40,025 $43,204 $36,888 $38,835 $37,964

     items(1)  (4,135)  5,990  (1,632)      -       -       -  (6,386)      -

    Net income
     (loss)(2) (5,187)  5,437 (10,427)    304     629      80  (7,709)    284

     per share:
    basic &
     diluted(2) (0.17)   0.18   (0.35)   0.01    0.02    0.00   (0.27)   0.01

    (1) includes environmental remediation and litigation provisions,
        restructuring charges for severance and termination, plant shut down
        costs and gain on sale of investments.
    (2) includes discontinued operations

    Summary Balance Sheet Information

                                            June 30, 2009   December 31, 2008

    Working capital, continuing operations      $31,825          $20,664

    Total assets                               $125,049         $153,224

    Total debt                                  $47,778          $70,376

    Shareholders' equity                        $22,083          $23,250

    The unaudited Consolidated Financial Statements for the three months
ended June 30, 2009 and related MD&A are available on our website at: and on SEDAR.

    %SEDAR: 00002555E

For further information:

For further information: Craig Yuen, Chief Financial Officer, (708)

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Northstar Aerospace

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