Northstar Aerospace Inc. reports increased revenue, margins, income in first quarter 2009

    SYMBOL: NAS       Common Shares

    CHICAGO, May 15 /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 March 31, 2009 of $45.2 million compared to $36.9 million in the
same period in 2008, an increase of $8.3 million or 22.5%.
    Defense sector revenue was $30.5 million for the three months ended March
31, 2009 compared to $25.5 million in 2008, primarily due to an increase in
activity on the CH-47 program.
    Commercial revenue in the three months ended March 31, 2009 was $14.7
million or $3.3 million higher than the $11.4 million in 2008. The Company's
commercial sector revenue benefited by approximately $3.9 million during the
period from a one-time sale of inventory held on consignment for spare parts
on the GE Aviation Risk and Revenue Sharing Agreement for the CF34-3 engine
program. This sale helped to offset reduced commercial activity caused by the
general slowdown in the global commercial aerospace market.
    Margins as a percentage of revenue of 21.0% in the three months ended
March 31, 2009 were consistent with the same period of 2008.
    Defense sector margins decreased to 21.2% in the three months ended March
31, 2009 from 24.9% in the same period of 2008 due to a shift in mix of
    Commercial sector margins increased to 20.8% in the three months ended
March 31, 2009 from 12.6% in 2008 mainly due to the sale of the CF34-3
consignment spares inventory.
    Selling, general and administrative ("SG&A") expenses were $5.1 million
(11.3% of revenue) for the three months ended March 31, 2009 compared to $3.8
million (10.3% of revenue) in the same period in 2008. The year-on-year
increase in total dollars resulted from the added depth in the management team
to accommodate the increase in revenue projected for 2009.
    In January 2009, the Company sold its investment in Vector Aerospace
Corporation for gross proceeds of approximately Cdn. $14.2 million resulting
in a gain of $6.0 million, net of commissions and legal costs. The Company
also recognized a net unrealized loss of $1.4 million on certain interest rate
swap contracts, including $1.6 million for contracts that were previously
accounted for as a cash flow hedge. Net of tax provisions, these items
combined to contribute $4.4 million to net income or $0.14 per share.
    The income from continuing operations for the three months ended March
31, 2009 was $5.2 million or $0.17 per share compared to a loss of $0.1
million or ($0.01) per share in the same period in 2008.
    The Company's backlog was $440 million at March 31, 2009 compared to $479
million at December 31, 2008.

    Glenn Hess, President and Chief Executive Officer, stated:

    "During the first quarter of 2009, we continued to focus on improving our
    processes and systems. While we are starting to realize some improvements
    in revenues and earnings, significant challenges remain as we continue to
    ramp up production on defense programs and respond to the softening of
    the commercial market.

    I would like to thank our customers, shareholders and employees for their
    continued support of our continuous improvement initiatives."

    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; Stroud, Oklahoma; Anderson, Indiana; and Milton
and Windsor, Ontario.

    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,
local and foreign government policies and actions and assumptions made based
upon discussions to date with the Company's lenders. 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 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 March 31, 2009
    prepared in accordance with Canadian GAAP
    (thousands of U.S. dollars except per share amounts)

    Summary of Quarterly Information

                                    Q1 2009    Q4 2008    Q3 2008    Q2 2008

    Revenues                       $ 45,233   $ 51,626   $ 40,025   $ 43,204

    Unusual items(1)                 (5,990)     1,632          -          -

    Net income (loss)(2)              5,437    (10,427)       304        629

    Income (loss) per share:
     basic & diluted(2)                0.18      (0.35)      0.01       0.02

                                    Q1 2008    Q4 2007    Q3 2007    Q2 2007

    Revenues                       $ 36,888   $ 38,835   $ 37,964   $ 37,463

    Unusual items(1)                      -      6,386          -          -

    Net income (loss)(2)                 80     (7,709)       284        (85)

    Income (loss) per share:
     basic & diluted(2)                0.00      (0.27)      0.01      (0.00)

    (1) includes environmental remediation 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

                                     March 31, 2009     December 31, 2008
    Working capital,
     continuing operations               $26,307             $20,664

    Total assets                        $139,538            $153,224

    Total debt                           $56,081             $70,376

    Shareholders' equity                 $25,912             $23,250

    The unaudited Consolidated Financial Statements for the three months
ended March 31, 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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