New Flyer Announces Required Restatement of 2007 Third Quarter Financial Statements

Highlights:

• 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, January 29, 2008 - 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: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2153800.

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 www.newflyer.com.

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

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 www.sedar.com.

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:

Glenn Asham
Chief Financial Officer
Tel: (204) 224-1251
E-mail: investor@newflyer.com