Press Releases

New Flyer Announces September Cash Distribution and Affirm 2009 Performance Guidance

Winnipeg, Manitoba, Canada − September 18, 2009

(TSX:NFI.UN) New Flyer Industries Inc. (“NFI”) and New Flyer Industries Canada ULC (“NFI ULC”) (together, “New Flyer” or the “Company”) today announced that the forty-ninth consecutive monthly cash distribution on the income deposit security (“IDS”) of New Flyer in the amount of C$0.0975 will be payable on October 15, 2009, to holders of record of IDSs at the close of business on September 30, 2009.  The IDSs trade on the Toronto Stock Exchange under the symbol NFI.UN.

Each IDS consists of one common share of NFI (a “common share”) and C$5.53 principal amount of 14% subordinated notes of NFI ULC (the “subordinated notes”), an indirect subsidiary of NFI.  The total distribution of C$0.0975 per IDS reflects a cash dividend of C$0.03298 per common share and an interest payment of C$0.06452 per C$5.53 principal amount of subordinated notes for the period from September 1, 2009 to September 30, 2009.

New Flyer’s management reaffirms the fiscal 2009 performance guidance provided in the Company’s press release issued on August 17, 2009 and discussed on the investor call held on August 18, 2009.  Management continues to expect that full-year total deliveries for fiscal 2009 should not be less than the 2,164 EUs delivered in fiscal 2008, resulting in Adjusted EBITDA not less than the 2008 Adjusted EBITDA of $92.4 million.

Management believes that New Flyer will continue to make monthly distributions to the holders of the IDSs at the current rate and to maintain compliance with all financial covenants under the Company’s senior credit facility.  Management anticipates that the payout ratio for fiscal 2009 should not be higher than the Company’s payout ratio for fiscal 2008 of 79.7% and that the excess Distributable Cash for fiscal 2009 should not be less than approximately C$14.5 million.

Management’s expectations are based on strong product mix with favourable margins, successfully implementing operational excellence initiatives, achieving targeted expense reductions, reducing work in process (“WIP”) and the continuation of favourable currency exchange rates.  Management’s expectations for Adjusted EBITDA includes redundancy and restructuring costs as a result of the deferred order and the costs incurred in retrofitting the previously disclosed design deficiency related to another customer’s contract.

As at September 13, 2009, WIP was 407 EUs and management anticipates WIP to be approximately 220 EUs by the end of fiscal 2009.  The current WIP includes approximately 60 EUs that have been completed and are in the process of being shipped to customers.  Also included in current WIP are 113 EUs being built for the customer affected by the design deficiency (62 EUs being directly related to the design deficiency) which are to be completed by year end.  As the Company plans to close production lines for six work days in December but will continue to ship buses up to the end of fiscal 2009, management does not expect to have a material number of buses in-transit at year end.

These expectations are based on the assumption that the Company is successful in delivering all customers’ orders as planned for the remainder of 2009 and the Company being able to successfully reduce the existing excess work in process, collect payment for buses from customers in accordance with the terms of such customers’ contracts and being able to successfully manage the Company’s working capital.

As previously reported following the order deferral, the Company has reduced its line entry production rate from approximately 50 EUs per week to approximately 36 EUs per week and has made the necessary adjustments to manpower.  Management’s initial estimates for 2010 line entry rates are in the range of approximately 40 to 42 EUs per week.

The Company reiterates that they have not been advised by other customers of any other material funding issues nor has it received any other material firm order deferrals from any of its other customers.

All dollar figures in this press release, unless otherwise stated, are expressed in U.S. dollars.

About New Flyer
New Flyer is the leading manufacturer of heavy-duty transit buses in the United States and Canada. 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 over 2,000 employees, the Company is a technology leader, 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 products are supported with an industry-leading, comprehensive parts and service network. New Flyer’s income deposit securities are traded on the Toronto Stock Exchange under the symbol NFI.UN. Further information is available on Company’s web site at www.www.newflyer.com.

Non-GAAP Measures
Adjusted EBITDA consists of earnings before interest, income taxes, depreciation, amortization and other non-cash charges, adjusted for certain costs related to offerings and certain other non-recurring charges as set out in the Company’s Management Discussion & Analysis. 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 increased for withholding taxes related to capital transactions, defined benefit funding, distributions on Class B and Class C common shares of New Flyer Holdings, Inc., costs related to offerings, 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 the IDSs and decreased for defined benefit expense, maintenance capital expenditures, fair market value adjustment to deferred revenue, fair market value adjustment to accounts payable and accrued liabilities 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.

Eligible Dividends
All dividends paid by NFI to Canadian residents on the common shares after December 31, 2005 are designated as “eligible dividends” for purposes of the enhanced dividend tax credit rules contained in the Income Tax Act (Canada) and any corresponding provincial and territorial tax legislation.  In addition, unless stated otherwise, all dividends paid by NFI hereafter on the common shares are designated as “eligible dividends” for the purpose of such rules.

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 are described in this press release and the Company’s public disclosure documents, including, but 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 and the Ontario government’s “Buy Canadian” purchasing policy may change and/or become more onerous, production delays may result in liquidated damages under the Company’s contracts with its customers, the Company’s ability to execute its planned production targets and reallocate production as a result of the deferred order described above, the Company’s ability to generate cash from the planned reduction in excess work in process, 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 existing contracts or obtain performance bonds and letters of credit required for new contracts, third party debt service obligations may have important consequences to the Company, the covenants contained in the senior credit facility and subordinated note indenture of NFI ULC could impact the ability of the Company to fund distributions and take certain other actions, interest rates could change substantially and materially impact the Company’s profitability, the dependence on limited sources of supply, the possibility of fluctuations in the market prices of the pension plan investments and discount rates used in the actuarial calculations will impact pension expense and funding requirements, the Company’s profitability and performance can be adversely affected by increases in raw material and component costs and the availability and efficiency 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 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 assume no obligation to update or revise them to reflect new events or circumstances, except as required by applicable securities laws.

For further information, please contact:
New Flyer Industries Inc.
Glenn Asham
Chief Financial Officer
Telephone: 204-224-1251