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New Flyer Announces September Cash Distribution and Reaffirm 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.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
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