Northstar Aerospace Inc. reports operational improvements, revenue growth and
increased margin in third quarter

    
    LISTED:   TSX
    SYMBOL:   NAS               Common Shares
    

CHICAGO , Nov. 5 /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 September 30, 2009 of $48.1 million compared to $40.0 million in the same period in 2008, an increase of 20.2%.

Defense revenue was $38.8 million for the three months ended September 30, 2009 compared to $29.1 million in 2008, due to increases in activity on the CH-47 Chinook, F-22 and Sikorsky programs. Commercial revenue in the three months ended September 30, 2009 was $9.3 million , $1.6 million lower than in 2008, primarily due to lower activity on the General Electric Aviation Risk and Revenue Sharing program involving the CF-34-3 engine that powers Bombardier regional and business aircraft.

Margin as a percentage of revenue increased to 20.8% in the three months ended September 30, 2009 , from 17.7% in 2008. Defense margin as a percentage of revenue was 23.7% in the three months ended September 30, 2009 an increase from 21.9% in the same period of 2008. The growth in defense sector margin is the result of manufacturing performance improvement as well as mix of product deliveries. Commercial margins as a percentage of revenue increased to 9.0% in the three months ended September 30, 2009 compared to 6.7% in 2008 due to improved performance.

Selling, general and administrative ("SG&A") expenses were $4.9 million (10.2% of revenue) for the three months ended September 30, 2009 compared to $4.5 million (11.2% 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.

The loss from continuing operations for the three months ended September 30, 2009 was $0.4 million or $0.01 per share, compared to income of $0.3 million or $0.01 per share in the same period in 2008. As noted in prior periods, the Company does not recognize the income tax benefit for losses generated in Canada . The benefit would have been $0.8 million for the three months ended September 30, 2009 .

The Company's backlog was $406 million at September 30, 2009 compared to $479 million at December 31, 2008 .

Glenn Hess , President and Chief Executive Officer, stated:

    
    "Balance sheet improvements during the quarter underscore management's
    commitment to strengthen the Company's financial position. Completion of
    an agreement on a legal proceeding related to an environmental matter at
    the Company's Canadian subsidiary was another important step toward
    improving financial stability.

    During the quarter, margin improvement and strong revenue growth
    resulting from increased deliveries are encouraging outcomes of earlier
    investments in our leadership team, employees and manufacturing
    processes."
    

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 www.sedar.com and on the Company's website at www.nsaero.com.

Northstar Aerospace, Inc. (www.nsaero.com) 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, 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, 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 rates.

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.

    
    NORTHSTAR AEROSPACE INC.
    FINANCIAL HIGHLIGHTS (UNAUDITED)
    For the three months ended September 30, 2009
    prepared in accordance with Canadian GAAP
    (thousands of U.S. dollars except per share amounts)
    ----------------------------------------------------

    Summary of Quarterly Information

                                       Q3 2009   Q2 2009   Q1 2009   Q4 2008

    Revenues                           $48,098   $46,871   $45,233   $51,626

    Gain (loss) from unusual items(1)        -    (4,135)    5,990    (1,632)

    Net income (loss)(2)                  (411)   (5,187)    5,437   (10,427)

    Income (loss) per share:
    basic & diluted(2)                   (0.01)    (0.17)     0.18     (0.35)


                                       Q3 2008   Q2 2008   Q1 2008   Q4 2007

    Revenues                           $40,025   $43,204   $36,888   $38,835

    Gain (loss) from unusual items(1)        -         -         -    (6,386)

    Net income (loss)(2)                   304       629        80    (7,709)

    Income (loss) per share:
    basic & diluted(2)                    0.01      0.02      0.00     (0.27)


    (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

                                                 September 30,   December 31,
                                                      2009           2008

    Working capital, continuing operations            $35,116        $20,664

    Total assets                                     $146,393       $168,208

    Total debt                                        $49,847        $70,376

    Shareholders' equity                              $23,270        $23,250
    

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

%SEDAR: 00002555E

For further information: Craig Yuen, Chief Financial Officer, [phone]