Northstar Aerospace Reports 2006 Year Results

Northstar Aerospace Inc. reported revenue totaling $34.1 million for the three months ended December 31, 2006 compared to $30.9 million in 2005, a increase of $3.2 million. For the year ended December 31, 2006, revenue increased to $144.1 million in 2006 from $137.6 million in 2005.

The quarter included several one-off factors including an $8.1 million charge for additional remediation costs related to the previously disclosed environmental issues at the Company's Canadian operations. The increase to the provision reflects a revised, longer groundwater remediation plan with more extensive testing, as required by Province of Ontario environmental agencies. The additional environmental provision contributed to the management's decision to fully reserve for the remaining net future income tax asset of $4.5 million related to the Company's Canadian operations.

A change in revenue recognition method on a specific customer contract was made in the quarter from percentage of completion, under which revenue and margin are recognized based on work completed to date, to completed contract, under which revenue and margin are recognized only upon shipment. This change resulted in reducing revenue by $3.2 million and margin by $1.1 million for the quarter.

Margins as a percentage of revenue were 20.3% in the three months ended December 31, 2006 compared to 20.0% in the same period of 2005. For the year ended December 31, 2006, margins as a percentage of revenue were 21.6% compared to 21.4% for 2005.

Earnings before interest, taxes, depreciation, amortization, foreign exchange and unusual items ("EBITDA") were $4.2 million for the fourth quarter of 2006 compared to $3.8 million for the fourth quarter of 2004. For the twelve months of 2006, EBITDA was $19.1 million; $0.4 million lower than 2005

The net loss for the three months ended December 31, 2006 was $12.8 million or $0.43 per share compared to a net loss of $4.7 million or $0.16 per share for the same period in the 2005.

Backlog increased to $222 million at December 31, 2006 from $204 million at December 31, 2006, an increase of 9% in the past 12 months. The majority of the backlog relates to the CH-47 program.

Mark Emery, President and Chief Executive Officer stated:

"The underlying results of operations before the impact of one-off adjustments demonstrate a strengthening of the business and in particular revenues on the CH-47 program moved to record levels. During the quarter, production was boosted by the implementation of the initial phase of new capital equipment and cell-based manufacturing. Margins are expected to benefit from improved pricing, making the CH-47 the key driver of Northstar's profitable growth in the year ahead.

The revisions to the environmental remediation requested by government authorities have significantly increased costs. While unexpected and disappointing, Northstar has placed the needs of the community as a high priority to ensure the Company is acting in a socially responsible manner. The community's understanding and support are major reasons for the considerable accomplishments to date."

A more detailed discussion of the Company's financial results for the three and twelve months ended December 31, 2006 is contained in Management's Discussion and Analysis, including comments on the comparability of results between the current and prior year. -- www.cnxmarketlink.com