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, announced today that as a result of ISE Limited’s (“ISE”) announcement on August 10, 2010 that it had filed a voluntary petition to reorganize its business under Chapter 11 of the United States Bankruptcy Code, New Flyer began contingency planning to provide support to customers with ISE’s hybrid propulsion system or integration components installed on their buses. New Flyer has manufactured 281 buses with ISE gas-electric hybrid or diesel-electric hybrid propulsion system components installed in them and 21 hydrogen fuel cell buses where ISE was the propulsion system integrator. These buses represent approximately 1% of the New Flyer fleet of buses in service in Canada and the United States.
ISE announced in its August 10, 2010 release that it will continue operating its business during the Chapter 11 restructuring. ISE has also announced that it is currently in discussions to obtain debtor-in-possession financing to provide adequate funds, when combined with ISE’s operating revenue, to fund working capital, to meet ongoing obligations and to ensure that its operations continue without interruption during the restructuring.
New Flyer began developing contingency plans in July 2010 after ISE issued a press release announcing that it had implemented a reduction in its labor force of 45 employees across all functions to lower costs and conserve capital while ISE actively sought additional financing. At that time, ISE stated that it could “continue day-to-day operation of its business”. New Flyer’s contingency plans include working with ISE to ensure continued supply and support for its components and seeking alternate components and support resources for buses requiring ISE components.
Currently, New Flyer’s total order backlog contains firm orders for 4 equivalent units (“EUs”) and options for 55 EUs that were intended to incorporate ISE hybrid propulsion system components. The execution of these orders is dependent on securing continued supply of ISE components and support resources and/or sourcing alternate components and support resources. These firm and option orders represent less than one percent of New Flyer’s $3.5 billion order backlog as at July 4, 2010.
Of the 302 buses produced by New Flyer with ISE components, 209 remain under warranty with warranty obligations expiring over the next five years. At this time, the amount of ISE warranty obligations, if any, that New Flyer may assume as a result of ISE’s bankruptcy is not known. New Flyer will support customers as required and has begun to put support plans in place to support buses in service.
About New Flyer
New Flyer (newflyer.com) is the leading manufacturer of heavy-duty transit buses in the United States and Canada. The Company's facilities are all ISO 9001, ISO 14001 and OHSAS 18001 certified. With a skilled workforce of over 2,000 employees, New Flyer 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 support network. The Company's IDSs are traded on the Toronto Stock Exchange under the symbol NFI.UN.
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, the dependence on limited sources of supply of components and services, including the limited supply of propulsion systems and ongoing warranty and maintenance support from such suppliers, 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, 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 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 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 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.