WINNIPEG, Jul 4, 2008 (Canada NewsWire via COMTEX) ----(TSX:NFI.UN) New Flyer Industries Inc. ("NFI") and New Flyer Industries Canada ULC ("NFI ULC") (together, "New Flyer") today announced that the thirty-fifth consecutive monthly cash distribution on the income deposit security ("IDS") of New Flyer in the amount of $0.0975 will be payable on August 15, 2008, to holders of record of IDSs at the close of business on July 31, 2008. 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 July 1, 2008 to July 31, 2008.

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.

New Flyer also announced that NFI ULC has recently entered into an amendment to its senior credit facility in order to better align the provisions of the senior credit facility with the working capital intensive nature of New Flyer's business and month-to-month variations in cash flows and earnings. The amendments have relaxed the restrictions on NFI ULC and certain of its affiliates relating to the payment of dividends. As before, dividends may only be paid from accumulated excess cash flow (as determined in accordance with the senior credit facility); however, fluctuations in working capital will no longer be included in determining excess cash flow. Additionally, dividends may now be paid based on excess cash flow generated during the prior four fiscal quarters.

The inclusion of working capital fluctuations in the determination of the pre-existing dividend restrictions under the senior credit facility resulted in certain breaches of such restrictions during 2006 and 2007. The substantial growth of New Flyer's business since the IPO in 2005 and the working capital necessary to support that growth contributed to these issues. In connection with the amendment, New Flyer's senior lenders waived the past breaches. Similar breaches had also occurred under the note indenture governing NFI ULC's subordinated notes. NFI ULC has rectified those breaches and has established a procedure to better align the ability to fund dividends on NFI's common shares under the provisions of the note indenture with the ability to do so under the amended senior credit facility.

Notwithstanding these historical events, management has determined that New Flyer has generated a significant cumulative surplus of excess cash (for the purposes of both the senior credit facility and the note indenture) over and above the amount of dividends paid since the IPO. These amendments will facilitate the ability of New Flyer to continue to make consistent monthly distributions on the IDSs.

John Marinucci, President and CEO of New Flyer, said, "The amendments to our senior credit facility are an important step forward in better aligning the requirements of the facility with the nature of New Flyer's business. As demonstrated by the significant growth in Adjusted EBITDA and backlog over the last five quarters and a 73.4% Distributable Cash payout ratio for the 52 weeks ended March 30, 2008, New Flyer's business has continued to perform very strongly."

About New Flyer

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New Flyer is the leading manufacturer of heavy-duty transit buses in the United States and Canada and a leading provider of aftermarket services. New Flyer has the broadest range of products in the heavy-duty transit bus industry and provides its products and services to the majority of the largest transit authorities in North America.

Non-GAAP Measures

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Adjusted EBITDA consists of earnings before interest, income taxes, depreciation, amortization and other non-cash charges, adjusted for certain costs related to the July 12, 2007 transaction and certain other non-recurring charges as set out in New Flyer's Management Discussion & Analysis. Management believes Adjusted EBITDA and Distributable Cash (as defined below) are useful measures in evaluating the performance of New Flyer. "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, follow-on offering related costs, 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 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.

Forward-Looking Statements

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This press release may contain forward-looking statements relating to expected future events and financial and operating results of NFI and NFI ULC that involve risks and uncertainties. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions, the covenants contained in NFI ULC's senior credit facility and subordinated note indenture and the other risks and uncertainties detailed in the disclosure documents filed with the Canadian securities regulatory authorities. Due to the potential impact of these factors, NFI and NFI ULC disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

SOURCE: New Flyer Industries Inc.

New Flyer Industries
   Inc., Glenn Asham, Chief Financial Officer, Tel: (204) 224-1251 

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