Sunday, March 28, 2010

NASA sets next shuttle launch for April 5

* Shuttle to deliver cargo to the space station

* Four flights remain before the shuttle fleet is retired


Defense News: CAPE CANAVERAL, Fla., March 26 (Reuters) - NASA on Friday cleared space shuttle Discovery for launch on April 5 on one of its final cargo runs to the International Space Station before the fleet is retired later this year.

Liftoff of the spaceship and seven astronauts is targeted for 6:21 a.m. EDT (1021 GMT) from the Kennedy Space Center in Florida.


Discovery

Preparing Discovery for Flight

The shuttle will be carrying a cargo pod filled with science racks and equipment for the space station, which is nearing completion after more than a decade of construction 220 miles (350 km) above Earth.

NASA has four flights remaining to finish outfitting the station, a $100 billion project of 16 nations.

The U.S. space agency has contracted with commercial launch service providers Space Exploration Technologies of California and Orbital Sciences Corp (ORB.N) of Virginia to deliver cargo to the station as early as next year.

SpaceX, which was founded by billionaire Internet entrepreneur Elon Musk, plans to debut its Falcon 9 rocket with a demonstration mission next month from a newly refurbished launch pad at Cape Canaveral Air Force Station, just south of the shuttles' launch complex. Orbital's Taurus 2 launcher is expected to make its first flight next year.

Cargo vessels operated by Russia, Japan and Europe also will keep the station stocked with equipment, supplies and gear for six live-aboard crewmembers. All crew transport has been turned over to Russia in preparation for the shuttles' retirement later this year.

NASA had been planning to develop a capsule-style spaceship to fly astronauts to the station, as well as the moon, but U.S. President Barack Obama is calling for the program's cancellation. Instead, the White House wants to see if commercial firms can provide another option besides relying exclusively on the Russians, which charge $51 million per seat for rides on their Soyuz capsules.

Obama is scheduled to host a space summit in Florida on April 15 in an attempt to win support for the new direction he envisions for NASA. An independent panel of advisers, including aerospace executives, astronauts and renowned scientists, last year determined that the moon exploration initiative, known as Constellation, had been underfunded and had no hope of reaching its goal of returning astronauts to the moon by 2020.

The program's cancellation, however, has drawn sharp rebuke from some members of Congress, particularly from districts in Florida, Texas and Alabama that will bear the brunt of an estimated 9,000 engineering and technical job losses due to the shuttle program's end.

Discovery's mission, which is scheduled to last 13 days, is the 131st mission since shuttle flights began in 1981. The program has had two fatal accidents, which took the lives of 14 astronauts, and costs about $200 million a month.

Obama proposes increasing NASA's budget by about $2 billion a year to jump-start commercial space taxi services, as well as invest in new technologies that would eventually lead to a human expedition to Mars. (Editing by Tom Brown and Eric Beech)

US Judge dismisses investor suit against EADS

Defense News: NEW YORK, March 26 (Reuters) - An investor lawsuit against European Aeronautic Defence and Space Co EADS NV (EAD.PA) over production delays of the Airbus A380 belongs in Europe and not in the United States, a U.S. judge ruled on Friday.

Bristol County, Massachusetts retirement system and other investors sued EADS in Manhattan federal court in 2008. The losses by 11 U.S. investors were estimated at 6 million euro.

Airbus A380
Airbus A380 in Emirates livery (October 2009)

U.S. District Judge William Pauley granted EADS request to dismiss the lawsuit, which purported to represent investors in the United States who bought or otherwise acquired EADS stock from July 27, 2005 through March 9, 2007.

"The complaint is a narrative of the peril Americans face when they invest abroad," Pauley said in a written opinion. "A court of limited jurisdiction lacks the authority to hear every grievance that arises overseas. On this record, Bristol County will have to pursue its claims where it purchased its shares - Europe."

Neither a lawyer for Bristol County nor a representative for EADS could immediately be reached to comment.

According to the complaint, in December 2000, the A380 was introduced and the first delivery scheduled for 2006. But in early 2005 the company learned that electrical wiring harness systems could not be installed in the aircraft being assembled in Toulouse, France.

In June 2005, EADS announced delivery delays of two to six months that would subject it to financial penalties with customers, pushing down its share price. Further delays in 2006 caused another drop in its share price.

The case is In Re:European Aeronautic Defence and Space Co securities litigation, U.S. District Court for the Southern District of New York, No. 08-5389. (Reporting by Grant McCool; editing byAndre Grenon)

Magellan Aerospace Corporation announces financial results



Defense News: TORONTO, March 26 /CNW/ - Magellan Aerospace Corporation ("Magellan" of the "Corporation") released its financial results for the fourth quarter of 2009. All amounts are expressed in Canadian Dollars unless otherwise indicated. The results are summarized as follows:


-------------------------------------------------------------------------
(Expressed in Three-months ended Twelve-months ended
thousands, December 31 December 31
except per --------------------------------------------------------
share
amounts) 2009 2008 Change 2009 2008 Change
-------------------------------------------------------------------------
Revenues $165,838 $180,145 (7.9)% $686,614 $686,436 0.0%
-------------------------------------------------------------------------
Gross Profit $ 19,100 $ 19,746 (3.3)% $ 82,312 $ 77,459 6.3%
-------------------------------------------------------------------------
Net Income $ 1,957 $ 7,411 (73.6)% $ 25,985 $ 12,900 101.4%
-------------------------------------------------------------------------
Net Income
per share -
Diluted $ 0.05 $ 0.39 (87.2)% $ 0.60 $ 0.62 (3.2)%
-------------------------------------------------------------------------
-------------------------------------------------------------------------


-------------------------------------------------------------------------
This news release contains certain forward-looking statements that
reflect the current views and/or expectations of the Corporation with
respect to its performance, business and future events. Such statements
are subject to a number of risks, uncertainties and assumptions, which
may cause actual results to be materially different from those expressed
or implied. The Corporation assumes no future obligation to update these
forward-looking statements.

The Corporation has included certain measures in this news release,
including EBITDA, the terms for which are not defined under Canadian
generally accepted accounting principles. The Corporation defines EBITDA
as earnings before interest, taxes, depreciation and amortization and
non-cash charges. The Corporation has included these measures, including
EBITDA, because it believes this information is used by certain investors
to assess financial performance and EBITDA is a useful supplemental
measure as it provides an indication of the results generated by the
Corporation's principal business activities prior to consideration of how
these activities are financed and how the results are taxed in various
jurisdictions. Although the Corporation believes these measures are used
by certain investors (and the Corporation has included them for this
reason), these measures may not be comparable to similarly titled
measures used by other companies.
-------------------------------------------------------------------------

Factors impacting the Corporation's performance in the fourth quarter of
2009 included the continued stability of the civil airliner market sub-sector,
particularly in single-aisle models, and the strength of the defence market.
Not withstanding this stability, lower than expected revenues from the
business jet sub-sector and continued delays in ramping up production of the
Airbus A380 and the Boeing 787 lead to lower revenue in Q4 2009 versus Q4
2008. In addition, some timing issues impacted the revenues reported in the
fourth quarter of 2009 from the sale of proprietary products in the defence
and space sector, but the underlying demand for these products remains solid.

The fourth quarter of 2009 also reflects the push out of deliveries by customers for inventory management, and isolated softening of specific sub-sectors of the civil aerospace markets in the third and fourth quarters of 2009. The continuing softness of the business jet sub-sector, and the weakening of the U.S. Dollar versus the Canadian Dollar, also contributed to reduced reported revenues in the fourth quarter 2009 when compared to the fourth quarter 2008. In spite of these headwinds experienced in the fourth quarter of 2009, the Corporation's overall revenue for the year 2009 matched that of the year 2008.

The fourth quarter of 2009 also saw continued improvements in operating efficiency and capacity in the Corporation's facilities, improved capability through the phase-in of new technology and training, and the continued transfer of non-core work to local and emerging market suppliers. Additionally, the Joint Strike Fighter F-35 program, which has recently received strong endorsement from both the United States Administration and Congress, continued to increase its pace of low-rate production and is projected to reach full scale production within the next five years. The Corporation continues to facilitize, train and develop the expertise to participate in this complex global program.

For additional information, please refer to the "Management's Discussion and Analysis" section of the Annual Report available on www.sedar.com.


Revenues
-------------------------------------------------------------------------
Three-months ended Twelve-months ended
December 31 December 31
(Expressed in ----------------------------------------------------------
thousands) 2009 2008 Change 2009 2008 Change
-------------------------------------------------------------------------
Canada $ 89,831 $ 80,551 11.5% $337,765 $304,123 11.1%
United States 42,931 64,890 (33.8)% 200,525 245,455 (18.3)%
United Kingdom 33,076 34,704 (4.7)% 148,324 136,858 8.4%
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Total revenue $165,838 $180,145 (7.9)% $686,614 $686,436 0.0%
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Consolidated revenues for the fourth quarter of 2009 were $165.8 million,
a decrease of $14.3 million or 7.9% lower than the fourth quarter of 2008.
Higher volumes in the Corporation's proprietary and specialty products
contributed to increased revenues in Canada. In US Dollars, revenues in the
United States declined in the fourth quarter 2009 from the fourth quarter of
2008 primarily as a result of the push out of deliveries from some of the
Corporation's customers as well as the decreased demand on some legacy
programs. Revenues in the United Kingdom for the full year 2009 increased over
revenues in the same period in 2008, despite the decline in the British Pound
exchange rate versus the Canadian Dollar. Revenues in the United Kingdom, in
British Pounds, in the fourth quarter 2009 increased over 2008 by 4.2% as
production activity on the Airbus statement of work, although decreased
quarter over quarter, continued to outpace the 2008 levels. The decline in
both the US Dollar and the British Pound against the Canadian Dollar, over the
exchange rates prevailing in the fourth quarter of 2008, contributed, on a net
basis, to a decrease of $17.7 million in revenues in the fourth quarter of
2009 versus the fourth quarter of 2008.


Gross Profit
-------------------------------------------------------------------------
Three-months ended Twelve-months ended
December 31 December 31
(Expressed in ----------------------------------------------------------
thousands) 2009 2008 Change 2009 2008 Change
-------------------------------------------------------------------------
Gross profit $ 19,100 $ 19,746 (3.3)% $ 82,312 $ 77,459 6.3%
-------------------------------------------------------------------------
Percentage of
revenue 11.5% 11.0% 12.0% 11.3%
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Gross profit of $19.1 million (11.5% of revenues) was reported for the
fourth quarter of 2009 compared to $19.8 million (11.0% of revenues) for the
same period in 2008. Product mix and production efficiencies achieved through
process improvements contributed to the Corporation achieving consistent
margins in 2008 and 2009 despite the fluctuations in the currencies that the
Corporation transacts in. The decline in both the US Dollar and the British
Pound against the Canadian Dollar, over the exchange rates prevailing in the
fourth quarter of 2008, contributed, on a net basis, to a decrease of $4.9
million in gross profit in the fourth quarter of 2009 versus the fourth
quarter of 2008.


Administrative and General Expenses
-------------------------------------------------------------------------
Three-months ended Twelve-months ended
December 31 December 31
----------------------------------------
(Expressed in thousands) 2009 2008 2009 2008
-------------------------------------------------------------------------
Administrative and general
expenses $ 11,706 $ 11,884 $ 44,489 $ 44,691
-------------------------------------------------------------------------
Percentage of revenue 7.1% 6.6% 6.5% 6.5%
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Administrative and general expenses were $11.7 million (7.1% of revenues)
in the fourth quarter of 2009 were comparable to $11.9 million (6.6% of
revenues) in the fourth quarter of 2008.


Other
-------------------------------------------------------------------------
Three-months ended Twelve-months ended
December 31 December 31
----------------------------------------
(Expressed in thousands) 2009 2008 2009 2008
-------------------------------------------------------------------------
Foreign exchange loss (gain) $ 290 $ (3,658) $ (6,383) $ (6,904)
Plant and program closure
(recovery) costs (642) 4,558 (642) 4,558
Loss (gain) on sale of capital
assets 83 288 272 (1,355)
-------------------------------------------------------------------------
Other $ (269) $ 1,188 $ (6,753) $ (3,701)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Other income of $0.3 million in the fourth quarter of 2009 resulted from
the partial reversal of a provision recorded on a pension plan obligation in
the fourth quarter of 2008, offset by the realized and unrealized foreign
exchange loss recorded due to the weaker United States Dollar in comparison to
the Canadian Dollar. Other loss in the fourth quarter of 2008 resulted largely
from the recording of a $4.5 million charge to income in respect to pension
obligations and additional closure costs in relation to the 2006 closure of
the Fleet Industries plant that was partially offset by a foreign exchange
gain of $3.7 million.


Interest Expense
-------------------------------------------------------------------------
Three-months ended Twelve-months ended
December 31 December 31
----------------------------------------
(Expressed in thousands) 2009 2008 2009 2008
-------------------------------------------------------------------------
Interest on bank indebtedness
and long-term debt $ 4,070 $ 4,066 $ 14,614 $ 15,070
Convertible debenture interest 1,014 450 3,810 2,141
Accretion charge for convertible
debt 142 66 678 437
Discount on sale of accounts
receivable 16 262 1,652 4,301
-------------------------------------------------------------------------
Total interest expense $ 5,242 $ 4,844 $ 20,754 $ 21,949
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Interest expense of $5.2 million in the fourth quarter of 2009 was higher
than the fourth quarter of 2008 amount of $4.8 million. Convertible debenture
interest and the accretion expense in relation to the Corporation's
convertible debentures were higher in the fourth quarter of 2009 than the
comparative quarter in 2008 due to a higher principal amount of convertible
debentures outstanding. Lower discount expense on the sale of accounts
receivable resulted from decreased amounts of accounts receivables sold in the
fourth quarter of 2009 when compared to the same quarter of 2008.


(Recovery of) Provision for Income Taxes
-------------------------------------------------------------------------
Three-months ended Twelve-months ended
December 31 December 31
----------------------------------------
(Expressed in thousands) 2009 2008 2009 2008
-------------------------------------------------------------------------
Recovery of current income taxes $ (144) $ (578) $ (63) $ (194)
Expense (recovery) of future
income taxes 608 (5,003) (2,100) 1,814
-------------------------------------------------------------------------
Total expense (recovery) of
income taxes $ 464 $ (5,581) $ (2,163) $ 1,620
-------------------------------------------------------------------------
Effective Tax Rate 19.2% (305)% (9.1)% 11.1%
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The Corporation recorded an income tax expense of $0.5 million for the
fourth quarter of 2009, compared to an income tax recovery of $5.6 million for
the fourth quarter of 2008. The change in effective tax rates is a result of a
changing mix of income across the different jurisdictions in which the
Corporation operates. The recognition of previous unrecorded future tax assets
derived from temporary difference in Canada also contributed to the lower
effective tax rate in the fourth quarter of 2009. The recovery of taxes in the
fourth quarter of 2008 resulted, in part, from an adjustment to the future tax
asset as a result of rate adjustments recorded in the United States and the
release of a future tax reserve. The recovery was offset by a non-cash charge
of $3.0 million to establish a valuation allowance against the Corporation's
net future tax assets in Canada.


Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
-----------------------------------------------------------------------

In addition to the primary measures of net income and net income per
share (basic and diluted) in accordance with GAAP, the Corporation includes
certain measures in this news release, including EBITDA (earnings before
interest expense, income taxes, depreciation, amortization and certain
non-cash charges). The Corporation has provided these measures because it
believes this information is used by certain investors to assess financial
performance and EBITDA is a useful supplemental measure as it provides an
indication of the results generated by the Corporation's principal business
activities prior to consideration of how these activities are financed and how
the results are taxed in the various jurisdictions. Each of the components of
this measure are calculated in accordance with GAAP, but EBITDA is not a
recognized measure under GAAP, and the Corporation's method of calculation may
not be comparable with that of other companies. Accordingly, EBITDA should not
be used as an alternative to net income as determined in accordance with GAAP
or as an alternative to cash provided by or used in operations.


-------------------------------------------------------------------------
Three-months ended Twelve-months ended
December 31 December 31
----------------------------------------
(Expressed in thousands) 2009 2008 2009 2008
-------------------------------------------------------------------------
Net income $ 1,957 $ 7,411 $ 25,985 $ 12,900
Interest 5,242 4,844 20,754 21,949
Taxes 464 (5,581) (2,163) 1,620
Stock based compensation 142 (166) 717 742
Depreciation and amortization 8,443 15,481 35,093 40,218
-------------------------------------------------------------------------
EBITDA $ 16,248 $ 21,989 $ 80,386 $ 77,429
-------------------------------------------------------------------------
-------------------------------------------------------------------------

EBITDA for the fourth quarter of 2009 was $16.2 million, compared to
$22.0 million in the fourth quarter of 2008. Decreased revenues in the fourth
quarter of 2009 compared to 2008 contributed to the decrease in EBITDA for the
current quarter.


Liquidity and Capital Resources
-------------------------------

Cash Flow from Operations
-------------------------------------------------------------------------
Three-months ended Twelve-months ended
December 31 December 31
----------------------------------------
(Expressed in thousands) 2009 2008 2009 2008
-------------------------------------------------------------------------
Decrease (increase) in accounts
receivable $ 12,799 $(18,198) $(19,083) $(22,844)
Decrease (increase) in
inventories 4,568 270 22,285 (16,628)
(Increase) decrease in prepaid
expenses and other (23,920) 1,401 (28,191) 2,176
Increase in accounts payable 40,646 9,240 11,857 4,475
-------------------------------------------------------------------------
Changes to non-cash working
capital balances 34,093 (7,287) (13,132) (32,821)
-------------------------------------------------------------------------
Cash provided by operating
activities $ 41,629 $ 13,951 $ 36,156 $ 23,155
-------------------------------------------------------------------------
-------------------------------------------------------------------------

In the quarter ended December 31, 2009, the Corporation generated $41.6
million of cash in its operations, compared to $14.0 million in the fourth
quarter of 2008. In the fourth quarter of 2009, cash was generated through
decreased accounts receivable and inventory and increased accounts payable.
This was offset by increased prepaid expenses and other.


Investing Activities
-------------------------------------------------------------------------
Three-months ended Twelve-months ended
December 31 December 31
----------------------------------------
(Expressed in thousands) 2009 2008 2009 2008
-------------------------------------------------------------------------
Acquisition of Verdict $ - $ (28) $ - $ (4,268)
Purchase of capital assets (6,914) (4,444) (21,675) (18,769)
Proceeds of disposals of capital
assets - 732 339 3,540
(Increase) decrease in other
assets (1,227) 2,080 (1,274) (3,768)
-------------------------------------------------------------------------
Cash used in investing activities $ (8,141) $ (1,660) $(22,610) $(23,265)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

In the fourth quarter of 2009, the Corporation invested $6.9 million in
capital assets to upgrade and enhance its capabilities for current and future
programs.


Financing Activities
-------------------------------------------------------------------------
Three-months ended Twelve-months ended
December 31 December 31
----------------------------------------
(Expressed in thousands) 2009 2008 2009 2008
-------------------------------------------------------------------------
(Decrease) increase in bank
indebtedness $(16,609) $(10,170) $(27,454) $ 19,065
Decrease in loan payable - - - (15,000)
Increase in loan payable - - - 15,000
(Decrease) increase in long-term
debt (766) 23 (2,824) (16,841)
Increase in long-term debt - - 15,000 50,000
Decrease in convertible debentures - - (20,950) (69,985)
Increase in convertible debentures - - 39,667 20,778
Increase (decrease) in long-term
liabilities 2,521 441 2,211 (392)
Issue of Common Shares - 11 8 71
Dividends on Preference Shares (1,600) (400) (1,600) (1,600)
-------------------------------------------------------------------------
Cash (used in) provided by
financing activities $(16,454) $(10,095) $ 4,058 $ 1,096
-------------------------------------------------------------------------
-------------------------------------------------------------------------

On April 30, 2009, the Corporation also completed the following
previously announced financing arrangements:


(a) the purchase by the Chairman of the Board of the Corporation,
directly or indirectly, of $40 million principal amount of a new
issue of 10% Convertible Secured Subordinated Debentures (the "New
Convertible Debentures") with a three year term; and

(b) the extension and restatement of a previous secured subordinated loan
(the "Original Loan") from Edco Capital Corporation ("Edco"), which
is wholly owned by the Chairman of the Board of the Corporation, to
the Corporation to increase the principal amount from $50 million to
$65 million and to extend the maturity date of the loan to July 1,
2010 in consideration for the payment of a one time fee to Edco equal
to 1% of the principal amount of $50 million outstanding and an
increase in the interest rate on the loan from 10% to 12% per annum
payable monthly in arrears.

(together the "2009 Financing Arrangements")

As a result of a requirement under a change of control provision in the
previously issued 8.5% convertible unsecured debentures due January 31, 2010
(the "2008 Debentures"), the Corporation was required to make an offer to
purchase the $20.95 million of the 2008 Debentures at a price of 102.5% of the
principal amount plus accrued and unpaid interest utilizing the proceeds of
the 2009 Financing Arrangements. In the second quarter of 2009, the 2008
Debentures were fully repurchased by the Corporation.

Pursuant to a similar change of control definition in the Corporation's outstanding Preference Shares' terms, the Corporation is required to retract its outstanding Preference Shares at a price of $10.00 per share plus accrued and unpaid dividends, unless such retraction contravenes any instrument of indebtedness of the Corporation or the terms of the Ontario Business Corporations Act (the "OBCA"). The Corporation is currently not in the position to retract the Preference Shares as it is prohibited from doing so by the terms of its operating credit facility. Accordingly, the Preference Shares continue to be classified as equity instruments.

During the quarter ended December 31, 2009, the Corporation declared a dividend in the amount of twenty cents ($.20) per share payable in respect of each of the following dates: April 30, 2009, July 30, 2009, October 29, 2009 and January 31, 2010 for a total dividend of eighty cents ($.80) per share on each of the Corporation's 8% cumulative redeemable first preference shares series A (the "First Preference Shares Series A") which was payable and was paid on January 31, 2010 to shareholders of record of the First Preference Shares Series A at the close of business on December 31, 2009.

On December 22, 2009, Edco provided a commitment letter that extends the due date of the Original Loan to July 1, 2011 on the same terms and conditions of the Original Loan except that the interest rate will be reduced from 12% to 11% per annum in consideration of the payment of a one time extension fee of 1% of the principal amount of $65.0 million to Edco as follows: (a) 0.20% on execution of the commitment letter for renewal and (b) 0.80% on the satisfaction of all conditions and closing of the renewal transaction. On March 26, 2010 the Original Loan was restated and extended in accordance with such terms. The Corporation was also granted the option to further extend the Original Loan on or before July 1, 2011, for a further period of one year maturing on July 1, 2012, on payment of an additional one time extension fee of 1% of the principal amount of the loan and on the condition the bank credit facility is renewed, for an additional 364 day period beginning May 21, 2011 on terms satisfactory to the Board and on the condition that there is no material change in the business, operations or capital of the Corporation. The Corporation has the right to prepay the Original Loan at any time without penalty.

On March 26, 2010, the Corporation amended its Bank Facility Agreement with its existing lenders. Under the terms of the amended agreement, the maximum amount available under the operating credit facility was reallocated to a Canadian dollar limit of $105.0 million (up from $90.0 million) plus a US dollar limit of US$70.0 million (down from US$85.0 million), with a maturity date of May 21, 2011. The facility is extendable for unlimited one-year renewal periods by the agreement of the Corporation and the lenders and continues to be guaranteed by the Chairman of the Board of the Corporation. The terms of the amended operating credit facility permit the Corporation to (i) repay the Original Loan in whole or in part and (ii) retract up to 20% ($4,000,000) of the Preference Shares on each of April 30 and October 31 (or the next business day if that day is not a business day) of each year starting with April 30, 2010, together with accrued and unpaid dividends on the shares to be retracted provided there is no current default or event of default under the operating credit facility and after the repayment of the Original Loan and the payment of the retraction amount the Corporation has at least $25.0 million in availability under the operating credit facility. Any permitted retraction amount not used on any prior date can be carried forward to future retraction dates. As a result, subject to such limitation under the operating credit facility and to applicable laws, the Corporation will retract on each of April 30 and October 31, beginning April 30, 2010, any Preference Shares tendered for retraction up to the permitted percentage of Preference Shares. The Preference Shares tendered for retraction will be classified as a current liability.


Share Data
----------

As at March 26, 2010, the Corporation had 18,209,001 common shares
outstanding, 2,000,000 outstanding First Preference Shares Series A
convertible into 1,333,333 common shares and $40.0 million convertible
debentures convertible into 40,000,000 common shares. The dilutive weighted
average number of common shares outstanding, resulting from the potential
common shares issuable on the conversion of the convertible debentures, for
the three and twelve month periods ending December 31, 2009 were 58,209,001
and 45,900,161 respectively. Subject to law the Corporation will be required
to retract the Preference Shares in whole or in part to the extent permitted
by any instrument of indebtedness of the Corporation.


Risks and Uncertainties
-----------------------

The Corporation manages a number of risks in each of its businesses in
order to achieve an acceptable level of risk without hindering the ability to
maximize returns. Management has procedures to identify and manage significant
operational and financial risks.

For more information in relation to the risks inherent in Magellan's business, reference is made to the information under "Company Overview" in Management's Discussion and Analysis for the year ended December 31, 2009 and to the information under "Risks Inherent in Magellan's Business" in the Annual Information Form for the year ended December 31, 2009, which will be filed with SEDAR (www.sedar.com).


Changes in Accounting Policies
------------------------------

On January 1, 2009, the Corporation adopted CICA Handbook 3064, "Goodwill
and Intangible Assets". This new section replaces the existing standards for
"Goodwill and Other Intangible Assets" (CICA Handbook Section 3062) and
"Research and Development Costs" (CICA Handbook Section 3450). The new
standard (i) states that upon their initial identification, intangible assets
are to be recognized as assets only if they meet the definition of an
intangible asset and the recognition criteria; (ii) provides guidance on the
recognition of internally generated intangible assets including research and
development costs; and (iii) carries forward the current requirements of
Section 3062 for subsequent measurement and disclosure of intangible assets
and goodwill. The adoption of this new section did not have a material impact
on the Corporation's consolidated financial statements.

On January 20, 2009, the Emerging Issues Committee ("EIC") of the AcSB issued EIC Abstract 173, which establishes that an entity's own credit risk and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and liabilities, including derivative instruments. The Corporation adopted this EIC on January 20, 2009 and applied the EIC retrospectively, without restatement of prior years to all financial assets and financial liabilities measured at fair value. The adoption of this new EIC did not have a material impact on the Corporation's consolidated financial statements.

In June 2009, the CICA amended section 3862, "Financial Instruments - Disclosures". The amendments include additional disclosure requirements about fair value measurement for financial instruments and liquidity risk disclosures. These amendments require a three-level hierarchy that reflects the significance of the inputs used in making the fair value measurements. Fair value of assets and liabilities included in Level I are determined by reference to quoted prices in active markets for identical assets and liabilities. Assets and liabilities in Level II include valuations using inputs other than the quoted prices for which all significant inputs are based on observable market data, either directly or indirectly. Level III valuations are based on inputs that are not based on observable market data. The amendment to this standard did not have any impact on the classification and measurement of our financial instruments. The new disclosures pursuant to the new Handbook Section are included in note 18 of the 2009 audited consolidated financial statements.


Future Changes in Accounting Policies
-------------------------------------

The Corporation will adopt the following accounting standards recently
issued by the CICA:

Sections 1582, Business Combinations, 1601, Consolidated Financial Statements, and 1602, Non-controlling Interests

In January 2009, the CICA issued Sections 1582, "Business Combinations", 1601, "Consolidated Financial Statements", and 1602, "Non-controlling Interests".

Section 1582 will be converged with IFRS 3, "Business Combinations". Section 1602 will be converged with the requirements of IAS 27, "Consolidated and Separate Financial Statements", for non-controlling interests. Section 1601 carries forward the requirements of Section 1600, "Consolidated Financial Statements", other than those relating to non-controlling interests.

Section 1582 applies to acquisitions made from January 1, 2011 in which the acquirer obtains control of one or more businesses. The term "business" is more broadly defined than in the existing standard. Most assets acquired and liabilities assumed, including contingent liabilities that are considered to be "improbable", will be measured at fair value. Any interest in the acquiree owned prior to obtaining control will be remeasured at fair value at the acquisition date, eliminating the need for guidance on step acquisitions. A bargain purchase will result in recognition of a gain. Acquisition costs must be expensed. Under Section 1602, any non-controlling interest will be recognized as a separate component of shareholders' equity. Net income will be calculated without deduction for the non-controlling interest. Rather, net income will be allocated between the controlling and non-controlling interests.

The new standards will become effective in 2011. The Corporation is currently evaluating the impact of the adoption of these new standards on its consolidated financial statements.

Multiple Deliverable Revenue Arrangements

In December 2009, the CICA issued EIC-175, Multiple Deliverable Revenue Arrangements ("EIC-175"). EIC-175, which replaces EIC-142, Revenue Arrangements with Multiple Deliverables, addresses some aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities. These new standards are effective for the Corporation's interim and annual consolidated financial statements commencing on January 1, 2011 with earlier adoption permitted as of the beginning of a fiscal year. The Corporation is assessing the impact of the new standards on its consolidated financial statements.

International Financial Reporting Standards

In February 2008, Canada's Accounting Standards Board ("AcSB") confirmed that Canadian GAAP, as used by publicly accountable enterprises, will be converged with International Financial Reporting Standards ("IFRS") effective January 1, 2011. The transition from Canadian GAAP to IFRS will be applicable to the Corporation for the first quarter of 2011 where current and comparative financial information will be prepared in accordance with IFRS.


IFRS Transition Plan
--------------------

The Corporation commenced its IFRS conversion efforts during 2008. The
transition project consists of four elements: planning and awareness raising;
assessment; design; and implementation. Resources have been deployed and
project management and governance practices are implemented to ensure a timely
transition to IFRS. The progresses made to date are as follows:

Planning and awareness raising - As part of planning, the Corporation completed a high level assessment of the major differences between Canadian GAAP and IFRS. Key differences were identified which assisted in the development of the project plan as well as prioritization of issues that would have significant impact to the Corporation. With the assistance of external consultants, the Corporation has conducted sessions to raise awareness in its efforts to transition to IFRS. Throughout 2009, several training sessions were conducted at the business unit level in order to increase awareness and knowledge of the transition to IFRS. Training sessions will continue to be conducted throughout 2010.

Assessment and design - Detailed evaluation of the differences on recognition, measurement and disclosures between Canadian GAAP and IFRS was initiated in 2009 and continues in 2010. The impact to systems, processes, controls (internal control over financial reporting and disclosure controls), and other business activities have been incorporated into the detailed analysis. The design of solutions for the transition to IFRS is ongoing and the requirements are being developed. No significant changes to systems processes and controls have been identified to-date.

Implementation - During the implementation phase leading up to the transition date, new IFRS updates will be monitored and any changes that are relevant to the Corporation will be identified and addressed. Activities with respect to selecting and finalizing IFRS 1 and accounting policy choices, restating comparative information, testing, review and sign off will occur throughout 2010 and continue to the early part of 2011.


Results of the Detailed GAAP Assessment
---------------------------------------

While IFRS uses a conceptual framework similar to Canadian GAAP, there
are significant differences on recognition, measurement and disclosures. In
the period leading up to the changeover, the AcSB will continue to issue
accounting standards that are converged with IFRS, thus mitigating the impact
of the transition to IFRS at the changeover date. The International Accounting
Standard Board will also continue to issue new accounting standards during the
conversion period, and as a result, the final impact of IFRS on the
Corporation's financial results will only be measured once all the IFRS
applicable at the conversation date are known. Preliminary analysis to-date of
the impacts of transition to IFRS on specific areas is detailed below. The
areas outlined below should not be considered as a complete analysis. Any
remaining potential accounting differences not discussed below are being
analyzed and will be discussed further in 2010.

IFRS 1 - IFRS 1 First-Time Adoption of International Financial Reporting Standards ("IFRS 1") provides entities adopting IFRSs for the first time with a number of mandatory exceptions and optional exemptions, in certain areas, to the general requirement for full retrospective application of IFRSs. The following are the significant optional exemptions available under IFRS 1 that the Corporation expects to apply in preparing the first financial statements under IFRS.


- Business Combinations - The Corporation expects to elect to not
restate any Business Combinations that have occurred prior to
January 1, 2010
- Employee Benefits - The Corporation expects to elect to recognize any
actuarial gains/losses as at January 1, 2010 in retained earnings
- Foreign Exchange - The Corporation expects to elect to reclassify
cumulative translation gains or losses in accumulated other
comprehensive income to retained earnings

Property, plant and equipment - International Accounting Standards
("IAS") 16 Property, Plant and Equipment ("IAS 16") provides a choice, for
each class of property, plant and equipment, in accounting for each class
using either the cost model or the revaluation model. The cost model is
generally consistent with Canadian GAAP where an item of property, plant and
equipment is carried at its cost less any accumulated depreciation and any
accumulated impairment losses. Under the revaluation model, an item of
property, plant and equipment is carried at its revalued amount, being its
fair value at the date of the revaluation less any accumulated depreciation
and accumulated impairment losses. In addition, under IAS 16, where part of an
item of property, plant and equipment has a cost that is significant in
relation to the cost of the item as a whole, it must be depreciated separately
from the remainder of the item. Canadian GAAP is similar in this respect;
however, it has often not been applied to the same extent due to practicality
and/or materiality. The Corporation expects to use the cost model to account
for all classes of property, plant and equipment. Review of the impact in
depreciating an item of property, plant and equipment separately from the
remainder of the item is currently underway.

Borrowing costs - IAS 23 Borrowing Costs ("IAS 23") requires the capitalization of borrowing costs directly attributable to the acquisition, construction or production of qualifying assets as part of the cost of that asset. Under Canadian GAAP, the Corporation's accounting policy is to expense these costs as incurred. IFRS 1 provides an election permitting the application of IAS 23 prospectively from the date of transition, January 1, 2010. The Corporation intends to apply this election and consequently, the Corporation does not expect to have an adjustment on its opening IFRS balance sheet.

Provisions - IAS 37 Provisions, Contingent Liabilities and Contingent Asset ("IAS 37") requires a provision to be recognized when: there is a present obligation as a result of a past transaction or event; it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate can be made of the obligation. "Probable" under IFRS means more likely than not. Under Canadian GAAP, the criterion for recognition in the financial statements is "likely", which is a higher threshold than "probable". Therefore, it is possible that there may be some contingent liabilities not recognized under Canadian GAAP which would require a provision under IAS 37. The Corporation is in the process of evaluating potential transactions to determine whether there is an impact of this difference on the opening balance sheet.

Impairments - IAS 36 Impairment of Assets ("IAS 36") uses a one-step approach for both testing for and measurement of impairment, with asset carrying values compared directly with the higher of fair value less costs to sell and value in use (which uses discounted future cash flows). Under Canadian GAAP, assets other than financial assets, are generally tested using a two-step approach: first comparing asset carrying values with undiscounted future cash flows to determine whether impairment exists; and then measuring any impairment by comparing asset carrying values with fair values. This may potentially result in more write-downs where carrying values of the assets were previously supported under Canadian GAAP on an undiscounted cash flow basis, but could not be supported on a discounted cash flow basis. In addition, the extent of any write downs may be partially offset by the requirement under IAS 36 to reverse any previous impairment losses where circumstances have changed such that the impairments have been reduced. Canadian GAAP prohibits reversal of impairment losses. The Corporation has not yet finalized the impairment testing for the opening balance sheet under IFRS, as such the impact, if any, is unknown at this time.

Government grants - IAS 20 Accounting for Government Grants and Disclosure of Government Assistance ("IAS 20") requires the benefit of a government loan at a below-market rate of interest be treated as a government grant. The benefit of the below-market rate of interest shall be measured as the difference between the initial carrying value of the loan determined and the proceeds received. Under Canadian GAAP, these forms of government assistance have not been disclosed in the financial statements. However, where the benefits are significant to the operations of the enterprise, it is desirable to disclosure the relevant terms and conditions of the programs. The Corporation is reviewing the government grants and expects some minor impacts.


Outlook
-------

There are a number of factors that indicate that a modest recovery may
occur in the global aerospace industry in 2010. Global air freight levels
began to improve in the second half of 2009 and air travel is expected to grow
in 2010 in step with most sectors of the global economy. Weaknesses in certain
subsectors of the civil market appear to have stabilized, and are expected to
show signs of recovery during 2010 and 2011. The defence sector remains
stable, and is introducing large, technologically advanced aircraft programs
that are expected to be deployed and supported over the next 20 years or more.
The strength and sustainability of the global economic recovery will strongly
influence demand for industrial power installations, especially in those
emerging markets that may lack large power-distribution capabilities.

For the last number of years, the Corporation has maintained a focus in its activities to concentrate key core capabilities in its own plants, while off-loading non-core activity to its local and emerging market supply bases. The air transportation market has remained stable throughout the economic downturn and higher levels of output have been forecasted for key aircraft platforms in 2010 and 2011. Large civil aircraft design and production issues appear to have been addressed during 2009, and annual production volumes are expected to increase somewhat, and workhorse single-aisle aircraft are expected to increase output in 2010 and beyond. In defence, combat aircraft and helicopter fleets are being replaced in an effort that is expected to continue for the foreseeable future. The Corporation has positions in civil airline aircraft, military aircraft and helicopters, respective aircraft engines, and aero-derivative industrial power generation sets globally in demand.

Sales in 2010 will be affected by fluctuations due to temporary cash management measures at customer and supplier levels, and potential exchange rate fluctuations. For 2010, the Corporation has exposure to the anticipated growth sectors of the global aerospace industry. It has captured opportunities on new civil and defence programs, has continued to modernize its facilities and updated its capabilities, and has taken measures to hopefully address further uncertainties that may arise during any residual economic volatility in 2010-2011.

Magellan Aerospace Corporation is one of the world's most integrated and comprehensive aerospace industry suppliers. Magellan designs, engineers, and manufactures aeroengine and aerostructure assemblies and components for aerospace markets, advanced products for military and space markets, and complementary specialty products. Magellan is a public company whose shares trade on the Toronto Stock Exchange (TSX:MAL - News), with operating units throughout Canada, the United States, the United Kingdom and India.

This release should be read in conjunction with the Corporation's 2009 audited financial statements and accompanying notes, Management's Discussion and Analysis contained in the Corporation's 2009 Annual Report and the Annual Information Form which will be filed with SEDAR (www.sedar.com).


-------------------------------------------------------------------------
MAGELLAN AEROSPACE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three-months ended Twelve-months ended
(Expressed in thousands of December 31 December 31
dollars, except per share ---------------------------------------
amounts) 2009 2008 2009 2008
-------------------------------------------------------------------------

Revenues $165,838 $180,145 $686,614 $686,436
Cost of revenues 146,738 160,399 604,302 608,977
-------------------------------------------------------------------------
Gross Profit 19,100 19,746 82,312 77,459
-------------------------------------------------------------------------

Administrative and general
expenses 11,706 11,884 44,489 44,691
Other (269) 1,188 (6,753) (3,701)
Interest 5,242 4,844 20,754 21,949
-------------------------------------------------------------------------
16,679 17,916 58,490 62,939
-------------------------------------------------------------------------
Income before income taxes 2,421 1,830 23,822 14,520

(Recovery of) provision for income
taxes
Current (144) (578) (63) (194)
Future 608 (5,003) (2,100) 1,814
-------------------------------------------------------------------------
464 (5,581) (2,163) 1,620
-------------------------------------------------------------------------
Net income $ 1,957 $ 7,411 $ 25,985 $ 12,900
-------------------------------------------------------------------------
Net income per share
-------------------------------------------------------------------------
Basic 0.09 0.39 1.34 0.62
Diluted 0.05 0.39 0.60 0.62
-------------------------------------------------------------------------
-------------------------------------------------------------------------



-------------------------------------------------------------------------
MAGELLAN AEROSPACE CORPORATION
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(unaudited)
Three-months ended Twelve-months ended
December 31 December 31
(Expressed in thousands of ---------------------------------------
dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------

Retained earnings, beginning
of the period $ 83,780 52,741 $ 59,752 $ 82,747
Effect of change in
accounting policy - - - (34,295)
-------------------------------------------------------------------------
Adjusted retained earnings,
beginning of period 83,780 52,741 59,752 48,452
Dividends (1,600) (400) (1,600) (1,600)
Net income 1,957 7,411 25,985 12,900
-------------------------------------------------------------------------
Retained earnings, end of
the period $ 84,137 $ 59,752 $ 84,137 $ 59,752
-------------------------------------------------------------------------
-------------------------------------------------------------------------



-------------------------------------------------------------------------
MAGELLAN AEROSPACE CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
Three-months ended Twelve-months ended
December 31 December 31
(Expressed in thousands of ---------------------------------------
dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------

Net income $ 1,957 $ 7,411 $ 25,985 $ 12,900
Other comprehensive (loss)
income:
Unrealized (loss) gain on
translation of financial
statements of self-sustaining
foreign operations (2,499) 13,886 (20,486) 19,518
-------------------------------------------------------------------------
Comprehensive (loss) income $ (542) $ 21,297 $ 5,499 $ 32,418
-------------------------------------------------------------------------
-------------------------------------------------------------------------



-------------------------------------------------------------------------
MAGELLAN AEROSPACE CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited) As at As at
December 31 December 31
(Expressed in thousands of dollars) 2009 2008
-------------------------------------------------------------------------
ASSETS
Current
Cash $ 22,641 $ 5,362
Accounts receivable 82,850 67,435
Inventories 147,248 178,474
Prepaid expenses and other 38,458 10,717
Future income tax assets 3,958 5,097
-------------------------------------------------------------------------
Total current assets 295,155 267,085

Capital assets 254,700 277,207
Technology rights 29,158 32,567
Deferred development costs 59,510 69,225
Other assets 24,909 15,970
Future income tax assets 17,186 8,643
-------------------------------------------------------------------------
Total long-term assets 385,463 403,612
-------------------------------------------------------------------------
Total assets $ 680,618 $ 670,697
-------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness $ 140,590 $ 177,766
Accounts payable and accrued charges 135,373 125,116
Current portion of long-term debt 2,321 52,321
-------------------------------------------------------------------------
Total current liabilities 278,284 355,203

Long-term debt 73,716 11,803
Future income tax liabilities 10,281 11,392
Convertible debentures 38,182 20,544
Other long-term liabilities 9,803 7,947
-------------------------------------------------------------------------
Total long-term liabilities 131,982 51,686
-------------------------------------------------------------------------

Shareholders' equity
Capital stock 234,389 234,381
Contributed surplus 4,708 3,991
Other paid in capital 13,565 11,645
Retained earnings 84,137 59,752
Accumulated other comprehensive loss (66,447) (45,961)
-------------------------------------------------------------------------
Total shareholders' equity 270,352 263,808
-------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 680,618 $ 670,697
-------------------------------------------------------------------------
-------------------------------------------------------------------------



-------------------------------------------------------------------------
MAGELLAN AEROSPACE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three-months ended Twelve-months ended
December 31 December 31
(Expressed in thousands of ---------------------------------------
dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------
OPERATING ACTIVITIES

Net income $ 1,957 $ 7,411 $ 25,985 $ 12,900

Add (deduct) items not affecting
cash
Depreciation and amortization 8,443 15,481 35,093 40,218
Net gain (loss) on sale of
capital asset 83 288 272 (1,355)
Employee future benefits (2,065) 2,789 (5,799) (1,277)
Write down of deferred costs - 312 - 2,184
Deferred revenue 114 60 466 313
Stock based compensation 142 (166) 717 742
Accretion of convertible
debentures 142 66 678 437
Future income tax (recovery)
expense (1,280) (5,003) (8,124) 1,814
-------------------------------------------------------------------------
7,536 21,238 49,288 55,976
-------------------------------------------------------------------------
Net change in non-cash working
capital items relating to
operating activities 34,093 (7,287) (13,132) (32,821)
-------------------------------------------------------------------------
Cash provided by operating
activities 41,629 13,951 36,156 23,155
-------------------------------------------------------------------------

INVESTING ACTIVITIES
Acquisition of Verdict - (28) - (4,268)
Purchase of capital assets (6,914) (4,444) (21,675) (18,769)
Proceeds from disposal of
capital assets - 732 339 3,540
(Increase) decrease in other
assets (1,227) 2,080 (1,274) (3,768)
-------------------------------------------------------------------------
Cash used in investing
activities (8,141) (1,660) (22,610) (23,265)
-------------------------------------------------------------------------

FINANCING ACTIVITIES
(Decrease) increase in bank
indebtedness (16,609) (10,170) (27,454) 19,065
Decrease in loan payable - - - (15,000)
Increase in loan payable - - - 15,000
(Decrease) increase in
long-term debt (766) 23 (2,824) (16,841)
Increase in long-term debt - - 15,000 50,000
Decrease in convertible
debentures - - (20,950) (69,985)
Increase in convertible
debentures - - 39,667 20,778
Increase (decrease) in long-term
liabilities 2,521 441 2,211 (392)
Issuance of common shares - 11 8 71
Dividends on preference shares (1,600) (400) (1,600) (1,600)
-------------------------------------------------------------------------
Cash (used in) provided by
financing activities (16,454) (10,095) 4,058 1,096
-------------------------------------------------------------------------

Effect of exchange rate changes
on cash (68) (204) (325) (508)
-------------------------------------------------------------------------

Net increase in cash during the
period 16,966 1,992 17,279 478
Cash, beginning of period 5,675 3,370 5,362 4,884
-------------------------------------------------------------------------
Cash, end of period $ 22,641 $ 5,362 $ 22,641 $ 5,362
-------------------------------------------------------------------------
-------------------------------------------------------------------------



For further information

James S. Butyniec, President and Chief Executive Officer, T: (905) 677-1889 ext. 233, E: jim.butyniec@magellan.aero
John B. Dekker, Vice President Finance & Corporate Secretary, T: (905) 677-1889 ext. 224, E: john.dekker@magellan.aero

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