Magellan Aerospace Corporation announces financial results

TORONTO, March 27, 2013 /CNW/ - Magellan Aerospace Corporation ("Magellan" or 
the "Corporation") released its financial results for the fourth quarter of 
2012. All amounts are expressed in Canadian dollars unless otherwise 
indicated. The results are summarized as follows: 


                                              
                  Three month period ended   Twelve month period ended
                               December 31                 December 31

Expressed in         2012    2011   Change      2012    2011    Change
thousands of
Canadian dollars,
except per share
amounts

Revenues          186,561 173,290     7.7%   704,579 691,410      1.9%

Gross              30,649  30,106     1.8%   100,692  97,410      3.4%
Profit

Net                22,098  16,646    32.8%    58,295  37,413     55.8%
Income

Net                  0.38    0.31    22.6%      1.00    0.73     37.0%
Income
per Share
- Diluted

 _____________________________________________________________________
|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      |
|except as required by law.                                           |
|                                                                     |
|The Corporation has included certain measures in this news release,  |
|including EBITDA and gross profit, the terms for which are not       |
|defined under International Financial Reporting Standards.  The      |
|Corporation defines EBITDA as net income before interest, dividends  |
|on preference shares, income taxes, stock-based compensation and     |
|depreciation and amortization.  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.                                                     |
|_____________________________________________________________________|

OVERVIEW

Magellan is a diversified supplier of components to the aerospace industry and 
in certain circumstances for power generation projects. Through its wholly 
owned subsidiaries, Magellan designs, engineers, and manufactures aeroengine 
and aerostructure components for aerospace markets, advanced products for 
military and space markets, and complementary specialty products. The 
Corporation also supports the aftermarket through supply of spare parts as 
well as performing repair and overhaul services and supplies in certain 
circumstances parts and equipment for power generation projects.

The Corporation's strategy has been to focus on several core competencies 
within the aerospace industry. These include precision machining of a wide 
variety of aerospace material, composites, complex high technology magnesium 
and aluminum alloy castings, repair and overhaul technologies and design of 
structures. The Corporation is now seeking to leverage these core 
competencies by achieving growth in applications where these abilities are 
critical in meeting customer needs.

BUSINESS UPDATE

With 70% of 2012 revenues coming from the commercial aircraft market, Magellan 
continues to be well positioned to take advantage of the current up cycle in 
this market segment. The year 2012 benefited from increased single and twin 
aisle production rates at Boeing and Airbus. Long term agreements secured 
with both Boeing and Airbus during 2012 confirmed Magellan's participation in 
key commercial aerospace programs and will serve to further augment the 
Corporation's strong positioning in this sector for the next decade.

While the defence market as a whole is contracting, Magellan is pleased that 
the Joint Strike Fighter ("JSF") Program achieved a number of key milestones 
over the course of 2012. Lockheed Martin delivered 30 aircraft in 2012, 
compared with 13 aircraft in 2011. The flight test program finished 9% ahead 
of plan for the year, which placed it at almost one third complete. 
Production orders Lots 5 and Lot 6 were confirmed for partnering countries in 
the period as well as orders for international customers. While the potential 
effects of the Budget Control Act and sequestration on the JSF program are 
unknown thus far, they are expected to be minimal in the near term. Magellan 
is anticipating moderate growth of JSF revenues over the next few years.

The power generation project segment provides specialty products complementary 
to the Corporation's principal business. The Corporation's sole project at 
present for the power generation project segment is a 132 megawatt thermal 
electric power generation plant in the Republic of Ghana. The work is being 
performed under contract with Canadian Commercial Corporation and is expected 
to be completed at the end of the first quarter of 2013. Installed capacity 
for electric power generation continues to lag current requirements in most 
developing nations with annual growth in demand often exceeding 10%. While 
interest in additional and complimentary opportunities remains high, at this 
time the Corporation does not have any additional committed projects.

Space products and services are expanding increasingly into everyday human 
activity, a circumstance that has protected the industry during a global 
recession, and will continue to propel the growth of the sector for the 
foreseeable future. The Space Report 2011 reported that the global space 
economy reached an estimated $276 billion in 2010 with the majority of the 
7.7% growth occurring in the commercial sector. Like the aerospace sector 
the global space market is seeing the effect of rising activities in this 
market by non-North American and European nations like China, India, and areas 
across Asia, the Middle East and Africa. Recognizing this, the Government of 
Canada's Aerospace Space Review, published in November 2012 stated that, 
"advancing the national interest through space-based activity and fostering a 
competitive Canadian space industry will require resolve, clear priorities 
that are set at the highest levels, and effective plans and programs to 
translate these priorities into practice". In order to support Canada's 
national efforts, the report issued eight clear recommendations, crafted to 
define the concrete goals, predictable funding, and orderly implementation 
required to help Canada's Space sector thrive. This stabilization of 
direction is expected to assure that the ongoing funding for Canadian space 
programs is sustained.

For additional information, please refer to the "Management's Discussion and 
Analysis" section of the Corporation's 2012 Annual Report that will be 
available shortly on www.sedar.com.

ANALYSIS OF OPERATING RESULTS FOR THE FOURTH QUARTER ENDED DECEMBER 31, 2012

The Corporation reported higher revenue in the fourth quarter of 2012 than the 
fourth quarter of 2011, primarily as a result of higher revenues in the 
aerospace segment. Gross profit and net income for the fourth quarter of 2012 
were $30.7 million and $22.1 million, respectively, an increase from the 
fourth quarter of 2011 gross profit of $30.1 million and an increase from the 
fourth quarter of 2011 net income of $16.6 million.

Consolidated Revenue

Overall, the Corporation's revenues increased when compared to the fourth 
quarter of 2011.
                                            
                       Three month period          Twelve month period
                         ended December 31           ended December 31

Expressed in        2012      2011  Change      2012      2011  Change
thousands of
Canadian
dollars

Aerospace        178,524   162,583    9.8% $ 659,301 $ 609,942    8.1%

Power              8,037    10,707 (24.9)%    45,278    81,468 (44.4)%
Generation
Project

Total revenues   186,561   173,290    7.7%   704,579   691,410    1.9%

Consolidated sales for the fourth quarter ended December 31, 2012 increased 
7.7% to $186.6 million from $173.3 million in the fourth quarter of 2011, due 
mainly to increased revenues earned in the aerospace segment partially offset 
by decreased revenues earned in the power generation project segment. As the 
Corporation moves into 2013, revenues earned on the current power generation 
project are expected to be completed and the Corporation does not anticipate 
additional revenues from this segment unless the Corporation receives further 
contracts in this area.

Aerospace Segment

Revenues for the Aerospace segment were as follows:
                                             
                        Three month period        Twelve month period
                          ended December 31          ended December 31

Expressed in          2012      2011 Change      2012      2011 Change
thousands of
Canadian dollars

Canada           $  80,112 $  79,845   0.3% $ 292,754 $ 284,385   2.9%

United States       49,665    47,434   4.7%   199,917   187,658   6.5%

Europe              48,747    35,304  38.1%   166,630   137,899  20.8%

Total revenues     178,524   162,583   9.8%   659,301   609,942   8.1%

Consolidated aerospace revenues for the fourth quarter of 2012 of $178.5 
million were 9.8% higher than revenues of $162.6 million in the fourth quarter 
of 2011. Revenues in Canada in the fourth quarter of 2012 remained 
consistent with those from the same period in 2011. Revenues in the United 
States in the fourth quarter of 2012 increased slightly from the fourth 
quarter of 2011 as production rates on single aisle aircraft continue to 
increase. Revenues in Europe in the fourth quarter of 2012 increased over 
revenues in the same period in 2011 mainly as a result of higher customer 
demand in 2012 on both single aisle and wide body aircraft when compared to 
2011. The increase in Europe revenues can also be partially attributed to 
the contribution of revenue from John Huddleston Engineering Limited ("JHE"), 
a company acquired in the third quarter of 2012.

Power Generation Project Segment

Revenues for the Power Generation Project segment were as follows:
                                           
                       Three month period      Twelve month period
                        ended December 31         ended December 31

Expressed in        2012     2011  Change     2012     2011  Change
thousands of
Canadian dollars

Power Generation $ 8,037 $ 10,707 (24.9)% $ 45,278 $ 81,468 (44.4)%
Project

Total revenues     8,037   10,707 (24.9)%   45,278   81,468 (44.4)%

Decreased revenues in the fourth quarter of 2012 over the same period in 2011 
represents the Corporation's activity level on the Ghana electric power 
generation project in the period in comparison to the activity level made in 
the previous comparable quarter, as the project moves to final completion. 
As the Corporation moves into 2013, revenue from the power generation project 
segment will decrease on a year over year basis unless the Corporation 
receives further contracts in this area.

Gross Profit
                                           
                       Three month period       Twelve month period
                        ended December 31         ended December 31

Expressed in         2012     2011 Change      2012     2011 Change
thousands of
Canadian dollars

Gross profit     $ 30,649 $ 30,106   1.8% $ 100,692 $ 97,410   3.4%

Percentage of       16.4%    17.4%            14.3%    14.1%       
revenues

Gross profit of $30.6 million (16.4% of revenues) was reported for the fourth 
quarter of 2012 compared to $30.1 million (17.4% of revenues) during the same 
period in 2011. Gross profit in the most recent quarter of 2012, as a 
percentage of revenues, decreased over the same period in 2011, as the 
Corporation recorded a reversal of impairment on intangible assets in the 
fourth quarter of 2011 of $1.8 million in comparison to a net impairment 
charge of $1.3 million in the fourth quarter of 2012. Also during the fourth 
quarter of 2012, the Corporation recorded additional investment tax credits 
("ITC's") of $7.0 million when compared to the same quarter in the prior year, 
which directly increased gross profit in the fourth quarter of 2012 by such 
amount. The additional ITC's of $7.0 million relates to activities of prior 
periods in which these tax benefits had not been recognized. Additional 
costs incurred in the quarter for the Ghana electric power generation project 
also reduced gross profit in the fourth quarter of 2012, when compared to the 
fourth quarter of 2011.

Administrative and General Expenses
                                                
                            Three month period      Twelve month period
                             ended December 31        ended December 31

Expressed in thousands    2012     2011 Change     2012     2011 Change
of Canadian dollars

Administrative and       9,948   10,618 (6.3)%   39,203   38,264   2.5%
general expenses

Percentage of revenues    5.3%     6.1%            5.6%     5.5%       

Administrative and general expenses were $9.9 million (5.3% of revenues) in 
the fourth quarter of 2012 compared to $10.6 million (6.1% of revenues) in the 
fourth quarter of 2011.

Other
                                                  
                              Three month period Twelve month period
                               ended December 31   ended December 31

Expressed in thousands of        2012       2011    2012        2011
Canadian dollars

Foreign exchange (gain) loss    (259)        200   (623)         238

Loss on disposal of property,     285         81     363         198
plant and equipment

Total other                        26        281   (260)         436

Other expense of $0.03 million in the fourth quarter of 2012 consisted of 
realized and unrealized foreign exchange gains offset by losses on the sale of 
property, plant and equipment.

Gain on Bargain Purchase
                                               
                           Three month period Twelve month period
                            ended December 31   ended December 31

Expressed in thousands of      2012      2011      2012      2011
Canadian dollars

Gain on bargain purchase    ─   ─   (9,597)   ─

Gain on bargain purchase    ─   ─   (9,597)   ─

On August 31, 2012, the Corporation purchased all of the issued and 
outstanding shares of the capital stock of JHE. As a result of such 
purchase, the Corporation recognized a gain on bargain purchase in 2012 of 
$9.6 million on such acquisition of JHE as the consideration paid for the 
identifiable tangible assets acquired was lower than the fair value, as 
determined by an independent valuation specialist.

Interest Expense
                                                                       
                                 Three month period Twelve month period
                                  ended December 31   ended December 31

Expressed in thousands of             2012     2011    2012        2011
Canadian dollars

Interest on bank indebtedness        2,154    1,910   7,982       9,397
and long-term debt

Convertible debenture interest     ─    1,008      66       4,000

Accretion charge for convertible     (112)    2,376     541       3,155
debenture, borrowings and
long-term debt

Discount on sale of accounts           196       86     648         447
receivable

Interest expense                     2,238    5,380   9,237      16,999

Interest expense of $2.2 million in the fourth quarter of 2012 was lower than 
the fourth quarter of 2011 amount of $5.4 million, largely due to the 
elimination of interest and accretion on convertible debentures which were not 
outstanding in the fourth quarter of 2012. Interest on bank indebtedness and 
long-term debt increased as the expense in 2012 includes interest costs 
incurred by JHE, a company the Corporation acquired in the third quarter of 
2012. Negative accretion charge for the quarter resulted from changes in 
discount rates in the period. The increase in the discount on sale of 
accounts receivable in the fourth quarter of 2012 over the same period in 2011 
resulted from an increased amount of receivables sold in the fourth quarter of 
2012 when compared to the fourth quarter of 2011.

Income Taxes
                                                                      
                                Three month period Twelve month period
                                 ended December 31   ended December 31

Expressed in thousands of           2012      2011    2012        2011
Canadian dollars

Expense (recovery) of current        373     (856)   2,925         280
income taxes

(Recovery) expense of deferred   (4,034)   (1,963)     889       3,708
income taxes

Total (recovery) expense of      (3,661)   (2,819)   3,814       3,988
income taxes

Effective tax rate               (19.9)%   (20.4)%    6.1%        9.6%

The Corporation recorded an income tax recovery of $3.7 million in the fourth 
quarter of 2012, compared to an income tax recovery of $2.8 million for the 
fourth quarter of 2011. The Corporation recognized deferred tax assets in 
Canada of $5.8 million in the fourth quarter of 2012 and $0.6 million in the 
fourth quarter of 2011 due to a reduction of the deferred income tax expense 
as the benefit from previously unrecorded loss carry forwards and other 
deferred tax assets of the Corporation were assessed as recoverable. The 
change in effective tax rates is also a result of a changing mix of income 
across the different jurisdictions in which the Corporation operates.

SELECTED QUARTERLY FINANCIAL INFORMATION
                                            
          

Expressed in                          2012                        2011
millions of
Canadian
dollars except
per share
information
               Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31

Revenues        187.0  169.5  161.6  186.5  170.5  186.0  161.6  173.3

Income before    14.0   11.3   18.4   18.4   10.1    7.0   10.4   13.8
taxes

Net income       11.8    9.2   15.2   22.1    7.2    4.9    8.6   16.6

Net income per                                                        
common share

  Basic          0.21   0.16   0.26   0.38   0.40   0.27   0.47   0.90

  Diluted        0.20   0.16   0.26   0.38   0.14   0.10   0.17   0.31

EBITDA           23.5   21.7   28.1   29.1   22.7   18.5   20.8   29.6

Revenues and net income reported in the quarterly information was impacted by 
the fluctuations in the Canadian dollar exchange rate in comparison to the US 
dollar and British Pound. The US dollar/Canadian dollar exchange rate in 
2012 fluctuated reaching a low of 0.9675 and a high of 1.0413. During 2012, 
the US dollar relative to the Canadian dollar moved from an exchange rate of 
1.0170 at the start of the 2012 calendar year to an exchange rate of 0.9949 by 
December 31, 2012. The British Pound/Canadian dollar exchange rate in 2012 
fluctuated reaching a low of 1.5515 and a high of 1.6162. During 2012, the 
British Pound relative to the Canadian dollar moved from an exchange rate of 
1.5799 at the start of the 2012 calendar year to an exchange rate of 1.6178 by 
December 31, 2012. Had exchange rates remained at levels experienced in 2011, 
reported revenues in 2012 would have been lower by $1.2 million in the first 
quarter, $5.6 million in the second quarter and $3.3 million in the third 
quarter and $1.7 million higher in the fourth quarter.

Net income in the third quarter of 2012 was higher than each of the first two 
quarters of 2012 as the Corporation recognized an after tax gain on bargain 
purchase of $7.4 million on the acquisition of JHE as the consideration paid 
was lower than the fair value of the identifiable tangible assets acquired at 
the time of purchase. Net income for the fourth quarter of 2011 and 2012 of 
$16.6 million and $22.1 million respectively were higher than most other 
quarterly net income disclosed in the table above. In the fourth quarter of 
2011 the Corporation recognized a reversal of previous impairment losses 
against intangible assets relating to various civil aircraft programs and in 
both the fourth quarter of 2011 and 2012 the Corporation recognized previously 
unrecognized investment tax credits as discussed above in the "Gross Profit" 
section, and recognized other deferred tax assets as discussed above in the 
"Income Taxes" section as the Corporation determined that it will be able to 
benefit from these assets,

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA)

In addition to the primary measures of earnings and earnings per share (basic 
and diluted) in accordance with IFRS, the Corporation includes certain 
measures in this news release, including EBITDA (as net income before 
interest, dividends on preference shares, income taxes, stock-based 
compensation and depreciation and amortization). 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 IFRS, but EBITDA is not a recognized measure under IFRS, 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 earnings as determined in accordance with IFRS or as an alternative to 
cash provided by or used in operations.
                                                                       
                               Three month period  Twelve month period
                                 ended December 31    ended December 31

Expressed in thousands of           2012      2011      2012       2011
Canadian dollars

Net income                        22,098    16,646    58,295     37,413

Interest                           2,238     5,380     9,237     16,999

Dividends on preference shares   ─   ─   ─        310

Taxes                            (3,661)   (2,819)     3,814      3,988

Stock-based compensation         ─        18         3         68

Depreciation and amortization      8,386    10,411    31,029     32,835

EBITDA                            29,061    29,636   102,378     91,613

EBITDA for the fourth quarter of 2012 was $29.1 million compared to $29.6 
million in the fourth quarter of 2011. EBITDA for the twelve month period 
ended December 31, 2012 includes a $9.6 million gain on bargain purchase on 
the acquisition of JHE and approximately $10.4 million (versus approximately 
$5.2 million in fiscal 2011) of investment tax credits recognized as a 
reduction of cost of revenues, both of which are not likely to recur in future 
periods.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow from Operating                         
Activities
                             Three month period  Twelve month period
                              ended December 31     ended December 31

Expressed in thousands of        2012      2011       2012       2011
Canadian dollars

Increase in accounts          (7,373)   (2,460)   (20,114)   (10,908)
receivable

Decrease (increase) in          7,839   (1,752)   (17,310)     24,704
inventories

Decrease (increase) in            592     3,812    (1,792)      6,559
prepaid expenses and other

Increase (decrease) in          5,742   (1,273)     13,861   (32,881)
accounts payable, accrued
liabilities and provisions

Changes to non-cash working     6,800   (1,673)   (25,355)   (12,526)
capital balances

Cash provided by operating     22,564    21,858     35,890     51,444
activities

In the quarter ended December 31, 2012, the Corporation generated $22.6 
million of cash from its operations, compared to cash generated by operations 
of $21.9 million in the fourth quarter of 2011.

Investing Activities                                                   
                               Three month period   Twelve month period
                                ended December 31     ended December 31

Expressed in thousands of         2012       2011       2012       2011
Canadian dollars

Acquisition of JHE             ─    ─   (13,641)    ─

Purchase of property, plant   (11,190)   (33,423)   (33,829)   (59,260)
& equipment

Proceeds from disposals of         120        168        187        514
property, plant & equipment

Decrease (increase) in           2,896     17,393    (6,654)     10,381
other assets

Cash used in investing         (8,174)   (15,862)   (53,937)   (48,365)
activities

In the fourth quarter of 2012, the Corporation invested $11.2 million in 
property, plant and equipment to upgrade and enhance capabilities for current 
and future programs.

Financing Activities                                                  
                               Three month period  Twelve month period
                                ended December 31    ended December 31

Expressed in thousands of         2012       2011      2012       2011
Canadian dollars

(Decrease) increase in bank   (18,381)    (7,092)   (7,812)      2,704
indebtedness

Increase (decrease) in debt      3,083   (12,725)    20,604    (3,617)
due within one year

Decrease in long-term debt     (1,416)    (2,937)   (8,849)   (17,221)

Increase in long-term debt       6,334     15,802     6,334     21,011

Increase in long-term              164      1,079       497        824
liabilities and provisions

Increase in borrowings             761      3,315     3,223      6,353

Redemption of preference       ─    ─   ─   (12,000)
shares

Cash (used in) provided by     (9,455)    (2,558)    13,997    (1,946)
financing activities

On December 21, 2012, the Corporation amended its operating credit agreement 
with its existing lenders. Under the terms of the amended agreement, the 
maximum amount available under the operating credit facility was decreased to 
a Canadian dollar limit of $115.0 million (down from $125.0 million) plus a US 
dollar limit of $35.0 million (down from US $50.0 million), with a maturity 
date of December 21, 2014. The Bank Facility Agreement also includes a Cdn$50 
million uncommitted accordion provision which will provide Magellan with the 
option to increase the size of the operating credit facility to $200 
million. The facility is extendible for unlimited future one year renewal 
periods, subject to mutual consent of the syndicate of lenders and the 
Corporation. The operating credit facility continues to be fully guaranteed 
until December 21, 2014 by Mr. Edwards in consideration of the continued 
payment by the Corporation of an annual fee, payable monthly, equal to 0.50% 
(down from 0.63%) of the loan amount.

On December 21, 2012, the Corporation also extended the 7.5% loan payable 
("Original Loan") to Edco Capital Corporation ("Edco"), a corporation 
controlled by the Chairman of the Board of the Corporation to January 1, 2015 
in consideration of the payment of a fee to Edco equal to 0.75% of the 
principal amount outstanding at the time of extension. The Corporation has 
the right to repay the Original Loan at any time without penalty.

The terms of the amended operating credit agreement continue to permit the 
Corporation to repay, in whole or in part, the Original Loan from Edco 
provided there is no current default or event of default under the operating 
credit facility and after the repayment of the loan the Corporation has at 
least $25.0 million in availability under the operating credit facility.

As at December 31, 2011, the Corporation had retracted all outstanding 
Preference Shares Series A and reduced the outstanding principal amount of the 
Original Loan to $33.5 million. During 2012, the Corporation repaid the 
Original Loan by an additional $3.5 million resulting in an outstanding 
principal amount of $30.0 million as at December 31, 2012.

On December 31, 2011, the Chairman of the Board exercised his conversion 
rights under the debenture agreement and $38.0 million principal amount of the 
10% convertible secured subordinated debentures ("Convertible Debentures") 
were converted into 38,000,000 common shares of the Corporation. On April 
30, 2012, an additional $2.0 million of the Convertible Debentures were 
converted into 2,000,000 common shares of the Corporation.

DERIVATIVE CONTRACTS

The Corporation operates internationally, which gives rise to a risk that its 
income, cash flows and shareholders' equity may be adversely impacted by 
fluctuations in foreign exchange rates. Currency risk arises because the 
amount of the local currency receivable or payable for transactions 
denominated in foreign currencies may vary due to changes in exchange rates 
and because the non-Canadian dollar denominated financial statements of the 
Corporation's subsidiaries may vary on consolidation into the reporting 
currency of Canadian dollars. The Corporation uses derivative financial 
instruments to help manage foreign exchange risk with the objective of 
reducing transaction exposures and the resulting volatility of the 
Corporation's earnings. The Corporation does not trade in derivatives for 
speculative purposes. Under these contracts the Corporation is obligated to 
purchase specified amounts at predetermined dates and exchange rates. These 
contracts are matched with anticipated cash flows in US dollars.

The counterparties to the foreign currency contracts are all major financial 
institutions with high credit ratings. The Corporation had no foreign 
exchange contracts outstanding as at December 31, 2012.

SHARE DATA

The authorized capital of the Corporation consists of an unlimited number of 
Preference Shares, issuable in series, and an unlimited number of common 
shares. As at March 22, 2013, 58,209,001 common shares were outstanding.

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 help 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 "Risk Factors" in the Corporation's 
Management's Discussion and Analysis for the year ended December 31, 2012 and 
to the information under "Risks Inherent in Magellan's Business" in the 
Corporation's Annual Information Form for the year ended December 31, 2012, 
which have been filed with SEDAR at www.sedar.com.

OUTLOOK

Over the next number of years the global commercial aerospace market is 
expected to reach record levels of production based on the need to replace 
older aircraft with new more fuel efficient models and on passenger travel 
growth in Asia and the Middle East. In contrast, the global defence market 
is in decline as the pressure to realize budget cuts is at the forefront of 
most government agendas.

The global defence market is expected to see a decline due to decreased 
spending in the US and European markets. With the US representing 50% of 
global defence procurement any growth in other countries is unable to 
effectively offset the potential reductions. Uncertainty in the US defence 
market is perpetuated by the unknowns of sequestration. In the absence of 
absolute directives, the US Department of Defense recently issued a memo 
suggesting that budgets focus primarily on readiness and urgent operational 
needs. It also suggested the cutting of future units, freezing civilian 
hiring and canceling certain maintenance activities. All procurement 
programs are expected to see reduced buys in the magnitude of 10 to 15%. 
European markets are similarly facing the challenge of reallocating 
expenditures as a consequence of the current financial and budgetary 
crisis. As the Western defence industry reacts to the shrinking market new 
competitive pressures will emerge as the focus shifts towards South American, 
Middle East and Asian markets.

In contrast to defence, the global commercial aerospace market is in a strong 
up cycle. Backlogs are expected to continue growing, as airlines update 
their fleets with new fuel-efficient aircraft in order to stay competitive. 
Boeing and Airbus delivered 601 and 588 aircraft respectively in 2012, as 
compared with 477 and 534 aircraft delivered in 2011. Production rates for 
2013 are forecasted to increase again to 665 and 641 respectively. The 737 
program is increasing to 38 per month in the second quarter of 2013 and the 
A320 is running at 42 per month. The B787 program will no doubt experience 
some delay due to the recent battery issues, however, firm orders of just 
under 800 aircraft should see Boeing ramp from 5 per month to 7 per month in 
2013 and then to 10 per month in 2014. Airbus has the A330 rate planned to 
ramp up from 9 per month to 11 per month by the fourth quarter of 2014 and the 
A380 to increase from 3 per month to 3.5 per month.

Prospects exist for regional aircraft market growth with the greatest 
opportunity to come from Asia/Pacific, Latin America and the Middle East 
regions. In the near term, two regional segments are expected to be 
particularly dynamic, the first being the 70 seat turboprop segment and the 
second the 90 to 120 seat jet market. The first segment has continued to 
grow due to persistently high fuel prices and the need for larger aircraft to 
accommodate increasing passenger traffic. Although the Bombardier Q400 is 
currently suffering a lower order backlog of less than one year, ATR is 
increasing 72-Series annual production to 80 aircraft in 2013 to satisfy an 
almost three year backlog. This market is better positioned to grow 
considering new scope clause agreements between regional airlines and pilots 
unions. Regional airlines will be replacing their older 35 to 50 seat, 
in-service fleet with larger turboprop or regional jet aircraft.

The 90 to 120 seat regional jet segment is somewhat limited by pilot scope 
clause agreements, however some predict that the market is poised for growth 
as Asia/Pacific regions could overtake Europe as the second largest market for 
regional aircraft. With the 50 seat segment disappearing, this will force 
airlines to replace this older in-service fleet (52% of the total) with larger 
turboprops and regional jets. As well, an American/US Air merger is expected 
to result in additional new orders as the airline adds seats to its regional 
fleet. Of course there are new fuel-efficient platforms entering this 
segment such as the Bombardier C-Series, the Mitsubishi MRJ, the Irkuit MS-21 
that will increase market competition.

Forecast International describes the current business jet market as "sluggish" 
and "struggling to recover from the wake of the global and financial 
collapse". The industry is frustrated that recovery has not yet happened 
despite that all key indicators continue to point in the right direction. 
Current forecasts suggest that the market is expected to pick up somewhat in 
the second half of 2013 as equity markets stabilize and corporate profits 
continue to grow. A positive sign in the market is that Bombardier reported 
net orders of 343 business jets in 2012 versus 191 in fiscal year 2011. The 
medium to large cabin jets continue to be more resilient than light jets 
during this cycle as buyers of the latter are much more sensitive to the 
economic environment. China is in the process of liberalizing its air space 
which could lead the growth in business jet aircraft due to the increasing 
number of wealthy individuals in that country. The Middle East is expected 
to follow the same pattern. Overall, recovery in this market is expected to 
be gradual in its year-to-year growth.

Finally, the global helicopter market has experienced some contraction because 
its largest segment, that of defence at 72% of the total, is being 
trimmed. The combination of the Iraq/Afghanistan withdrawal and US 
sequestration budget cuts will cause further contraction before recovery can 
be expected. Prior to this reversal, the industry was experiencing good 
growth and was anticipating a strong five year period to follow. Where North 
America dominated the industry to date, rise in military spending and economic 
growth amongst BRIC (Brazil, Russia, India & China) nations is expected to 
drive future industry growth.

ADDITIONAL INFORMATION

Additional information relating to Magellan Aerospace Corporation, including 
the Corporation's annual information form, can be found on the SEDAR web site 
at www.sedar.com.

FORWARD LOOKING STATEMENTS

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 uncertainties and assumptions, which may cause actual results to be 
materially different from those expressed or implied. These forward looking 
statements can be identified by the words such as "anticipate", "continue", 
"estimate", "forecast", "may", "project", "could", "plan", "intend", "should", 
"believe" and similar words suggesting future events or future performance. In 
particular there are forward looking statements contained under the headings: 
"Overview" which outlines certain expectations for future operations and 
"Outlook" which outlines certain expectations for the future. These statements 
assume the continuation of the current regulatory and legal environment; the 
continuation of trends for passenger airliner and defence production and are 
subject to the risks contained herein and outlined in our annual information 
form. The Corporation assumes no future obligation to update these 
forward-looking statements except as required by law.

MAGELLAN AEROSPACE CORPORATION                  

ICONSOLIDATED INTERIM STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                                       
                            Three month period      Twelve month period
                             ended December 31        ended December 31

(unaudited)                                                   
(expressed in
thousands of Canadian
dollars, except per
share amounts)               2012         2011        2012         2011

Revenues                  186,561      173,290     704,579      691,410

Cost of revenues          155,912      143,184     603,887      594,000

Gross profit               30,649       30,106     100,692       97,410
                                                                       

Administrative and                                            
general expenses            9,948       10,618      39,203       38,264

Other                          26          281       (260)          436

Gain on bargain                                               
purchase                  ─      ─     (9,597)      ─

Dividends on                                                  
preference shares         ─      ─     ─          310
                           20,675       19,207      71,346       58,400
                                                                       

Interest                    2,238        5,380       9,237       16,999

Income before income                                          
taxes                      18,437       13,827      62,109       41,401
                                                                       

Income taxes                                                           

  Current                     373        (856)       2,925          280

  Deferred                (4,034)      (1,963)         889        3,708
                          (3,661)      (2,819)       3,814        3,988

Net income                 22,098       16,646      58,295       37,413
                                                                       

Other comprehensive                                           
(loss) income                                                          

  Foreign currency                                            
  translation             (2,743)      (5,601)     (1,116)        4,149

  Actuarial loss on                                           
  defined benefit
  pension plans           (7,361)     (17,530)     (7,361)     (17,530)

Comprehensive income                                          
(loss)                     11,994      (6,485)      49,818       24,032
                                                                       

Net income per share                                                   

  Basic                      0.38         0.90        1.01         2.04

  Diluted                    0.38         0.31        1.00         0.73
    

MAGELLAN AEROSPACE CORPORATION            

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION        
                                                                       
                                          December 31       December 31

(unaudited)                                                
(expressed in thousands of Canadian
dollars)                                         2012              2011

Current assets                                                         

Cash                                           22,431            26,520

Trade and other receivables                   134,361           106,480

Inventories                                   147,382           127,473

Prepaid expenses and other                      7,879             5,326
                                              312,053           265,799

Non-current assets                                                     

Property, plant and equipment                 316,441           289,744

Investment properties                           2,875             3,041

Intangible assets                              60,701            66,134

Other assets                                   12,697             8,660

Deferred tax assets                            51,040            28,360
                                              443,754           395,939

Total assets                                  755,807           661,738
                                                                       

Current liabilities                                                    

Accounts payable, accrued liabilities                      
and provisions                                121,644           106,022

Debt due within one year                       32,425            12,513
                                              154,069           118,535

Non-current liabilities                                                

Bank indebtedness                             112,666           120,674

Long-term debt                                 80,024            81,768

Deferred tax liabilities                       14,761            10,088

Borrowings subject to specific                             
conditions                                     20,768            18,847

Other long-term liabilities and                            
provisions                                     39,003            29,131
                                              267,222           260,508
                                                                       

Equity                                                                 

Share capital                                 254,440           252,440

Contributed surplus                             2,044             2,041

Other paid in capital                          13,565            13,565

Retained earnings                              71,826            20,892

Accumulated other comprehensive loss          (7,359)           (6,243)
                                              334,516           282,695

Total liabilities and equity                  755,807           661,738
    

MAGELLAN AEROSPACE CORPORATION                

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW
                 
                                  Three month period        Twelve month period
                                    ended December 31         ended December 31

(unaudited)                                                           
(expressed in thousands of
Canadian dollars)                   2012         2011         2012         2011

Cash flow from operating                                              
activities                                                                     

  Net income                      22,098       16,646       58,295       37,413

  Amortization/depreciation                                           
  of intangible assets and
  property, plant and
  equipment                        8,386       10,411       31,029       32,835

  Net loss on disposal of                                             
  assets                             352           39          430          198

  Decrease in defined                                                 
  benefit plans                  (1,591)        (564)      (4,767)      (3,979)

  Impairment reversal, net         1,273      (1,847)        (270)      (1,847)

  Gain on bargain purchase       —      —      (9,597)      —

  Stock-based compensation       —           18            3           68

  Accretion                        (112)        2,566          541        3,155

  Deferred taxes                (14,642)      (3,738)     (14,419)      (3,873)

  Decrease (increase) in                                              
  working capital                  6,800      (1,673)     (25,355)     (12,526)

Net cash provided by                                                  
operating activities              22,564       21,858       35,890       51,444
                                                                               

Cash flow from investing                                              
activities                                                                     

  Acquisition of JHE             —      —     (13,641)      —

  Purchase of property,                                               
  plant and equipment           (11,190)     (33,423)     (33,829)     (59,260)

  Proceeds from disposal of                                           
  property, plant and
  equipment                          120          168          187          514

  Decrease (increase) in                                              
  other assets                     2,896       17,393      (6,654)       10,381

Net cash used in investing                                            
activities                       (8,174)     (15,862)     (53,937)     (48,365)
                                                                               

Cash flow from financing                                              
activities                                                                     

  (Decrease) Increase in                                              
  bank indebtedness             (18,381)      (7,092)      (7,812)        2,704

  Increase (decrease) in                                              
  debt due within one year         3,083     (12,725)       20,604      (3,617)

  Decrease in long-term                                               
  debt                           (1,416)      (2,937)      (8,849)     (17,221)

  Increase in long-term                                               
  debt                             6,334       15,802        6,334       21,011

  Increase in long-term                                               
  liabilities and
  provisions                         164        1,079          497          824

  Increase in borrowings             761        3,315        3,223        6,353

  Redemption of preference                                            
  shares                         ─      —      ─     (12,000)

Net cash (used in) provided                                           
by financing activities          (9,455)      (2,558)       13,997      (1,946)
                                                                               

Increase (decrease) in cash                                           
during the period                  4,935        3,438      (4,050)        1,133

Cash at beginning of the                                              
period                            17,104       23,898       26,520       24,952

Effect of exchange rate                                               
differences                          392        (816)         (39)          435

Cash at end of the period         22,431       26,520       22,431       26,520











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

SOURCE: Magellan Aerospace Corporation

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/March2013/27/c8665.html

CO: Magellan Aerospace Corporation
ST: Ontario
NI: ARO ERN 

-0- Mar/27/2013 12:15 GMT


 
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