Breeze-Eastern Corporation (NYSE Alternext: BZC) today reported that net income for the 2009 fiscal third quarter was $2.5 million versus $1.5 million in the prior-year period, a 62% increase, or $.26 per diluted share compared to $.16 per diluted share in the prior-year period. Operating income for the third quarter of fiscal 2009 was $4.6 million compared to $3.4 million for the third quarter of fiscal 2008, a 34% increase. Sales of $23.5 million in the fiscal third quarter of 2009 increased from $18.1 million for the same period in the prior year, a 30% increase. Adjusted EBITDA, as described under “Non-GAAP Financial Measures” in this press release, for the third quarter of fiscal 2009 increased 29% to $4.9 million versus $3.8 million in the prior-year period. New orders received during the 2009 fiscal third quarter were $17.7 million compared to $19.1 million in the prior fiscal year’s third quarter. The Company’s book-to-bill ratio for the fiscal 2009 third quarter was 0.8 compared with 1.1 for last year’s fiscal third quarter and 1.1 for the full fiscal year 2008.

For the nine month period ended December 28, 2008 the Company reported net income of $3.4 million versus $3.0 million for the same period last year or net income of $.36 per diluted share for the first nine months of fiscal 2009 compared to $.32 per diluted share for the same period in fiscal 2008. Operating income for the first nine months of fiscal 2009 remained relatively unchanged at $7.6 million versus $7.7 million for the same period in fiscal 2008. Sales for the first nine months of fiscal 2009 increased to $52.0 million from $51.6 million for the same period last year. Adjusted EBITDA was unchanged at $8.7 million for the first nine months of fiscal 2009 compared to the same period last year. New orders received during the first nine months of fiscal 2009 were $59.0 million compared to $54.8 million for the same period in fiscal 2008. The book-to-bill ratio was 1.1 for the first nine months of both fiscal 2009 and 2008.

Robert L. G. White, President and Chief Executive Officer of the Company, said, “The significant increases in sales, operating income, net income and income per diluted share for the third quarter of fiscal 2009 compared to the same period last year are a positive sign that our business plan is solid. The backlog as of December 28, 2008 was $131.3 million compared to $122.5 million at December 30, 2007 representing a 7% increase. The challenge continues to be our ability to book orders that can be shipped in fiscal 2009. However, based on current available information relative to our customers’ schedules, we are confident that the order pattern necessary to achieve our previously disclosed fiscal 2009 target of a sales increase in the range of 2% to 5% will be accomplished. In recent years, our revenues in the second half of the fiscal year have generally exceeded revenues in the first half. Fiscal 2009 indicates a continuance of this trend as evidenced by the strong sales reported in the third quarter which we expect to continue for the remainder of fiscal 2009 resulting in a favorable sales comparison for the entire year.”

Mr. White continued, “The gross margin of 40% for the 2009 fiscal third quarter versus 45% for the same period last year reflects costs incurred in fiscal 2009 associated with a contract to develop a new piece of equipment for a fixed wing aircraft to be used by the U.S. Army for tactical combat operations as well as very favorable margins in the third quarter of fiscal 2008 for new equipment. Likewise, the gross margin of 41% for the first nine months of fiscal 2009 versus 42% for the same period last year is attributable to the aforementioned increase in our contractual product development cost. While spare parts sales were $1.1 million higher in the third quarter of fiscal 2009 compared to the same period last year, the sales for the first nine months of fiscal 2009 remained weak, down $1.3 million compared to the first nine months of fiscal 2008. We believe that the decreased demand is due primarily to prioritization of procurement due to the delay in fully funding the war effort in Iraq and Afghanistan. This delay is the single biggest factor impacting the shift in our product mix. While we remain confident that the unrealized portion of the spare parts sales will eventually be ordered, it is not clear at this time when that will occur.”

Mr. White stated, “Our general, administrative and selling expenses for the first nine months of fiscal 2009 were $0.5 million less than the same period in fiscal 2008. This reduction was primarily due to lower non-recurring engineering expenditures and one time costs in the second quarter of fiscal 2008 associated with a threatened proxy contest offset somewhat by higher internal research and development costs related to new product development. We continue to review our expenses to identify areas in which to control and reduce costs where practicable. The reduction in interest expense for the quarter and nine months reflect the refinancing completed in the second quarter of fiscal 2009 along with the lower debt levels. Our debt, net of cash on hand, at the end of the third quarter of fiscal 2009 was $22.4 million, a decrease of $0.3 million from the end of the second fiscal quarter of 2009 and a reduction of $1.6 million from the end of fiscal 2008. At $30.4 million, working capital increased by $1.9 million in the third quarter of fiscal 2009 compared to the second quarter of fiscal 2009 due mainly to a greater level of shipments taking place in the latter part of the third quarter of fiscal 2009. While we expect to be reporting a provision for income taxes on a GAAP basis in the 42% range for fiscal 2009, the cash taxes to be paid will be below 10% as we expect to continue to utilize our net operating loss carry-forwards to offset the reported tax expense.”

Outlook

Mr. White concluded, “While we have not seen a discernable impact on our operating results due to the turmoil in the world economy, the global nature of our customer base could eventually result in an impact on our operations. The programs in which we are involved continue to receive the necessary funding. Our backlog is strong and we expect to realize the benefits of this in the last quarter of fiscal 2009 and beyond. The fundamentals of our company are strong and we remain confident that our fiscal 2009 sales will be 2% to 5% higher than fiscal 2008, and that our overall cost and expense structure will remain relatively consistent between the two years.”

Breeze-Eastern Corporation (http://www.breeze-eastern.com) is the world’s leading designer and manufacturer of sophisticated lifting devices for military and civilian aircraft, including rescue hoists, cargo hooks, and weapons-lifting systems. The Company, which employs approximately 184 people at its facility in Union, New Jersey, reported sales of $76.0 million in the fiscal year ended March 31, 2008.

Non–GAAP Financial Measures

In addition to disclosing financial results that are determined in accordance with Generally Accepted Accounting Principles (“GAAP”), the Company also discloses operating income (gross profit less general, administrative and selling expenses) and Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, interest and other income/expense and loss on extinguishment of debt). These are presented as supplemental measures of performance. The Company presents Adjusted EBITDA because it considers it an important supplemental measure of performance. Measures similar to Adjusted EBITDA are widely used by the Company and by others in the Company's industry to evaluate performance and price potential acquisition candidates. The Company believes Adjusted EBITDA facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structure (affecting relative interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense). The Company also presents Adjusted EBITDA because it believes it is frequently used by investors and other interested parties as a basis for evaluating performance to formulate investment decisions.

Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of the limitations of Adjusted EBITDA are that (i) it does not reflect the Company's cash expenditures for capital assets, (ii) it does not reflect the significant interest expense or cash requirements necessary to service interest or principal payments on the Company's debt, and (iii) it does not reflect changes in, or cash requirements for, the Company's working capital. Furthermore, other companies in the aerospace and defense industry may calculate these measures differently than the manner presented above. Accordingly, the Company focuses primarily on its GAAP results and uses Adjusted EBITDA only supplementally.

INFORMATION ABOUT FORWARD-LOOKING STATEMENTS

Certain statements in this press release constitute “forward-looking statements” within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the "Acts"). Any statements contained herein that are not statements of historical fact are deemed to be forward-looking statements.

The forward-looking statements in this press release are based on current beliefs, estimates and assumptions concerning the operations, future results, and prospects of the Company. As actual operations and results may materially differ from those assumed in forward-looking statements, there is no assurance that forward-looking statements will prove to be accurate. Forward-looking statements are subject to the safe harbors created in the Acts.

Any number of factors could affect future operations and results, including, without limitation, competition from other companies; changes in applicable laws, rules and regulations affecting the Company in the locations in which it conducts its business; interest rate trends; a decrease in the United States government defense spending, changes in spending allocation or the termination, postponement, or failure to fund one or more significant contracts by the United States government; determination by the Company to dispose of or acquire additional assets; general industry and economic conditions; events impacting the U.S. and world financial markets and economies; and those specific risks that are discussed in the Company’s previously filed Annual Report on Form 10-K for the fiscal year ended March 31, 2008 and Quarterly Report on Form 10-Q for the period ended September 28, 2008.

The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information or future events.

Breeze-Eastern Corporation
Robert L.G. White, 908-206-3700
President and CEO