U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of ~~September 2003~~March 2004

NORTHSTAR AEROSPACE (CANADA) INC.

~~105~~6006 ~~Bedford~~West ~~Road~~73rd Street ~~Toronto~~Bedford Park, ~~Ontario Canada M5R~~IL ~~2K4~~60638 U.S.A.

(Address of registrant’s principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ý Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No ý

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): .

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		NORTHSTAR AEROSPACE (CANADA) INC.
		(Registrant)
Date: November 13, 2003		By:	Randal L. Levine
Date:	5/19/04	By:	/s/ Alan Gatlin
		Name:	~~Randal~~Alan ~~L. Levine~~Gatlin
		Title:	Vice-President and Chief Financial Officer

NORTHSTAR AEROSPACE REPORTS ~~THIRD~~ FIRST QUARTER FINANCIAL RESULTS

REPORT TO SHAREHOLDERS – ~~THIRD~~ FIRST QUARTER FINANCIAL RESULTS (Canadian Dollars)

~~TORONTO~~CHICAGO, ~~November~~ ILLINOIS, May 11, ~~2003~~2004 - Northstar Aerospace, Inc. today reported ~~earnings~~income from continuing operations for the ~~third~~ first quarter ending ~~September 30~~March 31, ~~2003~~2004 of $0.4 million or $0.01 per share compared to $42.67 million or $0.1609 per share in the prior year period. Changes in foreign exchange rates continue to have a significant negative impact on revenues and earnings. Net ~~earnings~~income for the quarter, after discontinued operations ~~were~~was $0.4 million or $0.01 per share compared to $4.1 million or $0.14 per share in the prior year. For the nine months of 2003 earnings from continuing operations were $4.4 million or $0.15 per share compared to $9.8 million or $0.34 per share in the prior year. Net earnings, including discontinued operations were a loss of $56.~~1 million or $0.18 per share in the nine months of 2003 compared to a profit of $~~8.6 million or $0.3024 per share in the prior year.

Revenue from continuing operations totaled $4137.24 million in the ~~third~~first quarter compared to $4347.32 million in the ~~previous~~prior year, ~~representing~~ a decrease of 420.97%. ~~Military~~Both defence and commercial revenues decreased in the quarter ~~were~~compared ~~lower as~~to athe ~~result~~prior year. Excluding the impact of changes in foreign exchange rates, revenues for the first quarter were 8.4% lower ~~volumes~~than the prior year. The slowdown on a ~~key~~major defence program towhich was the ~~Canadian~~primary ~~operations. For~~reason for the ~~nine~~Company’s ~~months~~closure of ~~2003~~the Cambridge, ~~revenues~~Ontario ~~were $130.2~~machining ~~million,~~facility accounted for a 2%major ~~decrease~~portion ~~from~~of ~~2002~~the balance of the decline.

Earnings before interest and taxes (“EBIT”) ~~margin for~~ from continuing operations ~~were~~was 7$3.2%5 million for the ~~third~~ first quarter compared to 19$6.9%5 million in the prior year. The higher Canadian/US exchange rate reduced EBIT by approximately $12.91 million in the ~~third quarter as compared to the prior~~ ~~year. EBIT~~first ~~margins for the nine months of 2003 were 10.5% compared to 15.3% in the prior year. . The decrease EBIT in the~~ quarter and the nine months is attributable primarily to the impact of foreign exchange, lower commercial aerospace activity, lower activity on a key military program in Canada, severance costs in the second quarter and a legal settlement in the third quarter. A more detailed discussion of the ~~third~~first quarter ~~and first nine months~~ of ~~2003~~2004 is contained in the Management Discussion and Analysis including comments on the comparability of results between the current and prior year.

Commenting on these results, President and Chief Executive Officer, Mark Emery stated:

~~“The~~Lower ~~third~~activity ~~quarter~~on ofthe ~~2003~~Lynx program was ~~difficult. The~~ ~~reduced~~a ~~commercial aerospace~~primary ~~activities~~driver ~~and negative impact~~ of ~~an improved Canadian dollar have~~ ~~had~~the adecrease ~~significant~~in ~~impact~~revenue onand ~~our~~EBIT ~~results~~ for the ~~first~~quarter, ~~nine~~in ~~months~~addition ~~of 2003. We are adjusting~~ to the ~~new~~impact ~~reality~~of foreign ~~and~~exchange ~~have~~rates. The related ~~taken~~closure ~~steps~~of tothe ~~reduce~~Cambridge, ~~costs~~Ontario ~~and~~machining ~~increase~~facility, ~~profitability~~initiated ~~but~~at ~~this~~the ~~will~~end ~~take some~~of ~~time~~2003, ~~before~~is ~~the~~progressing ~~impacts~~on ~~are seen~~target. ~~Our~~I would ~~commercial~~like ~~aerospace~~to ~~manufacturing~~acknowledge ~~activities~~all ~~continue~~of toour beemployees ~~negatively~~ impacted by the ~~downturn~~closure inof ~~their markets.~~ the WeCambridge domachining ~~not expect to realize improvements in our commercial aerospace activities in the short term~~facility. ~~Also,~~They ~~reduced~~worked ~~volumes~~diligently onthrough athe ~~key~~last ~~military~~day ~~program~~of ~~due~~operations to ~~reduced~~provide ~~customer demand, have~~superior ~~impacted~~service to our ~~Canadian facilities~~customers.

Foreign exchange and other factors have significantly changed the market dynamics from a year ago. Along with the closure of Cambridge, the Company has initiated a broad program of improvements to strengthen Northstar’s competitive position.

Our increased focus on cash flow improvements is producing results. Cash generated from operating activities was $5.4 million higher this quarter compared to the same quarter last year.

At March 31, 2004, the released backlog was $167 million, virtually unchanged from December 31, 2003. We anticipate strengthening in our military order intake later in the second half of 2004.

We anticipate the balance of 2003 to show continued weakness in results.

We are focusing increased efforts on cash flow improvements and are expecting to show positive results in this area by year-end.

At September 30, 2003 the released backlog was $166 million, compared to $238 million at December 31, 2002. Recently received orders have not been fully incorporated into the September 2003 backlog as they have not yet been released.”

Forward Looking Statements

This report includes “forward-looking statements” that are subject to risk and uncertainty. All statements other than statements of historical facts included in this report, including, without limitation, those regarding the Company’s financial position, business strategy, projected costs and plans, projected revenues, objectives of management for future operations, and certain other items discussed above may be or include forward-looking statements. There is uncertainty over the impact ~~of the September 11, 2001~~ terrorist ~~attacks~~activity and the ~~declining~~ North American economy on the Company’s revenues and earnings for ~~2002~~2004 and beyond. There is also uncertainty as a result of the ~~extend~~extent and duration of a downturn in the commercial aerospace market, the impact of lower world wide ~~commercial~~ commercial passenger air travel, air freight traffic and the impact of the level of future U.S. military expenditures. Forward-looking information contained herein is based upon a number of assumptions regarding the Canadian, U.S. and global economic environment and local and foreign government policies and actions. Actual future results of the Company may differ materially depending on a variety of factors, including production rates, timing of ~~product~~ product deliveries, Canadian, U.S. and foreign government activities, volatility of the market for the Company’s products and services, worldwide political stability, factors that result in significant and prolonged disruption to commercial air travel worldwide, worldwide political stability, domestic and international economic conditions, and other political and economic risks and uncertainties. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations (“Cautionary Statements’), are included in the Company’s Annual Report for the ~~Year~~ Years Ended December 31, 2002 -and 2003 - Management’s Discussion and Analysis - Risks and Uncertainties, and in Form 20F under the heading of Risks and Uncertainties. All information contained in this report and subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by the Cautionary Statements.

Non-GAAP ~~Measure~~ Measures

The Company defines ~~EBITDA~~EBIT as earnings from operations before interest~~, income~~ ~~taxes, depreciation, amortization~~ and ~~write-off~~income ~~of deferred development costs~~taxes.

The Company has included information concerning ~~EBITDA~~EBIT because it believes ~~certain~~this ~~investors~~measure ~~use~~is ~~this~~used ~~measure~~by certain investors as a ~~means~~measure of ~~measuring~~ continuing financial performance. ~~EBITDA~~EBIT is not a measure of financial performance under Canadian or United ~~American~~States generally accepted accounting principles (“GAAP”). As well, this measure has no standardized meaning prescribed under GAAP and may not be comparable to similarly titled measures used by other companies. This measure should not be construed as an alternative to ~~cash flow from operations or~~ earnings from operations as as determined in accordance with GAAP as ~~measures~~a measure of ~~liquidity or~~ earnings.

~~Donald~~/s/ K.Mark ~~Jackson~~Emery ~~Chairman~~Mark ~~Attachments:~~Emery ~~Consolidated~~President ~~Balance~~& ~~Sheet~~Chief ~~Consolidated~~Executive ~~Statement of Shareholders’ Equity Consolidated Statement of Operations Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements Management Discussion and Analysis~~Officer

Attachments:	Consolidated Balance Sheet
	Consolidated Statement of Shareholders’ Equity
	Consolidated Statement of Operations
	Consolidated Statement of Cash Flows
	Notes to Consolidated Financial Statements
	Management Discussion and Analysis

Consolidated Balance Sheets

As at ~~September 30~~March 31

(in thousands of Canadian dollars)

UNAUDITED

	September 30 2003		December 31 2002
	March 31 2004		December 31 2003
ASSETS
Current
Cash	$	—4,395	$	24,~~450~~181
Accounts receivable	3122,~~440~~415		2117,~~864~~770
Inventories	7571,~~491~~045		8670,~~844~~446
Other current assets	21,~~946~~841		2,~~525~~119
Discontinued operations	—		27,201
Total current assets	99,696		94,516
Total current assets	109,877		140,884
Property, plant and equipment	47,545		48,011
Property, plant and equipment	53,016		58,490
Goodwill, net	3,724		3,657
Goodwill, net	5,767		6,692
Other long-term assets (note 3b)	10,625		10,489
Other long-term assets (note 2b)	10,275		16,025
Total assets	$	161,590	$	156,673
Total assets	$	178,935	$	222,091
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Bank indebtedness	$	10,779	$	—
Accounts payable and accrued liabilities	$	25,024	$	22,619
Accounts payable and accrued liabilities	21,653		29,959
Current portion of long-term debt	670		634
Current portion of long-term debt	634		722
Total current liabilities	25,694		23,253
Discontinued operations	—		25,730
Long-term debt	83,627		82,102
Total current liabilities	33,066		56,411
Other long-term liabilities (note 3c)	14,343		13,876
Long-term debt	85,939		100,243
Total liabilities	123,664		119,231
Other long-term liabilities (note 2c)	13,619		22,719
Shareholders’ equity	37,926		37,442
Total liabilities	132,624		179,373
Total liabilities and shareholders’ equity	$	161,590	$	156,673
Shareholders’ equity	46,311		42,718
Total liabilities and shareholders’ equity	$	178,935	$	222,091

To be read in conjunction with notes to interim consolidated financial statements.

Consolidated Statements of Shareholders’ Equity

For ~~three~~the ~~and~~quarter ~~nine months~~ ended ~~September 30~~March 31

(in thousands of Canadian dollars)

UNAUDITED

	Three Months Ended September 30						Nine Months Ended September 30
	2004			2003
	2003			2002			2003			2002
Deficit – beginning of period as previously reported	$	(110,580	)	$	(96,819	)
Deficit – beginning of period as previously reported	$	(102,332	)	$	(92,911	)	$	(96,819	)	$	(95,066	)
Change in accounting policy – stock based compensation (note 2)	(146		)	—
Change in accounting policy	—			—			—			(2,357		)
Deficit – beginning of period as restated	(110,726		)	(96,819		)
Deficit – beginning of period as restated	(102,332		)	(92,911		)	(96,819		)	(97,423		)
Net income (loss) for the period	369			(6,806		)
Net income (loss) for the period	374			4,105			(5,139		)	8,617
Deficit – end of period	(110,357		)	(103,625		)
Deficit – end of period	(101,958		)	(88,806		)	(101,958		)	(88,806		)
Contributed surplus (note 2)	184			—
Capital stock	152,851			152,~~642~~659			~~152,851~~			~~152,642~~
Currency Translation Adjustment –
Currency translation adjustment	(4,752		)	(3,615		)
Continuing operations	(4,582		)	(3,581		)	(4,582		)	(3,581		)
Total shareholders’ equity	$	37,926		$	45,419
Discontinued Operations (note 3)	—			(9,467		)	—			(9,467		)
TOTAL SHAREHOLDERS’ EQUITY	$	46,311		$	50,788		$	46,311		$	50,788

To be read in conjunction with notes to interim consolidated financial statements.

Consolidated Statements of Operations

For ~~three~~the ~~and~~quarter ~~nine months~~ ended ~~September 30~~March 31

(in thousands of Canadian dollars except per share amounts)

UNAUDITED

	Three months ended September 30					Nine Months ended September 30
	2004		2003
	2003		2002			2003			2002
REVENUE	$	37,375	$	47,158
REVENUES	$	41,189	$	43,307		$	130,243		$	132,710
Cost of sales and expenses
COST OF SALES AND EXPENSES
Cost of sales	27,716		33,519
Cost of Sales	30,974		27,928			93,940			92,573
Selling, general and administration	4,175		5,016
Selling, general and administration	5,216		4,672			16,498			13,784
Foreign exchange loss	—		41
Depreciation and amortization	21,~~029~~951		2,~~081~~053			~~6,113~~			~~6,019~~
Interest, net	2,~~348~~165		2,~~626~~779			~~7,242~~			~~7,752~~
Income from continuing operations before income taxes	~~622~~1,368		63,~~000~~750			~~6,450~~			~~12,582~~
Income taxes	248		1,386			2,065			2,812
Income tax expense	999		1,032
Income from continuing operations	~~374~~369		42,~~614~~718			~~4,385~~			~~9,770~~
Discontinued operations (note 3)	—		(~~509~~9,524		)	~~(9,524~~		)	~~(1,153~~		)
Net Income (loss) for the period	$	374	$	4,105		$	(5,139	)	$	8,617
Net income (loss) for the period	$	369	$	(6,806	)
Income (loss) per common share
Income (loss) per common share (note 3d)
Basic
Continuing operations	$0.01	~~0.01~~	$0.09	~~0.16~~		$	~~0.15~~		$	~~0.34~~
Discontinued operations	~~0.00~~—		(0.0233		)	~~(0.33~~		)	~~(0.04~~		)
Net income (loss) per common share - basic	$	0.01	$	0.14		$	(0.18	)	$	0.30
Net income per common share – Basic	0.01		(0.24		)
Diluted
Continuing operations	$0.01	~~0.01~~	$0.09	~~0.16~~		$	~~0.15~~		$	~~0.33~~
Discontinued operations	~~0.00~~—		(0.0231		)	~~(0.32~~		)	~~(0.04~~		)
Net income (loss) per common share - diluted	$	0.01	$	0.14		$	(0.17	)	$	0.29
Net income per common share – Diluted	0.01		(0.22		)
Weighted average number of shares
Basic	2829,~~878~~021,~~573~~318		28,~~836,~~847,625			~~28,895,176~~			~~28,839,136~~
Diluted	29,~~768~~711,~~682~~982		29,~~220~~808,~~460~~107			~~29,785,285~~			~~29,222,749~~

To be read in conjunction with notes to interim consolidated financial statements.

Consolidated Statements of Cash Flows

For the ~~three~~quarter ~~and nine months~~ ended ~~September 30~~March 31

(in thousands of Canadian dollars)

UNAUDITED

	Three Months Ended September 30						Nine Months Ended September 30
	2004			2003
	2003			2002			2003			2002
CASH PROVIDED BY (USED FOR):
CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
OPERATING ACTIVITIES
Income from continuing operations	$	369		$	2,718
Income from continuing operations	$	374		$	4,614		$	4,385		$	9,770
Items not affecting cash:
Items not affecting cash:
Depreciation and amortization	1,951			2,053
Depreciation and amortization	2,029			2,081			6,113			6,019
Stock compensation expense (note 2)	38			—
Post retirement benefits	~~291~~277			—64			~~711~~			~~377~~
Foreign exchange (gains)/losses	—			(79		)	50			(21		)
Foreign exchange losses	—			41
Future income taxes	~~177~~801			~~1,291~~793			~~1,654~~			~~2,591~~
	2,871			7,907			12,913			18,736
	3,436			5,669
Net change in non-cash working capital balances related to continuing operations (note 2a)	(3,227		)	(12,311		)	(16,359		)	(15,710		)
Net change in non-cash working capital balances related to continuing operations (note 3a)	(1,469		)	(9,089		)
	(356		)	(4,404		)	(3,446		)	3,026
Cash provided by (used for) operating activities	$	1,967		$	(3,420	)
Discontinued operations	—			1,051			—			1,520
INVESTING ACTIVITIES
Cash provided by (used for) operating activities	(356		)	(3,353		)	(3,446		)	4,546
Capital expenditures	(502		)	(2,132		)
INVESTING ACTIVITIES
Increase in long-term assets	(1,106		)	(2,455		)
Capital expenditures	(1,899		)	(3,252		)	(5,708		)	(5,914		)
Discontinued operations	—			(300		)
Decrease (increase) in long-term assets	(209		)	(18		)	(2,973		)	(96		)
Cash used for investing activities	(1,608		)	(4,887		)
Discontinued operations	—			(256		)	(300		)	(402		)
FINANCING ACTIVITIES
Cash used for investing activities	(2,108		)	(3,526		)	(8,981		)	(6,412		)
Common shares issued	—			17
FINANCING ACTIVITIES
Long-term debt repayments	(141		)	(119		)
Common shares issued	60			—			209			17
Increase in bank indebtedness	—			5,977
Long-term debt (repayments) increase	8			(224		)	(514		)	(1,095		)
Increase (decrease) in other long term liabilities	(4		)	(18		)
Increase (decrease) in bank indebtedness	2,333			8,850			10,670			6,011
Cash provided by (used for) financing activities	(145		)	5,857
Increase (decrease) in other long term liabilities	63			(952		)	(388		)	(1,949		)
Increase (decrease) in cash during the period	214			(2,450		)
Discontinued operations	—			(795		)	—			(1,118		)
Cash at beginning of period	4,181			2,450
Cash provided by financing activities	2,464			6,879			9,977			1,866
Cash at end of period	$	4,395		$	—
Change in cash during the period	—			—			(2,450		)	—
Cash at beginning of period	—			—			2,450			—
Cash at end of period	$	—		$	—		$	—		$	—

~~See~~To ~~also~~be read in conjunction with notes to interim consolidated financial statements.

Notes to Consolidated Interim Financial Statements

For the Quarter ended ~~September 30~~March 31

(in thousands of Canadian dollars)

UNAUDITED

1. SIGNIFICANT ACCOUNTING POLICIES

Accounting standards

The unaudited interim consolidated financial statements have been prepared by the Company in accordance with Canadian generally accepted accounting principles (“GAAP”) on a basis consistent with those in the ~~2002~~most ~~audited~~recent audited consolidated financial statements except for the change described in note 2 below. These unaudited consolidated ~~financial~~ financial statements do not contain all the disclosures required by generally ~~accepted~~ accepted accounting principles for annual financial statements and should be read in conjunction with the audited consolidated financial statements and ~~notes~~ notes included in the Company’s ~~2002~~2003 annual report.

2. ~~SUPPLEMENTARY~~CHANGE ~~INFORMATION~~IN ACCOUNTING POLICY

~~a) Details of~~Stock ~~changes~~Based ~~in non-cash working capital items related to continuing operations as follows:~~Compensation

	Three Months Ended September 30						Nine Months Ended September 30
	2003			2002			2003			2002
Cash provided by (used for):
Accounts receivable	$	(12,967	)	$	(11,520	)	$	(12,970	)	$	(3,021	)
Inventories	11,240			(1,519		)	2,535			(11,996		)
Other current assets	(309		)	(602		)	(698		)	(205		)
Accounts payable and accrued liabilities	(1,191		)	1,330			(5,226		)	(488		)
Cash used, net	$	(3,227	)	$	(12,311	)	$	(16,359	)	$	(15,710	)

Effective for January 1, 2004 annual and interim reporting, the Company implemented, with retroactive application without restatement, the new CICA accounting standard relating to stock-based compensation and other stock-based payments. The effect was to increase contributed surplus and increase the opening deficit by $146. In 2004, an additional $38 was charged to earnings as stock compensation expense and is included in selling, general and administration costs.

~~The~~Asset ~~majority~~Retirement of the company’s non-cash working capital items are denominated in US dollars. The amounts above include the US dollar changes in those assets and liabilities for the period, translated to Canadian dollars at the average rate for the period. The resultant changes measured in Canadian dollars, will not equal the changes between the corresponding balance sheet amounts, in which US dollar balances are translated at period end rates.Obligations

Effective January 1, 2004 the Company adopted CICA 3110, Asset Retirement Obligations, which establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. The adoption of this standard did not have any impact on the consolidated financial statements.

b)3. ~~Other~~SUPPLEMENTARY ~~long-term assets comprise the following:~~INFORMATION

	September 30 2003		December 31 2002
Debt issue costs net of amortization of $4,308 (2002-$3,800)	$	1,280	$	1,548
Future income tax asset	2,430		4,084
Investment in Vector Aerospace Corporation (quoted market value $7,464 (2002 - $2,246))	4,672		2,019
Other	1,893		1,837
Discontinued operations	—		6,537
Total other long-term assets	$	10,275	$	16,025

a) Details of changes in non-cash working capital items related to continuing operations as follows:

c) Other long-term liabilities comprise:

	Three Months Ended March 31
	2004			2003

Cash provided by (used for):
Accounts receivable	$	(4,419	)	$	(2,475	)
Inventories	376			(8,437		)
Other current assets	317			79
Accounts payable and accrued liabilities	2,257			1,744
Cash provided by (used for), net	$	(1,469	)	$	(9,089	)

	September 30 2003		December 31 2002
Pensions and post retirement benefits	$	11,129	$	11,105
Environmental remediation – long-term portion	2,280		3,045
Other	210		261
Discontinued operations	—		8,308
Total other long-term liabilities	$	13,619	$	22,719

b) Other long term assets comprise the following:

d) Earnings per share

	March 31 2004		December 31 2003

Debt issue costs net of amortization of $5,020 (2003–$4,850)	$	718	$	888
Future income tax asset	3,283		4,084
Investment in Vector Aerospace Corporation (quoted market value $6,225 (2003 – $6,619)	5,768		4,672
Other	856		845
Total other long-term assets	$	10,625	$	10,489

~~Diluted earnings per share reflect the dilutive effect~~c) Other oflong-term ~~the~~liabilities ~~exercise~~comprise ~~of options where~~ the grant price was below the average market price for the period ended September 30. The dilutive effect of options for the nine months of 2003 was 890,109 shares and for the nine months of 2002 was 383,613 shares.following:

3. DISCONTINUED OPERATIONS

	March 31 2004		December 31 2003

Pensions and post retirement benefits	$	11,221	$	10,815
Environmental remediation – long-term portion	2,925		2,864
Other	197		197
Total other long-term liabilities	$	14,343	$	13,876

On March 31, 2003, the Company completed a significant capital restructuring of the pump companies with its joint venture partner. Under the agreement, the Company’s common shares in the pump companies were exchanged for non-participating preferred shares, which the pump companies must purchase on March 31, 2008 for $18 million.

At December 31, 2002 the Company made a provision to reduce the carrying value of the pump investments to nil given the significant uncertainty about the future of the pump companies.

~~As a result of the completion of the capital~~d) Earnings ~~restructuring,~~per ~~the Company wrote off in the quarter ended March 31, 2003, the currency translation adjustment included in shareholders’ equity related to discontinued operations.~~share

4The calculation of earnings per share is based on the weighted average number of shares outstanding of 29,021,318 for 2004 and 28,847,625 for 2003. ~~SEGMENTED~~ Diluted earnings per share reflect the ~~INFORMATION~~dilutive effect of the exercise of options where the grant price was below the average market price for the period ended March 31. The diluted effect of options for the first quarter of 2004 was 690,664 shares and for the first quarter of 2003 was 960,482 shares.

~~The continuing operations of the Company solely relate~~4. DISCONTINUED ~~to the aerospace industry and are organized and managed as business segments outlined below:~~OPERATIONS

On March 31, 2003, the Company completed a significant capital restructuring of the pump companies with its joint venture partner. Under the agreement, the Company’s common shares in the pump companies were exchanged for $18 million non-participating preferred shares, which the pump companies must purchase on or before March 31, 2008. The Company has fully reserved the carrying value of this investment.

As a result of the completion of the capital restructuring, the Company wrote off in the quarter ended March 31, 2003, as a charge to discontinued operations, the currency translation adjustment included in shareholders’ equity related to discontinued operations, which amounted to $9.5 million.

5. SEGMENTED INFORMATION

The continuing operations of the Company relate solely to the aerospace industry and are organized and managed as business segments outlined below:

Defense – The main products for military markets include helicopter gears and transmissions, helicopter rotor heads, accessory gearboxes for engines used in military aircraft, and maintenance, repair and overhaul (“MRO”) services for certain helicopter transmissions.

Commercial – The main products include components for accessory gearboxes and auxiliary power units for engines used in fixed wing aircraft, machining and fabrication services, and MRO services for helicopter engines, and gyroscope inertial navigation systems.

Sector income statement:

		Three Months Ended September 30				Nine Months Ended September 30
		Three Months Ended March 31
		2003		2002		2003		2002
		2004		2003
Revenue	Defense	$	2925,~~065~~741	$	2732,~~216~~317	$	~~89,047~~	$	~~82,450~~
	Commercial	1211,~~124~~634		1614,~~091~~841		~~41,196~~		~~50,260~~
		41,189		43,307		130,243		132,710
		37,375		47,158
Cost of Sales	Defense	2117,~~027~~913		1722,~~339~~367		~~60,141~~		~~54,901~~
	Commercial	9,~~947~~803		1011,~~589~~152		~~33,799~~		~~37,672~~
		30,974		27,928		93,940		92,573
		27,716		33,519
Selling, general and administration		5,216		4,672		16,498		13,784
Gross Margin, excluding depreciation	Defense	7,777		9,950
Depreciation and amortization		2,029		2,081		6,113		6,019
	Commercial	1,882		3,689
Interest, net		2,348		2,626		7,242		7,752
		9,659		13,639
Income from continuing operations before income taxes		$	622	$	6,000	$	6,450	$	12,582
Selling, general and administration		4,175		5,016
Foreign exchange loss		—		41
Depreciation and amortization		1,951		2,053
Interest, net		2,165		2,779
Income from continuing operations before income taxes		$	1,368	$	3,750

910

The same fixed assets of the Company are used for both the Commercial and Defense aerospace manufacturing segments. Accordingly, the identifiable assets, capital and goodwill expenditures cannot be specifically allocated to these segments.

Geographic Information

	Three Months Ended September 30
Revenue	Canada		United States		Intercompany			Total
	Canada				United States					Total
2004	$	14,326	$	24,263	$	(1,214	)	$	37,375
2003	~~2003~~$	20,185	~~2002~~$	30,723	~~2003~~$	(3,750	)	~~2002~~$	47,158	~~2003~~		~~2002~~
Revenue	$	17,202	$	19,646	$	23,987		$	23,661	$	41,189	$	43,307

	Nine Months Ended September 30
	Canada				United States				Total
	2003		2002		2003		2002		2003		2002
	2004		2003		2004		2003		2004		2003
Revenue	$	54,568	$	62,462	$	75,675	$	70,248	$	130,243	$	132,710
Property, plant and equipment	$	16,927	$	17,751	$	30,618	$	30,260	$	47,545	$	48,011
Goodwill	$	509	$	509	$	3,215	$	3,148	$	3,724	$	3,657

~~Revenues~~ Sales are attributed to geographic location based on the location of the business unit reporting the revenue. Domestic sales to foreign customers totaled approximately $1713,~~107~~610 ~~(2002 - $19,303)~~ in the ~~third~~first quarter ~~and~~of ~~$54,279~~2004 (~~2002~~ 2003– $6017,~~350~~965) ~~in the nine months of 2003~~.

	Canada				United States				Total
	Sept 30 2003		Dec 31 2002		Sept 30 2003		Dec 31 2002		Sept 30 2003		Dec 31 2002
Property, plant and equipment and goodwill	$	20,998	$	19,958	$	37,785	$	45,224	$	58,783	$	65,182

INTENTIONALLY BLANK

MANAGEMENT DISCUSSION & ANALYSIS

For the three ~~and nine~~ months ended March ~~September 30~~31, ~~2003~~2004

The following discussion and analysis by management of the financial position and results of operations of the Company is qualified by and should be read in conjunction with the Interim Consolidated ~~Financial~~ Financial Statements and Notes thereto for the ~~three~~Quarter ~~and~~ended ~~nine~~March ~~months~~31, 2004. The ~~ended~~accompanying statements for ~~September 30~~the quarters ended March 31, 2004 and 2003 have not been subjected to a review by the Company auditors in accordance with CICA 7050.

RESULTS OF OPERATIONS

Revenues in the ~~third~~first quarter were $29.1 8 million (420.97%) below the prior year comparative as a result of changes in foreign exchange rates, lower activity on two major defence programs and lower commercial aerospace volumes. Excluding foreign exchange impacts, revenue for the ~~third~~first quarter would have been $18.4% ~~million~~lower ~~higher~~ than the previous year.

~~For~~Defence ~~the~~revenues ~~nine~~for ~~months~~Q1 ~~ended September 30, 2003, revenues~~ decreased by $26.5 6 million ~~from~~(20.3%) compared to the prior year. Much asof athe ~~result~~decrease ofrelates ~~foreign~~to ~~exchange impacts. Using~~reductions in the ~~same~~Lynx ~~exchange~~contract ~~rate~~activity asand ~~for~~ the ~~comparable~~Apache ~~period~~AH in64 ~~2002,~~build ~~revenues~~program ~~for~~somewhat ~~the~~offset ~~first~~by ~~nine~~higher ~~months~~CH47 ofand other ~~2003~~program ~~would~~volumes. ~~have~~The ~~been~~impact ~~approximately~~of $5the ~~million~~ higher ~~than~~Canadian dollar further reduced defence revenues in the ~~previous~~quarter ~~year~~approximately 12.2%.

~~For~~Commercial ~~the~~aerospace ~~third~~revenues ~~quarter~~in ~~and~~ the ~~nine~~first quarter ~~months~~ of ~~2003,~~2004 ~~commercial~~were ~~aerospace revenues~~$3.2 ~~have~~million ~~declined~~(21.6%) ~~from~~below the prior year. The ~~due~~higher toCanadian ~~the~~dollar ~~impact of foreign~~reduced ~~exchange~~commercial ~~and~~revenues ~~decreased~~by ~~activity~~approximately 12.6% in the quarter. Lower repair and overhaul ~~and~~volumes ~~machining and fabrication~~also ~~services. These~~contributed ~~areas are anticipated~~ to ~~remain at depressed levels throughout~~ the ~~balance of 2003~~decrease.

~~Compared~~Gross margins as a percentage of sales, excluding depreciation, for the first quarter were 25.8%, compared to 28.9% for the prior year. Gross margins, ~~military~~as ~~related~~a percentage ~~activity~~of sales in the defence sector were 30.4% for Q1 2004, slightly lower than the ~~quarter~~prior year comparative. Higher profitability on the mix of ~~and~~military programs was mostly offset by the ~~nine~~negative ~~months~~impact ~~ended~~of ~~September 30~~the stronger Canadian dollar. Commercial gross margin as a percentage of sales for the quarter were 15.7%, ~~2003~~compared ~~has~~to ~~increased~~24.9% last year. ~~Increased~~The ~~work~~decrease ~~related~~is toprimarily ~~the~~attributable ~~Apache~~to ~~build~~exchange impacts, ~~contract~~product ~~accounts~~sales ~~for~~mix, ~~this~~and ~~improvement~~pricing pressures. AUsing ~~stronger~~the same Canadian/US ~~dollar~~exchange ~~compared~~rates toas the ~~previous~~prior year, ~~has negatively~~gross ~~impacted~~margins ~~revenues~~for inthe ~~2003~~first ~~and~~quarter iswould ~~expected~~have toincreased ~~continue~~6.7% toas ~~have~~a ~~negative~~percentage ~~effects~~of sales oncompared ~~revenues~~to ~~and~~the ~~margins~~reported results.

~~Gross margins~~Selling, ~~excluding~~general ~~depreciation,~~and ~~for the third quarter were~~administration ~~24.8%,~~(“SG&A”) ~~compared~~expenses tototaled 35$4.5%2 million for the ~~third~~first quarter ofcompared ~~2003. Gross margins related~~ to ~~military activities~~$5 ~~for~~million ~~the quarter decreased 8.6% year-over-year as a result of product mix. The reduction~~ in ~~activity related to~~ the ~~Lynx~~ ~~contract~~prior ~~due~~year ~~to reduced customer requirements has negatively impacted margins and overhead absorption at Northstar’s Canadian facilities~~comparative. ~~Also, the Apache build contract comprised a~~ ~~higher~~The ~~portion~~decrease ofprimarily ~~total~~relates ~~military margins in 2003 as compared~~ to ~~2002~~administrative ~~due~~cost ~~to higher~~reductions ~~activity levels. Margins on this contract are below the average military margins due to pricing pressures~~ and ~~learning~~exchange ~~curve~~ impacts. Commercial margins for the quarter decreased 16.2% compared to the prior year primarily as a result of lower activity levels in machining and fabrication services, the impact of a higher Canadian dollar and pricing reductions.

~~For~~Depreciation ~~the~~and ~~nine~~amortization ~~months~~in ~~ended~~Q1 ~~September 30,~~of ~~2003 gross margins,~~$2.0 ~~excluding~~million ~~depreciation~~was ~~were 27~~$0.9%1 ~~compared~~million tolower ~~30.2%~~than in the prior year~~. Both~~ ~~military~~comparative ~~and commercial margins decreased~~ as a result of reduced ~~the~~fixed ~~factors~~asset ~~noted above~~additions. ~~Using the same Canadian/US exchange rate as the~~

Net interest expense in Q1 was $2.2 million, $0.6 million lower than the first quarter of 2003 mainly as a result of exchange impacts on the U.S. dollar denominated long-term debt.

Earnings from continuing operations, before taxes, were $2.4 million below the prior year comparative. These decreases are a result of lower revenues and margins offset somewhat by improved selling, general and administrative expenses and lower interest expense.

Income tax expense for continuing operations was $1.0 million, similar to the prior year,. The ~~gross~~difference ~~margins~~in ~~for~~effective ~~the~~tax ~~nine~~rates ~~months~~is ofin ~~2003~~part ~~would~~due ~~have~~to the recording of ~~increased~~an byadjustment ~~approximately~~to $5the ~~million~~valuation ~~compared~~allowances toagainst the ~~reported~~future ~~results~~tax asset in December 2003.

~~For~~Income ~~the~~from ~~last~~continuing ~~quarter~~operations ofafter ~~2003 military and commercial gross margins are~~tax ~~expected~~for toQ1 bewas ~~marginally~~$0.4 ~~lower~~million ~~than~~($0.01 ~~the~~per ~~third~~share) ~~quarter~~compared asto a$2.7 ~~result~~million of($0.09 ~~changes~~per toshare) ~~product~~in ~~mix,~~the ~~pricing,~~prior ~~lower customer demand and exchange rates~~year.

~~Selling,~~The ~~general~~first ~~and administration (“SG&A”) expenses totaled $5.2 million (12.7% of sales) for the third~~ quarter ~~compared to $4.7 million in the prior year comparative. The increase is largely a result~~ of ~~costs~~2003 ~~related~~included to a ~~legal settlement of approximately $0.6~~charge ~~million recorded in the third quarter~~ of ~~2003. For the nine months ended September 30, 2003, SG&A expenses were~~ $169.5 million ~~(12.7%~~related ~~of sales) representing an increase of $2.7 million over the prior year. The increase primarily relates~~ to a ~~one-time~~discontinued ~~insurance~~business ~~recovery~~(see ofnote ~~$0.7~~4 ~~million~~to ~~in 2002, severance costs of $1 million incurred in~~ the ~~second quarter of 2003 and legal~~ ~~settlements~~consolidated offinancial $0statements).~~6 million in the third quarter of 2003.~~

~~Depreciation~~The ~~and~~net ~~amortization~~income infor the ~~third~~three ~~quarter~~months ~~was~~ended ~~$2.0~~March ~~million~~31, ~~similar~~2004 towas ~~the third quarter of 2002~~$0. ~~For~~01 ~~the~~per ~~nine~~share ~~months~~compared ~~ended~~to ~~September 30,~~a ~~2003~~loss ~~depreciation and~~of ~~amortization was~~ $60.124 ~~million~~per ~~compared~~share tofor the ~~$6.0~~prior ~~million in 2002~~year.

Net interest expense in the third quarter was $2.3 million, $0.3 million lower than the prior year as a result of exchange impacts. Net interest expense for the nine months of 2003 was $7.2 million compared to $7.8 million in the prior year. The decrease in interest expense results from foreign exchange effects and lower interest rates on bank overdraft borrowings as compared to 2002.

Income from continuing operations, before taxes, for the third quarter and nine months of 2003 was respectively $5.4 million and $6.1 million below the prior year comparatives. These decreases are primarily a result of the impact of the higher Canadian dollar on gross margins. In addition, one-time severance expenses in the second quarter and legal settlements in the third quarter negatively impacted EBIT. Year-over-year the strengthening Canadian dollar negatively impacted earnings before interest and taxes (“EBIT”) by approximately 6¢ per share.

Income tax expense for continuing operations for the third quarter was $0.2 million compared to $1.4 million in the prior year. Income taxes for the nine months of 2003 of $2.1 million decreased $0.7 million from the prior year comparative. The difference in effective tax rates between 2003 and 2002 relates to the lower profitability and the utilization of tax loss carry forwards.

Income from continuing operations after tax for the third quarter decreased $4.2 million year-over-year from $0.16 per share to $0.01 per share. For the nine months of 2003 the year-over-year decrease was $5.4 million from $0.34 per share to $0.15 per share.

Net income for the three months ended September 30, 2003 was $0.01 per share compared to $0.14 per share for the prior year. The net loss for the nine months of 2003 was of $0.18 per share compared to income of $0.30 per share for the prior year. The decrease is primarily

a result of the write-off of the currency translation adjustment related to the discontinued operations in the first quarter of 2003 and lower earnings from continuing operations.

Sector Revenue and Gross Margin Analysis

	Quarter ended September 30						Nine months ended September 30
	Quarter ended March 31
	(in millions)						~~(in millions)~~
	2003			2002			2003			2002
	2004			2003
Revenues
Defense	$	29.1		$	27.2		$	89.0		$	82.4
Defence	$	25.8		$	32.3
Commercial	1211.16			1614.19			~~41.2~~			~~50.3~~
Total revenues	$	4137.24		$	4347.32		$	~~130.2~~		$	~~132.7~~
Gross margin (% of revenue)
Defense	27.7		%	36.3		%	32.5		%	33.4		%
Defence	30.4		%	30.8			%
Commercial	1815.07		%	3424.29		%	~~18.0~~%		%	~~25.0~~		%
Total gross margin%	2425.8		%	3528.59		%	~~27.9~~%		%	~~30.2~~		%

~~Comparability~~EBITDA Summary Table

	Quarter ended September 30						Nine months ended September 30
			Quarter ended March 31
	~~(in millions)~~		(in millions)				~~(in millions)~~
	2003			2002			2003			2002
			2004			2003
Income from continuing operations – before interest and taxes, as reported	$	3.0		$	8.6		$	13.7		$	20.3
Income from continuing operations – before taxes			$	1.4		$	3.8
Adjustments:
	% of Revenue		3.7		%	8.0		%
Legal settlement	0.6			—			0.6			—
Add:
Benefits insurance recovery	—			—			—			(0.7		)
Depreciation and amortization			2.0			2.0
Income from continuing operations, before interest and taxes – comparable basis	$	3.6		$	8.6		$	14.3		$	19.6
Interest expense			2.2			2.8
% of Revenue	8.7		%	19.9		%	11.0		%	14.8		%
EBITDA, continuing operations			$	5.5		$	8.6
Add:
	% of Revenue		14.7		%	18.2		%
Depreciation and amortization	2.0			2.1			6.1			6.0
EBITDA, continuing operations – comparable basis	$	5.6		$	10.7		$	20.4		$	25.6
% of Revenue	13.6		%	24.7		%	15.7		%	19.3		%

1413

BALANCE SHEET

Total assets ~~related to continuing operations,~~ increased by $04.9 million in the quarter ~~and~~to ~~decreased~~ $9161.46 million ~~year-to-date~~ toas ~~$179~~at ~~million~~March 31, 2004 as ata ~~September 30,~~result ~~2003. The~~of higher receivables ~~Canadian~~and ~~dollar~~increased ~~reduced~~investment ~~total~~in Vector Aerospace Corporation, partially ~~assets~~offset by ~~approximately~~a ~~$19~~decrease ~~million~~ in ~~the~~future ~~nine~~income ~~months~~tax ~~of 2003~~assets.

Working capital ~~related to continuing operations of $76.8 million~~ increased by $12.07 million in the ~~third~~first quarter ~~and~~of ~~decreased~~2004 to $674.~~2 million~~0 ~~year-to-date~~million. ~~Excluding~~ ~~the~~The ~~impact of~~increase ~~changes~~relates inprimarily ~~foreign~~to higher ~~exchange~~receivables ~~rates,~~due ~~working~~to ~~capital~~timing ~~increased~~of ~~$1.0~~shipments ~~million in the quarter~~ and ~~$3.6~~progress ~~million year-to-date~~billings.

Fixed assets declined $0.15 million in the quarter ~~due to~~as ~~the~~lower ~~impact~~capital ofexpenditures ~~foreign~~were ~~exchange~~more ~~rates. The~~than ~~decrease~~offset inby ~~goodwill~~depreciation expense. isGoodwill ~~solely~~increased ~~related~~marginally due to the impact of foreign exchange.

LIQUIDITY AND CAPITAL RESOURCES

A significant portion of the Company’s assets and liabilities are denominated in US dollars. The amounts included in the Consolidated Statement of Cash Flows for changes in these US dollar assets and liabilities are calculated in US currency and then translated to Canadian dollars, at the average exchange rate for the period. For this reason, the resultant changes measured in Canadian dollars will not equal the difference between balance sheet amounts. In the balance sheet, US dollar balances are translated to Canadian dollars at period end exchange rates.

At ~~September 30~~March 31, ~~2003~~2004, the Company had total ~~net~~ debt of $9784.~~4 million. Bank~~3 ~~indebtedness increased by $1.5~~ million ~~during the third quarter of 2003~~. At ~~September 30~~March 31, ~~2003~~2004 the Company had ~~bank~~cash ~~indebtedness~~ of $104.~~8 million~~4 million compared to ~~cash of~~ $24.52 million at December 31, ~~2002~~2003. During the ~~three~~quarter ~~and~~cash ~~nine~~flows ~~months~~were ~~ended~~positive despite the semi-annual bond ~~September 30,~~interest ~~2003,~~payment ~~cash~~of ~~flows~~approximately ~~were~~$4.0 ~~negatively~~million ~~impacted~~and byincreased ~~working~~investment ~~capital~~in ~~changes~~Vector Aerospace Corporation of $1.1 million.

Cash ~~used~~provided ~~for~~by operating activities ~~related to continuing operations~~ in the first ~~third~~ quarter was $02.40 million~~. This~~, ~~represents~~representing aan ~~decrease~~improvement of $45.04 million compared to the ~~third~~first quarter of ~~2002~~2003. ~~The year-over-year change for~~ ~~the~~Increased ~~third~~cash ~~quarter~~provided isfrom ~~largely~~operations ~~due to working capital changes and lower net income. The Company continues to fund a significant portion of the work-~~in~~-progress~~ ~~related to~~ the ~~Apache~~quarter ~~build contract~~is ~~from~~primarily ~~cash generated from operations.~~ due ~~This~~to ~~situation has~~ improved ~~after~~inventory ~~quarter-end~~management, aspartially aoffset ~~result~~by ofincreases ~~collection of~~in ~~progress billings on this job~~receivables.

~~For~~Cash ~~the nine months ended September 30, 2003 cash~~ used in ~~operating~~ investing activities related to continuing operations ~~increased~~for the first quarter of 2003 was $61.56 million, which ~~over~~included ~~the~~capital ~~prior~~expenditures ~~comparative,~~of ~~primarily~~$0.5 asmillion aand ~~result~~additional ofVector ~~lower~~common share ~~net~~purchases ~~income~~of $1.1 million. ~~The~~Cash used ~~Company~~in isinvesting ~~focusing~~activities ~~significant attention~~related onto continuing operations for the ~~reduction~~first quarter of ~~inventories~~2003 ~~through~~was ~~the~~$4.6 ~~implementation~~million, ofincluding ~~lean manufacturing~~capital ~~techniques,~~expenditures ~~which~~of is$2.1 million ~~anticipated~~and toinitial ~~improve~~Vector ~~future~~investment ~~cash~~of ~~flows~~$2.3 million.

15Cash used for financing activities for the first quarter was $0.1 million, mainly resulting from long-term debt principal repayments. In the first quarter of 2003, cash provided by financing activities was $5.9 million, primarily related to increases in bank indebtedness.

Cash used in investing activities related to continuing operations for the third quarter of 2003 was $2.1 million and $8.7 million for the first nine months, which included capital expenditures of $1.9 million for the third quarter and $5.7 million for the nine months of 2003. Cash invested to increase the investment in Vector Aerospace amounted to $2.6 million in the nine months of 2003. Cash used in investing activities related to continuing operations for the third quarter of 2002 was $3.3 million and $6.0 million in the nine months of 2002. The 2002 amounts included capital expenditures of $3.3 million for the quarter and $5.9 million for the nine months ended September 30, 2002.14

~~Cash~~At ~~provided~~March by31, ~~financing~~2004, ~~activities~~the ~~related~~Company ~~to continuing operations~~had ~~for~~approximately ~~the third quarter was~~ $~~2.5~~12 million ~~and~~of ~~$10.0~~borrowing ~~million~~capacity ~~for~~available ~~the~~under ~~nine~~its ~~months of~~existing ~~2003. This~~credit ~~included~~facilities anrelated ~~increase~~to ofcontinuing ~~bank indebtedness of $2~~operations.3 ~~million~~The inCompany ~~the~~believes ~~third~~it ~~quarter and $10.7 million for the~~has ~~nine~~adequate ~~months~~credit offacilities ~~2003. In~~to ~~the~~meet ~~third~~its ~~quarter of 2002,~~ cash ~~used~~requirements ~~in financing activities from continuing operations was $7.7 million and $3.0 million~~ for the ~~nine~~remainder ~~months~~ of ~~2002. The year-over-year change is primarily related to increases in~~ ~~bank indebtedness and debt repayments~~2004.

At September 30, 2003, the Company had approximately $5 million of borrowing capacity available under its existing credit facilities. The Company believes it has adequate credit facilities to meet its cash requirements for the remainder of 2003.

INVESTMENT IN VECTOR AEROSPACE

During the ~~past twelve months~~quarter, the Company ~~has~~increased its ~~acquired~~holdings ~~shares~~ in Vector Aerospace Corporation (“Vector”) in conjunction with Vector’s common stock offering to maintain its pro-rata investment in Vector’s common stock and today owns approximately 9.98% of Vector’s common stock. Vector’s business is in the Maintenance Repair and Overhaul (“MRO”) sector while Northstar’s primary business is ~~the~~in the manufacture of precision gears, transmissions and auxiliary gear boxes. ~~Less than 5% of Northstar’s existing revenues relate to activities that currently compete with Vector. Northstar does not consider the companies to be competitors.~~

Northstar, together with a limited number of other Vector shareholders proposed an alternate slate of directors for Vector at the Vector Annual Meeting held on May 23, 2003. At that meeting, the incumbent management slate of directors was elected by a very narrow margin. Subsequent to the Vector Annual Meeting, additional shareholders indicated a willingness to support an alternate slate of directors and Northstar requisitioned a shareholders meeting of Vector to elect a new Vector board. The Vector Shareholders’ Meeting is scheduled for November 28, 2003. An Information Circular relating to meeting will be issued.

DISCONTINUED OPERATIONS

On March 31, 2003 the Company concluded an agreement with its joint venture partner resulting in Northstar’s common shares ~~of the pump~~ ~~companies~~ being exchanged for $18 million non-participating preferred shares. The ~~pump~~preferred ~~companies~~shares ~~must~~are ~~purchase~~required ~~the~~to be ~~preferred~~purchased ~~shares~~by the pump companies on or before March 31, 2008. The ~~for~~preferred ~~$18~~shares ~~million~~are classified as a long-term asset on the balance sheet and are carried at a nil value.

~~The~~On ~~preferred~~March ~~shares~~31, ~~are~~2003 ~~classified~~the Company wrote off as a charge ~~long-term~~to ~~asset~~discontinued onoperations in the ~~balance~~Income Statement the currency ~~sheet~~translation ~~and~~adjustment ~~are~~of ~~carried~~$9.5 atmillion. Shareholders’ aequity ~~nil~~was ~~value~~not effected by this write-off.

OnOFF ~~March 31,~~BALANCE ~~2003 the Company recorded as a~~SHEET ~~charge~~ARRANGEMENTS toAND ~~discontinued~~FINANCIAL operations in the Income Statement the currency translation adjustment (“CTA”) related to discontinued operations, which was previously included as a separate component of Shareholders’ Equity. The CTA write off for discontinued operations amounted to $9.5 million. Shareholders’ equity was not affected by this charge.INSTRUMENTS

The Company’s off balance sheet arrangements and financial instruments are disclosed in the Management Discussion and Analysis section of the Company’s 2003 annual report. These off balance sheet arrangements and financial instruments have not changed materially in the first quarter of 2004.

ACCOUNTING POLICY CHANGES

Stock Based Compensation

Asset Retirement Obligations

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company evaluates its estimates on an on-going basis, including those related to revenues and expenses where percentage of completion accounting is applied, bad debts, inventories, investments, intangible assets, income taxes, litigation and other contingencies. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The accounting policies and estimates that have had, or will have, a significant impact on the Company’s reported earnings are disclosed in the Company’s 2003 annual report.

TRANSACTIONS WITH RELATED PARTIES

The Company has not entered into any material transactions with related parties as defined in the Canadian Institute of Chartered Accountants Handbook in the last three years.

PROPOSED TRANSACTIONS

There are no proposed transactions of any significance that are expected to have an effect on the financial position or results of operations of the Company.

OUTSTANDING SHARE DATA

The authorized share capital of the Company consists of an unlimited number of preference shares of no par value to be issued in series and an unlimited number of common shares of no par value. As at March 31, 2004 there were 29,021,318 common shares outstanding and no preference shares outstanding.

OUTLOOK

The Company expects the ~~last~~balance ~~quarter~~ of ~~2003~~2004 to ~~show continued weak~~ ~~results~~be challenging. Continued ~~strength~~weakness in ~~the~~ ~~Canadian~~the US dollar ~~has~~coupled ~~adversely~~with ~~affected~~the ~~results~~reduction ~~for~~in ~~the~~an ~~first~~on-going ~~nine~~military ~~months~~program ofand ~~2003~~lower ~~and~~commercial isaerospace ~~expected~~activity towill ~~continue~~adversely toaffect doresults sofor 2004.

During the ~~third~~first quarter of ~~2003~~2004 more than 70 68% of the Company’s revenues were derived from ~~defense~~defence customers. ~~This~~ ~~has increased by approximately 8% from the prior year comparative~~The ~~primarily~~substantial asweighting ~~a result of the decline in commercial aerospace activity. The trend~~ towards ~~increased~~defence ~~defense~~business ~~revenues in proportion to total revenues~~ is expected to continue ~~and~~for ~~results from~~the ~~ongoing~~foreseeable ~~weakness~~future. Activity inon ~~commercial revenues.~~ CH47 ~~The~~spare ~~increase~~parts inand ~~defense activity also relates to~~ the ~~higher activity in the~~ Apache ~~build~~Build ~~contract,~~program ~~which~~as ~~began~~well inas ~~the~~other ~~second~~defence ~~half~~programs remains ~~of 2002~~strong. ~~This~~ The Apache Build contract is expected to continue to generate revenues until the end of 2004. Although the Company has performed work on the Apache transmission components before, this is the first contract to deliver complete assembled new transmissions. AsThe ~~with~~program ~~most~~was ~~new~~also ~~work, there~~priced isvery acompetitively. We ~~learning~~expect ~~curve;~~defense ~~the~~margins ~~Apache~~to ~~build~~be ~~contract~~negatively impacted isthroughout no2004 ~~exception~~related to this program.

There continues to be uncertainty regarding the duration and extent of the continued ~~softening~~weakness in the commercial aviation market. AWhile ~~number~~some segments of the ~~Company’s~~ commercial aerospace ~~customers~~ ~~have~~market ~~indicated~~are ~~that~~seeing ~~their~~recovery ~~requirements~~in ~~will~~2004, ~~likely~~demand beremains ~~lower~~at ~~in the~~historically ~~latter~~low ~~half of 2003~~levels. The Company anticipates slow ~~lower~~growth in commercial revenues ~~and~~that ~~margins~~may innot ~~the~~fully ~~remainder~~materialize ofuntil ~~2003~~2005.

The Canadian dollar has appreciated against its US counterpart inby ~~the first~~more ~~nine~~than ~~months~~10% ofin ~~2003 from a Canadian/US exchange rate of $1.57 (December 31, 2002) to $1.35 (September 30, 2003). Subsequent to quarter-end,~~ the ~~dollar~~last ~~has strengthened~~twelve ~~further to $1~~months.~~30.~~ The vast majority of the Company’s revenues are US dollar based. The stronger Canadian currency ~~will~~negatively ~~continue to~~impacts ~~negatively~~the ~~impact~~Company’s revenues, margins and cash flows. ~~Management~~While the Company is ~~assessing~~taking ~~various~~actions to ~~options~~offset currency impacts, the average exchange rates in 2004 are expected to ~~improve~~be ~~profitability~~well below the average rates in 2003 and will have continuing adverse effects on the ~~face~~results offor athe ~~strengthening~~remainder ~~Canadian~~of ~~dollar~~2004.

Northstar’s aerospace operations are however, well positioned for long-term growth. The Company believes that its mix of commercial and defense work will enhance its future success. The Company’s strategic positioning on proven military programs should provide for increased defence order intake in the later part of 2004.

Released backlog for continuing operations, at March 31, 2004 was approximately $167 million, virtually unchanged from December 31, 2003. Backlog includes the value of purchase orders in hand with respect to long-term customer supply agreements and fully funded orders.

~~The~~FORWARD-LOOKING Company anticipates lower revenues and margins in 2004 as compared to 2003, primarily as a result of foreign exchange rates and military product mix. The average US/Canadian exchange rate for 2003 is anticipated to be approximately $1.40 compared to the current rate of $1.30 and an average rate in 2002 of $1.58. The changes in exchange rates are anticipated to have a significant negative impact on revenues and earnings in 2004 as compared to prior years. In addition, a significant military contract, which had reported strong gross margins is anticipated to have much lower volumes in 2004 as compared to the last two years. These reductions are due to lower customer demands and customer inventory adjustments.STATEMENTS

~~These~~This ~~impacts~~report ~~together~~includes “forward-looking statements” that are ~~expected~~subject to ~~result~~risks and uncertainties. All statements, other than statements of historical facts included in this areport, ~~decrease~~including, without limitation, those regarding the Company’s financial position, business strategy, projected costs and plans, objectives of management for future operations, and certain items discussed in ~~revenue~~“Risks and Uncertainties” below may be or include forward-looking statements. There is uncertainty over the impact of potential terrorist attacks, the deployment of U.S. troops in hostile situations and the uncertain North American economy on the Company’s revenues and earnings ~~for~~in 2004 and beyond. ~~These~~As ~~impacts~~a ~~are~~result ~~not~~of ~~expected~~these tofactors and others, the extent and duration of the soft commercial aerospace market and the impact of lower world wide commercial passenger air travel cannot be ~~long-term~~accurately inestimated. Also, ~~nature~~the impact of the level of future U. S. military ~~The~~expenditures and its impact on the Company’s revenues cannot be estimated with a high degree of accuracy. Forward-looking information contained herein is ~~taking~~based ~~steps~~upon ~~necessary~~a number of assumptions regarding the U.S. and global economic environment and local and foreign government policies and actions. Actual future results of the Company may differ materially depending on a variety of factors, including production rates, timing of product deliveries, U.S. and foreign government activities, volatility of the market for the Company’s products and services, worldwide political stability, factors that result in significant and prolonged disruption to ~~reduce~~commercial air travel worldwide, worldwide political stability, U.S. military activity, domestic and international economic conditions, and other political and economic risks and uncertainties. Although the ~~impacts~~Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations ~~extent~~(“Cautionary ~~possible~~Statements”), including those set forth under the caption “Risks and Uncertainties” below, are disclosed herein. ~~The~~All ~~long~~subsequent written and oral forward-~~term~~looking statements ~~viability~~attributable ~~and~~to ~~prospects~~the Company or persons acting on behalf of the Company ~~remain~~are expressly ~~strong~~qualified in their entirety by the Cautionary Statements.

~~Northstar’s~~The ~~aerospace~~Company ~~operations~~disclaims ~~are~~any ~~well~~intentions ~~positioned~~or ~~for~~obligation ~~long-term~~to ~~growth. The~~update ~~Company~~or ~~believes~~revise ~~that~~any ~~its mix~~forward oflooking ~~commercial~~statements ~~and~~or ~~defense~~comments ~~work~~as ~~will~~a ~~continue~~result toof ~~enhance~~any new ~~its~~information, future ~~success~~event or otherwise, unless such disclosure is required by law.

Backlog for continuing operations, at September 30, 2003 was approximately $166 million compared to $238 million at December 31, 2002. Of the $72 million decrease, $20 million is a result of the higher Canadian/US exchange rate. The balance of the reduction primarily relates to work completed on programs in the nine months of 2003. Further purchase orders are anticipated later in 2003. Backlog only includes the value of purchase orders in hand with respect to long-term customer supply agreements.

Forward-Looking statements

This report includes “forward-looking statements” that are subject to risks and uncertainties. All statements, other than statements of historical facts included in this report, including, without limitation, those regarding the Company’s financial position, business strategy, projected costs and plans, objectives of management for future operations, and certain items discussed in “Risks and Uncertainties” below may be or include forward-looking statements. There is uncertainty over the impact of potential terrorist attacks, the war in Iraq and the uncertain North American economy on the Company’s revenues and earnings in 2003 and beyond. As a result of these factors and others, the extent and duration of the soft commercial aerospace market and the impact of lower world wide commercial passenger air travel cannot be accurately estimated. Also, the impact of the level of future U.S. military expenditures and its impact on the Company’s revenues cannot be estimated with a high degree of accuracy. Forward-looking information contained herein is based upon a number of assumptions regarding the U.S. and global economic environment and local and foreign government policies and actions. Actual future results of the Company may differ materially depending on a variety of factors, including production rates, timing of product deliveries, U.S. and foreign government activities, volatility of the market for the Company’s products and services, worldwide political stability, factors that result in significant and prolonged disruption to commercial air travel worldwide, worldwide political stability, U.S. military activity, domestic and international economic conditions, and other political and economic risks and uncertainties. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations (“Cautionary Statements”),

including those set forth under the caption “Risks and Uncertainties” below, are disclosed herein. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by the Cautionary Statements.

The Company disclaims any intentions or obligation to update or revise any forward looking statements or comments as a result of any new information, future event or otherwise.

Non-GAAP Measures

The Company defines ~~EBITDA~~EBIT as earnings from operations before interest, ~~income taxes, depreciation~~ and ~~amortization~~income ~~including the write-off of deferred development costs~~taxes.

The Company has included information concerning ~~EBITDA~~ EBIT because it believes this measure is used by certain investors as a measure of continuing financial performance. ~~EBITDA~~ EBIT is not a measure of financial performance under Canadian or United States generally ~~accepted~~ accepted accounting principles (“GAAP”). As As well, this measure has no standardized meaning prescribed under GAAP and ~~is unlikely~~may tonot be comparable to similarly titled measures used by other companies. This measure should not be construed as an alternative to ~~cash flow from operations or~~ earnings from operations as determined in accordance with GAAP as ~~measures~~a measure of ~~liquidity or~~ earnings.

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