The General Donlee Income Fund (the "Fund") was established to hold the securities of General Donlee Limited (the "Company"). The Fund successfully completed its IPO (initial public offering) of 8,947,000 units for gross proceeds of $89.47 million in May, 2002, after taking into consideration the over-allotment option. These funds, net of applicable underwriting and other expenses of the offering, together with a $10 million term loan, provided the funds to purchase the securities of General Donlee Limited.

The Company began business in the early 1960s operating as two divisions, Donlee Nuclear and General Gear. Over the years the current operational structure evolved. In 1983, Donlee Nuclear changed its name to Donlee Precision to reflect the emphasis of manufacturing precision cylindrical products for the military and commercial aerospace and industrial markets. This successfully transitioned the Company into manufacturing various types of axles, pistons, cylinders, aircraft engine shafting and helicopter rotor masts.

In the 1960s and 1970s, General Gear primarily manufactured individual gears for equipment manufacturers. In the next two decades, General Gear expanded its production capabilities to include other types of gears such as ground bevel and helical gears, complete gear boxes and related sophisticated machined components.
 

Questions about General Donlee Income Fund

1. What is the General Donlee Income Fund?

The General Donlee Income Fund is a trust established in March, 2002 to hold the securities of General Donlee Limited (its operating subsidiary). The Fund intends to make cash distributions to Unitholders of amounts received as interest and/or dividends on the General Donlee Common Shares and Notes, less estimated amounts required for the payment of Fund expenses.

2. What is General Donlee Limited’s business?

General Donlee is a leading diversified manufacturer of precision-machined products for the military, commercial and general aviation industries and also is a specialist in the manufacture of precision-machined products for the industrial products and power generation industries. The company markets its products in the United States, Canada and Europe, selling over 275 specialized products to 100 high quality customers.

3. What is the Company’s strategy?

General Donlee follows a business strategy to capitalize on its competitive strengths and industry trends. This includes:

• targeting niche markets,
• focusing on expanding product offerings to existing customers,
• increasing participation in military and power generation programs, and
• maintaining and enhancing its reputation as a reliable supplier of top-quality products.

4. What are the Company’s main competitive advantages?

General Donlee believes it has the following competitive strengths:

• Extensive Manufacturing Capabilities – management believes that it is the only Canadian company and one of few North American companies currently capable of producing such a broad range of precision cylindrical shafts and complex gearing products.
• Reliability as a Supplier – management believes that the Company has continued to win contracts, many of which are awarded on a sole source basis, because it has earned the confidence and loyalty of its customers by consistently satisfying their quality, service and delivery requirements.
• Strategic Marketing – the Company targets strategic, niche markets, focusing on identifying sophisticated, high value-added products that fit with its manufacturing capabilities and are likely to result in long-term revenue generating programs.
• Skilled Workforce – of the 160 employees, over 70 are highly-skilled machinists, having accumulated an average of over 14 years experience.
• Competitive Cost Structure – General Donlee has continued to win new business from its customers by offering high-quality products at competitive prices. In-house expertise, state-of-the-art equipment, and the ability to perform substantially all of its machining operations internally all help to achieve this result.
• Strong Customer Base – The Company’s customer base consists predominantly of well-established, large, credit-worthy corporations in diverse industries, who have been in business for numerous years and tend to be market leaders in their respective industries.
• Product Diversity – General Donlee manufactures over 275 products, which are used in a variety of customer applications and programs spanning a range of industries. Over the past decade, General Donlee has used this product and customer diversification to insulate itself from periodic declines that may have affected any single industry.