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Finning Announces Fourth Quarter and Annual Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 18, 2009) - Finning International Inc. (Finning) (TSX:FTT) - 

Highlights from Continuing Operations

- Record quarterly revenues achieved this quarter. Annual revenues in 2008 of almost $6 billion were also a record and were up 6% from prior year.

- Annual diluted earnings per share was $0.55. Excluding certain non-recurring items of $0.06 per share and a non-cash goodwill impairment charge of $0.88 per share, annual diluted earnings per share was $1.49, down 4% from 2007.

- Cash flow provided by operating activities in 2008 improved almost $130 million, year over year, to $72.7 million.

- Actions taken in the fourth quarter to respond to global economic downturn.

Finning International Inc. (Finning) today reported record quarterly revenues of almost $1.6 billion for the fourth quarter of 2008, an increase of 7.3% over the fourth quarter of 2007 driven by strong demand for customer support services. As a result of certain non-recurring costs and charges in the fourth quarter of 2008, the Company experienced a loss from continuing operations before interest and income taxes (EBIT) of $84.5 million, and fourth quarter net loss from continuing operations was $106.8 million or $0.62 diluted loss per share. The non-recurring costs included a non-cash goodwill impairment charge as a result of a deterioration in market conditions, and restructuring costs in connection with the business support integration in the U.K. as well as the restructuring of Hewden's nationwide depot network. In addition, in response to the current market conditions, Finning initiated certain actions in the fourth quarter of 2008 to reduce costs that resulted in restructuring charges globally. Excluding these non-recurring costs, diluted earnings per share from continuing operations for the fourth quarter of 2008 would have been $0.33 per share, 15.4% lower than the fourth quarter of 2007.

"Fourth quarter earnings were solid at 33 cents and consistent with expectations, excluding non-recurring items," said Mike Waites, Finning's President and CEO. "Revenues were at record levels and Free Cash Flow (before dividends) was also very strong at $152 million. While challenging business conditions will impact 2009 revenues, we have acted quickly and decisively to reduce our costs and adjust our staffing levels where needed. Having said that, I want to emphasize that the large fleet of Caterpillar equipment in our territories continues to provide us with good customer support growth. We achieved $1.9 billion of customer support revenues in 2008, well on our way to achieving our target of $2.3 billion of customer support revenues in 2010. Our balance sheet is healthy and our net debt to net debt plus equity ratio is expected to be towards the lower end of our target range of 40-50% by the end of 2009."

/T/

                      -----------------------    ------------------------
                         Three months ended        Twelve months ended
                             December 31               December 31
$ millions, except    -----------------------    ------------------------
per share data           2008     2007 Change       2008     2007  Change
                      -----------------------    ------------------------
Revenue               1,566.7  1,459.5    7.3%   5,991.4  5,662.2     5.8%
Earnings from
 continuing
 operations
 before interest
 and income
 taxes (1)
 before goodwill
  impairment             66.9    112.2  (40.4)%    388.1    455.8   (14.9)%
 goodwill impairment   (151.4)       -      -     (151.4)       -       -
                      -----------------------    ------------------------
                        (84.5)   112.2 (175.3)%    236.7    455.8   (48.1)%
                      -----------------------    ------------------------
                      -----------------------    ------------------------
Net income (loss) (2)
 before goodwill
  impairment             44.6     70.5  (36.7)%    247.4    280.1   (11.7)%
 goodwill impairment   (151.4)       -      -     (151.4)       -       -
                      -----------------------    ------------------------
 from continuing
  operations           (106.8)    70.5 (251.5)%     96.0    280.1   (65.7)%
                      -----------------------    ------------------------
                      -----------------------    ------------------------
Diluted Earnings
 (Loss) Per Share (2)
 before goodwill
  impairment           $ 0.26   $ 0.39  (33.3)%   $ 1.43   $ 1.55    (7.7)%
 goodwill impairment    (0.88)       -      -      (0.88)       -       -
                      -----------------------    ------------------------
 from continuing
  operations          $ (0.62)  $ 0.39 (259.0)%   $ 0.55   $ 1.55   (64.5)%
                      -----------------------    ------------------------
                      -----------------------    ------------------------
Cash flow after
 changes in working
 capital                169.0    221.3  (23.6)%    278.1    404.4   (31.2)%
                      -----------------------    ------------------------
                      -----------------------    ------------------------

(1) This amount does not have a standardized meaning under generally
    accepted accounting principles. For a reconciliation of this amount to
    net income from continuing operations, see the heading "Description of
    Non-GAAP Measure" in the Company's management discussion and analysis
    which accompanies the fourth quarter and annual consolidated financial
    statements.

(2) On July 31, 2007, the Company's U.K. subsidiary, Hewden Stuart Plc,
    sold its Tool Hire Division. As a consequence, the results of
    operations of the Tool Hire Division were reclassified as discontinued
    operations in 2007 and prior periods. The net loss from discontinued
    operations for the year ended December 31, 2007 was $2.0 million and
    diluted loss per share was $0.01.

/T/

Fourth Quarter Results

Finning's revenues from continuing operations in the fourth quarter were almost $1.6 billion, up 7.3% from the fourth quarter of 2007 and were the highest quarterly revenues ever recorded by Finning. Finning achieved record quarterly revenues driven primarily by strong customer support services, particularly in the Company's Canadian and South American operations. Revenue growth in Canada and South America was driven primarily by strong demand from mining customers. In the U.K., revenues were down in the fourth quarter of 2008 compared with the same period last year, with reduced new equipment sales and lower rental activity in the Hewden rental business, partially offset by higher customer support services revenues experienced at the Company's UK dealership.

Finning's global order book or backlog (the retail value of new equipment units ordered by customers for future deliveries) is approximately $1.5 billion at the end of the fourth quarter of 2008, lower than the December 2007 level of $1.7 billion and the September 2008 level of $2.0 billion. Backlog and new orders were down in all operations, reflecting the global economic slowdown, and as a result, Finning has reduced and cancelled certain orders with Caterpillar in the fourth quarter of 2008 in order to align its inventory orders with slower market demand.

In the fourth quarter of 2008, EBIT included certain costs which are considered by the Company to be non-recurring and as a result, the Company experienced a loss before interest and taxes of $84.5 million. These non-recurring items, which totalled $166.4 million, included a non-cash goodwill impairment charge, business support and depot restructuring costs in the U.K., and restructuring costs incurred globally by Finning in the fourth quarter of 2008 in light of current market conditions. Excluding these restructuring costs and a non-cash goodwill impairment charge, EBIT would have been $81.9 million, 27.0% lower than the fourth quarter of 2007.

- EBIT from Finning's Canadian reporting segment of $47.1 million in the fourth quarter of 2008 was 32.0% lower than the fourth quarter of 2007. The decrease in 2008 was primarily due to higher selling, general, and administrative costs, in part to support customer demand and growth in the Alberta oil sands. In addition, higher costs were incurred in the design of a new information technology system which is expected to provide benefits in the future, as well as restructuring costs incurred in response to the current market conditions.

- EBIT for Finning's South American operations in the fourth quarter of 2008 of $38.3 million was 35.8% higher than the 2007 fourth quarter. The fourth quarter of 2008 includes the positive impact of translating U.S. dollar results with a weaker Canadian dollar and in functional currency (the U.S. dollar), EBIT was 10.0% higher than the fourth quarter in 2007, reflecting strong volumes in most lines of business.

- For the UK Group, EBIT in the fourth quarter of 2008 was a loss of $9.7 million, compared with EBIT of $16.1 million in the comparable period last year. Adjusting for the restructuring costs incurred in connection with the business support integration and depot closures, EBIT from continuing operations in the fourth quarter of 2008 would have been a loss of $3.7 million, primarily reflecting lower results from the UK Group's rental business.

Finning recorded a net loss from continuing operations for the quarter of $106.8 million compared with net income of $70.5 million for the same period in 2007. Adjusting for the non-recurring restructuring costs and non-cash goodwill impairment charge noted above, net income from continuing operations would have been $55.9 million, and diluted earnings per share (EPS) from continuing operations for the quarter would have been $0.33, down 15.4% compared with the fourth quarter of 2007. The total positive impact due to the stronger Canadian dollar in the fourth quarter of 2008 compared to the same period last year was approximately $0.09 per share.

Cash flow after changes in working capital for the fourth quarter was $169.0 million, down from cash flow of $221.3 million generated in the same period last year. Strong demand, particularly in South America, from mining customers resulted in increased investments in inventory for committed orders for deliveries in early 2009. Working capital demands stabilized in the fourth quarter of 2008 and, combined with initiatives to improve cash cycle times, have resulted in the improvement in cash flow after changes in working capital in the fourth quarter of 2008 (generation of $169.0 million) compared to the third quarter of 2008 (generation of $84.1 million).

Annual 2008 Results

On an annual basis, revenue from continuing operations increased by 5.8% to almost $6 billion. EBIT of $236.7 million from continuing operations in 2008 included certain items that are considered by the Company to be non-recurring. These items, which totalled $169.1 million, included a non-cash goodwill impairment charge, costs related to the integration and transition of Collicutt Energy Services Inc. (Collicutt), business support and depot restructuring costs in the U.K., restructuring costs incurred globally by Finning in the fourth quarter of 2008 in light of the current market conditions, and the gains on the sale of certain properties at Hewden. Adjusting for these non-recurring items, EBIT for 2008 would have been $405.8 million, 11.0% lower than the prior year.

- Annual revenue was up 9.6% at the Company's Canadian operations, reflecting growth in most lines of business, particularly new equipment sales and customer support services. Adjusting for non-recurring costs related to the transition and integration of Collicutt and restructuring costs, EBIT from Finning's Canadian reporting segment would have been $255.1 million for 2008, down 10.9% from 2007. The results of 2008 were negatively impacted by higher variable operating costs, in part to support the growth in the Alberta oil sands, and costs related to the design of a new information technology system.

- For the year ended December 31, 2008, revenues from the Company's South American operations were at record levels. Finning South America's revenues increased 13.3% (12.7% increase in functional currency) over last year, most notably in customer support services, new equipment sales, and rentals. Annual EBIT for 2008 of $148.2 million was 16.3% higher compared to 2007 (17.9% in functional currency).

- Annual revenues from the UK Group decreased 9.1% in 2008 compared with last year (1.0% decrease in local currency), and EBIT decreased 26.6% (22.3% in local currency). Adjusting for the restructuring costs related to the business support integration, depot closures, and restructuring noted above, net of the gain on the sale of properties, EBIT from continuing operations for 2008 would have been 31.9% lower than the comparable period in 2007. The results from Hewden were lower than the prior year, in part due to the significant operational changes experienced in the second half of the year.

Consolidated net income from continuing operations in 2008 was $96.0 million compared with $280.1 million in 2007. Adjusting for the non-recurring items noted above, net income from continuing operations would have been $257.8 million, 8.0% lower than 2007 results.

Basic EPS from continuing operations for the year ended December 31, 2008 of $0.56 included the non-recurring items described above. Adjusting the 2008 results for these non-recurring items, including the goodwill impairment charge, basic EPS would have been $1.50 for the year ended December 31, 2008 compared with $1.57 in 2007, a decrease of 4.5%. The total negative impact due to the stronger Canadian dollar in 2008 compared to the prior year was approximately $0.10 per share.

Cash flow after changes in working capital for the year ended December 31, 2008 was $278.1 million, compared with cash flow of $404.4 million generated in 2007. Throughout all operations, management continues to focus on improving cash cycle times and operating efficiencies while ensuring appropriate levels of working capital exist to support current activity levels.

The Company made a net investment in rental assets of $204.8 million in 2008, which was less than half of what was invested in 2007. As a result of softening demand, rental investment moderated in 2008 compared to the very high demand for rental assets in 2007, particularly at the Company's Canadian and Hewden operations.

As a result of these items, cash flow provided by operating activities was $72.7 million in 2008 compared to cash flow used by operating activities of $56.7 million in 2007.

Important New Business

In December 2008, Finning announced that its South American mining division secured a sale of six 793 mining trucks to Minera Argentina Gold, a subsidiary of Barrick Gold Corporation and operator of the Veladero gold mine in Argentina. Finning also secured a one year extension on its Maintenance and Repair Contract (MARC) with Minera Argentina Gold that covers 28 existing 793 mining trucks and 18 pieces of support equipment. The combined value of these deals is approximately $70 million. The new trucks will be delivered in the first quarter of 2009 and used in the existing operations at the Veladero mine. The Veladero mine is located approximately 320 kilometres northwest of the city of San Juan in Argentina, close to the Chilean border.

Market Outlook

The world's financial crisis and liquidity concerns continued through the fourth quarter of 2008. The resultant expected economic slowdown has occurred and commodity prices have fallen to comparatively low levels. Spending has been curbed by consumers in most parts of the world. Reduced consumer demand, lower availability of credit and reduced access to capital markets will impact some of Finning's customers who will have less demand for new equipment as a result.

However, Governments around the world have responded with stimulus packages that include significant amounts of capital spending directed to infrastructure projects. Much of this construction will require heavy equipment and will provide work for some of Finning's customers.

A significant portion of Finning's business is derived from the sale of parts and service for previously sold equipment operating in Finning's geographic territories. Given the large volumes of new equipment sold in recent years, the demand for parts and service is expected to remain reasonably good. Finning's large mining and oil sands customers continue to run their equipment at high levels and continue to require significant parts and service from Finning.

Given the current economic uncertainty, management's confidence in predicting future business levels is lower than in the past. The current outlook is for lower new equipment sales compared to 2008 and for parts and services revenues to grow, but at a more modest rate than the prior year. 2009 results are also expected to generate higher cash flow than 2008 as working capital requirements are reduced, and assuming budgeted levels of equipment sales are achieved. Overall expenditures on equipment additions to Finning's rental fleets are expected to be meaningfully reduced in 2009; however, demand for rental equipment, as an alternative to purchasing, is increasing among Finning's customers, especially in Canada.

Finning's financial condition is strong. The Company has committed bank facilities totalling approximately $870 million with various Canadian and U.S. financial institutions. The largest of these facilities ($800 million) is committed until December 2011. At December 31, 2008 over $300 million was available under these facilities. At January 31, 2009 approximately $230 million was available. Finning expects to generate higher cash flow in 2009 as a result of lower capital spending, lower rental equipment additions, and reduced working capital requirements. Given the expected improved cash flow, the committed credit facilities, and the discretionary nature of some of Finning's cash outflows, such as rental additions and capital expenditures, as well as the absence of any term debt maturities until late 2011, management believes that Finning has sufficient credit and liquidity to meet operational needs in the foreseeable future.

Finning has taken extensive action to reduce its costs in the face of lower demand for equipment. In response to the current market conditions, Finning incurred restructuring costs globally during the fourth quarter of 2008, resulting in a reduction of headcount of approximately 700 employees. However, its long term strategy is unchanged as it continues to focus on the parts and service business as well as the mining and heavy construction sectors. Finning expects to continue to invest in technical training, and in some locations additional human resources are still required to meet the projected strategic growth. These include Fort McMurray, Edmonton, and some mining branches in Chile.

Please refer to the Management's Discussion and Analysis for the complete outlook commentary.

February 18, 2009

Executive Appointment

Mr. David S. Smith has been appointed Executive Vice President and Chief Financial Officer of Finning International Inc. effective February 2, 2009. Mr. Smith was Chief Financial Officer of Ballard Power Systems Inc. since December 2002 and was Ballard's Vice President, Controller from October, 2000. Immediately prior to joining Ballard, he spent 16 years with Placer Dome Inc. in various senior positions, including Vice President, Corporate Relations, Vice President, Business Development, and as regional Vice President and Chief Financial Officer in the United States, Chile, and Canada. Mr. Smith also was with Price Waterhouse for four years in the United States, is a Certified Public Accountant and holds a Bachelor of Science, Business Administration, from California State University, Sacramento.

Director Appointment

In December 2008, The Honourable David Emerson was appointed to the Board of Directors. Mr. Emerson has extensive senior leadership experience in business, as an elected Member of Parliament and in the Canadian Federal Cabinet. Mr. Emerson has held senior positions in government that include Minister of Foreign Affairs, Minister of Industry, Minister of International Trade and Minister for Pacific Gateway and Vancouver - Whistler Olympics. In British Columbia he served as Deputy Minister of Finance, Deputy Minister to the Premier and President of the British Columbia Trade Development Corporation. Mr. Emerson also held executive leadership roles in the private sector including President and CEO of Canfor Corporation, President and CEO of the Vancouver International Airport Authority and Chairman and CEO of Canadian Western Bank. Mr. Emerson received his doctorate degree in economics from Queen's University and also attended the University of Alberta where he obtained his bachelor's and master's degrees in economics.

Common Share Dividend

The Board of Directors approved the Company's quarterly dividend at $0.11 per common share, payable on March 18, 2009, to shareholders of record on March 4, 2009.

/T/

CONSOLIDATED STATEMENTS OF INCOME

--------------------------------------------------------------------------
For years ended December 31
($ thousands, except share and per share amounts)         2008        2007
--------------------------------------------------------------------------
Revenue
 New mobile equipment                              $ 2,376,933 $ 2,233,512
 New power and energy systems                          551,710     503,012
 Used equipment                                        431,804     417,613
 Equipment rental                                      712,791     781,194
 Customer support services                           1,899,483   1,701,253
 Other                                                  18,704      25,660
--------------------------------------------------------------------------
  Total revenue                                      5,991,425   5,662,244
Cost of sales                                        4,276,749   4,063,079
--------------------------------------------------------------------------
Gross profit                                         1,714,676   1,599,165
Selling, general, and administrative expenses        1,309,756   1,144,753
Other expenses (income)                                 16,801      (1,435)
Goodwill impairment                                    151,373           -
--------------------------------------------------------------------------
Earnings from continuing operations before interest
 and income taxes                                      236,746     455,847
Finance costs                                           83,636      72,842
--------------------------------------------------------------------------
Income from continuing operations before provision
 for income taxes                                      153,110     383,005
Provision for income taxes                              57,114     102,898
--------------------------------------------------------------------------
Net income from continuing operations                   95,996     280,107
Loss from discontinued operations, net of tax                -      (2,050)
--------------------------------------------------------------------------
Net income                                         $    95,996 $   278,057
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Earnings (loss) per share - basic
 From continuing operations                        $      0.56 $      1.57
 From discontinued operations                                -       (0.01)
--------------------------------------------------------------------------
                                                   $      0.56 $      1.56
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Earnings (loss) per share - diluted
 From continuing operations                        $      0.55 $      1.55
 From discontinued operations                                -       (0.01)
--------------------------------------------------------------------------
                                                   $      0.55 $      1.54
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Weighted average number of shares outstanding
 Basic                                             172,361,881 178,844,411
 Diluted                                           173,318,957 180,459,955

/T/

These Consolidated Financial Statements should be read in conjunction with the Notes to the Consolidated Financial Statements, which can be found at www.sedar.com or the Company's website at www.finning.com.

/T/

CONSOLIDATED BALANCE SHEETS

--------------------------------------------------------------------------
December 31
($ thousands)                                             2008        2007
--------------------------------------------------------------------------
ASSETS
Current assets
 Cash and cash equivalents                         $   109,772 $    61,860
 Accounts receivable                                   840,810     728,696
 Service work in progress                              102,607      83,742
 Inventories                                         1,473,504   1,207,802
 Other assets                                          288,102     166,842
--------------------------------------------------------------------------
  Total current assets                               2,814,795   2,248,942

Finance assets                                          11,671      26,714
Rental equipment                                       987,835   1,028,301
Land, buildings, and equipment                         470,859     348,923
Intangible assets                                       38,344      24,548
Goodwill                                                99,278     251,099
Other assets                                           297,593     205,636
--------------------------------------------------------------------------
                                                   $ 4,720,375 $ 4,134,163
--------------------------------------------------------------------------
--------------------------------------------------------------------------

LIABILITIES
Current liabilities
 Short-term debt                                   $   193,635 $   370,942
 Accounts payable and accruals                       1,316,818   1,106,392
 Income tax payable                                      3,187      32,440
 Current portion of long-term debt                       2,643     215,663
--------------------------------------------------------------------------
  Total current liabilities                          1,516,283   1,725,437

Long-term debt                                       1,410,727     590,382
Long-term obligations                                   96,296     101,699
Future income taxes                                    129,965      98,848
--------------------------------------------------------------------------
  Total liabilities                                  3,153,271   2,516,366
--------------------------------------------------------------------------
Commitments and Contingencies

SHAREHOLDERS' EQUITY
 Share capital                                         554,966     571,402
 Contributed surplus                                    25,441      15,356
 Accumulated other comprehensive loss                 (176,444)   (232,223)
 Retained earnings                                   1,163,141   1,263,262
--------------------------------------------------------------------------
  Total shareholders' equity                         1,567,104   1,617,797
--------------------------------------------------------------------------
                                                   $ 4,720,375 $ 4,134,163
--------------------------------------------------------------------------
--------------------------------------------------------------------------

/T/

These Consolidated Financial Statements should be read in conjunction with the Notes to the Consolidated Financial Statements, which can be found at www.sedar.com or the Company's website at www.finning.com.

/T/

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

--------------------------------------------------------------------------
For years ended December 31
($ thousands)                                              2008       2007
--------------------------------------------------------------------------
Net income                                             $ 95,996  $ 278,057
--------------------------------------------------------------------------

Other comprehensive income (loss), net of income tax
 Currency translation adjustments                        60,536   (194,452)
 Unrealized gains on net investment
  hedges, net of tax of $1.7 million (2007: net of
  tax of $20.6 million)                                   2,154     47,394
Realized translation adjustment, net of investment
 hedges, reclassified to earnings on disposition of
 investment, net of tax of $0.2 million                       -        443
Unrealized losses on cash flow hedges, net of tax
 of $3.6 million (2007: net of tax of $1.5 million)      (8,276)    (3,512)
Realized losses (gains) on cash flow hedges,
 reclassified to earnings, net of tax of $0.3
 million (2007: net of tax of $0.8 million)               1,365       (747)
--------------------------------------------------------------------------
Comprehensive income                                  $ 151,775  $ 127,183
--------------------------------------------------------------------------
--------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

--------------------------------------------------------------------------
                                                 Share Capital
                                             --------------------
                                                                    Contri-
                                                                     buted
($ thousands, except share amounts)               Shares   Amount  Surplus
--------------------------------------------------------------------------
Balance, January 1, 2007                     179,090,738  573,482    7,791
Comprehensive income (loss)                            -        -        -
Issued on exercise of stock options              732,541    9,848   (1,695)
Repurchase of common shares                   (3,691,400) (11,928)       -
Stock option expense                                   -        -    9,260
Dividends on common shares                             -        -        -
--------------------------------------------------------------------------
Balance, December 31, 2007                   176,131,879 $571,402  $15,356
Transition adjustment                                  -        -        -
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Balance, January 1, 2008                     176,131,879 $571,402  $15,356
Comprehensive income (loss)                            -        -        -
Issued on exercise of stock options              199,627    2,260     (341)
Issued for acquisition                            15,403      398       65
Repurchase of common shares                   (5,901,842) (19,094)       -
Stock option expense                                   -        -   10,361
Dividends on common shares                             -        -        -
--------------------------------------------------------------------------
Balance, December 31, 2008                   170,445,067 $554,966  $25,441
--------------------------------------------------------------------------
--------------------------------------------------------------------------


--------------------------------------------------------------------------
                             Accumulated Other
                            Comprehensive Income
                                   (Loss)
                          ------------------------
                              Foreign
                             Currency
                          Translation
                            and Gains/
                              (Losses)       Gains/
                               on Net  (Losses) on
($ thousands, except       Investment    Cash Flow    Retained
 share amounts)                Hedges       Hedges    Earnings       Total
--------------------------------------------------------------------------
Balance, January 1, 2007      (77,046)      (4,303)  1,140,415   1,640,339
Comprehensive income (loss)  (146,615)      (4,259)    278,057     127,183
Issued on exercise of stock
 options                            -            -           -       8,153
Repurchase of common shares         -            -     (90,764)   (102,692)
Stock option expense                -            -           -       9,260
Dividends on common shares          -            -     (64,446)    (64,446)
--------------------------------------------------------------------------
Balance, December 31, 2007  $(223,661)    $ (8,562) $1,263,262  $1,617,797
Transition adjustment                                    6,282       6,282
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Balance, January 1, 2008    $(223,661)    $ (8,562) $1,269,544  $1,624,079
Comprehensive income (loss)    62,690       (6,911)     95,996     151,775
Issued on exercise of stock
 options                            -            -           -       1,919
Issued for acquisition              -            -           -         463
Repurchase of common shares         -            -    (128,402)   (147,496)
Stock option expense                -            -           -      10,361
Dividends on common shares          -            -     (73,997)    (73,997)
--------------------------------------------------------------------------
Balance, December 31, 2008  $(160,971)    $(15,473) $1,163,141  $1,567,104
--------------------------------------------------------------------------
--------------------------------------------------------------------------

/T/

These Consolidated Financial Statements should be read in conjunction with the Notes to the Consolidated Financial Statements, which can be found at www.sedar.com or the Company's website at www.finning.com.

/T/

CONSOLIDATED STATEMENTS OF CASH FLOW

--------------------------------------------------------------------------
For years ended December 31
($ thousands)                                              2008       2007
--------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income                                            $  95,996  $ 278,057
Add items not affecting cash
 Depreciation and amortization                          326,095    351,289
 Future income taxes                                      9,822     18,393
 Stock-based compensation                                14,144     25,540
 Gain on disposal of capital assets                     (19,892)    (6,552)
 Goodwill impairment                                    151,373          -
 Gain on disposal of discontinued operations                  -    (38,590)
 Other                                                     (816)    (5,122)
--------------------------------------------------------------------------
                                                        576,722    623,015
Changes in working capital items                       (298,589)  (218,588)
--------------------------------------------------------------------------
Cash provided after changes in working capital items    278,133    404,427
 Rental equipment, net of disposals                    (204,800)  (474,566)
 Equipment leased to customers, net of disposals           (652)    13,449
--------------------------------------------------------------------------
Cash flow provided by (used in) operating activities     72,681    (56,690)
--------------------------------------------------------------------------
INVESTING ACTIVITIES
 Additions to capital assets                           (100,417)   (74,226)
 Proceeds on disposal of capital assets                  50,954     20,212
 Proceeds from sale of discontinued operations                -    242,851
 Acquisition of businesses                             (148,639)    (2,670)
 Payment of contingent consideration                          -       (767)
 Payments on settlement of foreign currency forwards          -     (4,065)
--------------------------------------------------------------------------
Cash provided by (used in) investing activities        (198,102)   181,335
--------------------------------------------------------------------------
FINANCING ACTIVITIES
 Decrease in short-term debt                           (198,147)   (43,608)
 Increase of long-term debt                             589,861    135,642
 Payment on settlement of derivative                     (8,914)         -
 Repurchase of securitized accounts receivable                -    (45,000)
 Defined benefit pension plan special funding                 -    (17,066)
 Issue of common shares on exercise of stock options      1,919      8,153
 Repurchase of common shares                           (147,496)  (102,692)
 Dividends paid                                         (73,997)   (64,446)
--------------------------------------------------------------------------
Cash provided by (used in) financing activities         163,226   (129,017)
--------------------------------------------------------------------------
Effect of currency translation on cash balances          10,107    (12,253)
--------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents         47,912    (16,625)
Cash and cash equivalents, beginning of year             61,860     78,485
--------------------------------------------------------------------------
Cash and cash equivalents, end of year                $ 109,772  $  61,860
--------------------------------------------------------------------------
--------------------------------------------------------------------------

/T/

These Consolidated Financial Statements should be read in conjunction with the Notes to the Consolidated Financial Statements, which can be found at www.sedar.com or the Company's website at www.finning.com.

Fourth Quarter / Annual Results Conference Call

Management will hold an investor conference call on Wednesday, February 18, 2009 at 3:30 pm Eastern Time. Dial-in numbers:

1-866-898-9626 (anywhere within Canada and the US)

(416) 340-2216 (for participants dialing from Toronto and overseas)

The call will be webcast live at http://www.finning.com/investors/investors.aspx and subsequently archived on the Finning website. Playback recording will be available at 1-800-408-3053 from 6:00 pm Eastern Time on February 18, 2009 until the end of business day on February 25, 2009. The passcode to access the playback recording is 3280317 followed by the number sign.

About Finning International

Finning International Inc. sells, rents, and provides customer support services for Caterpillar equipment and engines, and complementary equipment, in Western Canada (Alberta, British Columbia, the Northwest Territories and the Yukon Territory and a portion of Nunavut), the U.K. and South America (Argentina, Bolivia, Chile and Uruguay). Headquartered in Vancouver, B.C., Canada, Finning International Inc. (www.finning.com) is a widely held, publicly traded corporation, listed on the Toronto Stock Exchange (symbol FTT). Complete financial statements and Management's Discussion and Analysis can be accessed at www.finning.com.

Forward-Looking Disclaimer

This report (including the attached Management's Discussion and Analysis) contains forward-looking statements and information, which reflect the current view of Finning International Inc. with respect to future events and financial performance. Any such forward-looking statements are subject to risks and uncertainties and Finning's actual results of operations could differ materially from historical results or current expectations. Finning assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein do not materialize.

Refer to Finning's annual report, management information circular, annual information form and other filings with Canadian securities regulators, which can be found at www.sedar.com, for further information on risks and uncertainties that could cause actual results to differ materially from forward-looking statements contained in this report.

Next Quarterly Results May 14, 2009

Finning International's first quarter for 2009 will be released and an investor conference call will be held on May 14, 2009.

Annual General Meeting

The Company's annual general meeting will be held at the Terminal City Club, 837 West Hastings Street, Vancouver, British Columbia, at 10:00 am Pacific Time on Thursday May 14, 2009.

To download Finning's complete Fourth Quarter and Annual 2008 Results in PDF, please open the following link: http://media3.marketwire.com/docs/FinningQ42008.pdf.

Finning International Inc. Tom Merinsky Vice President, Investor Relations and Corporate Affairs (604) 331-4950 (604) 331-4660 (FAX) Email: investor_relations@finning.ca Website: www.finning.com

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