Bombardier Inc.

Bombardier Inc.

March 31, 2005 06:00 ET

Bombardier Announces Financial Results for the Fourth Quarter and the Year Ended Jan. 31, 2005


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: BOMBARDIER INC.

TSX SYMBOL: BBD.MV.A
TSX SYMBOL: BBD.SV.B

MARCH 31, 2005 - 06:00 ET

Bombardier Announces Financial Results for the Fourth
Quarter and the Year Ended Jan. 31, 2005

MONTREAL, QUEBEC--(CCNMatthews - March 31, 2005) - Bombardier
Inc.(TSX:BBD.MV.A)(TSX:BBD.SV.B)



- Consolidated revenues of $4.8 billion for the fourth quarter; $15.8
billion for fiscal year 2005
- Good free cash flow performance with $388 million, $1.1 billion
improvement over last year
- Strong recovery in the business jet market, net orders up 69%
- Regional jet leadership in a challenging market
- Successful ongoing execution of the restructuring initiative at
Transportation
- Solid cash position
- No dividend payment on common shares for fiscal year 2006


Bombardier today announced its financial results for the fourth quarter
and the year ended Jan. 31, 2005.

Consolidated revenues totalled $4.8 billion for the three-month period
ended Jan. 31, 2005, compared to $4.9 billion for the same period last
year. For the year ended Jan. 31, 2005, consolidated revenues totalled
$15.8 billion, compared to $15.5 billion the previous year. These
results mainly reflect higher revenues in the transportation segment and
lower revenues in the aerospace segment.

Consolidated earnings (loss) before income taxes (EBT), before special
items, were $93 million for the fourth quarter of fiscal year 2005,
compared to negative $38 million for the same period last fiscal year.
The improvement of $131 million is mainly due to better results in the
transportation segment. EBT before special items for fiscal year 2005
was $71 million, compared to $311 million last year.

The manufacturing segments' free cash flow for the fourth quarter of
fiscal year 2005 was $704 million, an improvement of $60 million over
the corresponding period last year. For fiscal year 2005, free cash flow
was $388 million for a $1.1 billion improvement, compared to last fiscal
year. The Corporation's cash position as at Jan. 31, 2005 was solid at
$2.4 billion.

In the aerospace segment, business jet net orders were up 69% year over
year, demonstrating the continued strengthening of the market. For the
transportation segment, its restructuring initiative is proceeding as
planned with a net workforce reduction of approximately 4,000 as at Jan.
31, 2005.

In accordance with the Corporation's policy and based on last fiscal
year results, the Board of Directors decided there will be no dividend
payment on common shares (Class A and Class B shares) for fiscal year
2006.

"Despite a very challenging environment, our cash position is solid and
we had a good free cash flow performance this year," said Laurent
Beaudoin, Chairman of the Board and Chief Executive Officer of
Bombardier Inc. "The Corporation's foundations are robust: highly
skilled employees and great product portfolios. All our efforts will be
concentrated on our two main businesses to ensure that they can achieve
their full profit potential."

Bombardier Aerospace

Bombardier Aerospace was profitable for the fourth quarter and the year
ended Jan. 31, 2005 in spite of a challenging environment.

Total aircraft deliveries increased to 329 from 324 the previous year.
Business jet deliveries were up 44%. Lower Bombardier CRJ200 deliveries
were partially offset by a 26% increase in Bombardier CRJ700 and CRJ900
aircraft deliveries. With regards to aircraft orders, business jet net
orders were up 69% and Q-Series turboprop aircraft orders were up 88%
for fiscal year 2005.

Bombardier Aerospace continues to be a leader in the business jet and
regional aircraft segments in which it competes. The business jet market
share, based on deliveries, reached 27% from 20% last year. The regional
aircraft market share, based on gross order intake, increased from 56%
to 67%. Deliveries of Bombardier products represented 57% of the overall
20- to 90-seat regional aircraft deliveries during the last year.

Bombardier Aerospace also maintains its competitiveness with product
innovations that meet customers' needs. An enhanced version of the
CRJ900 aircraft which combines substantially improved take-off and
landing performance, increased range and lower fuel consumption was
recently introduced. An engine upgrade was also introduced for the
CRJ700 aircraft, that will offer operators savings of up to 15% in
engine maintenance costs over 15 years.

In March 2005, the Board of Directors of the Corporation granted
Bombardier Aerospace authority to offer the new CSeries family of
aircraft to customers. The authority to offer is an important step in
the process that could lead to the aircraft program launch. Prior to
launch, Bombardier will seek firm commitments from potential customers,
suppliers and government partners.

Bombardier Transportation

Bombardier Transportation's results continue to improve as the ongoing
restructuring initiative progresses on schedule.

Site closures are proceeding as planned with three plant closures in
fiscal year 2005. Site improvement measures were deployed with clear,
measurable cost saving targets. The project management function has been
strengthened with regular audits of the most critical 40 projects,
supported by a strict governance system and resulting in enhanced
accountability. A detailed procurement action plan was put in place to
reduce costs and the number of suppliers.

Two important product milestones were achieved in the last fiscal year.
The first Bombardier TRAXX MS multi-system freight locomotive was
delivered to the Swiss Federal Railways, bringing significant
commonality and interoperability advantages to customers. Also, the
first AGC high-capacity regional trainset was delivered to the French
National Railways ahead of schedule, reflecting the improvements in
project management and the focus on customer satisfaction.

Bombardier Transportation remains the global leader in rail equipment
manufacturing. Sales efforts will be intensified in the new member
countries of the European Union, the Middle East, and Asia. Emphasis
will also be placed on the fast-growing signalling and services segments.

FINANCIAL RESULTS FOR THE FOURTH QUARTER AND THE YEAR ENDED JAN. 31, 2005

ANALYSIS OF RESULTS

Bombardier Inc. announced today financial results for the fourth quarter
and the year ended Jan. 31, 2005.

Effective the first quarter of fiscal year 2005, the Corporation changed
its reporting currency to the U.S. dollar. Therefore, all amounts in
this press release are in U.S. dollars unless otherwise indicated.

Effective the fourth quarter of fiscal year 2005, the Corporation ceased
the allocation of net corporate interest costs to the manufacturing
segments because management now assesses the segment performance based
on the consolidated earnings (loss) before net interest and income taxes
(EBIT), consistent with its current centralized debt management
strategies. Comparative figures have been reclassified.

Consolidated results

Consolidated revenues totalled $4.8 billion for the three-month period
ended Jan. 31, 2005, compared to $4.9 billion for the same period last
year. This decrease is due to lower sales in the aerospace segment,
partially offset by higher sales in the transportation segment. For the
year ended Jan. 31, 2005, consolidated revenues totalled $15.8 billion,
compared to $15.5 billion the previous year. This increase is due to
higher revenues in the transportation segment, partially offset by lower
revenues in the aerospace segment.

EBT before special items for the three-month period ended Jan. 31, 2005
amounted to $93 million, compared to negative $38 million for the same
period last year. This improvement results from better performance in
the transportation segment, partially offset by lower results in the
aerospace and BC segments. EBT before special items reached $71 million
for fiscal year 2005, compared to $311 million for fiscal year 2004.
This decrease is mainly explained by lower performance in the Aerospace
and BC segments.

Special items for the three-month period ended Jan. 31, 2005 amounted to
$38 million, compared to $362 million for the same period last year. For
the year ended Jan. 31, 2005, special items reached $172 million,
compared to $330 million for fiscal year 2004.

As a result, EBT amounted to $55 million for the fourth quarter of
fiscal year 2005, compared to a negative EBT of $400 million for the
same period the previous year. For the year ended Jan. 31, 2005, EBT was
negative $101 million, compared to negative EBT of $19 million for
fiscal year 2004.

Income from continuing operations was $56 million, or $0.03 per share,
for the fourth quarter of fiscal year 2005, compared to a loss of $415
million, or $0.24 per share, for the same period the previous year. For
the year ended Jan. 31, 2005, loss from continuing operations was $85
million, or $0.06 per share, an improvement of $81 million over the $166
million loss, or $0.11 per share, for fiscal year 2004.

As at Jan. 31, 2005, Bombardier's order backlog was $31.5 billion,
compared to $34.6 billion as at Jan. 31, 2004. The main reason for the
reduction is an excess of revenues recorded over order intake in the
transportation segment.



Financial highlights

(millions of dollars, except per share amounts and number of shares
outstanding)
(unaudited)

Three months ended Jan. 31 Years ended Jan. 31
2005 2004 2005 2004
---------------------------------------------------------------------
Segmented revenues
Aerospace $2,607 $2,862 $7,944 $8,243
Transportation 2,119 1,936 7,584 6,954
Bombardier Capital (BC) 105 114 426 493
Intersegment revenues (30) (37) (115) (182)
---------------------------------------------------------------------
External revenues 4,801 4,875 15,839 15,508
---------------------------------------------------------------------
---------------------------------------------------------------------
Income (loss) from
continuing operations
before special items,
interest and income
taxes
Aerospace 78 152 190 390
Transportation 61 (145) 33 39
BC (1) 13 29 53
Intersegment interest (9) (11) (28) (12)
---------------------------------------------------------------------
129 9 224 470
Special items 38 362 172 330
---------------------------------------------------------------------
Income (loss) from
continuing operations
before interest and
income taxes 91 (353) 52 140
Interest expense, net 36 47 153 159
---------------------------------------------------------------------
Income (loss) from
continuing operations
before income taxes 55 (400) (101) (19)
Income tax expense
(recovery) (1) 15 (16) 147
---------------------------------------------------------------------
Income (loss) from
continuing operations 56 (415) (85) (166)
Income from discontinued
operations - net of tax - 75 - 81
---------------------------------------------------------------------
Net income (loss) $56 $(340) $(85) $(85)
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings (loss) per share:
Basic and diluted
From continuing
operations $0.03 $(0.24) $(0.06) $(0.11)
Net income (loss) $0.03 $(0.20) $(0.06) $(0.07)
---------------------------------------------------------------------
---------------------------------------------------------------------

Weighted average number of
common shares outstanding
during the periods
(in thousands) 1,750,466 1,749,555 1,750,292 1,670,690



Bombardier Aerospace

- Revenues of $2.6 billion for the fourth quarter; $7.9 billion for
fiscal year 2005
- EBITDA of $164 million for the fourth quarter; $555 million for
fiscal year 2005
- EBIT of $78 million for the fourth quarter; $190 million for fiscal
year 2005
- Order backlog of $10.2 billion
- Aircraft deliveries totalled 108, compared to 107 for the previous
fourth quarter; 329 compared to 324 for the previous fiscal year


Bombardier Aerospace's segmented revenues amounted to $2.6 billion for
the three-month period ended Jan. 31, 2005, compared to $2.9 billion for
the same period the previous year. Bombardier Aerospace's segmented
revenues amounted to $7.9 billion for the year ended Jan. 31, 2005,
compared to $8.2 billion for the same period the previous year. These
decreases mainly result from lower deliveries of CRJ200 aircraft,
partially offset by increased deliveries and a favourable mix of
business aircraft and increased deliveries of CRJ700 and Q400 aircraft.
Effective the first quarter of fiscal year 2005, Bombardier
prospectively changed its revenue recognition policy for sales of
aircraft fractional shares. Under the previous accounting policy, total
revenues would have been higher by $163 million for fiscal year 2005.

Earnings before net interest expense, income taxes and depreciation and
amortization (EBITDA) amounted to $164 million for the three-month
period ended Jan. 31, 2005, compared to $232 million for the same period
last year. EBITDA amounted to $555 million for fiscal year 2005,
compared to $717 million for fiscal year 2004. These decreases mainly
result from the negative impact of higher effective exchange rates of
the Canadian dollar compared to the U.S. dollar, lower deliveries of
CRJ200 aircraft, severance and other involuntary termination costs and
higher research and development costs related to the CSeries aircraft
for the periods of fiscal year 2005. These decreases were partially
offset by increased deliveries and a favourable mix of business
aircraft, increased deliveries of CRJ700 and Q400 aircraft and improved
margin on pre-owned aircraft.

EBIT amounted to $78 million, or 3% of segmented revenues, for the
fourth quarter ended Jan. 31, 2005, compared to $139 million, or 4.9%,
for the same period the previous year. For fiscal year 2005, EBIT was
$190 million, or 2.4% of segmented revenues, compared to $409 million,
or 5%, for fiscal year 2004.

For the quarter ended Jan. 31, 2005, aircraft deliveries totalled 108,
compared to 107 for the same period the previous year. The 108
deliveries were made up of 47 business aircraft, 60 regional aircraft
and one amphibious aircraft. During fiscal year 2005, Bombardier
Aerospace delivered 329 aircraft, compared to 324 for fiscal year 2004.
Aircraft delivered during fiscal year 2005 consisted of 200 regional
aircraft, 128 business aircraft and one amphibious aircraft. Bombardier
expects aircraft deliveries in fiscal year 2006 to remain at a similar
level as in fiscal year 2005.

For the fourth quarter and fiscal year ended Jan. 31, 2005, Bombardier
received 54 and 154 net orders for business aircraft, compared to 48 and
91 net orders for the same periods last fiscal year. This increase
reflects the introduction of new models and the sustained recovery in
the worldwide business aircraft market.

For the fourth quarter and fiscal year ended Jan. 31, 2005, Bombardier
received 12 and 133 net orders for regional aircraft, compared to 38 and
140 for the same periods last year. The fiscal year 2005 orders included
an order for 32 CRJ200 aircraft from Atlantic Southeast Airlines, valued
at approximately $780 million; an order from Air Canada for 15 CRJ
Series 705 and 15 CRJ200, valued at approximately $821 million; an order
from Air Nostrum for 20 Bombardier CRJ200 aircraft, valued at
approximately $512.6 million; and an order from FlyBE. for 20 Q400
aircraft valued at approximately $485 million.

As at Jan. 31, 2005, the aerospace firm order backlog totalled $10.2
billion, compared to $10.9 billion as at Jan. 31, 2004. The
year-over-year reduction in the backlog is mainly due to the voluntary
removal of 34 CRJ200 aircraft orders from Independance Air, Inc.
(formerly Atlantic Coast Airlines, Inc.), and the deliveries exceeding
new orders for regional aircraft (mainly CRJ200 aircraft), partially
offset by the increase in the backlog for business aircraft.



Bombardier Transportation

- Successful ongoing execution of the restructuring initiative
- Revenues of $2.1 billion for the fourth quarter; $7.6 billion for
fiscal year 2005
- EBITDA before special items of $94 million ($56 million after
special items) for the fourth quarter; $171 million (negative $1
million after special items) for fiscal year 2005
- EBIT before special items of $61 million ($23 million after special
items) for the fourth quarter; $33 million (negative $139 million
after special items) for fiscal year 2005
- Special items of $38 million for the fourth quarter; $172 million
for fiscal year 2005
- New order intake totalling $4.4 billion for the year
- Order backlog of $21.3 billion


Bombardier Transportation's segmented revenues amounted to $2.1 billion
for the three-month period ended Jan. 31, 2005, compared to $1.9 billion
for the same period last year. For the year ended Jan. 31, 2005,
segmented revenues amounted to $7.6 billion, compared to $7 billion for
the previous year. These increases were mainly due to higher revenues on
mainline contracts and the positive effect of foreign currency
fluctuations resulting from the weakening of the U.S. dollar compared to
the euro and other western European currencies.

EBITDA before special items amounted to $94 million for the three-month
period ended Jan. 31, 2005, compared to negative $98 million for the
same period last year. The increase is primarily due to contract
adjustments in fiscal year 2004 related to revisions in estimates for
the completion of certain contracts and the charge related to the
settlement of all outstanding claims in connection with the Amtrak Acela
high-speed train contracts. For fiscal year 2005, EBITDA before special
items totalled $171 million, compared to $197 million for fiscal year
2004. The decrease is primarily due to the deterioration in the
profitability of certain significant contracts during the fourth quarter
of fiscal year 2004 and the first quarter of fiscal year 2005, which are
now accounted for at a lower margin, partially offset by lower operating
expenses resulting from the positive effects of various restructuring
and cost reduction initiatives.

EBIT before special items totalled $61 million, or 2.9% of segmented
revenues for the fourth quarter ended Jan. 31, 2005, compared to
negative $145 million for the same quarter the previous fiscal year. For
fiscal year 2005, EBIT before special items was $33 million, or 0.4% of
segmented revenues, compared to $39 million, or 0.6%, for fiscal year
2004.

Special items amounted to $38 million for the three-month period ended
Jan. 31, 2005, compared to $349 million for the same period last year.
For fiscal year 2005, special items totalled $172 million, compared to
$349 million for fiscal year 2004. These special items relate to
severance and other involuntary termination costs, as well as site
closure costs. The total cost of the restructuring initiative, initially
estimated at $583 million, is now expected to amount to $617 million.

As a result, EBIT amounted to $23 million, or 1.1% of segmented
revenues, for the fourth quarter ended Jan. 31, 2005, compared to
negative $494 million for the same quarter the previous fiscal year. For
fiscal year 2005, EBIT amounted to negative $139 million, compared to
negative $310 million for fiscal year 2004.

Major orders during fiscal year 2005 were for 324 high-capacity trains,
AGC type, from the French National Railways (SNCF), valued at $474
million; a fully-automated rapid transit system from Yong-In of Korea,
valued at $320 million; and 20 eight-car high-speed trainsets from the
Ministry of Railways of China, valued at $263 million.

Bombardier Transportation's backlog totalled $21.3 billion as at Jan.
31, 2005, compared to $23.7 billion as at Jan. 31, 2004. This decrease
in the value of the order backlog reflects an excess of revenues
recorded over order intake, partially offset by the positive impact of a
foreign exchange adjustment of approximately $800 million, mainly due to
the weakening of the U.S. dollar compared to the euro and other western
European currencies.



Bombardier Capital

- Revenues of $105 million for the fourth quarter; $426 million for
fiscal year 2005
- EBT of negative $1 million for the fourth quarter; positive $29
million for fiscal year 2005
- 13% reduction of wind-down portfolios for the fourth quarter; 45%
reduction for fiscal year 2005


For the fourth quarter of fiscal year 2005, Bombardier Capital's
segmented revenues amounted to $105 million, compared to $114 million
for the same quarter the previous year. For the year ended Jan. 31,
2005, Bombardier Capital's segmented revenues amounted to $426 million,
compared to $493 million for fiscal year 2004. These decreases are
consistent with the reduction in average assets under management.

Bombardier Capital's EBT amounted to negative $1 million and positive
$29 million for the quarter and fiscal year ended Jan. 31, 2005,
compared to EBT of $13 million and $53 million for the same periods the
previous year. These decreases are mainly due to the payment of $19
million in connection with the repurchase of call options related to
putable/callable notes as a result of the downgrades in the
Corporation's credit ratings in November 2004 and the reduction in net
margin resulting from the decrease in the wind-down portfolios,
partially offset by lower non-interest expenses and improved credit
quality trends resulting in lower provision requirements.

Significant progress was made in reducing the wind-down portfolios
during fiscal year 2005. Finance receivables and assets under operating
leases related to the wind-down portfolios declined 45%, or $420
million, during fiscal year 2005, mainly arising from reductions in the
business aircraft, manufactured housing and consumer finance portfolios
as a result of loan repayments.

Continued portfolios are regularly assessed for strategic fit,
profitability, funding availability and risk profiles. The orderly and
timely reduction of the wind-down portfolios carries on as planned.

About Bombardier

A world-leading manufacturer of innovative transportation solutions,
from regional aircraft and business jets to rail transportation
equipment, Bombardier Inc. is a global corporation headquartered in
Canada. Its revenues for the fiscal year ended Jan. 31, 2005 were $15.8
billion US and its shares are traded on the Toronto Stock Exchange
(BBD). News and information are available at www.bombardier.com.

Bombardier, CRJ, CRJ200, CRJ700, CRJ900, Q-Series, Q300, Q400, CSeries
and TRAXX are trademark(s) of Bombardier Inc. or its subsidiaries.

The Management's Discussion and Analysis and the Consolidated Financial
Statements are available at www.bombardier.com.

FORWARD-LOOKING STATEMENTS

This press release includes "forward-looking statements" that are
subject to risks and uncertainties. For information identifying
legislative or regulatory, economic, currency, technological,
competitive and other important factors that could cause actual results
to differ materially from those anticipated in the forward-looking
statements, see Bombardier's Annual Report under the heading Risks and
Uncertainties in the Management's Discussion and Analysis section.

CAUTION REGARDING NON-GAAP EARNINGS MEASURES

This press release is based on reported earnings in accordance with
Canadian generally accepted accounting principles (GAAP). It is also
based on earnings (loss) before net interest of the manufacturing
segments, income taxes and depreciation and amortization (EBITDA);
earnings (loss) before net interest of the manufacturing segments and
income taxes (EBIT); and earnings (loss) before income taxes (EBT),
before special items, and free cash flow. These measures are directly
derived from the Consolidated Financial Statements but do not have a
standardized meaning prescribed by GAAP; therefore, others using these
terms may calculate them differently. Management believes that a
significant number of the users of its Consolidated Financial Statements
and MD&A analyze the Corporation's results based on these performance
measures and that this presentation is consistent with industry
practice. Special items are viewed by Management as items that do not
arise as part of the normal day-to-day business operations or that could
potentially distort the analysis of trends.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Bombardier Inc.
    John Paul Macdonald
    Senior Vice President, Public Affairs
    (514) 861-9481
    www.bombardier.com