Bombardier Aerospace
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Bombardier Aerospace

January 13, 2016 08:45 ET

Bombardier Business Aircraft Implementing Business Model Enhancements to Solidify its Long-term Profitability

(All amounts in this press release are in U.S. dollars unless otherwise indicated)

- Executing agreements to create direct sales channels and improve margins

- Assuming sales leadership through termination of select sales representative and distribution agreements as well as restructuring customer commercial agreements will result in charges of $278 million recorded as special items in Q4 2015

MONTRÉAL, QUÉBEC--(Marketwired - Jan. 13, 2016) - Bombardier Business Aircraft continues to restructure and enhance its business model to improve long-term profitability. To that end, the business segment has completed initiatives to increase the number of direct-to-market channels, including termination of third-party sales representative and distribution agreements, as well as the restructuring of customer commercial agreements. As a result of these agreements, Bombardier will incur pre-tax special charges of $278 million in the fourth quarter of 2015, of which approximately $145 million is non-cash. Of the cash impact, approximately $50 million was disbursed in Q4 2015 and the balance will be paid in 2016.

"We are changing our sales strategy to increase our focus on direct channels," said David Coleal, President, Bombardier Business Aircraft. "This, coupled with our robust transformation plan, will increase our long-term profitability. Our overall business model enhancements will leverage our class-leading aircraft, which continue to be outstanding business tools for operators in all regions of the world."

In line with this change in sales strategy, Bombardier terminated select sales representative and distribution agreements. Bombardier will become directly responsible for sales activities in the associated regions leveraging its existing sales teams allowing for increased direct relationships with operators.

Bombardier Business Aircraft has also completed a restructuring of certain customer commercial agreements. These agreements resulted in the cancellation of 24 firm orders, which had an aggregate value of $1.75 billion at 2015 list prices, with an additional cancellation of 30 optional orders. Bombardier expects to sell these positions at improved margins.

"Restructuring these commercial agreements will strengthen our business and solidify our long-term profitability," added Coleal. "Our sales team is well equipped to increase our position in the marketplace, and ultimately, we expect our current industry-leading backlog to become even stronger."

Bombardier will release consolidated results for the fourth quarter and 2015 fiscal year on February 18, 2016.

About Bombardier

Bombardier is the world's leading manufacturer of both planes and trains. Looking far ahead while delivering today, Bombardier is evolving mobility worldwide by answering the call for more efficient, sustainable and enjoyable transportation everywhere. Our vehicles, services and, most of all, our employees are what make us a global leader in transportation.

Bombardier is headquartered in Montréal, Canada. Our shares are traded on the Toronto Stock Exchange (BBD) and we are listed on the Dow Jones Sustainability North America Index. In the fiscal year ended December 31, 2014, we posted revenues of $20.1 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.

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FORWARD-LOOKING STATEMENTS

This press release includes forward-looking statements, which may involve, but are not limited to: statements with respect to the Corporation's objectives, guidance, targets, goals, priorities, market and strategies, financial position, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business outlook, prospects and trends of an industry; expected growth in demand for products and services; product development, including projected design, characteristics, capacity or performance; expected or scheduled entry-into-service of products and services, orders, deliveries, testing, lead times, certifications and project execution in general; competitive position; and the expected impact of the legislative and regulatory environment and legal proceedings on the Corporation's business and operations; available liquidities and ongoing review of strategic and financial alternatives, the launch and completion of an initial public offering (IPO) or private placement of a minority stake and the proceeds therefrom; the completion of the investment by the Government of Québec in the C Series aircraft program (the "Investment") and the use of proceeds therefrom; the impact and expected benefits of an IPO or private placement of a minority stake and the Investment on our operations, infrastructure, opportunities, financial condition, access to capital and overall strategy; the impact of an IPO or private placement of a minority stake on the Corporation's share price, the statement that a carve-out IPO or private placement of a minority stake should help to crystallize share price value, the impact of the sale of equity on our balance sheet and liquidity position, the effect of an IPO or private placement of a minority stake on the range of options available to us, our participation in future rail equipment industry consolidation, the stock exchange on which an IPO would be effected, the capital and governance structure of the Transportation segment following an IPO or private placement of a minority stake, the receipt of required third party, regulatory and other approvals, and the anticipated timing thereof. Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "anticipate", "plan", "foresee", "believe", "continue", "maintain" or "align", the negative of these terms, variations of them or similar terminology. By their nature, forward-looking statements require management to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from forecast results. While management considers their assumptions to be reasonable and appropriate based on information currently available, there is risk that they may not be accurate.

Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, risks associated with general economic conditions, risks associated with our business environment (such as risks associated with the financial condition of the airline industry and rail industry, political instability and force majeure), operational risks (such as risks related to developing new products and services; fixed-price commitments and production and project execution; doing business with partners; product performance warranty and casualty claim losses; regulatory and legal proceedings; the environment; dependence on certain customers and suppliers; human resources), financing risks (such as risks related to liquidity and access to capital markets, retirement benefit plan risk, exposure to credit risk, certain restrictive debt covenants, financing support provided for the benefit of certain customers and reliance on government support), market risks (such as risks related to foreign currency fluctuations, changing interest rates, decreases in residual values and increases in commodity prices), the conditions to completion of the Investment not being satisfied, failure to receive third party, regulatory and other approvals, and changes in the terms of the Investment. For more details, see the Risks and uncertainties section in Other in the Management's Discussion and Analysis (MD&A) of the Corporation's financial report for the fiscal year ended December 31, 2014. Certain important assumptions by management in making forward-looking statements include, but are not limited to: the decision to launch an IPO or private placement of a minority stake and the timing, size and successful completion thereof; our ability to consummate an IPO or private placement of a minority stake in favourable market conditions, that ongoing due diligence investigations by the Government of Québec will not identify any materially adverse facts or circumstances; the satisfaction of all conditions to the completion of the Investment; the receipt of required third party, regulatory and other approvals, and our ability to consummate the Investment. For additional information with respect to the assumptions underlying the forward-looking statements made in this press release, refer to the Guidance and forward-looking statements sections in the MD&A of the Corporation's financial report for the fiscal year ended December 31, 2014. There can be no assurance that any IPO or private placement of a minority stake, or the Investment or other transaction will be undertaken or completed in whole or in part or of the timing, size and proceeds of any such offering or transaction, which will depend on a number of factors, including prevailing market conditions.

Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. The forward-looking statements set forth herein reflect management's expectations as at the date of this press release and are subject to change after such date. Unless otherwise required by applicable securities laws, the Corporation expressly disclaims any intention, and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

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