CAE Inc.
TSX : CAE
NYSE : CGT

CAE Inc.

May 14, 2009 08:57 ET

CAE reports fourth quarter and full-year results for fiscal year 2009

MONTREAL, QUEBEC--(Marketwire - May 14, 2009) - CAE (NYSE:CGT)(TSX:CAE)

- Annual revenue increased 17% to C$1.66 billion

- Annual net earnings increased 31% to C$199 million

- Record military orders of C$1.1 billion and civil orders of C$847 million contributed to consolidated backlog of C$3.2 billion

- Measures introduced to strengthen CAE's future position and to size company to market conditions

CAE (NYSE:CGT)(TSX:CAE) today reported financial results for the fourth quarter and fiscal year ended March 31, 2009. Earnings from continuing operations were $51.3 million ($0.20 per share) this quarter, compared to $47.0 million ($0.18 per share) in the fourth quarter of last year. Earnings from continuing operations for the year were $200.5 million ($0.79 per share) compared to $164.8 million ($0.65 per share) last year. All financial information is in Canadian dollars.

Summary of consolidated results



(amounts in millions,
except operating
margins) FY2009 FY2008 Q4-2009 Q3-2009
-------------------------------------------------------------------------
Revenue $ 1,662.2 1,423.6 438.8 424.6
Earnings before
interest and income
taxes (EBIT) $ 303.6 251.5 78.1 78.7
As a % of revenue % 18.3 17.7 17.8 18.5
Earnings from
continuing
operations $ 200.5 164.8 51.3 53.3
Results from
discontinued
operations $ (1.1) (12.1) - -
Net earnings $ 199.4 152.7 51.3 53.3
Backlog $ 3,181.8 2,899.9 3,181.8 2,942.8
--------------------------------------------------------------------------
--------------------------------------------------------------------------

(amounts in millions,
except operating
margins) Q2-2009 Q1-2009 Q4-2008
----------------------------------------------------------
Revenue $ 406.7 392.1 366.6
Earnings before
interest and income
taxes (EBIT) $ 75.5 71.3 69.7
As a % of revenue % 18.6 18.2 19.0
Earnings from
continuing
operations $ 48.9 47.0 47.0
Results from
discontinued
operations $ (0.2) (0.9) (11.4)
Net earnings $ 48.7 46.1 35.6
Backlog $ 2,741.8 2,847.9 2,899.9
----------------------------------------------------------
----------------------------------------------------------


Consolidated revenue this quarter was $438.8 million compared to $366.6 million in the fourth quarter last year. Consolidated revenue for the year was $1.66 billion, compared to $1.42 billion in 2008.

Net earnings, including the impact of discontinued operations, were $51.3 million in the fourth quarter and $199.4 million for the year.

Fourth-quarter consolidated earnings before interest and taxes(1) (EBIT) were $78.1 million, or 17.8% of revenue. EBIT for the year was $303.6 million, or 18.3% of revenue compared with $251.5 million last year, or 17.7% of revenue.

"CAE delivered a strong performance this past fiscal year because we successfully executed our diversification strategy and maintained our financial discipline." said Robert E. Brown, CAE's President and Chief Executive Officer. "The impact of the aerospace market downturn to date has been mitigated by our geographic diversification, our backlog of civil orders from the past few years, and from the portion of our business that is defence related. For the first time in our history, military orders exceeded $1 billion.

During the past five years we have been unrelenting in our pursuit of diversification, innovation and productivity. We have made good progress and succeeded to overcome a number of major challenges. Marc Parent, Executive Vice President and COO, has recently led a comprehensive corporate review to identify additional opportunities for synergies among our four business units and within our global structure. We are now implementing a series of organizational changes which will make CAE even more competitive by bringing its senior people closer to our customers while increasing efficiency. Concurrent with this initiative, we are taking further actions required to size the company to current and expected market conditions.

In order to better serve our customers, we are refining our business structure to create a leaner, more regionally accountable organization that will compete even more effectively in the market. We are placing greater responsibility within our regions to reduce costs and to provide more decision-making capabilities to those closest to our customers. This reorganization provides a more efficient management structure that derives synergies through shared services for engineering, manufacturing and support functions. We are consolidating the leadership of our two civil business segments to provide customers with a single portfolio of solutions.

Aerospace companies are facing extraordinary challenges and CAE is being tested as well. Our military business has never been stronger but we expect civil orders to decline in the current context. As a result, we are taking exceptional actions which will be concentrated in two phases - the first of which is already underway. Overall, we will be laying off 700 of our 7,000 employees, which represents 10 percent of our workforce: 380 in the coming weeks and the balance in the fall. All employees affected will be advised in the coming days. Approximately 600 out of the 700 employees affected are based in Montreal where we produce our civil simulators. The rest are based in our other locations around the world. Included in the layoffs are 70 management positions.

We regret the hardship this will cause those affected and we are grateful to all of our employees for their dedication. We intend to do what we can to help them through this difficult period. We estimate a restructuring expense of approximately $34 million for both phases to be recorded in the first quarter of fiscal year 2010.

We are implementing cost-containment measures that will allow us to secure other jobs. Effective immediately, management and most other employees globally will be subject to a salary freeze and will have five mandatory furlough days over the current fiscal year. We have also introduced new limits on overtime, and we are offering early retirement incentives to qualifying employees.

These initiatives will allow us to substantially offset the cost of the reorganization this year and we expect annualized recurring cost savings of about $15 million going forward.

Change is part of our culture and CAE's employees have a proven ability to adapt. We have a well diversified base and a sound financial structure, and now we have a plan to manage the downturn while still delivering value to shareholders. Our reorganization will position us to take advantage of the eventual upturn in the civil market and to emerge even stronger when the market recovers."

Business segment highlights

With more than $544 million of military orders in the fourth quarter alone, we concluded the fiscal year with record order activity in our military segments. Military orders totaled $1.09 billion and represented the largest annual military order intake in CAE's history. Key contract awards included the Government of Canada C-130J aircrew training, a contract extension with the Commonwealth of Australia for training support services and a contract to develop Hawk 128 full-mission simulators for the U.K.'s Military Flying Training System (MFTS) program. As well, we won a series of contracts with the U.S. Navy for MH-60S/R simulators. Fiscal year 2009 also marked for CAE and our partners the inauguration of NH90 helicopter training at the German Army Aviation School in Bueckeburg.

In Training and Services/Civil we secured training and services contracts valued at approximately $464 million and succeeded in growing our average RSEUs (Revenue Simulator Equivalent Units) by approximately 10% year over year. RSEUs were 118 for the fiscal year and 123 for the fourth quarter. With simulator builds and deployments already in progress, we expect a further 10% increase in average annual RSEUs by the end of fiscal 2010 as we develop a critical mass of simulator types to target the already installed base of aircraft.

We won orders for four civil full-flight simulators (FFSs) during the fourth quarter, bringing the total number for the fiscal year to 34. Since the start of the new fiscal year we have announced two FFS sales. We currently expect to receive approximately 20 orders for fiscal year 2010 and will update this figure as the year progresses and market conditions become clearer. We continued to have success with our breakthrough CAE 5000 full-flight simulator with sales to Aeroflot Russian Airlines, Avianca Airlines of Columbia, Sofia Flight Training of Bulgaria, the Zhuhai Flight Training Centre in China and the Embraer CAE Training Services joint venture.

At the end of the fourth quarter we reaffirmed our commitment to technological leadership with the announcement of Project Falcon, a five-year investment plan for up to $714 million for research and development, which is expected to maintain or create approximately 1,000 high-value jobs over the next five years.

Civil segments

Training & Services/Civil (TS/C)



Financial results
(amounts in millions,
except operating
margins, RSEU and
FFSs deployed)
FY2009 FY2008 Q4-2009 Q3-2009
-------------------------------------------------------------------------
Revenue $ 460.5 382.1 121.4 120.9
Segment operating
income $ 85.1 73.5 23.7 21.6
Operating margins % 18.5 19.2 19.5 17.9
Backlog $ 1,006.4 963.3 1,006.4 1,036.0
RSEU 118 108 123 118
FFSs deployed 141 124 141 135
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(amounts in millions,
except operating
margins, RSEU and
FFSs deployed) Q2-2009 Q1-2009 Q4-2008
-----------------------------------------------------------
Revenue $ 108.0 110.2 104.5
Segment operating
income $ 19.1 20.7 23.8
Operating margins % 17.7 18.8 22.8
Backlog $ 907.6 932.7 963.3
RSEU 118 114 110
FFSs deployed 133 132 124
-----------------------------------------------------------
-----------------------------------------------------------


Fourth quarter revenue in the TS/C segment increased 16% over the same period last year. Good operational performance, the deployment of additional RSEUs to our network and results from acquired companies, Sabena Flight Academy and Academia Aeronautica de Evora S.A. mainly explain the increase. As well, the weaker Canadian dollar against our main operating currencies helped to offset market pressures in North America and preliminary indications of softness in Europe.

Revenue for the year was up 21% to $460.5 million.

Segment operating income was $23.7 million (19.5% of revenue) in the fourth quarter, compared to $21.6 million (17.9% of revenue) last quarter and $23.8 million (22.8% of revenue) in the fourth quarter last year. We made further progress integrating Sabena Flight Academy and continued to ramp-up our North East and Burgess Hill training centres. These gains were partially offset by market pressure in North America.

For the year, segment operating income increased 16% to $85.1 million (18.5% of revenue), compared to $73.5 million (19.2% of revenue) last year.

New orders for the year totalled $463.7 million, and segment backlog reached $1,006.4 million. The book-to-sales ratio was 1.01x.

Simulation Products/Civil (SP/C)



Financial results
(amounts in millions,
except operating
margins) FY2009 FY2008 Q4-2009 Q3-2009
-------------------------------------------------------------------------
Revenue $ 477.5 435.3 107.3 119.3
Segment operating
income $ 92.1 94.9 18.5 22.8
Operating margins % 19.3 21.8 17.2 19.1
Backlog $ 288.2 381.8 288.2 359.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(amounts in millions,
except operating
margins) Q2-2009 Q1-2009 Q4-2008
-----------------------------------------------------------
Revenue $ 114.3 136.6 106.5
Segment operating
income $ 23.4 27.4 23.8
Operating margins % 20.5 20.1 22.3
Backlog $ 343.4 373.2 381.8
-----------------------------------------------------------
-----------------------------------------------------------


Revenue in the SP/C segment was $107.3 million during the fourth quarter, stable compared to the same period last year. Revenue for the year reached $477.5 million, an increase of 10% over the prior year. We delivered 38 FFSs to our customers in fiscal year 2009 compared to 29 in 2008.

Segment operating income was $18.5 million (17.2% of revenue) in the fourth quarter, down by 22% over the same period last year. We had a $2.2 million charge resulting from a hedging instrument that was unwound following the termination of a contract with a customer. As well, the weaker Canadian dollar resulted in higher costs on U.S. dollar and euro-denominated content.

For the year, segment operating income was $92.1 million (19.3% of revenue), $2.8 million lower than last year as a result of the higher costs noted above and a lower contribution from our research and development cost-sharing program Project Phoenix.

During the year, we received orders for 34 civil FFSs. Orders for the year totalled $383.2 million, and segment backlog reached $288.2 million.

Military segments

Revenue in the fourth quarter for our combined Military business was $210.1 million and operating income was $35.9 million, resulting in an operating margin of 17.1%.

Combined revenue for the year was $724.2 million and operating income was $126.4 million, resulting in an operating margin of 17.5%.

Combined new orders totaled a record $1,093.3 million, up 47% compared to $746.1 million booked in fiscal 2008. For the year, the book-to-sales ratio was 1.51x.

Simulation Products/Military (SP/M)



Financial results
(amounts in millions,
except operating
margins) FY2009 FY2008 Q4-2009 Q3-2009
-------------------------------------------------------------------------
Revenue $ 483.5 383.7 143.6 125.5
Segment operating
income $ 87.7 51.7 26.8 25.7
Operating margins % 18.1 13.5 18.7 20.5
Backlog $ 893.0 765.1 893.0 714.0
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(amounts in millions,
except operating
margins) Q2-2009 Q1-2009 Q4-2008
-----------------------------------------------------------
Revenue $ 126.0 88.4 101.5
Segment operating
income $ 21.6 13.6 14.5
Operating margins % 17.1 15.4 14.3
Backlog $ 705.6 752.6 765.1
-----------------------------------------------------------
-----------------------------------------------------------


Revenue in the SP/M segment was $143.6 million in the fourth quarter, up by 41% year over year. The increase comes mainly from a higher level of activity on a number of our simulator contracts awarded in fiscal 2009 - most notably on our various NH90 programs - combined with the positive impact of a lower Canadian dollar.

Revenue for the year was $483.5 million, up 26% because of higher activity levels on helicopter and transport aircraft programs.

Segment operating income this quarter was $26.8 million (18.7% of revenue), up 85% year over year.

Segment operating income for the year was $87.7 million (18.1% of revenue), up 70% year over year.

Improvements in both periods are the result of increased activity, higher contributions to R&D from Project Phoenix in keeping with higher business volume, higher investment tax credits, and our attainment of milestones on several NH-90 programs.

New orders for the year totalled $599.4 million and segment backlog reached $893.0 million at the end of the year, for a book-to-sales ratio of 1.24x.

Training & Services/Military (TS/M)



Financial results
(amounts in millions,
except operating
margins) FY2009 FY2008 Q4-2009 Q3-2009
-------------------------------------------------------------------------
Revenue $ 240.7 222.5 66.5 58.9
Segment operating
income $ 38.7 31.4 9.1 8.6
Operating margins % 16.1 14.1 13.7 14.6
Backlog $ 994.2 789.7 994.2 833.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(amounts in millions,
except operating
margins) Q2-2009 Q1-2009 Q4-2008
-----------------------------------------------------------
Revenue $ 58.4 56.9 54.1
Segment operating
income $ 11.4 9.6 7.6
Operating margins % 19.5 16.9 14.0
Backlog $ 785.2 789.4 789.7
-----------------------------------------------------------
-----------------------------------------------------------


Revenue in the TS/M segment was $66.5 million for the fourth quarter, up by 23% year over year.

Revenue for the year in the TS/M segment was $240.7 million, up by 8% over last year.

We had a high level of activity this year in our Professional Services business and from the SE Core program in the U.S. As well, we benefitted from the lower Canadian dollar against the euro and the U.S. dollar, which was partially offset by the weakness of the British pound.

Segment operating income was $9.1 million this quarter, up 20% from the same period last year as we had higher volume and better margins on some maintenance service contracts. We also received a $1.2 million dividend from a U.K.-based investment, which was not received during the fourth quarter of fiscal 2008. This dividend is recurring but is not necessarily received during the same fiscal quarter.

Segment operating income for the year was $38.7 million, 23% higher than last year as a result of the benefits described above.

New orders this year totalled $493.9 million and segment backlog reached $994.2 million at the end of the year. The book-to-sales ratio was 2.05x.

Cash flow and financial position

This year we generated $195.5 million of net cash from continuing operations. We invested $54.5 million in maintenance capital expenditures, and paid cash dividends of $29.6 million. As a result, we generated free cash flow(2) of $106.4 million. This is $55.9 million lower than last year as a result of higher investment in non-cash working capital (up $78.9 million) and higher dividends (up 19.8 million) to shareholders.

Inventory has increased by $104.3 million due to the growth of unbilled sales.

Total capex in FY2009 was $203.7 million of which $149.2 million was for investment in growth capital expenditures. We expect total capital expenditures in fiscal year 2010 to be approximately $150 million.

Net debt(3) was $285.1 million at March 31, 2009, up $161 million from last year mainly from lower cash before proceeds and repayment of long-term debt and the depreciation of the Canadian dollar against our foreign-denominated debt.

CAE will pay a dividend of $0.03 per share on June 30, 2009 to shareholders of record at the close of business on June 15, 2009.

Additional consolidated financial results

Orders and backlog

The consolidated backlog was $3.182 billion at the end of this year, compared to $2.900 billion at the end of last year. New orders of $1.940 billion were added to backlog, offset by $1.662 billion in revenue generated from backlog.

Income taxes

Income taxes were $82.9 million this year, representing an effective tax rate of 29%. This is lower than the 30% rate the year prior because of the mix of income we generated in various jurisdictions. We expect the effective income tax rate for fiscal 2010 to be approximately 31%.

You will find a more detailed discussion of our results by segment in the Management's Discussion and Analysis (MD&A) as well as in our consolidated financial statements which are posted on our website at www.cae.com/Q4FY09.

CAE's audited annual financial statements and management's discussion and analysis for the year ended March 31, 2009 have been filed with the Canadian securities commissions and are available on our website (www.cae.com) and on SEDAR (www.sedar.com). They have also been filed with the U.S. Securities and Exchange Commission and are available on their website (www.sec.gov).

Conference call

CAE will host a conference call today at 12:30 p.m. EST for analysts, institutional investors and the media. North American participants can listen to the conference by dialing +1-866-540-8136 or +1-514-868-1042. Overseas participants can dial +800-9559-6849 or +1-514-868-1042. The conference call will also be audio Webcast live for the public at www.cae.com.

CAE is a world leader in providing simulation and modelling technologies and integrated training solutions for the civil aviation industry and defence forces around the globe. With annual revenues exceeding C$1.6 billion, CAE employs approximately 7,000 people at more than 75 sites and training locations in 20 countries. We have the largest installed base of civil and military full-flight simulators and training devices. More than 75,000 crewmembers train yearly in our global network of 27 civil aviation and military training centres. We also offer modelling and simulation software to various market segments and through CAE's professional services division, we assist customers with a wide range of simulation-based needs.

Certain statements made in this news release, including, but not limited to, statements that are not historical facts, are forward-looking and are subject to important risks, uncertainties and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events. These statements do not reflect the potential impact of any non-recurring or other special items or events that are announced or completed after the date of this news release, including mergers, acquisitions, or other business combinations and divestitures.

You will find more information about the risks and uncertainties associated with our business in the MD&A section of our annual report and annual information form for the year ended March 31, 2008. These documents have been filed with the Canadian securities commissions and are available on our website (www.cae.com), on SEDAR (www.sedar.com) and a free copy is available upon request to CAE. They have also been filed with the U.S. Securities and Exchange Commission under Form 40-F and are available on EDGAR (www.sec.gov). You will also find on our web site the English MD&A for the fiscal year 2009. The forward-looking statements contained in this news release represent our expectations as of May 14, 2009 and, accordingly, are subject to change after this date.

We do not update or revise forward-looking information even if new information becomes available unless legislation requires us to do so. You should not place undue reliance on forward-looking statements.

Notes

(1) Earnings before interest and taxes (EBIT) is a non-GAAP measure that shows us how we have performed before the effects of certain financing decisions and tax structures. We track EBIT because we believe it makes it easier to compare our performance with previous periods, and with companies and industries that do not have the same capital structure or tax laws.

(2) Free cash flow is a non-GAAP measure that tells us how much cash we have available to build the business, repay debt and meet ongoing financial obligations. We use it as an indicator of our financial strength and liquidity. We calculate it by taking the net cash generated by our continuing operating activities, subtracting maintenance capital expenditures, other assets and dividends paid. Dividends are deducted in the calculation of free cash flow because we consider them an obligation, like interest on debt, which means that amount is not available for other uses.

(3) Net debt is a non-GAAP measure we use to monitor how much debt we have after taking into account liquid assets such as cash and cash equivalents. We use it as an indicator of our overall financial position, and calculate it by taking our total long-term debt (debt that matures in more than one year), including the current portion, and subtracting cash and cash equivalents.



Consolidated Balance Sheets

(Unaudited)
As at March 31
(amounts in millions of Canadian dollars) 2009 2008
-------------------------------------------------------------------------

Assets
Current assets
Cash and cash equivalents $195.2 $255.7
Accounts receivable 322.4 255.0
Inventories 334.2 229.9
Prepaid expenses 31.3 32.7
Income taxes recoverable 11.5 39.0
Future income taxes 5.3 14.1
-------------------------------------------------------------------------
$899.9 $826.4
Property, plant and equipment, net 1,302.4 1,046.8
Future income taxes 86.0 64.3
Intangible assets 77.1 62.0
Goodwill 159.1 115.5
Other assets 151.6 138.2
-------------------------------------------------------------------------
$2,676.1 $2,253.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued liabilities $540.4 $482.7
Deposits on contracts 203.8 209.3
Current portion of long-term debt 125.6 27.3
Future income taxes 20.9 16.8
-------------------------------------------------------------------------
$890.7 $736.1
Long-term debt 354.7 352.5
Deferred gains and other long-term liabilities 185.6 184.9
Future income taxes 40.0 31.2
-------------------------------------------------------------------------
$1,471.0 $1,304.7
-------------------------------------------------------------------------

Shareholders' equity
Capital stock $430.2 $418.9
Contributed surplus 10.1 8.3
Retained earnings 813.3 644.5
Accumulated other comprehensive loss (48.5) (123.2)
-------------------------------------------------------------------------
$1,205.1 $948.5
-------------------------------------------------------------------------
$2,676.1 $2,253.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------



Consolidated Statements of Earnings

(Unaudited)
(amounts in millions of Three months ended Twelve months ended
Canadian dollars, except March 31 March 31
per share amounts) 2009 2008 2009 2008
-------------------------------------------------------------------------
Revenue $438.8 $366.6 $1,662.2 $1,423.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings before
interest and
income taxes $78.1 $69.7 $303.6 $251.5
Interest expense, net 5.1 4.7 20.2 17.5
-------------------------------------------------------------------------
Earnings before
income taxes $73.0 $65.0 $283.4 $234.0
Income tax expense 21.7 18.0 82.9 69.2
-------------------------------------------------------------------------
Earnings from
continuing operations $51.3 $47.0 $200.5 $164.8
Results of discontinued
operations - (11.4) (1.1) (12.1)
-------------------------------------------------------------------------
Net earnings $51.3 $35.6 $199.4 $152.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic earnings per
share from continuing
operations $0.20 $0.19 $0.79 $0.65
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Diluted earnings per
share from continuing
operations $0.20 $0.18 $0.79 $0.65
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted
earnings per share $0.20 $0.14 $0.78 $0.60
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average number
of shares outstanding
(basic) 254.9 253.9 254.8 253.4
-------------------------------------------------------------------------
Weighted average number
of shares outstanding
(diluted)(1) 254.9 254.9 255.0 254.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(1) For the three months ended March 31, 2009, the effect of stock options
potentially exercisable was anti-dilutive; therefore, the basic and
diluted weighted average number of shares outstanding are the same.



Consolidated Statements of Changes in Shareholders' Equity

(Unaudited)
Year ended March 31, 2009
(amounts in millions of Canadian dollars, except number of shares)
--------------------------------------------------------------------------
Accumulated
Common Other Total
Number Shares Contri- Comprehen- Share-
of Stated buted Retained sive holders'
Shares Value Surplus Earnings Loss Equity
--------------------------------------------------------------------------
Balances,
beginning
of year 253,969,836 $418.9 $8.3 $644.5 $(123.2) $948.5
Stock options
exercised 1,077,200 9.3 - - - 9.3
Transfer upon
exercise of
stock options - 1.0 (1.0) - - -
Stock dividends 99,407 1.0 - (1.0) - -
Stock-based
compensation - - 2.8 - - 2.8
Net earnings - - - 199.4 - 199.4
Dividends - - - (29.6) - (29.6)
Other
comprehensive
income - - - - 74.7 74.7
--------------------------------------------------------------------------
Balances,
end of
year 255,146,443 $430.2 $10.1 $813.3 $(48.5) $1,205.1
--------------------------------------------------------------------------
--------------------------------------------------------------------------



(Unaudited)
Year ended March 31, 2008
(amounts in millions of Canadian dollars, except number of shares)
--------------------------------------------------------------------------
Accumulated
Common Other Total
Number Shares Contri- Comprehen- Share-
of Stated buted Retained sive holders'
Shares Value Surplus Earnings Loss Equity
--------------------------------------------------------------------------
Balances,
beginning
of year 251,960,449 $401.7 $5.7 $510.2 $(87.7) $829.9
Shares issued 169,851 0.8 - - - 0.8
Stock options
exercised 1,814,095 13.9 - - - 13.9
Transfer upon
exercise of
stock options - 2.2 (2.2) - - -
Stock dividends 25,441 0.3 - (0.3) - -
Stock-based
compensation - - 4.8 - - 4.8
Cumulative effect
of implementing
accounting
standards - - - (8.3) (3.5) (11.8)
Net earnings - - - 152.7 - 152.7
Dividends - - - (9.8) - (9.8)
Other
comprehensive
loss - - - - (32.0) (32.0)
--------------------------------------------------------------------------
Balances,
end of
year 253,969,836 $418.9 $8.3 $644.5 $(123.2) $948.5
--------------------------------------------------------------------------
--------------------------------------------------------------------------



Consolidated Statements of Comprehensive Income

(Unaudited) Three months ended Twelve months ended
(amounts in millions March 31 March 31
of Canadian dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------
Net earnings $51.3 $35.6 $199.4 $152.7
Other comprehensive
income (loss), net
of income taxes:
Foreign currency
translation adjustment
Net foreign exchange
gains (losses) on
translation of financial
statements of self-
sustaining foreign
operations $18.0 $63.7 $113.3 $(50.2)
Net change in (losses)
gains on certain
long-term debt
denominated in foreign
currency and designated
as hedges on net
investments of self-
sustaining foreign
operations (1.2) (1.3) (7.7) 15.7
Reclassifications
to income - - (1.9) -
Income tax adjustment (1.0) (1.2) (1.3) (0.6)
-------------------------------------------------------------------------
$15.8 $61.2 $102.4 $(35.1)
-------------------------------------------------------------------------
Net changes in cash
flow hedge
Net change in (losses)
gains on derivative
items designated as
hedges of cash flows $(11.5) $(14.1) $(48.8) $29.7
Reclassifications to
income or to the
related non-financial
assets or liabilities 5.8 (6.3) 10.4 (25.2)
Income tax adjustment 0.3 6.6 10.7 (1.4)
-------------------------------------------------------------------------
$(5.4) $(13.8) $(27.7) $3.1
-------------------------------------------------------------------------
Total other
comprehensive income
(loss) $10.4 $47.4 $74.7 $(32.0)
-------------------------------------------------------------------------
Comprehensive income $61.7 $83.0 $274.1 $120.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------



Consolidated Statement of Accumulated Other Comprehensive Loss

(Unaudited)
as at and for the year Foreign Accumulated
ended March 31, 2009 Currency Other
(amounts in millions of Translation Cash Flow Comprehensive
Canadian dollars) Adjustment Hedge Loss
--------------------------------------------------------------------------
Balance in accumulated other
comprehensive loss at beginning
of year $(122.8) $(0.4) $(123.2)
Details of other
comprehensive loss:
Net change in gains (losses) 105.6 (48.8) 56.8
Reclassifications to income
or to the related non-financial
assets or liabilities (1.9) 10.4 8.5
Income tax adjustment (1.3) 10.7 9.4
--------------------------------------------------------------------------
Total other comprehensive income
for the year $102.4 $(27.7) $74.7
--------------------------------------------------------------------------
Balance in accumulated other
comprehensive loss at end of year $(20.4) $(28.1) $(48.5)
--------------------------------------------------------------------------
--------------------------------------------------------------------------




Consolidated Statements of Cash Flows

(Unaudited) Three months ended Twelve months ended
(amounts in millions March 31 March 31
of Canadian dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------
Operating activities
Net earnings $51.3 $35.6 $199.4 $152.7
Results of discontinued
operations - 11.4 1.1 12.1
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Earnings from continuing
operations $51.3 $47.0 $200.5 $164.8
Adjustments to reconcile
earnings to cash flows
from operating
activities:
Depreciation 18.3 15.1 71.3 60.6
Financing cost
amortization 0.2 0.2 0.8 0.8
Amortization and write
down of intangible and
other assets 6.7 4.2 19.7 16.9
Future income taxes (7.6) (3.7) 8.0 26.4
Investment tax credits 9.3 5.6 19.9 15.4
Stock-based
compensation plans 4.0 (1.1) (11.5) (0.8)
Employee future
benefits, net 0.2 0.4 0.4 0.1
Amortization of other
long-term liabilities (2.7) (1.1) (9.6) (6.8)
Other (3.9) (8.9) (9.4) (0.8)
Changes in non-cash
working capital (4.6) 73.2 (94.6) (15.7)
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Net cash provided by
operating activities $71.2 $130.9 $195.5 $260.9
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Investing activities
Business acquisitions
(net of cash and cash
equivalents acquired) $(2.4) $(1.1) $(41.5) $(41.8)
Capital expenditures (62.8) (48.3) (203.7) (189.5)
Deferred development
costs (3.1) (2.6) (10.5) (16.5)
Deferred pre-operating
costs 0.5 (3.0) (1.8) (3.9)
Other (2.0) (1.2) (5.0) (5.5)
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Net cash used in
investing activities $(69.8) $(56.2) $(262.5) $(257.2)
-------------------------------------------------------------------------
Financing activities
Net borrowing under
revolving unsecured
credit facilities $- $(30.0) $- $-
Proceeds from long-term
debt, net of transaction
costs and debt basis
adjustment 11.2 16.0 50.3 141.1
Reimbursement of
long-term debt (5.1) (16.5) (27.8) (37.4)
Dividends paid (7.6) (2.4) (29.6) (9.8)
Common stock issuance 0.9 0.2 9.3 13.9
Other (4.3) (0.1) (13.4) (5.9)
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Net cash (used in)
provided by financing
activities $(4.9) $(32.8) $(11.2) $101.9
-------------------------------------------------------------------------
Effect of foreign
exchange rate changes
on cash and cash
equivalents $0.9 $12.8 $17.7 $(0.1)
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Net (decrease) increase
in cash and cash
equivalents $(2.6) $54.7 $(60.5) $105.5
Cash and cash
equivalents at
beginning of period 197.8 201.0 255.7 150.2
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Cash and cash
equivalents at end
of period $195.2 $255.7 $195.2 $255.7
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