BRP Reports Third Quarter Financial Results.VALCOURT, Quebec Valcourt is a small town in southern Quebec, Canada. It is located about 130km from Montreal and is where Bombardier, the first snowmobile manufacturer, was founded in 1942. -- Bombardier Recreational Products Inc. (BRP BRP Bombardier Recreational Products, Inc. BRP Blue Ribbon Panel BRP Bioengineering Research Partnership BRP Business Resumption Plan BRP Business Recovery Plan BRP Bathroom Privileges BRP Bronx River Parkway (New York) ) Highlights: - Gross profit increased by 5.5 percentage points to reach 25.9% or $161.5 million for the third quarter of fiscal 2006 - Adjusted EBITDA increased by 18.6% and reached $94.5 million for the third quarter of fiscal 2006 compared to $79.7 million for the corresponding period of fiscal 2005 - Operating income improved in both the Powersports and Marine Engines segments during the third quarter - The Company will transfer its ATV assembly and its ATV engine manufacturing operations to Mexico Bombardier Recreational Products Inc. (BRP), a privately-held company, today reported that consolidated revenues for the three- month period ended October 31, 2005 reached $624.6 million compared to consolidated revenues of $631.2 million for the three-month period ended October 31, 2004. The decrease is due to: - lower number of units sold for $50.2 million - the unfavourable effect of foreign exchange rate changes for approximately $24.0 million which was largely offset by improved product and price mix of $68.3 million. Consolidated revenues for the nine-month period ended October 31, 2005 reached $1,685.9 million compared to consolidated revenues of $1,828.9 million for the nine-month period ended October 31, 2004. The decrease is due to the following: - the lower number of units sold amounted to $170.2 million - the unfavourable exchange rate variations of approximately $84.0 million which was partially offset by improved product and price mix of $119.3 million. Consolidated gross profit reached $161.5 million for the third quarter of fiscal 2006 compared to $128.9 million for the corresponding three-month period of fiscal 2005. The 5.5 percentage points improvement in gross profit margin on sales is primarily due to: - favourable product and price mix for $53.3 million which was partially offset by: - lower number of units sold for $14.0 million - unfavourable exchange rate variations for approximately $4.0 million. Consolidated gross profit reached $356.9 million for the nine months of fiscal 2006, compared to $316.3 million for the corresponding nine-month period of fiscal 2005. The 3.9 percentage points improvement in gross margin on sales is primarily due to the following: - favourable product and price mix for approximately $74.2 million - decreased production costs for approximately $12.0 million all of which were partially offset by: - lower number of units sold for $26.8 million - unfavourable foreign exchange rate variations for approximately $23.0 million. Gross profit for the nine-month period of the previous fiscal year was unfavourably impacted by $9.3 million as a result of inventory sold during that period, having been marked up to the distributor's selling prices as a result of purchase accounting. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , comprised of selling and marketing, research and development and general and administrative expenses, amounted to $102.2 million for the three-month period ended October October: see month. 31, 2005; a $12.4 million increase when compared to $89.8 million for the third quarter ended October 31, 2004. Operating expenses amounted to $300.0 million for the nine-month period ended October 31, 2005; an increase of $23.7 million when compared to $276.3 million for the nine-month period ended October 31, 2004. The increased selling and marketing expenses for the three- and nine-month periods ended October 31, 2005 are attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the advertising campaigns to promote the Evinrude E-TEC outboard Not built in. Outboard devices are external to the main unit. Contrast with inboard. See offboard. engines and the introduction of the 2006 ATV (1) (Advanced TV) An early name for the digital TV standard proposed by the Advisory Committee on Advanced Television Service (ACATS). See ACATS. See also ATV Forum. (2) (Analog TV) Refers to the NTSC, PAL and SECAM analog TV standads. line-up line-up Noun 1. people or things assembled for a particular purpose: Christmas TV line-up 2. and the promotion of sales incentives Noun 1. sales incentive - remuneration offered to a salesperson for exceeding some predetermined sales goal bonus, incentive - an additional payment (or other remuneration) to employees as a means of increasing output relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc watercraft and ATVs. The increase in the general and administrative expenses, during the nine-month period of fiscal 2006, results mainly from the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of the distributor agreement in France partially offset by favourable foreign exchange rate variations. Since October 1, 2005, BRP distributes its products directly to its dealer network in France. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become amounted to $94.5 million and $79.7 million, respectively, for the three-month periods ended October 31, 2005 and 2004 and $157.4 million and $167.2 million, respectively, for the nine-month periods ended October 31, 2005 and 2004. Net income for the three-month period ended October 31, 2005 amounted to $48.9 million compared to $72.1 million for the three-month period ended October 31, 2004. Net income for the nine-month period ended October 31, 2005 amounted to $44.4 million compared to $52.4 million for the nine-month period ended October 31, 2004. Foreign exchange gain amounted to $14.8 million for the three-month period of fiscal 2006 compared to $79.7 million for the corresponding period of fiscal 2005. A significant portion of the foreign exchange gain resulted from the translation of the Company's US dollar denominated debt into Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents and also from certain forward contracts not eligible for hedge accounting Why is hedge accounting necessary? Many financial institutions and corporate businesses (entities) use derivative financial instruments to hedge their exposure to different risks (eg interest rate risk, foreign exchange risk, commodity risk, etc). . "I am satisfied with our progress because gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. and income from operations have increased as a result of our cost reduction efforts and our rationalisation Noun 1. rationalisation - (psychiatry) a defense mechanism by which your true motivation is concealed by explaining your actions and feelings in a way that is not threatening rationalization of the product offering in both segments," said Jose JOSE Jealous One's Still Envy (song) JOSE Joint Optics Structures Experiment Boisjoli, BRP's President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "I am particularly pleased with our gains in the Marine Engines segment, resulting from our decision to concentrate on E-TEC products," he added. BRP operates in two segments: the Powersports Powersports are a subset of the generalized category motorsports. Examples of powersport vehicles are motorcycles, ATVs, snowmobiles and PWCs. One of the defining features of any powersport is the use of an engine, in one form or another. segment includes snowmobiles, watercraft, all-terrain vehicles all-ter·rain vehicle n. Abbr. ATV A small, open motor vehicle having one seat and three or more wheels fitted with large tires. It is designed chiefly for recreational use over roadless, rugged terrain. , sport boats and Rotax Rotax is an Austrian engine manufacturer, founded in 1920 in Dresden, Germany. Operations were moved to Wels, Austria in 1943 and finally to Gunskirchen in 1947. In 1959, Rotax merged with the Vienna-based Lohner-Werke, a manufacturer of car and railway wagon bodies. (R) engines; the Marine Engines segment includes outboard engines. Powersports segmented revenues were $501.2 million for the three- month period ended October 31, 2005 as compared to $513.5 million for the three-month period ended October 31, 2004. The decrease primarily results from the following: - a lower number of units sold amounting to $34.8 million - the unfavourable impact of exchange rates of approximately $16.0 million partially offset by: - improved product and price mix of $34.9 million mainly in the ATV and snowmobile product lines. The decrease in units sold is mainly due to: - a lower number of ATVs due to no deliveries under the Deere and Company agreement and management's decision to discontinue the production of the Traxter and Quest utility models - a lower number of snowmobiles due to timing of deliveries to dealers and temporary manufacturing delays which postponed deliveries to the fourth quarter. Segmented revenues reached $1,294.9 million for the nine-month period ended October 31, 2005 as compared to $1,416.7 million for the nine- month period ended October 31, 2004. The decrease is due to: - lower number of units sold totalling $127.8 million - the impact of unfavourable exchange rate movements of approximately $57.0 million partially offset by: - improved product and price mix of $55.9 million. The decrease in the number of deliveries results from: - no ATV deliveries under the Deere and Company agreement - changes in the snowmobiles production schedule and temporary manufacturing delays which postponed the deliveries to the fourth quarter - less Rotax engines sold to OEMs partially offset by an increase in the number of deliveries of watercraft resulting from the production push from the fourth quarter of fiscal 2005 to the first quarter of fiscal 2006 to align more closely with the market demand. Powersports segmented operating income amounted to $58.4 million for the third quarter of fiscal 2006 as compared to $42.6 million for the third quarter of fiscal 2005. The increase is due to the combination of: - favourable product and pricing mix of $32.7 million - favourable foreign exchange rate movements of approximately $2.0 million all of which were partially offset by: - reduced number of units sold of $8.9 million - higher operating expenses of $13.3 million. The higher operating expenses are mainly due to the advertising campaign to promote the introduction of the 2006 ATV line-up and the promotion of sales incentive programs relating to watercraft and ATVs. Segmented operating income amounted to $77.7 million for the nine months of fiscal 2006 as compared to $73.7 million for the nine months of fiscal 2005. The increase results from the following: - a favourable product mix of $33.4 million - reduced production costs of $11.6 million, as a result of product complexity reductions and the restructuring of the operations all of which were offset in part by: - a lower number of units sold of $18.0 million - higher operating expenses of $16.5 million resulting from higher marketing expenses - unfavourable foreign exchange rate movements of approximately $14.0 million. Operating income for the nine-month period of the previous fiscal year was unfavourably impacted by $7.8 million, as a result of inventory sold during that period having been marked up to the distributor's selling prices as a result of purchase accounting. Marine Engines segmented revenues increased to $139.0 million for the three-month period ended October 31, 2005 compared to $127.6 million for the three-month period ended October 31, 2004. The increase results primarily from: - an improved product mix of $34.3 million due to an increase in the number of Evinrude E-TEC engines sold which was partially offset by: - a lower number of units sold in the 4-stroke and 2-stroke carbureted engine categories due to the rationalisation of the product offering for $15.4 million - the strengthening of the Canadian dollar in relation to the US dollar for approximately $8.0 million. Segmented revenues decreased to $430.5 million for the nine-month period ended October 31, 2005 compared to $443.2 million for the nine-month period ended October 31, 2004. The decrease results primarily from: - lower number of units sold due to the rationalisation of the product offering for $42.4 million - the strengthening of the Canadian dollar in relation to the US dollar for approximately $27.0 million which was offset in part by an improved product and price mix of $55.1 million resulting from the decision to focus on the Evinrude E-TEC outboard engines. Marine Engines segmented operating income amounted to $14.8 million for the third quarter of fiscal 2006 as compared to $7.2 million for the third quarter of fiscal 2005. The increase results from: - improved margins due to the rationalisation of the product offering and the decision to focus on the Evinrude E-TEC outboard engines totalling $16.6 million partially offset by: - reduced number of units sold of $5.1 million - unfavourable foreign exchange rate changes of approximately $2.0 million. Segmented operating income amounted to $24.3 million for the nine months of fiscal 2006 as compared to $4.1 million for the nine months of fiscal 2005. The increase results from: - improved margins due to the rationalisation of the product offering and the decision to focus on the Evinrude E-TEC outboard engines totalling $40.8 million - favourable foreign exchange rate movements of approximately $3.0 million partially offset by: - higher operating expenses of $13.1 million - reduced number of units sold of $8.9 million. The favourable impacts from the improved operating income were partially offset by increased marketing expenses for the promotion of the Evinrude E-TEC brand. "The global business environment in which we operate is changing rapidly and we believe that we are well equipped to take on the challenges facing us. We have reacted promptly prompt adj. prompt·er, prompt·est 1. Being on time; punctual. 2. Carried out or performed without delay: a prompt reply. tr.v. and have taken difficult decisions to ensure the Company's future. Moving our ATV manufacturing activities to Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. in order to increase our competitiveness was one of those difficult decisions," commented Boisjoli. "BRP remains focused on designing and developing innovative products. Over the years this strategy has contributed to our success and going forward it should continue to do so," he concluded. Subsequent to the quarter's end, the Company announced that it would transfer the vehicle assembly and the engine manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. of its ATVs to Mexico. The external pressures brought on by a strong Canadian dollar and Asian competition compelled the Company to turn to Mexico to remain competitive. BRP, a privately-held company, is a world leader in the design, development, manufacturing, distribution and marketing of motorised Adj. 1. motorised - equipped with a motor or motors; "a motorized wheelchair" motored, motorized recreational vehicles. Our portfolio of brands and products includes: Ski-Doo(R) and Lynx lynx, name given to several related small, ferocious members of the cat family. All have small heads, tufted ears, and heavy bodies with long legs and short tails. All are primarily terrestrial, although they are able to climb trees. (TM) snowmobiles, Sea-Doo Sea-Doo is a brand name for Bombardier Recreational Products' popular line of personal water craft (PWC). The name is derived from Bombardier's Ski-Doo snowmobile line. It is also used regionally as a genericized trademark for any type of sit-down PWC. (R) watercraft and sport boats, Johnson(R) and Evinrude(R) outboard engines, direct injection technologies such as Evinrude E-TEC(R), Bombardier(i) ATV all-terrain vehicles, Rotax(R) engines and karts. See attached unaudited interim consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. , consolidated statements of operations, and cash flows as well as segmented statement of income and schedules of consolidated adjusted EBITDA. This release refers to non-GAAP financial measures, such as EBITDA and Consolidated Adjusted EBITDA. In addition to the results reported in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , the Company uses non-GAAP financial measures as supplemental indicators of operating performance and financial position. Management uses these non-GAAP financial measures internally for comparing actual results from one period to another, as well as for future planning purposes. Management believes non-GAAP financial results reported provide more insight into the Company's performance. EBITDA and Consolidated Adjusted EBITDA. EBITDA are defined as earnings before financing costs, taxes, depreciation and amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. . Consolidated Adjusted EBITDA includes the further adjustments described below. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting and may be different from non-GAAP financial measures used by other companies. The Company's Credit Agreement (as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. and restated) contains covenant covenant (kŭv`ənənt), agreement entered into voluntarily by two or more parties to do or refrain from doing certain acts. In the Bible and in theology the covenant is the agreement or engagement of God with man as revealed in the tied to similar measures. Management believes that EBITDA and Consolidated Adjusted EBITDA are a fair representation of and provide information with respect to the Company's ability to service its debt. However, these measures should not be considered as substitutes for, or superior to, measures of operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , net income, total debt or other measures of financial performance prepared in accordance with GAAP. The Company defines Consolidated Adjusted EBITDA as earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before financing costs, taxes, depreciation and amortisation and certain elements of other income or expense. Because Consolidated Adjusted EBITDA excludes financing and taxes, it provides a more standard comparison among businesses by eliminating the differences that arise between them due to the manner in which they were acquired or funded. The Company uses the Consolidated Adjusted EBITDA measure as a supplemental cash flow measure as Consolidated Adjusted EBITDA also excludes depreciation and amortisation, both of which are non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. . Consolidated Adjusted EBITDA, adjusted for certain impacts resulting from purchase accounting and other income and expenses such as unrealised foreign exchange gains and losses on translation of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. , accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the in carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of redeemable Redeemable Eligible for redemption under the terms of an indenture. preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. and loss on early redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. of preferred shares all of which are items not considered relevant to operating performance. This release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. with respect to our financial condition, results of operations and business. All of these forward-looking statements, which can be identified by the use of terminology The terminology used in the computer and telecommunications field adds tremendous confusion not only for the lay person, but for the technicians themselves. What many do not realize is that terms are made up by anybody and everybody in a nonchalant, casual manner without any regard or such as "subject to," "believe," "expects," "may," "will," "should," "can," or "anticipates," or the negative thereof, or variations thereon there·on adv. 1. On or upon this, that, or it. 2. Archaic Following that immediately; thereupon. Adv. 1. thereon - on that; "text and commentary thereon" on it, on that , or comparable terminology, or by discussions of strategy, although believed to be reasonable, are inherently uncertain. Factors which may materially affect such forward-looking statements include: (i) slow or negative growth in the recreational products industry; (ii) interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. of business or negative impact on sales and earnings due to acts of war Tom Clancy's Op-Center: Acts of War is a technothriller by Jeff Rovin Plot introduction The mobile Regional Operations Center (ROC) in Turkey investigates a dam blown up by Kurdish terrorists. , terrorism terrorism, the threat or use of violence, often against the civilian population, to achieve political or social ends, to intimidate opponents, or to publicize grievances. , bio-terrorism, civil unrest Unrest is a sociological phenomenon, for instance:
adj. Not available, accessible, or at hand. un  a·vail of additional debt or equity capital; (viii) changes in
general worldwide economic and political conditions in the markets in
which BRP may compete from time to time; (ix) the inability of BRP to
gain and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. hold market share of its wholesale and/or retail customers anywhere in the world; (x) the inability of BRP's clients to obtain and/or renew insurance; (xi) exposure to, and expense of defending and resolving, product liability claims and other litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; (xii) the ability of BRP to successfully implement its business strategy; (xiii) the inability of BRP to manage its retail, wholesale, manufacturing and other operations efficiently; (xiv) consumer acceptance of BRP's products; (xv) fluctuations in foreign currencies, including the Canadian Dollar; (xvi) import-export controls on sales to foreign countries; (xvii) introduction of new federal, state, local or foreign legislation or regulation or adverse determinations by regulators anywhere in the world; (xviii) the mix of BRP's products and the profit margins thereon; and (xix) other factors beyond BRP's control. Readers are cautioned not to place undue reliance on forward-looking statements. BRP cannot guarantee future results, trends, events, levels of activity, performance or achievements. BRP does not undertake and specifically declines any obligation to update, republish re·pub·lish tr.v. re·pub·lished, re·pub·lish·ing, re·pub·lish·es 1. To publish again. 2. Law To revive (a libel or a canceled will). or revise forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrences of unanticipated events. (R) TM Trademarks of Bombardier Recreational Products Inc. or its subsidiaries. (i) Trademark of Bombardier Inc. used under license.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(millions of Canadian Three months ended Nine months ended
dollars) October 31, October 31, October 31, October 31,
2005 2004 2005 2004
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(Restated) (Restated)
Revenues $624.6 $631.2 $1,685.9 $1,828.9
Cost of sales 463.1 502.3 1,329.0 1,512.6
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Gross profit 161.5 128.9 356.9 316.3
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Operating expenses
Selling and marketing 46.4 34.3 130.2 103.2
Research and development 22.8 23.9 72.8 79.3
General and administrative 33.0 31.6 97.0 93.8
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Total operating expenses 102.2 89.8 300.0 276.3
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Operating income from
continuing operations 59.3 39.1 56.9 40.0
Other (income) and
expenses
Financing costs 8.0 12.2 25.0 36.7
Accretion in carrying
value of redeemable
preferred shares - 7.4 - 9.4
Loss on disposal of
property, plant and
equipment 0.2 0.6 0.2 1.0
Gain on disposal of
assets held for sale - (0.3) (1.5) (0.3)
Foreign exchange gain (14.8) (79.7) (21.3) (76.3)
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Income from continuing
operations before income
taxes 65.9 98.9 54.5 69.5
Income tax expense 17.0 26.5 10.1 13.5
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Income from continuing
operations 48.9 72.4 44.4 56.0
Loss from discontinued
operations, net of tax - (0.3) - (3.6)
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Net income $48.9 $72.1 $44.4 $52.4
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UNAUDITED SEGMENTED STATEMENTS OF INCOME
For the Three Months Ended
(millions of Consolidated Powersports Marine Engines
Canadian dollars) October October October October October October
31, 31, 31, 31, 31, 31,
2005 2004 2005 2004 2005 2004
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(Restated) (Restated)
External revenues $624.6 $631.2 $494.4 $507.4 $130.2 $123.8
Intersegment revenues - - 6.8 6.1 8.8 3.8
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Segment revenues 624.6 631.2 501.2 513.5 139.0 127.6
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Cost of sales and
operating expenses 528.2 549.3 425.3 444.1 118.5 115.1
Depreciation and
amortisation 23.2 32.1 17.5 26.8 5.7 5.3
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551.4 581.4 442.8 470.9 124.2 120.4
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Segment operating
income 73.2 49.8 58.4 42.6 14.8 7.2
Corporate and other 13.4 10.4
Depreciation of
dealer network 0.5 0.3
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Operating income 59.3 39.1
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Financing cost 8.0 12.2
Accretion in carrying
value of redeemable
preferred share - 7.4
Loss on disposal of
property, plant and
equipment 0.2 0.6
Gain on disposal of
assets held for sale - (0.3)
Foreign exchange gain (14.8) (79.7)
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Income before income
taxes $65.9 $98.9
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For the Nine Months Ended
(millions of Consolidated Powersports Marine Engines
Canadian dollars) October October October October October October
31, 31, 31, 31, 31, 31,
2005 2004 2005 2004 2005 2004
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(Restated) (Restated)
External revenues $1,685.9$1,828.9$1,275.8$1,401.6 $410.1 $427.3
Intersegment
revenues - - 19.1 15.1 20.4 15.9
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Segment revenues 1,685.9 1,828.9 1,294.9 1,416.7 430.5 443.2
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Cost of sales and
operating expenses 1,509.2 1,660.0 1,158.0 1,268.7 390.7 422.3
Depreciation and
amortisation 74.7 91.1 59.2 74.3 15.5 16.8
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1,583.9 1,751.1 1,217.2 1,343.0 406.2 439.1
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Segment operating
income 102.0 77.8 77.7 73.7 24.3 4.1
Corporate and other 43.7 36.6
Depreciation of
dealer network 1.4 1.2
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Operating income 56.9 40.0
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Financing cost 25.0 36.7
Accretion in
carrying value of
redeemable preferred
share - 9.4
Loss on disposal of
property, plant and
equipment 0.2 1.0
Gain on disposal of
assets held for sale (1.5) (0.3)
Foreign exchange gain (21.3) (76.3)
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Loss before income
taxes $54.5 $69.5
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UNAUDITED SCHEDULES OF CONSOLIDATED ADJUSTED EBITDA
(millions of Canadian Three months ended Nine months ended
dollars) October 31, October 31, October 31, October 31,
2005 2004 2005 2004
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(Restated) (Restated)
Income from continuing
operations $48.9 $72.4 $44.4 $56.0
Financing cost 8.0 12.2 25.0 36.7
Accretion in the carrying
value of redeemable
preferred shares - 7.4 - 9.4
Income tax expense 17.0 26.5 10.1 13.5
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EBIT 73.9 118.5 79.5 115.6
Depreciation and
amortisation 23.9 32.3 76.6 92.5
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EBITDA 97.8 150.8 156.1 208.1
Adjustments:
Impact of fair value
increments of inventory
on cost of sales - - - 9.3
Impact of foreign
exchange contracts
acquired at acquisition - 6.2 - 18.7
Impact of foreign
exchange contracts
not subject to hedge
accounting 6.7 (27.3) 12.5 (23.4)
Foreign exchange gain
on long-term debt (11.5) (51.9) (13.6) (50.6)
Management fees 0.7 1.0 2.2 2.5
Employee stock
compensation 0.6 0.6 1.5 1.9
Loss on disposal of
property, plant and
equipment 0.2 0.6 0.2 1.0
Gain on disposal of
assets held for sale - (0.3) (1.5) (0.3)
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Consolidated Adjusted
EBITDA $94.5 $79.7 $157.4 $167.2
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UNAUDITED CONSOLIDATED BALANCE SHEETS
As at As at
(millions of Canadian dollars) October 31, January 31,
2005 2005
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ASSETS (Restated)
Current assets
Cash and cash equivalents $30.8 $150.3
Receivables 100.9 112.7
Inventories 353.8 302.1
Other assets 117.9 150.4
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Total current assets 603.4 715.5
Property, plant and equipment 387.7 425.8
Goodwill 102.7 119.9
Trademarks 151.1 151.1
Other intangible assets 68.7 78.1
Other assets 59.3 66.5
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$1,372.9 $1,556.9
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LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Bank loans $- $12.3
Accounts payable and accrued liabilities 522.6 591.8
Current portion of long-term debt 0.6 147.2
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Total current liabilities 523.2 751.3
Long-term debt 296.0 249.5
Deferred income taxes 44.8 38.0
Employee future benefits liability 117.8 125.6
Other long-term liabilities 27.9 28.5
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Total liabilities 1,009.7 1,192.9
Shareholder's equity
Capital stock 364.8 364.4
Additional paid-in capital 3.8 2.3
Retained earnings 55.4 11.0
Cumulative translation adjustment (60.8) (13.7)
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363.2 364.0
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$1,372.9 $1,556.9
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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions of Canadian Three months ended Nine months ended
dollars) October 31, October 31, October 31, October 31,
2005 2004 2005 2004
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Operating Activities (Restated) (Restated)
Income from continuing
operations $48.9 $72.4 $44.4 $56.0
Non-cash items:
Depreciation and
amortisation 23.9 32.3 76.6 92.5
Amortisation of
deferred financing
costs 1.1 1.5 3.3 4.7
Employee stock
compensation 0.6 0.6 1.5 1.9
Deferred income taxes
recovery 12.9 19.8 (0.4) (3.5)
Loss on disposal of
property, plant and
equipment 0.2 0.6 0.2 1.0
Gain on disposal of
assets held for sale - (0.3) (1.5) (0.3)
Accretion in carrying
value and loss on
early redemption of
preferred shares - 7.4 - 9.4
Change in fair value
of interest rate swaps - 0.3 (0.2) (0.8)
Foreign exchange gain (11.5) (79.2) (11.2) (74.0)
Net changes in non-cash
working capital balances
related to operations 19.6 (27.1) (69.8) (3.1)
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Cash flows from operating
activities 95.7 28.3 42.9 83.8
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Investing Activities
Additions to property,
plant and equipment (25.7) (15.8) (49.0) (35.6)
Proceeds on disposal
of property, plant and
equipment 0.1 1.2 0.3 1.3
Proceeds on disposal of
assets held for sale - 1.4 4.9 1.4
Proceeds on disposal of
Utility Vehicles
segment, net of
transaction cost of
$1.6 million - 41.1 - 41.1
Business acquisition - (3.6) (6.6) (17.5)
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Cash flows from investing
activities (25.6) 24.3 (50.4) (9.3)
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Financing Activities
Increase in bank loans (57.6) - (12.3) -
Increase in capital stock 0.1 53.1 0.4 59.6
Redemption of preferred
shares - (52.6) - (52.6)
Repayment of long-term debt - - (147.5) (2.7)
Issuance of long-term debt - - 62.1 -
Other - - (0.5) (2.7)
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Cash flows from financing
activities (57.5) 0.5 (97.8) 1.6
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Effect of exchange rate
changes on cash and cash
equivalents (2.7) (5.8) (14.2) (9.8)
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Cash flows from continuing
operations 9.9 47.3 (119.5) 66.3
Cash flows from
discontinued operations - (2.0) - (11.6)
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Net decrease in cash and
cash equivalents 9.9 45.3 (119.5) 54.7
Cash and cash equivalents
at beginning of period 20.9 205.6 150.3 196.2
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Cash and cash equivalents
at end of period $30.8 $250.9 $30.8 $250.9
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Supplemental information
Cash paid for:
Interest $1.4 $4.2 $16.2 $20.4
Income taxes 0.5 9.3 4.7 15.7
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