Bombardier Presents Comprehensive Restructuring Initiative for Rail Transportation Business-Financial Results for Fiscal Year Ended Jan. 31 2004 are Announced.Business Editors TORONTO--(BUSINESS WIRE)--March 17, 2004 Bombardier Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : BBD BBD In currencies, this is the abbreviation for the Barbados Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. .A)(TSX: BBD.B): -- Major restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). initiative for Bombardier Transportation Bombardier Transportation is the rail equipment division of the Bombardier group. Bombardier Transportation is the world’s largest company in the rail equipment manufacturing and servicing industry. Its headquarters are in Berlin. proposed including: -- Global workforce reduction of 6,600 positions -- Seven production sites to be closed -- Productivity improvement initiatives at five targeted sites -- Procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. process improvements -- Financial highlights: -- Consolidated revenues for fiscal year 2004 of $21.3 billion and EBT EBT See: Earnings Before Taxes before special items of $439 million; EBT of $10 million -- Special items of $457 million at Bombardier Transportation in the fourth quarter -- Negative free cash flow of $1 billion -- Order backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of $45.9 billion -- Aircraft deliveries total 324 units Bombardier 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. Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. M. Tellier announced today a major restructuring initiative for the Corporation's rail transportation business that will address excess capacity in its industrial operations, drive performance improvements and restore its earnings power. The Corporation proposes to reduce its rail operations workforce by 6,600 positions, or 18.5% of its total workforce. Furthermore, the initiative calls for seven production sites in five European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. countries to be closed over the next two years. Since 65% of costs are in materials, this initiative also includes new arrangements with suppliers to better coordinate materials procurement. An industrial site improvement program is also being launched at five European locations to further reduce manufacturing costs. Earlier this year, Bombardier announced a new management team and organizational structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. to improve accountability and increase focus on project management at Bombardier Transportation. The Industrial Division has been disbanded. Manufacturing facilities and processes will now form part of the respective product divisions, thereby allowing each one to have direct responsibility for marketing, sales and engineering, as well as production. "This restructuring initiative is part of a three-year strategy to bring back improved margins and profitability to this Company," said Tellier. "Last April, in the first year, I announced an aggressive action plan that was designed to restructure the balance sheet, restore shareholder confidence, and get Bombardier back to profitability. We have made good on that plan and have met all of our commitments. Now, we are restructuring our businesses. A series of measures were introduced earlier at Bombardier Aerospace Bombardier Aerospace is a division of the Bombardier group, with the third largest workforce (behind Boeing and Airbus) and the fourth largest in yearly delivery of commercial airplanes (behind Boeing, Airbus and Embraer). , and we are already seeing concrete results. Today's announcement focuses on Bombardier Transportation. The initiatives launched in the fourth quarter of fiscal year 2004 will set the stage for the third phase of our strategy-capitalizing on growth opportunities and maximizing shareholder value next year," he explained. "The urgency to move now at Bombardier Transportation has been underscored by disappointing financial results in this division in the last two quarters of fiscal year 2004," Tellier pointed out. "The improved results at Bombardier Aerospace and those of Bombardier Capital have been offset by this poor performance." "Overall, Bombardier's strengths are positive cash flow in the fourth quarter, a strong backlog, an excellent product portfolio and a solid global market position. Consolidated revenues of the Corporation were stable despite the effect of a lower U.S. dollar, which had a negative impact mainly on the aerospace segment." "We had a good year at Bombardier Aerospace, and the restructuring plan is on target. The organization is leaner and more efficient, and both regional and business aircraft deliveries are up on a year-over-year basis," he said. "During fiscal year 2004, aircraft deliveries totalled 324, compared to 298 last year, representing a 9% improvement." "As for Bombardier Capital, results and the winding down of portfolios are on track," continued Tellier. "While our revenues have held and our backlog is good at Bombardier Transportation, we need to push performance improvements forward. Plant efficiency is not adequate, with certain facilities operating at barely 50% capacity. Our goal is to improve margins," said Tellier. "We could no longer delay moving ahead on our restructuring initiative as our competitors have already dealt with industry changes. During the year, we put in place a rigorous bid review process and we are now focusing on project management." SITE CLOSURES AND WORKFORCE REDUCTIONS Proposed general workforce reductions at sites around the world and site closures in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). would impact 6,600 positions, 37% of which are
"white collar" workers. These workforce reductions have
already begun at some locations.Bombardier Transportation currently operates 35 production sites in 15 European countries, significantly more than either of its main competitors. It employs a global workforce of 35,600 people, 78% of which is based in Europe. The excess capacity issue was most acute in Europe, where all the site closures and 86% of the workforce reductions are intended to take place. In North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , actions to address overcapacity o·ver·ca·pac·i·ty n. Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. issues have already been initiated: four sites located in Kingston, Ontario Kingston, Ontario, is a Canadian city located at the eastern end of Lake Ontario, where the lake runs into the St. Lawrence River and the Thousand Islands begin. Kingston is the county seat of Frontenac County. ; Burnaby, British Columbia “Burnaby” redirects here. For persons sharing this surname, see Burnaby (surname). Burnaby, British Columbia, Canada, is the city immediately east of Vancouver. ; Barre, Vermont Barre, Vermont can refer to either of two contiguous areas:
Pittsburg is a city located in north central Contra Costa County, California, the outer portion of the East Bay / San Francisco Bay Area. ceased or suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. operations. Sites identified for closure in 2004 are Amadora Amadora (pron. IPA: [ɐmɐ'doɾɐ]) is a city and a municipality in Portugal, in the northwest of the Lisbon Metropolitan Area. , Portugal Portugal (pôr`chəgəl), officially Portuguese Republic, republic (2005 est. pop. 10,566,000), 35,553 sq mi (92,082 sq km), SW Europe, on the western side of the Iberian Peninsula and including the Madeira Islands and the Azores in the ; and Doncaster Doncaster (dŏng`kəstər), town (1991 pop. 74,727) and metropolitan district, N central England, on the Don River. Doncaster is a communications center, located on important rail lines and roads, and a market for fruits, vegetables, and and Derby Pride Park in the United Kingdom. "We will maintain our manufacturing capability in the U.K. with the Derby Litchurch Lane facility," stated Tellier. Closures of facilities in Pratteln Pratteln is a municipality in the canton of Basel-Country in Switzerland, located in the district of Liestal. , Switzerland Switzerland (swĭt`sərlənd), Fr. Suisse, Ger. Schweiz, Ital. Svizzera, officially Swiss Confederation, federal republic (2005 est. pop. 7,489,000), 15,941 sq mi (41,287 sq km), central Europe. ; Ammendorf, Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). ; Kalmar Kalmar (käl`mär), city (1990 pop. 30,820), capital of Kalmar co. (1995 pop. 144,060), SE Sweden, on the Kalmarsund (an arm of the Baltic Sea) opposite Öland Island. , Sweden Sweden, Swed. Sverige, officially Kingdom of Sweden, constitutional monarchy (2005 est. pop. 9,002,000), 173,648 sq mi (449,750 sq km), N Europe, occupying the eastern part of the Scandinavian peninsula. ; and Wakefield Wakefield, estate, United States Wakefield, family estate of George Washington, on the Potomac River, E Va.; part of the George Washington Birthplace National Monument (see National Parks and Monuments, table). in the United Kingdom are envisaged for 2005. The cost of this restructuring initiative is estimated at $777 million, $457 million of which was recorded during the fourth quarter of fiscal year 2004, with the remainder to be recorded over the next two years. Once fully implemented, the restructuring initiative will reduce transportation's costs by approximately $600 million annually. "Although the cost of these efforts is high, these steps are essential to maintain our competitive position in the market," Tellier said. The proposed site and workforce reductions balance Bombardier Transportation's industrial footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. with projected market demand. None of the plants proposed for closing currently has work scheduled after 2005. The proposed site closures are based on an in-depth in-depth adj. Detailed; thorough: an in-depth study. in-depth Adjective detailed or thorough: an in-depth analysis assessment of global industrial locations which covered workload The term workload can refer to a number of different yet related entities. An amount of labor While a precise definition of a workload is elusive, a commonly accepted definition is the hypothetical relationship between a group or individual human operator and task demands. , operating efficiency, technical capability, prospects for future contracts and detailed economic evaluations. Within the framework of this restructuring initiative, Bombardier Transportation is about to embark em·bark v. em·barked, em·bark·ing, em·barks v.tr. 1. To cause to board a vessel or aircraft: stopped to embark passengers. 2. upon an extensive collective consultation exercise with its respective workplace partners and in compliance with all local legal requirements. INDUSTRIAL SITE IMPROVEMENT PROGRAM Five additional sites in Crespin, France; Aachen Aachen (ä`khən), Aix-la-Chapelle (ĕks-lä-shäpĕl`), or Bad Aachen (bät ä`khən), city (1994 pop. and Siegen Siegen, city (1994 pop. 111,845), North Rhine–Westphalia, W Germany, on the Sieg River. Iron ore is mined nearby, and the city has iron foundries. Other manufactures include leather goods and machinery. , Germany; Bruges Bruges (br  zh, Fr. brüzh) or Brugge (brŭ`gə, Du. brüpstr;khə), city (1991 pop. 117,063), capital of West Flanders prov. , Belgium Belgium (bĕl`jəm), Du. België, Fr. La Belgique, officially Kingdom of Belgium, constitutional kingdom (2005 est. pop. 10,364,000), 11,781 sq mi (30,513 sq km), NW Europe. ; and Crewe Crewe (kr), town (1991 pop. 59,097), Cheshire, W central England. It is an important railroad junction with large locomotive and car works, including Rolls-Royce motors. , United Kingdom will take part in
the initial phase of a global industrial site improvement program that
will, over time, be rolled out to all manufacturing facilities. This
program will focus on reducing inventory levels and production overhead,
improving project management and increasing efficiency in site
configuration.PROCUREMENT PROGRAM Management is also targeting procurement and supplier base as areas offering significant opportunities for cost savings and efficiency improvements. The procurement integration program, launched earlier in 2004, will rationalize ra·tion·al·ize v. 1. To make rational. 2. To devise self-satisfying but false or inconsistent reasons for one's behavior, especially as an unconscious defense mechanism through which irrational acts or feelings are made to appear the number of suppliers the business utilizes, increase parts standardization standardization In industry, the development and application of standards that make it possible to manufacture a large volume of interchangeable parts. Standardization may focus on engineering standards, such as properties of materials, fits and tolerances, and drafting , and centralize cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. negotiation processes to achieve economies of scale wherever possible. "The program we have embarked on at Bombardier Transportation-along with what has already been accomplished at Bombardier Aerospace and Bombardier Capital-is solid," said Tellier. "We've made a lot of progress in the past, but there's still a lot of progress to be made. Ultimately, all our efforts point to a leaner, more competitive Bombardier that will carry us into the future," he concluded. FINANCIAL RESULTS FOR THE FOURTH QUARTER AND THE YEAR ENDED JAN. 31, 2004 Bombardier Inc. also announced today unaudited financial results for the fourth quarter and the year ended Jan. 31, 2004. Audited consolidated financial results for the year will be released as planned on March 31, 2004. However, the Corporation believes it is important to disclose these unaudited results in light of the restructuring initiative for its transportation segment being announced today in the interest of timely disclosure. Consolidated unaudited results 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 Consolidated revenues totalled $6.4 billion for the three-month period ended Jan. 31, 2004, compared to $5.9 billion for the same period last year. This increase is mainly due to higher revenues in the aerospace segment. For the year ended Jan. 31, 2004, consolidated revenues totalled $21.3 billion, compared to $21.2 billion the previous year. Loss before special items and income taxes for the three-month period ended Jan. 31, 2004 was $52 million, compared to a loss of $358 million for the same period last year. This improvement results from higher earnings before taxes (EBT) before special items in the aerospace segment, partially offset by the decrease of EBT before special items in the transportation segment. EBT before special items reached $439 million for fiscal year 2004, compared to an EBT before special items of $381 million for fiscal year 2003. Special items for the three-month period ended Jan. 31, 2004 amounted to $474 million, compared to $1.1 billion for the same period last year. For the year ended Jan. 31, 2004, special items reached $429 million, compared to $1.3 billion for fiscal year 2003. As a result, the loss before income taxes was $526 million for the fourth quarter of fiscal year 2004, compared to a loss of $1.5 billion for the same period the previous year. For the year ended Jan. 31, 2004, EBT was $10 million, compared to a loss before income taxes of $930 million for fiscal year 2003. Income taxes for the three-month period ended Jan. 31, 2004 were $20 million, compared to an income tax recovery of $397 million for the same period last year. For the year ended Jan. 31, 2004, income taxes totalled $205 million, compared to an income tax recovery of $221 million for fiscal year 2003. The income tax expense for the fourth quarter and for the fiscal year ended Jan. 31, 2004 were higher than the expense that would be recognized at the effective income tax rate, mainly due to the non-recognition of $123 million of income tax benefits related to the restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of Bombardier Transportation, and an increase in the valuation allowance for deferred tax assets recorded for the U.S. operations in the fourth quarter. As a result, loss from continuing operations was $546 million, or $0.32 per share, for the fourth quarter of fiscal year 2004, compared to a loss of $1.1 billion, or $0.78 per share, for the same period the previous year. For the year ended Jan. 31, 2004, loss from continuing operations was $195 million, or $0.13 per share, compared to a loss of $709 million, or $0.54 per share, for fiscal year 2003. Discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. On Dec. 18, 2003, the Corporation completed the sale of its recreational products segment to 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) ), a corporation formed by Bain Capital Bain Capital LLC is a Boston, Massachusetts-based private equity firm founded in 1984 by Mitt Romney, the former Governor of Massachusetts, and two other partners from the consulting firm Bain & Company: T. Coleman Andrews III and Eric Kriss. , members of the Bombardier family and the Caisse de depot et placement du Quebec. The results of this segment are presented as discontinued operations. Income from discontinued operations, net of income taxes, totalled $98 million for the fourth quarter of fiscal year 2004, compared to income of $38 million for the same period for fiscal year 2003. Income from discontinued operations, net of income taxes, totalled $106 million for fiscal year 2004, compared to income of $94 million for fiscal year 2003. Income from discontinued operations includes a $101-million after-tax gain on the sale of the segment, recorded in the fourth quarter of fiscal year 2004. Consolidated net loss and backlog Resulting net loss was $448 million, or $0.26 per share, for the fourth quarter of fiscal year 2004, compared to a net loss of $1 billion, or $0.75 per share, for the fourth quarter of fiscal year 2003. Net loss for fiscal year 2004 was $89 million, or $0.07 per share, compared to a net loss of $615 million, or $0.47 per share, for fiscal year 2003. As at Jan. 31, 2004, the order backlog was $45.9 billion, compared to $45.8 billion as at Oct. 31, 2003 and $44.4 billion as at Jan. 31, 2003.
Financial Highlights
(millions of Canadian dollars, except per share amounts and number of
shares outstanding)
(unaudited)
Three months Years ended
ended Jan. 31 Jan. 31
2004 2003 2004 2003
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Segmented revenues
Aerospace $3,744 3,393 11,307 11,294
Transportation 2,533 2,414 9,586 9,422
Bombardier Capital (BC) 149 246 681 895
Intersegment revenues (49) (118) (253) (422)
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External revenues 6,377 5,935 21,321 21,189
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Income (loss) from
continuing operations
before special items
and income taxes
Aerospace 118 (376) 262 (33)
Transportation (186) 4 104 310
BC 16 14 73 104
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(52) (358) 439 381
Special items 474 1,100 429 1,311
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Income (loss) from
continuing operations
before income taxes (526) (1,458) 10 (930)
Income tax expense (recovery) 20 (397) 205 (221)
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Loss from continuing
operations (546) (1,061) (195) (709)
Income from discontinued
operations - net of tax 98 38 106 94
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Net loss $(448) $(1,023) $(89) $(615)
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Earnings (loss) per share
Basic and diluted
From continuing operations $(0.32) $(0.78) $(0.13) $(0.54)
From discontinued
operations 0.06 0.03 0.06 0.07
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$(0.26) $(0.75) $(0.07) $(0.47)
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Weighted average
number of common
shares outstanding
during the periods
(thousands) 1,749,555 1,374,087 1,670,690 1,372,747
Bombardier Aerospace -- Revenues of $11.3 billion; $3.7 billion for the fourth quarter -- EBT before special items of $262 million; $118 million for the fourth quarter -- EBT of $290 million; $101 million for the fourth quarter -- Order backlog of $14.5 billion -- Aircraft deliveries totalled 324 compared to 298 for the previous fiscal year; 107 compared to 92 for the fourth quarter Bombardier Aerospace's segmented revenues amounted to $3.7 billion for the three-month period ended Jan. 31, 2004, compared to $3.4 billion for the same period the previous year. The increase is mainly attributable to increased deliveries of business aircraft, including deliveries of the new Bombardier(i) Challenger(i) 300 and the Bombardier(i) Learjet(i) 40, and a positive impact, when compared to the fourth quarter of fiscal year 2003, of the decision to cease recognizing revenues on sale of narrow-body aircraft Noun 1. narrow-body aircraft - a commercial airliner with a single aisle narrow-body, narrowbody aircraft airliner - a commercial airplane that carries passengers upon green aircraft delivery during the fourth quarter of fiscal year 2003. This increase was offset by reduced regional aircraft deliveries and lower deliveries of wide-body aircraft interiors. The impact of the lower effective exchange rate for the U.S. dollar compared to the 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 was negative $260 million. Bombardier Aerospace's segmented revenues amounted to $11.3 billion for each of the years ended Jan. 31, 2004 and 2003. The increase in deliveries of business and regional aircraft was partially offset by lower deliveries of wide- body aircraft interiors, lower sales of fractional ownership In business, fractional ownership is a percentage share of an expensive asset. Shares are sold to individual owners. A fractional owner enjoys priorities and privileges, such as reduced rates, priority access on holidays and income sharing. shares, and a lower effective exchange rate for the U.S. dollar compared to the Canadian dollar, which had a negative impact of approximately $750 million. EBT before special items amounted to $118 million, or 3.2% of segmented revenues, for the fourth quarter ended Jan. 31, 2004, compared to negative EBT before special items of $376 million for the same period the previous year. The increase is mainly attributable to increased deliveries of business aircraft, partially offset by reduced regional aircraft deliveries, lower deliveries of wide-body aircraft interiors and additional 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 . EBT before special items was $262 million, or 2.3% of segmented revenues, for fiscal year 2004, compared to negative EBT before special items of $33 million for fiscal year 2003. This increase results mainly from higher business and regional aircraft deliveries and lower interest expense, partially offset by additional sales incentives.
Bombardier Aerospace recorded the following special items:
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Three Three Twelve Twelve
months months months months
(in millions ended Jan. ended Jan. ended Jan. ended Jan.
of Canadian dollars) 31, 2004 31, 2003 31, 2004 31, 2003
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Gain on sale of Military
Aviation Services $- $- $(98) $-
Gain on sale of Belfast
City Airport - - (3) -
Severance and other
involuntary termination
costs 17 67 73 67
Revisions of program
estimates - 615 - 615
Write-downs of inventories
and other related provisions - 418 - 588
Claim settlements - - - 41
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$17 $1,100 $(28) $1,311
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As a result, EBT amounted to $101 million, or 2.7% of revenues, for the fourth quarter ended Jan. 31, 2004, compared to negative EBT of $1.5 billion, for the same period the previous year. EBT was $290 million, or 2.6% of revenues, for fiscal year 2004, compared to negative EBT of $1.3 billion for the previous fiscal year. For the quarter ended Jan. 31, 2004, aircraft deliveries totalled 107, compared to 92 for the same period the previous year. The 107 deliveries were made up of 39 business aircraft, 65 regional aircraft and three amphibious aircraft Noun 1. amphibious aircraft - an airplane designed to take off and land on water amphibian aeroplane, airplane, plane - an aircraft that has a fixed wing and is powered by propellers or jets; "the flight was delayed due to trouble with the airplane" . During fiscal year 2004, Bombardier Aerospace delivered 324 aircraft, compared to 298 for fiscal year 2003. Aircraft delivered during fiscal year 2004 consisted of 232 regional aircraft, 89 business aircraft and three amphibious aircraft. (See appendix 1 for more details on deliveries.) Bombardier expects aircraft deliveries in fiscal year 2005 to remain at a similar level as in fiscal year 2004. As at Jan. 31, 2004, the aerospace firm order backlog totalled $14.5 billion, compared to $14.8 billion as at Oct. 31, 2003, and to $18.7 billion as at Jan. 31, 2003. The year-over-year reduction in the backlog reflects higher deliveries versus orders received, as well as a negative foreign exchange adjustment of approximately $1.8 billion. (See appendix 1 for more details on regional aircraft orders.) Bombardier Transportation -- Revenues of $9.6 billion; $2.5 billion for the fourth quarter -- EBT before special items of $104 million; negative $186 million for the fourth quarter -- Special items of $457 million; $434 million after tax -- Loss before income taxes of $353 million; $643 million for the fourth quarter -- New order intake totalling $15.7 billion for the year -- Order backlog of $31.4 billion Bombardier Transportation's segmented revenues amounted to $2.5 billion for the three-month period ended Jan. 31, 2004, compared to $2.4 billion for the same period last year. For the year ended Jan. 31, 2004, segmented revenues amounted to $9.6 billion, compared to $9.4 billion for the previous year. These increases were mainly due to a higher level of activities in Europe, partially offset by a lower level of activities in North America as a result of the timing of the completion and the start-up Start-up The earliest stage of a new business venture. of contracts. EBT before special items was negative $186 million for the fourth quarter ended Jan. 31, 2004, compared to $4 million for the same period last year. For the year ended Jan. 31, 2004, EBT before special items amounted to $104 million, or 1.1% of segmented revenues, compared to EBT before special items of $310 million, or 3.3% of segmented revenues, for the previous fiscal year. On March 16, 2004, the Corporation reached an agreement with Amtrak Amtrak, the National Railroad Passenger Corp., authorized to operate virtually all intercity passenger railroad routes in the United States. Amtrak was created by Congress in 1970 in response to more than two decades of continuous operating deficits by privately run to settle all outstanding claims in connection with the Acela(i)(i) High-Speed trainset and locomotive locomotive, vehicle used to pull a train of unpowered railroad cars. Types of Locomotives The steam-powered locomotive played a key role during the development and golden age of railroading, but, despite its long and picturesque history, it has contracts. As a result of this agreement, the Corporation recorded a pre-tax charge of $139 million during the fourth quarter of fiscal year 2004. This charge relates mainly to the excess of the value of receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and an investment over the amount of the settlement. The investment was for a joint venture set up in connection with the Acela contracts. The charge also reflects an amount to provide for the extension of the period covered by warranties, and for the remaining obligations under the contracts. Additional adjustments in the fourth quarter of fiscal year 2004 related to a revision in estimates for the completion of certain contracts also negatively impacted EBT. This revision in estimates relates to a limited number of contracts and mainly arises from additional costs from unforeseen technical issues, primarily on new product development, anticipated liquidated damages Monetary compensation for a loss, detriment, or injury to a person or a person's rights or property, awarded by a court judgment or by a contract stipulation regarding breach of contract. and manufacturing inefficiencies. Bombardier Transportation's restructuring initiative will result in the following expected restructuring charges, as well as the following expected net cash outflows:
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(in millions of Canadian dollars) 2004 2005 2006 Total
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Severance and other involuntary
termination costs 212 105 35 352
Property, plant and equipment write-downs 211 - - 211
Other(1) 34 110 70 214
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Accounting charge 457 215 105 777
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Net cash outflows - 240 326 566
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(1) Includes lease termination and environmental costs, as well as
other costs.
Once fully implemented, the restructuring initiative will reduce transportation's costs by approximately $600 million annually. As a result, EBT was negative $643 million for the quarter ended Jan. 31, 2004, compared to $4 million for the same period the previous year. Negative EBT amounted to $353 million for the year ended Jan. 31, 2004, compared to EBT of $310 million for the preceding fiscal year. Bombardier Transportation's order backlog was as follows as at January 31: --------------------------------------------------------------------- --------------------------------------------------------------------- (billions of Canadian dollars) 2004 2003 --------------------------------------------------------------------- Manufacturing operations $24.9 $20.2 Service businesses 6.5 5.5 --------------------------------------------------------------------- TOTAL $31.4 $25.7 --------------------------------------------------------------------- --------------------------------------------------------------------- Order intake during the three-month period ended Jan. 31, 2004 totalled $1.2 billion, for a total of $15.7 billion for the full year. The increase in the value of the backlog as at Jan. 31, 2004 compared to Jan. 31, 2003 reflects mainly an excess of order intake over revenues of $6.1 billion, and a $0.4 billion negative foreign exchange adjustment. Bombardier Capital -- Revenues of $681 million; $149 million in the fourth quarter -- EBT of $73 million; $16 million in the fourth quarter -- 71% reduction of wind-down portfolios for fiscal year 2004 and 14% for the quarter For the fourth quarter of fiscal year 2004, Bombardier Capital's segmented revenues amounted to $149 million, compared to $246 million for the same quarter the previous year. For the year ended Jan. 31, 2004, Bombardier Capital's segmented revenues amounted to $681 million, compared to $895 million for fiscal year 2003. These decreases are mainly due to the reduction in the wind-down portfolios and a stronger Canadian dollar compared to the U.S. dollar. Bombardier Capital's EBT amounted to $16 million for the quarter ended Jan. 31, 2004, compared to EBT of $14 million for the same period the previous year. This increase is mainly due to reductions of non-interest expenses and provision for credit losses in the fourth quarter of fiscal year 2004. EBT amounted to $73 million for fiscal year 2004, compared to $104 million in fiscal year 2003. This decrease is mainly due to the decrease in net margin (defined as revenues less interest expense) resulting from the reduction of wind- down portfolios, partially offset by a decrease in non-interest expenses and provision for credit losses. Finance receivables and assets under operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. before allowance for credit losses amounted to $4.9 billion as at Jan. 31, 2004, compared to $8.5 billion as at Jan. 31, 2003. This 43% decrease is primarily due to the continued reduction of the wind-down portfolios totalling $3 billion, particularly the business aircraft and receivable factoring portfolios, as well as a decline in the inventory finance portfolio and the commercial aircraft interim financing Interim financing A short-term loan made to a company on the condition that a takeout will follow with long-term or intermediate financing. interim financing The financing that supports a transaction until permanent financing can be arranged. portfolio. The strengthening of the Canadian dollar compared to the U.S. dollar accounted for approximately $680 million of the decrease in finance receivables and assets under operating leases. (See appendix 2 for more details on finance receivables and assets under operating leases before allowance for credit losses). Bombardier Capital also manages an off-balance sheet railcar leasing portfolio, totalling $864 million, and other off-balance sheet portfolios totalling $84 million as at Jan. 31, 2004, compared to $1 billion and $179 million, respectively, as at Jan. 31, 2003. Significant progress was made in reducing the wind-down portfolios during fiscal year 2004. Finance receivables and assets under operating leases related to the wind-down portfolios declined 71%, or $3 billion, during fiscal year 2004, mainly due to a $2.6-billion decrease in assets related to business aircraft and factored receivables. Cash flow information Bombardier's cash flows used in operating activities amounted to $746 million for fiscal year 2004, compared to cash flow from operating activities of $1.3 billion the previous year, a year-over-year change of $2.1 billion. This change results from cash flows from operating activities before net changes in non-cash balances related to operations of $961 million in fiscal year 2004, compared to $778 million the previous year, and the net changes in non-cash balances of negative $1.7 billion for fiscal year 2004, compared to positive $553 million for the previous year. The net change in non-cash balances for fiscal year 2004 is mainly due to the impact of the decision to cease the financing activities with BC in respect of factoring of receivables and used business aircraft totalling $1.6 billion, and a decrease in total customer advances received, mainly in the transportation segment. Bombardier's net investment in property, plant and equipment for fiscal year 2004 was $270 million, compared to $636 million in fiscal year 2003. This reduction is mainly due to lower capital expenditures for aerospace program tooling, and higher proceeds from the sale of property, plant and equipment, mainly in the transportation segment. As a result, Bombardier's free cash flow, defined as cash flows from operating activities less net additions to property, plant and equipment, amounted to a use of $1 billion, compared to a free cash flow of $695 million the previous fiscal year. Audited consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge and Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial Bombardier expects to release its audited consolidated financial statements and Management's Discussion and Analysis of results for the year ended Jan. 31, 2004 on March 31, 2004. 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, 2004, were $21.3 billion Cdn and its shares are traded on the Toronto, Brussels and Frankfurt stock exchanges Frankfurt Stock Exchange The largest of Germany's eight securities exchanges, operated by Deutsche Borse AS. (BBD, BOM and BBDd.F). News and information are available at www.bombardier.com. The following appendices ap·pen·di·ces n. A plural of appendix. and backgrounders are available at www.bombardier.com: Backgrounders on the rail transportation business restructuring -- Proposed site closures -- Proposed global workforce reductions -- Bombardier Transportation after proposed restructuring initiative -- Site fact sheets for -- Ammendorf, Germany -- Amadora, Portugal -- Kalmar, Sweden -- Pratteln, Switzerland -- Derby Pride Park, United Kingdom -- Doncaster, United Kingdom -- Wakefield, United Kingdom Financial appendices Appendix 1: Bombardier Aerospace - Supplementary information Appendix 2: Bombardier Capital - Supplementary information Appendix 3: Effect of currency fluctuations and change of reporting currency Reporting Currency The currency used in published reports and financial documents. Notes: All annual and quarterly reports state the currency in which their results are listed. Appendix 4: Pension Appendix 5: Net changes in non-cash balances related to operations - Bombardier Appendix 6: Consolidated financial statements 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. This press release includes "forward-looking statements" that are subject to risks and uncertainties. For information identifying legislative or regulatory, economic, climatic, 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 release is based on the reported earnings 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. 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 (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). It is also based on earnings before income taxes (EBT) and EBT before the effect of special items, a non-GAAP measure. Special items are viewed by Management as items that do not arise as part of the normal day-to- day business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets or that could potentially distort the analysis of trends. These earnings measures do not have a standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. meaning prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). by GAAP and are therefore not readily comparable to similar measures presented by other corporations. (i) Trademark(s) of Bombardier Inc. or its subsidiaries. (i)(i) Acela is a trademark of Amtrak. |
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