April 1, 2010 — Montréal
Corporate

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

Fiscal year highlights

• Consolidated revenues of $19.4 billion, compared to $19.7 billion last fiscal year
• EBITDA of $1.6 billion, compared to $2 billion last fiscal year
• EBIT of $1.1 billion, compared to $1.4 billion last fiscal year
• Net income of $707 million (EPS of $0.39), compared to $1 billion (EPS of $0.56) last fiscal year
• Free cash flow usage of $215 million, compared to a free cash flow of $342 million last fiscal year
• Strong cash position of $3.4 billion
• Backlog of $43.8 billion
• Subsequent to year-end, implementation of a long-term debt-refinancing plan resulting in the extension of debt maturities and a cash increase of approximately $500 million

Bombardier today reported good overall financial results for the fourth quarter and the year ended January 31, 2010 in a difficult economic environment.Revenues reached $19.4 billion, compared to $19.7 billion last fiscal year. Earnings before financing income, financing expense and income taxes (EBIT) totalled $1.1 billion, compared to $1.4 billion last fiscal year. EBIT margin at 5.7% compares to last year’s 7.2%. Net income reached $707 million, compared to $1 billion last fiscal year. Diluted earnings per share (EPS) reached $0.39, compared to $0.56 last fiscal year.

Free cash flow (cash flows from operating activities less net additions to property, plant and equipment and intangible assets) usage of $215 million compared to a free cash flow of $342 million last fiscal year. The cash position remained strong at $3.4 billion as at January 31, 2010, a level similar to January 31, 2009. The overall backlog stood at $43.8 billion as at January 31, 2010, compared to $48.2 billion as at January 31, 2009.

“Against a challenging economic backdrop, we delivered good financial results. We took the downturn as an opportunity to fine-tune the way we operate in order to execute better and cut costs intelligently, said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc.” 

“In Aerospace, we took the necessary steps to adapt to the economic reality by carefully monitoring capital expenditures and reducing our production rates for both business and regional jets. We met our target deliveries and increased our market share in both segments. Keeping our sight on the long term, we continued to invest in the development of our new flagship products, the Learjet 85 business jet and the CSeries commercial aircraft for which we have now received 90 orders.”

“The rail market remained resilient. Bombardier Transportation increased both revenues and profitability. The group posted a 6.2% EBIT margin exceeding the 6% target set four years ago. The level of activity in traditional markets remained robust and we won breakthrough contracts such as the order for 80 ZEFIRO very high speed trains in China and, more recently, an $11-billion framework agreement with the SNCF for regional trains.”

“Sharpening our execution, investing in our people and products, being socially responsible:  these are the drivers of profitable growth at Bombardier,” concluded Mr. Beaudoin.

In March 2010, Bombardier Inc. issued $1.5 billion of unsecured long-term debt maturing in calendar years 2018 and 2020.  The proceeds are intended to be used to repurchase approximately $1 billion of existing long-term debt maturing from calendar years 2012 to 2014, thus extending Bombardier’s debt maturity profile.  The balance of approximately $500 million will be used for general corporate purposes.

Bombardier Aerospace
At Bombardier Aerospace, revenues totalled $9.4 billion compared to $10 billion last fiscal year, while EBIT reached $473 million, or 5.1% of revenues, compared to $896 million, or 9%, for the same period last year. Bombardier Aerospace’s backlog reached $16.7 billion as at January 31, 2010, compared to $23.5 billion at the same date last year.

The group recorded 11 net orders (213 gross orders and 202 cancellations) in fiscal year 2010, compared to 367 net orders (423 gross orders and 56 cancellations) last fiscal year. Deliveries totalled 302 aircraft, versus 349 last fiscal year.

Bombardier Aerospace delivered 176 business aircraft in fiscal year 2010, compared to 235 aircraft last year. In spite of this lower level of deliveries, Business aircraft increased its revenue market share leadership to 32% compared to 31% last year. Commercial Aircraft delivered 121 units in fiscal year 2010, compared to 110 aircraft in the previous year and also increased its market share to 44% this year from 37% last year. Bombardier Aerospace expects to deliver approximately 15% less business aircraft and 20% fewer commercial aircraft in fiscal year 2011, compared to the previous fiscal year. 

The development of new aircraft programs is evolving as planned.  Flight testing on the CRJ1000 NextGen aircraft has resumed in February 2010 and its entry into service is scheduled for the second half of calender year 2010. The construction of a new manufacturing facility for key components of the Learjet 85 aircraft has begun in Querétaro, Mexico. The CSeries’ Complete Integrated Aircraft Test Area (CIASTA) systems testing facility in Mirabel, Canada and the wing-manufacturing facility in Belfast, U.K., are also under construction. 

In February 2010, Republic Airways Holdings Inc. signed an agreement to purchase 40 CSeries CS300 aircraft, with options for an additional 40 CS300 aircraft. The value of this contract, based on list price, is $3.1 billion which could increase to $6.3 billion if all options are exercised. Including this order, the backlog for the CSeries family of aircraft now stands at 90 firm orders.

Bombardier Transportation
Bombardier Transportation’s revenues totalled $10 billion, compared to $9.8 billion last fiscal year. EBIT reached $625 million, compared to $533 million for last fiscal year. This represents an EBIT margin of 6.2%, versus 5.5% last fiscal year, exceeding the 6% target set four years ago. 

The group reported a solid new order intake of $9.6 billion, compared to $9.8 billion last fiscal year with a book-to-bill ratio of 1.0 for both fiscal years. The order backlog stood at $27.1 billion as at January 31, 2010 compared to $24.7 billion last year.

During the year, Bombardier Transportation continued to drive innovation related to reliability, energy efficiency and total train performance for its customers worldwide. As an illustration, the group, through one of its joint ventures in China, signed a $4-billion landmark order to supply 80 ZEFIRO 380 very high speed trains to the Ministry of Railways of China, of which Bombardier’s share represents $2.0 billion.

In February 2010, building on a successful year in both emerging and traditional markets, Bombardier Transportation signed an $11-billion framework agreement with the Société Nationale des Chemins de fer Français (SNCF) for the design and manufacture of 860 double-deck electrical multiple units (EMUs). Two firm orders for 129 trains valued at $1.6 billion were obtained subsequent to year-end under this framework agreement.

Optimization of Bombardier Transportation’s geographic footprint, a better mix of contracts, improved execution and ongoing focus on reducing costs will contribute to further EBIT margin growth while maintaining market leadership.

Financial Highlights
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FINANCIAL RESULTS FOR THE FOURTH QUARTER AND THE YEAR ENDED JANUARY 31, 2010

ANALYSIS OF RESULTS

Consolidated results
Consolidated revenues totalled $5.4 billion for the fourth quarter ended January 31, 2010, in line with the same period last fiscal year. For the year ended January 31, 2010, consolidated revenues reached $19.4 billion, compared to $19.7 billion last year.

For the fourth quarter ended January 31, 2010, EBIT amounted to $288 million, or 5.4% of revenues, compared to $438 million, or 8.1%, for the same period the previous year. For the year ended January 31, 2010, EBIT reached $1.1 billion, or 5.7% of revenues, compared to $1.4 billion, or 7.2%, for the previous year.

Net financing expense amounted to $60 million and $183 million for the fourth quarter and fiscal year ended January 31, 2010, compared to $56 million and $138 million for the corresponding periods last year. The $4-million and $45-million increases are mainly due to lower interest income on cash and cash equivalent and on invested collateral, and a net financing gain realized in fiscal year 2009 for long-term debt repurchases on the open market; partially offset by lower interest expense on long-term debt after the effect of hedges, positive variations in fair value of financial instruments and a loss related to the write-off of deferred costs in connection with the BT portion of the previous letter of credit facility recorded in the fourth quarter of fiscal year 2009.

The effective income tax rate was 21.5% and 22.7% respectively for the fourth quarter and fiscal year ended 2010, compared to a statutory income tax rate of 31.3%. The lower effective tax rates are mainly due to the positive impact of the recognition of tax benefits related to operating losses and temporary differences, partially offset by unrecognized tax benefits, permanent differences and a write-down of deferred tax assets.

As a result, net income amounted to $179 million, or diluted EPS $0.10, for the fourth quarter of fiscal year 2010, compared to $312 million, or diluted EPS $0.17, for the same period the previous year. For the year ended January 31, 2010, net income was $707 million, or diluted EPS $0.39, compared to $1 billion, or diluted EPS $0.56, for the previous year.

For the three-month period ended January 31, 2010, free cash flow amounted to $512 million, compared to a usage of $91 million for the corresponding period the previous year. For the year ended January 31, 2010, free cash flow amounted to a usage of $215 million, compared to a free cash flow of $342 million last fiscal year.

As at January 31, 2010, Bombardier’s order backlog stood at $43.8 billion, compared to $48.2 billion as at January 31, 2009.

In the context of the upcoming implementation of the International Financial Reporting Standards (IFRS) in fiscal year 2012 and related EBIT guidance, please refer to the Management Discussion & Analysis (MD&A) sections of each group in the Corporation’s fiscal year 2010 annual report.

Bombardier Aerospace

• Revenues of $2.7 billion for the fourth quarter; $9.4 billion for fiscal year 2010
• EBITDA of $196 million for the fourth quarter; $844 million for fiscal year 2010
• EBIT of $106 million, or 4% of revenues, for the fourth quarter; $473 million, or 5.1%, for fiscal year 2010
• Free cash flow of $212 million for the fourth quarter; free cash flow usage of $267 million for fiscal year 2010
• Order backlog of $16.7 billion as at January 31, 2010
• Signature of a CSeries aircraft firm order totalling 40 aircraft plus 40 options in February 2010

Bombardier Aerospace’s revenues amounted to $2.7 billion for the three-month period ended January 31, 2010, compared to $2.8 billion for the same period the previous year. The decrease is mainly due to lower manufacturing revenues, mainly attributable to lower deliveries and selling prices for business aircraft. Revenues amounted to $9.4 billion for the year ended January 31, 2010, compared to $10 billion for the previous year. The decrease is mainly due to a decrease in manufacturing revenues, mainly attributable to lower deliveries and selling prices for business aircraft, partially offset by a higher percentage of medium and large business aircraft deliveries. The decrease was also partially offset by higher revenues for commercial aircraft, mainly due to higher deliveries. 

For the fourth quarter ended January 31, 2010, EBIT amounted to $106 million, or 4% of revenues, compared to $271 million, or 9.8%, for the same period the previous year. The 5.8 percentage-point decrease is mainly due to higher cost of sales per unit mainly due to price escalations of materials, lower selling prices for business aircraft, the mix between business and commercial aircraft deliveries, and the net negative impact in other expense (income) from the revaluation of certain balance sheet accounts in foreign currencies at the balance sheet date; partially offset by higher write-down of inventories for the fourth quarter ended January 31, 2009 compared to the fourth quarter of fiscal year 2010, lower selling, general and administrative (SG&A) expenses mainly due to lower business aircraft deliveries, lower amortization expense due to the aerospace program tooling on some aircraft models being fully amortized, and liquidated damages from customers mainly as a result of business aircraft order cancellations.

For the year ended January 31, 2010, EBIT amounted to $473 million, or 5.1% of revenues, compared to $896 million, or 9%, for the previous year. The 3.9 percentage-point decrease is mainly due to higher cost of sales per unit mainly due to price escalations of materials and disruption costs in connection with changes in production rates, lower selling prices for business aircraft, the mix between business and commercial aircraft deliveries, lower margins for services activities, the net negative impact in other expense (income) from the revaluation of certain balance sheet accounts in foreign currencies at the balance sheet date, and higher write-down of inventories mainly due to lower market values for pre-owned aircraft; partially offset by liquidated damages from customers mainly as a result of business aircraft order cancellations, lower SG&A expenses mainly due to lower business aircraft deliveries, a net positive variance on financial instruments carried at fair value and recorded in other expense (income) and lower amortization expense due to the aerospace program tooling on some aircraft models being fully amortized.

Free cash flow totalled $212 million for the fourth quarter ended January 31, 2010, compared to a free cash flow usage of $271 million for the same period last fiscal year. The $483-million increase is mainly due to a positive period-over-period variation in net change in non-cash balances related to operations; partially offset by a lower EBIT before amortization (EBITDA) and higher net additions to property, plant and equipment and intangible assets due to our significant investments in product development. For the year ended January 31, 2010, free cash flow usage amounted to $267 million, compared to a free cash flow of $128 million for the previous year. The $395-million decrease is mainly due to a lower EBITDA and higher net additions to property, plant and equipment and intangible assets due to our significant investments in product development; partially offset by a positive period-over-period variation in net change in non-cash balances related to operations.

For the quarter ended January 31, 2010, aircraft deliveries totalled 86, compared to 93 for the same period the previous year. The 86 deliveries consisted of 49 business aircraft, 35 commercial aircraft and two amphibious aircraft (54, 37 and two aircraft respectively for the corresponding period last fiscal year). During fiscal year 2010, Bombardier Aerospace delivered 302 aircraft compared to 349 aircraft for fiscal year 2009. Aircraft delivered during fiscal year 2010 consisted of 176 business aircraft, 121 commercial aircraft and five amphibious aircraft (235, 110 and four aircraft respectively last fiscal year).

Aerospace received 33 net orders during the quarter ended January 31, 2010, compared to six during the corresponding period the previous year. The 33 net orders consisted of 22 commercial aircraft, seven business aircraft and four amphibious aircraft (25 commercial aircraft net orders and 19 negative net orders for business aircraft for the corresponding period last fiscal year). During fiscal year 2010, Aerospace received 11 net orders compared to 367 for fiscal year 2009. Net orders during fiscal year 2010 consisted of 88 net orders for commercial aircraft, 85 negative net orders for business aircraft and eight net orders for amphibious aircraft (net orders for 114 commercial, 251 business and two amphibious aircraft last fiscal year).

Aerospace’s firm order backlog reached $16.7 billion as at January 31, 2010, compared to $23.5 billion as at January 31, 2009. The decrease reflects significantly higher business aircraft order cancellations, as well as an overall level of new orders lower than revenues in business aircraft and in regional jets during fiscal year 2010, partially offset by orders received for the CSeries family of aircraft in the first quarter of fiscal year 2010.

Bombardier Transportation

• Revenues of $2.7 billion for the fourth quarter; $10 billion for fiscal year 2010
• EBITDA of $221 million for the fourth quarter; $752 million for fiscal year 2010
• EBIT of $182 million, or 6.8% of revenues for the fourth quarter; $625 million, or 6.2%, for fiscal year 2010
• Free cash flow of $372 million for the fourth quarter; $293 million for fiscal year 2010
• New order intake totalling $1.8 billion for the fourth quarter; $9.6 billion for fiscal year 2010 (book-to-bill ratio of 1.0)
• Order backlog of $27.1 billion as at January 31, 2010
• Signature of an $11-billion framework agreement with the SNCF in February 2010

Bombardier Transportation’s revenues amounted to $2.7 billion for the three-month period ended January 31, 2010, a similar level compared to the same period last year. The slight increase is mainly due to a positive currency impact, increased activities in intercity, high-speed and very high-speed trains mainly in China, and increased activities in propulsion and controls in China. The increase was partially offset by lower activities in locomotives mainly in the U.K. and Italy, and lower activities in commuter and regional trains mainly in the U.K. and France. For the year ended January 31, 2010, revenues totalled $10 billion, compared to $9.8 billion for the previous year. The increase is mainly due to higher activity in rolling stock reflecting increased activity in commuter and regional trains and in metro, mainly in Germany, India, Denmark, France, Sweden and the U.K., in intercity, high speed and very high speed trains mainly in China, in locomotives mainly in Germany and Spain, and in propulsion and controls in China. This increase was partially offset by a negative currency impact and lower activities in locomotives, mainly in the U.K. and Italy.

For the fourth quarter ended January 31, 2010, EBIT totalled $182 million, or 6.8% of revenues, compared to $167 million, or 6.3%, for the same quarter the previous year. The 0.5 percentage-point increase is mainly due to better contract execution, partially offset by higher SG&A expenses, mainly due to a high level of bid activities to capture significant new market opportunities, and higher research and development (R&D) expenses related to our continuous upgrades in product offering. For the year ended January 31, 2010, EBIT totalled $625 million, or 6.2% of revenues, compared to $533 million, or 5.5%, for the previous year. The 0.7 percentage-point increase for the fiscal year is mainly due to better contract execution, mainly in North America, partially offset by a lower net gain recorded in other expense (income) compared to the same period last fiscal year related to foreign exchange fluctuations and certain financial instruments carried at fair value.

Free cash flow for the quarter ended January 31, 2010 was $372 million, compared to $360 million for the same period last fiscal year. The $12-million increase is mainly due to lower net additions to property, plant and equipment and intangible assets and a higher EBITDA, partially offset by a negative period-over-period variation in net change in non-cash balances related to operations. For the year ended January 31, 2010, free cash flow was $293 million, compared to $480 million for the previous year. The $187-million decrease is mainly due to a negative period-over-period variation in net change in non-cash balances related to operations, partially offset by a higher EBITDA.

The order intake for the fourth quarter ended January 31, 2010 was $1.8 billion, compared to $2.6 billion for the same period last fiscal year. The decrease is mainly due to lower order intake in rolling stock in Europe and Asia, partially offset by higher order intake in services in Europe and a positive currency impact. During the year ended January 31, 2010, the order intake reached $9.6 billion, compared to $9.8 billion for the same period last year. This slight decrease is mainly due to fewer orders received in services in Europe, as some customers are postponing orders given the current economic situation, lower order intake in rolling stock in Europe, a negative currency impact, and lower order intake in system and signalling in Europe; partially offset by higher order intake in rolling stock in Asia.

Bombardier Transportation’s backlog totalled $27.1 billion as at January 31, 2010, compared to $24.7 billion as at January 31, 2009. The increase is due to the strengthening of foreign currencies as at January 31, 2010 compared to January 31, 2009, mainly the euro and the pound sterling compared to the U.S. dollar, partially offset by revenues recorded being higher than order intake.

DIVIDENDS ON COMMON SHARES

Class A and Class B Shares
A quarterly dividend of $0.025 Cdn per share on Class A Shares (Multiple Voting) and of $0.025 Cdn per share on Class B Shares (Subordinate Voting) is payable on May 31, 2010 to the shareholders of record at the close of business on May 14, 2010.

Holders of Class B Shares (Subordinate Voting) of record at the close of business on May 14, 2010 also have a right to a priority quarterly dividend of $0.000390625 Cdn per share.

DIVIDENDS ON PREFERRED SHARES

Series 2 Preferred Shares
A monthly dividend of $0.04688 Cdn per share on Series 2 Preferred Shares has been paid on December 15, 2009, on January 15, on February 15 and on March 15, 2010. 

Series 3 Preferred Shares
A quarterly dividend of $0.32919 Cdn per share on Series 3 Preferred Shares is payable on April 30, 2010 to the shareholders of record at the close of business on April 16, 2010.

Series 4 Preferred Shares
A quarterly dividend of $0.390625 Cdn per share on Series 4 Preferred Shares is payable on April 30, 2010 to the shareholders of record at the close of business on April 16, 2010.

About Bombardier    
A world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services, Bombardier Inc. is a global corporation headquartered in Canada. Its revenues for the fiscal year ended Jan. 31, 2010, were $19.4 billion, and its shares are traded on the Toronto Stock Exchange (BBD). Bombardier is listed as an index component to the Dow Jones Sustainability World and North America indexes. News and information are available at www.bombardier.com

CRJ, CRJ1000, CSeries, CS300, Learjet, Learjet 85, NextGen and ZEFIRO are trademarks of Bombardier Inc. or its subsidiaries.

Source and picture: Bombardier