Financial Results of Bombardier Inc. for the Second
Quarter and the Six Months Ended July 31, 2000
MONTREAL, QUEBEC--AUGUST 22, 2000 - 09:51 EDT
Consolidated revenues of Bombardier Inc. for the
quarter ended July 31, 2000 reached $3.4 billion, an 8 % increase
over the revenues of $3.2 billion for the same period last year.
Net income for the quarter, before the net effect of the special
item, rose to $210.1 million, an increase of 24 % compared to a
net income of $169.1 million for the same period last year.
Earnings per share, before the net effect of the special item,
rose to $0.16 from $0.12 the previous year, a 33 % increase.
After the effect of the special item of $49.8 million ($44.0
million after tax), net income for the quarter amounted to $254.1
million, or $0.19 per share.
For the six months ended July 31, 2000, consolidated revenues
totalled $6.7 billion, an 11 % increase over the revenues of $6.0
billion for the same period last year. Net income, before the net
effect of the special items, rose to $405.2 million, an increase
of 29 % compared to a net income of $313.6 million for the same
period last year. Earnings per share, for the six-month period,
before the net effect of the special items, rose to $0.29 from
$0.22 the previous year, a 32 % increase. After the effect of the
special items of $29.7 million ($3.7 million after tax), net
income for the six-month period amounted to $401.5 million, or
$0.29 per share.
The special items consist of a charge of $79.5 million ($47.7
million after tax) provided for in the first quarter as additional
provision for bad debt related to the small item portfolio of
Bombardier Capital. This special charge was offset by a net gain
of $49.8 million ($44.0 million after tax) in the second quarter
on the divestiture of Bombardier Services (UK) Limited's defence
service business in the United Kingdom.
Bombardier's order backlog at July 31, 2000 reached $30.9 billion,
a 19 % increase over the $26.0 billion backlog at the end of the
second quarter last year. In aerospace, the backlog increased
from $17.6 billion last year to $23.0 billion at July 31, 2000 and
in transportation, it went from $8.4 billion to $7.9 billion. The
decrease of Bombardier Transportation's order backlog is mainly
the result of changes in the exchange rate of the euro compared to
the Canadian dollar.
/T/
The highlights are as follows:
(unaudited,
millions of Canadian dollars, except per share amounts)
Three months ended Six months ended
July 31 July 31
2000 1999 2000 1999
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Revenues
Aerospace $2,145.5 $1,846.7 $4,156.5 $3,417.7
Recreational Products 329.9 239.3 645.3 555.3
Transportation 752.7 959.2 1,515.8 1,800.6
Bombardier Capital 245.2 173.9 467.2 329.7
Intersegment
eliminations (49.9) (38.3) (94.7) (71.9)
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External revenues $3,423.4 $3,180.8 $6,690.1 $6,031.4
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Income before special
items and income taxes
Aerospace $253.4 $194.8 $487.4 $361.3
Recreational Products 12.1 1.1 21.2 1.1
Transportation 37.6 50.4 76.7 94.2
Bombardier Capital 11.6 6.1 21.6 11.5
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314.7 252.4 606.9 468.1
Special items (49.8) -- 29.7 --
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Income before
income taxes 364.5 252.4 577.2 468.1
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Income taxes 110.4 83.3 175.7 154.5
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Net Income $254.1 $169.1 $401.5 $313.6
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Earnings per share :
Basic $0.19 $0.12 $0.29 $0.22
Fully diluted $0.18 $0.12 $0.28 $0.22
Average number of common
shares outstanding
during the period 1,372.4 1,367.1
(millions)
/T/
Commenting on these results, President and Chief Executive Officer
Robert E. Brown noted that "In the second quarter, higher revenues
are mainly attributable to increased aircraft deliveries, higher
deliveries of Sea-Doo* watercraft and Bombardier all-terrain
vehicles as well as growth at Bombardier Capital. The growth in
income before special items and income taxes is due to the
excellent performance of the aerospace segment and to the
increased profitability of Bombardier Capital and of Bombardier
Recreational Products." Mr. Brown added: "We remain confident of
achieving the earnings per share growth target of 30 % to 40 % set
for the current fiscal year."
Bombardier Inc., a diversified manufacturing and service company,
is a world leading manufacturer of business jets, regional
aircraft, rail transportation equipment and motorized recreational
products. It is also a provider of financial services and asset
management. The Corporation employs 56,000 people in 12 countries
in North America, Europe and Asia, and more than 90 % of its
revenues are generated outside Canada. Bombardier's revenues for
its fiscal year ended Jan. 31, 2000 totalled $13.6 billion.
* Trademark of Bombardier Inc.
/T/
BOMBARDIER INC.
Consolidated Balance Sheets
(millions of Canadian dollars)
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Bombardier Inc.
consolidated Bombardier BC
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July January July January July January
31 31 31 31 31 31
2000 2000 2000 2000 2000 2000
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(Unaudited) (Unaudited) (Unaudited)
Assets
Cash and
cash equiva-
lents $585.1 $1,664.0 $521.2 $1,548.7 $63.9 $115.3
Accounts
receiva-
ble 463.3 570.7 463.3 570.7 --- ---
Asset-based
financing
items 8,195.8 7,194.9 56.7 57.1 8,139.1 7,137.8
Invento-
ries 6,652.0 5,361.5 6,652.0 5,361.5 --- ---
Fixed
assets 1,959.9 1,898.7 1,835.4 1,776.4 124.5 122.3
Investment
in and
advances
to BC --- --- 1,239.5 1,531.2 --- ---
Other
assets 372.8 344.3 138.4 146.3 234.4 198.0
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$18,228.9 $17,034.1 $10,906.5 $10,991.9 $8,561.9 $7,573.4
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Liabilities
Short-term
borro-
wings $2,722.6 $2,002.7 $104.5 $--- $2,618.1 $2,002.7
Advances
from
Bombardier --- --- --- --- 170.2 459.8
Accounts
payable and
accrued lia-
bilities 3,190.2 3,335.2 2,958.3 3,125.2 231.9 210.0
Advances
and progress
billings in
excess of
related
costs 2,451.6 2,636.8 2,451.6 2,636.8 --- ---
Long-term
debt 5,459.0 4,795.0 986.6 971.4 4,472.4 3,823.6
Other liabi-
lities 1,040.4 652.6 1,040.4 646.7 --- 5.9
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14,863.8 13,422.3 7,541.4 7,380.1 7,492.6 6,502.0
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Shareholders'
equity
Preferred
shares
Issued and
outstanding:
Series 2:
12,000,000 300.0 300.0 300.0 300.0 --- ---
Common shares
Issued and
outstanding:
Class A:
347,655,766
(351,594,128
as at January
31, 2000) 48.1 48.6 48.1 48.6 --- ---
Class B:
1,016,244,570
(1,026,023,888
as at January
31, 2000) 813.2 813.7 813.2 813.7 --- ---
Other equity
accounts
(Investment
in BC) 2,203.8 2,449.5 2,203.8 2,449.5 1,069.3 1,071.4
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3,365.1 3,611.8 3,365.1 3,611.8 1,069.3 1,071.4
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$18,228.9 $17,034.1 $10,906.5 $10,991.9 $8,561.9 $7,573.4
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Notes to these consolidated financial statements provide information
on the financial statement presentation.
BOMBARDIER INC.
Consolidated Statements of Income
(Unaudited)
(millions of Canadian dollars except per share amounts)
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Three months ended Six months ended
July 31 July 31
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2000 1999 2000 1999
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Revenues
Aerospace $2,145.5 $1,846.7 $4,156.5 $3,417.7
Recreational Products 329.9 239.3 645.3 555.3
Transportation 752.7 959.2 1,515.8 1,800.6
BC 245.2 173.9 467.2 329.7
Intersegment eliminations (49.9) (38.3) (94.7) (71.9)
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External revenues $3,423.4 $3,180.8 $6,690.1 $6,031.4
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Income before special
items and income taxes
Aerospace $253.4 $194.8 $487.4 $361.3
Recreational Products 12.1 1.1 21.2 1.1
Transportation 37.6 50.4 76.7 94.2
BC 11.6 6.1 21.6 11.5
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314.7 252.4 606.9 468.1
Special items (49.8) --- 29.7 ---
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Income before income taxes 364.5 252.4 577.2 468.1
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Income taxes 110.4 83.3 175.7 154.5
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Net income $254.1 $169.1 $401.5 $313.6
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Earnings per share:
Basic $0.19 $0.12 $0.29 $0.22
Fully diluted $0.18 $0.12 $0.28 $0.22
Average number of common
shares outstanding during
the period (millions) 1,372.4 1,367.1
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Notes to these consolidated financial statements provide information
on the financial statement presentation.
BOMBARDIER INC.
Consolidated Statements of Cash Flows
(Unaudited)
For the six months ended July 31 (millions of Canadian dollars)
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Bombardier Inc.
consolidated Bombardier BC
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2000 1999 2000 1999 2000 1999
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Operating
activities
Net income
(loss) $401.5 $313.6 $401.5 $313.6 $(35.0) $6.8
Non-cash
items:
Depreciation
and amorti-
zation 107.6 109.9 102.7 105.9 4.9 4.0
Net loss
(income)
from BC --- --- 35.0 (6.8) --- ---
Provision
for credit
losses -
BC 27.7 29.4 --- --- 27.7 29.4
Future
income
taxes 114.4 144.1 149.0 144.9 (34.6) (0.8)
Special
items 29.7 --- (49.8) --- 79.5 ---
Net changes
in non-cash
balances
related to
opera-
tions (1,485.5) (1,228.7) (1,498.3) (1,231.3) 12.8 2.6
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Cash flows
from opera-
ting acti-
vities (804.6) (631.7) (859.9) (673.7) 55.3 42.0
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Investing
activities
Additions to
fixed
assets (180.1) (118.3) (173.8) (107.9) (6.3) (10.4)
Net invest-
ment in
asset-based
financing
items (955.8) (690.8) 0.4 (24.5) (956.2) (666.3)
Investment
in and
advances
to BC --- --- 279.1 (212.5) (279.1) 212.5
Disposal
of busi-
nesses 66.1 --- 66.1 --- --- ---
Other 0.1 13.5 (1.4) 0.3 1.5 13.2
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Cash flows
from inves-
ting acti-
vities (1,069.7) (795.6) 170.4 (344.6) (1,240.1) (451.0)
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Financing
activities
Net variation
in short-
term borro-
wings 679.0 530.5 104.1 61.4 574.9 469.1
Net variation
in long-
term debt 578.0 (98.5) 15.7 (18.5) 562.3 (80.0)
Redemption
of common
shares (294.1) --- (294.1) --- --- ---
Issuance of
shares, net
of related
costs 8.9 3.5 8.9 3.5 --- ---
Dividends
paid (102.5) (84.3) (102.5) (84.3) --- ---
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Cash flows
from finan-
cing acti-
vities 869.3 351.2 (267.9) (37.9) 1,137.2 389.1
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Effect of
exchange
rate
changes on
cash and
cash equi-
valents (73.9) 14.8 (70.1) 12.1 (3.8) 2.7
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Net decrease
in cash and
cash equiva-
lents (1,078.9) (1,061.3) (1,027.5) (1,044.1) (51.4) (17.2)
Cash and
cash equiva-
lents at
beginnning
of year 1,664.0 1,738.7 1,548.7 1,706.3 115.3 32.4
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Cash and
cash equiva-
lents as at
July 31 $585.1 $677.4 $521.2 $662.2 $63.9 $15.2
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Supplemental
Information
Cash paid
for
- interest $254.0 $155.4
- income
taxes $59.2 $20.9
Notes to these consolidated financial statements provide information
on the financial statement presentation.
BOMBARDIER INC.
Notes to Consolidated Financial Statements
(Unaudited)
CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION
The accompanying consolidated financial statements include the
accounts of Bombardier Inc. and its subsidiaries (the "Corporation"),
substantially all of which are wholly owned. They also include the
Corporation's proportionate share of its joint ventures. The
descriptions of the columns shown in these financial statements are
as follows:
Bombardier Inc. consolidated
This column represents all of the activities of the Corporation on a
consolidated basis, after elimination of balances and transactions
between Bombardier and BC.
Bombardier
This column represents the activities of the Corporation's three
manufacturing segments. Each reportable segment offers different
products and services, requires different technology and marketing
strategies and is headed by a President and Chief Operating Officer.
These segments are grouped and referred to as "Bombardier" and the
intercompany transactions within this column have been eliminated.
"Investment in BC" is accounted for under the equity method and
comprises BC's equity and subordinated debt of Bombardier in BC.
The aerospace segment is engaged in the design, manufacture and sale
of business and regional aircraft for individuals, corporations as
well as commercial airline customers. It is also engaged in the
manufacture of major airframe components for aircraft designed and
built by other American and European aircraft manufacturers. In
addition, it provides commercial and military aviation services,
including technical services and pilot training.
The recreational products segment is involved in the development,
manufacturing and marketing of snowmobiles, watercraft, boats, all-
terrain vehicles, utility vehicles and engines.
The transportation segment carries on all activities related to rail
transportation equipment. It offers a full range of vehicles for
urban, suburban, intercity rail-passenger transportation, freight
cars, as well as integrated rail transit systems for turnkey
projects. In addition, the transportation segment provides
operations and maintenance services.
BC
Bombardier Capital ("BC") includes financial services and real estate
activities. The financial services are all asset-based and cover
five specific markets: inventory financing; financing to commercial
customers with respect to various commercial and industrial
equipment, new or trade-in aircraft and open accounts receivable;
consumer finance operations; mortgage financing to purchasers of
manufactured homes; and leasing and technology management services.
The real estate activities of this segment consist in selling land to
real estate developers and renting office buildings to Bombardier.
The intercompany transactions within this column have been
eliminated.
SPECIAL ITEMS
On June 12, 2000 Bombardier Aerospace sold Bombardier Services (UK)
Limited's defence service business, including its wholly owned
subsidiary Airwork Ltd, an operation located in the United Kingdom.
The net sale proceeds of $66.1 million resulted in a net gain of
$49.8 million ($44.0 million after tax).
On May 12, 2000 involuntary bankruptcy proceedings were filed under
Chapter 7 of the US Bankruptcy Code against the principal recourse
lessor providing credit support for a significant portion of BC's
smaller item portfolio, which is in the process of being wound down.
As a result of this development as well as defaults from other
recourse lessors and the deterioration of the credit quality of this
portfolio, a special charge of $79.5 million ($47.7 million after
tax) has been provided for in the first quarter of fiscal year 2001,
related to additional provision for bad debt.
SEGMENT DISCLOSURE
The Corporation evaluates performance based on income or loss before
special items and income taxes. Intersegment services are accounted
for as if the services were provided to third parties, at current
market prices. For all segments, interest costs are allocated to
each segment based on its net assets. Most corporate office charges
are allocated based on their respective revenues. For the
manufacturing segments, net segmented assets are comprised of the
assets of each segment except for investment in and advances to BC
and cash and cash equivalents, less accounts payable and accrued
liabilities and advances and progress billings in excess of related
costs. For BC, the net segmented assets correspond to the combined
amount of BC's equity and subordinated debt which is maintained at a
level to produce a debt to equity ratio, including subordinated debt,
which approximates 9 to 1. Consequently, this amount is shown as net
segmented assets for BC.
SHARE CAPITAL SPLIT
On June 20, 2000, the shareholders of the Corporation approved a
Class A and Class B share split on a two-for-one basis, effective as
of the close of business on July 7, 2000. The number of shares
outstanding and the per share amounts give effect to the share split
on a retroactive basis.
SUBSEQUENT EVENT
On August 4, 2000, the Corporation signed a sale and purchase
agreement with DaimlerChrysler AG of Stuttgart, Germany, for the
acquisition of Berlin-based DaimlerChrysler Rail Systems GmbH
(Adtranz), for a cash consideration of $725 million US
($1.1 billion Cdn). The purchase price is subject to adjustments
including a reduction to reflect the proceeds from the planned
disposal of Adtranz' Fixed installations and Signaling businesses and
adjustments based on the financial performance of Adtranz until the
closing date of the transaction.
The Corporation intends to fund this acquisition through its existing
working capital facilities. The acquisition is subject to
appropriate regulatory approvals.
Adtranz is an integrated transportation equipment manufacturer
currently employing approximately 22,000 people, including 3,600 for
its Fixed installations and Signaling businesses. Its operations
will be integrated to the Transportation segment from the date of
closing. Adtranz's revenues for 1999 totalled $5 billion, including
revenues from its Fixed installations and Signaling businesses.
BOMBARDIER INC.
Net Segmented Assets
(millions of Canadian dollars)
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July January
31 31
2000 2000
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(Unaudited)
Aerospace $4,107.7 $2,938.0
Recreational Products 272.8 103.2
Transportation (644.6) (891.2)
BC 1,069.3 1,071.4
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4,805.2 3,221.4
Accounts payable and accrued liabilities 2,958.3 3,125.2
Advances and progress billings in excess
of related costs 2,451.6 2,636.8
Advances to BC 170.2 459.8
Cash and cash equivalents 521.2 1,548.7
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Total assets - Bombardier 10,906.5 10,991.9
Investment in and advances to BC (1,239.5) (1,531.2)
Total assets - BC 8,561.9 7,573.4
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Total assets - Bombardier Inc. consolidated $18,228.9 $17,034.1
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BC total assets under management, including those off-balance sheet,
amount to $11,777.7 million (unaudited) as at July 31, 2000 and to
$10,847.6 million as at January 31, 2000.
Additional Information
(Unaudited)
(millions of Canadian dollars)
Three months ended Six months ended
July 31 July 31
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2000 1999 2000 1999
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Depreciation and amortization
Aerospace $27.2 $23.2 $54.2 $52.6
Recreational Products 8.9 8.7 17.5 16.4
Transportation 15.6 21.0 31.0 36.9
BC 2.4 2.2 4.9 4.0
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$54.1 $55.1 $107.6 $109.9
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Interest expense
Aerospace $41.6 $36.2 $77.9 $70.0
Recreational Products 4.7 4.4 7.5 8.7
Transportation (42.7) (40.8) (85.6) (85.1)
BC 8.7 11.5 17.6 19.9
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$12.3 $11.3 $17.4 $13.5
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