Bombardier Announces Financial Results for Second
Quarter Ended July 31, 2003 and Agreement for the Sale
of Bombardier Recreational Products
MONTREAL, QUEBEC--AUGUST 27, 2003 - 06:00 ET
/T/
Results and highlights of the quarter
- Consolidated revenues of $5.3 billion
- Earnings before income taxes (EBT) of $147.3 million
- Earnings per share of $0.05
- Overall order backlog reaches $48.1 billion
- Bombardier Aerospace signs a contract with US Airways for 85
regional jets, valued at approximately $3.2 billion; contract also
includes 90 reconfirmable orders and 100 options
- New order intake for Bombardier Transportation totals $3.4
billion for a record backlog of $32.1 billion
Key achievements year to date
- April 3 recapitalization initiative all but complete:
- Central element of action plan achieved with agreement to sell
Bombardier Recreational Products for an aggregate purchase price
of $1.225 billion
- Equity issue closed on April 17 for total gross proceeds of $1.2
billion
- Belfast City Airport sold for 35 million pounds sterling ($77.7
million)
- Agreement reached to sell Military Aviation Services unit for $90
million US ($126.7 million)
- Agreement reached to sell significant portion of Bombardier
Capital's business aircraft portfolio at carrying value
- Reduction in the wind-down portfolios proceeding as planned at
Bombardier Capital
- Military Aviation Training unit sale process underway
- Financial update:
- Renewal of 364-day portion of Bombardier's European credit
facility and confirmation of renewal of 364-day portion of North
American credit facility
- Credit ratings of the Corporation affirmed by Moody's Investor
Services, Standard & Poor's and Fitch Ratings
/T/
"I am very pleased our action plan designed to restore our
balance sheet and liquidity profile is all but complete. With
today's announcement of the breakthrough on the sale of
Bombardier Recreational Products, our recapitalization initiative
has been a tremendous success with proceeds of more than $2.5
billion, well beyond our objectives," said Paul M. Tellier,
President and Chief Executive Officer. "The value for all
shareholders is undeniable.
"On the financial side, the recent renewal of our short-term
credit facilities and the affirmation of our credit ratings by
major agencies are also very good news. Our results for the
second quarter are on target and in line with the street's
expectations.
"Prospects for the whole Canadian aerospace industry are
improving with recent developments contributing to the
enhancement of the aircraft financing capability in this country.
And although the general economic context has not changed a great
deal, there are encouraging signs of improvement.
"The measures we have taken at Bombardier Aerospace to reduce
costs are starting to show results. The level of regional
aircraft deliveries demonstrates once more that the regional jet
is the right product for today's changing air travel
environment," he added.
"At Bombardier Transportation, we continue to benefit from a
strong backlog, and our ongoing review of operations, activities,
geographies and workforce will contribute to our overall
results," said Tellier.
"The agreement to sell a significant portion of the business
aircraft portfolio illustrates the progress we are making with
the wind-down portfolios at Bombardier Capital.
"Our focus on value creation remains a central priority. We are
definitely on the right track," concluded Tellier.
/T/
Financial Highlights
(in millions of Canadian dollars, except per share amounts)
Three months ended July 31 Six months ended July 31
2003 2002 2003 2002
(restated) (restated)
---------------------------------------------------------------------
Segmented revenues
Aerospace $2,839.6 $2,747.5 $5,223.9 $5,403.1
Transportation 2,319.4 2,399.0 4,748.8 4,713.1
Bombardier
Capital (BC) 172.9 222.3 389.9 414.3
Intersegment
eliminations (65.4) (101.7) (156.9) (200.4)
---------------------------------------------------------------------
External revenues 5,266.5 5,267.1 10,205.7 10,330.1
---------------------------------------------------------------------
Income (loss) from
continuing operations
before income taxes
Aerospace 24.3 (74.7) 17.3 83.3
Transportation 104.5 108.5 212.7 199.1
BC 18.5 31.2 43.1 51.8
Income from continuing
operations before
income taxes 147.3 65.0 273.1 334.2
Income taxes 51.3 21.7 95.0 111.6
---------------------------------------------------------------------
Income from continuing
operations 96.0 43.3 178.1 222.6
Income (loss)
from discontinued
operations - net of tax (2.8) 24.7 (4.2) 42.6
---------------------------------------------------------------------
Net income $93.2 $68.0 $173.9 $265.2
---------------------------------------------------------------------
Earnings per share
Basic and diluted
From continuing
operations $0.05 $0.02 $0.10 $0.15
From discontinued
operations - 0.02 - 0.03
---------------------------------------------------------------------
$0.05 $0.04 $0.10 $0.18
---------------------------------------------------------------------
---------------------------------------------------------------------
Average number of common 1,748,099 1,592,046
shares outstanding
during the period
(thousands)
---------------------------------------------------------------------
/T/
ANALYSIS OF RESULTS
On April 3, 2003, the Corporation announced its plan to sell the
recreational products segment. Accordingly, the results of
operations, cash flows and the financial position of Bombardier
Recreational Products are reported as discontinued operations.
Consolidated results
Consolidated revenues amounted to $5.3 billion for each of the
quarters ended July 31, 2003 and 2002. For the six-month period
ended July 31, 2003, consolidated revenues reached $10.2 billion,
compared to $10.3 billion for the same period last year. The
decrease is mainly due to lower revenues in the aerospace
segment.
Earnings before taxes (EBT) for the three-month period ended July
31, 2003 were $147.3 million, compared to $65.0 million for the
same period last year. The increase is due to higher EBT in the
aerospace segment. EBT for the six-month period ended July 31,
2003 was $273.1 million, compared to $334.2 million for the same
period last year. This decrease is mainly attributable to lower
EBT in the aerospace segment, partially offset by higher EBT in
the transportation segment.
Income from continuing operations was $96.0 million, or $0.05 per
share, for the second quarter of the current fiscal year,
compared to $43.3 million, or $0.02 per share, for the second
quarter last year. For the six-month period ended July 31, 2003,
income from continuing operations was $178.1 million, or $0.10
per share, compared to $222.6 million, or $0.15 per share, for
the same period last year.
Discontinued operations
Loss from discontinued operations (Bombardier Recreational
Products) totalled $2.8 million for the second quarter of the
current fiscal year, compared to income of $24.7 million for the
same period last year. This decrease in income is mainly due to
the change in the timing of recognition of sales concessions
under a newly adopted accounting principle and a different
product mix. Discontinued operations include revenues of $492.1
million for the three-month period ended July 31, 2003, compared
to $500.4 million for the same period last year.
Consolidated net income and backlog
Resulting net income was $93.2 million, or $0.05 per share, for
the second quarter of the current fiscal year, compared to $68.0
million, or $0.04 per share, for the second quarter last year.
On a year-to-date basis, net income totalled $173.9 million, or
$0.10 per share, compared to $265.2 million, or $0.18 per share,
for the same period last year.
As at July 31, 2003, the order backlog was $48.1 billion,
compared to $44.4 billion as at Jan. 31, 2003. This increase in
backlog is mainly attributable to the Metronet consortia orders
received during the first quarter of the current fiscal year,
partially offset by a decrease in the backlog in the aerospace
segment and the impact of the strengthening of the Canadian
dollar compared to the U.S. dollar and the euro.
/T/
Bombardier Aerospace
- Revenues of $2.8 billion
- EBT of $24.3 million
- Order backlog of $16 billion
- Aircraft deliveries totalled 85 compared to 74 in same quarter last
year
/T/
During the year ended Jan. 31, 2003, the Corporation changed its
method of accounting for the cost of sales of aircraft from the
program accounting method to the average cost accounting method.
In addition, non-recurring costs, including prototype design and
development, which were previously deferred as inventory costs,
are now accounted for as program tooling in property, plant and
equipment. These changes in accounting policies were adopted
retroactively with restatement of prior-period financial
statements, including the unaudited interim consolidated
financial statements for the three- and six-month periods ended
July 31, 2002.
Bombardier Aerospace's segmented revenues amounted to $2.8
billion for the three-month period ended July 31, 2003, compared
to $2.7 billion for the same period the previous year. This
increase is mainly due to higher deliveries of regional jets,
partially offset by a lower effective exchange rate for the U.S.
dollar, which had an impact of approximately $170 million.
EBT amounted to $24.3 million for the second quarter ended July
31, 2003, compared to a negative EBT of $74.7 million for the
same period last year.
Aircraft deliveries totalled 85, compared to 74 in the second
quarter of the previous fiscal year. This number includes
deliveries of 19 business aircraft and 66 regional aircraft.
The aerospace firm order backlog totalled $16 billion as at July
31, 2003, compared to $18.7 billion as at Jan. 31, 2003. The
reduction in the backlog, when compared to Jan. 31, 2003,
reflects higher deliveries versus orders received, as well as a
negative foreign exchange adjustment of approximately $1.0
billion, relating to a lower exchange rate for the U.S. dollar
compared to the Canadian dollar.
/T/
Bombardier Transportation
- Revenues of $2.3 billion
- EBT of $104.5 million
- New order intake totalling $3.4 billion for the quarter
- Order backlog of $32.1 billion
/T/
For the second quarter ended July 31, 2003, Bombardier
Transportation's segmented revenues amounted to $2.3 billion,
compared to $2.4 billion for the second quarter of the previous
year. This decrease is mainly due to a lower level of activities
as a result of the timing of the completion and start-up of
contracts, partially offset by the strengthening of the average
exchange rate of the euro compared to the Canadian dollar, which
had an impact of approximately $150 million.
EBT amounted to $104.5 million for the second quarter ended July
31, 2003, compared to $108.5 million for the same period last
year.
Bombardier Transportation's backlog reached $32.1 billion as at
July 31, 2003, compared to $25.7 billion as at Jan. 31, 2003.
Bombardier Transportation signed contracts for a total value of
$3.4 billion during the quarter. Major contracts were with Kung
Sing Engineering Corporation for the supply of a 15-km rapid
transit system, including 202 vehicles, for the Neihu Line in the
City of Taipei in Taiwan, valued at $729 million; and for the
supply of 233 double-deck cars and 60 four-car regional trains
for Deutsche Bahn AG of Germany, for a total value of $722
million.
/T/
Bombardier Capital
- Revenues of $172.9 million
- EBT of $18.5 million
- 16.7% reduction of wind-down portfolios for the quarter
/T/
For the second quarter of the current fiscal year, Bombardier
Capital's segmented revenues amounted to $172.9 million, compared
to $222.3 million for the quarter ended July 31, 2002. The
decrease reflects the reduction of assets under management which
is an integral part of the financial restructuring plan.
Bombardier Capital's EBT amounted to $18.5 million for the
quarter ended July 31, 2003, compared to an EBT of $31.2 million
for the same period last year. This decrease is mainly due to the
decrease in revenues from the wind-down portfolios, partially
offset by a decrease in non-interest expenses.
Assets under management amounted to $6.8 billion as at July 31,
2003, compared to $9.7 billion as at Jan. 31, 2003. This 29.6%
decrease is primarily due to the continued reduction of the
wind-down portfolios and, in particular, the receivable factoring
and business aircraft portfolios, as well as a decline in the
inventory finance portfolios, consistent with a lower cyclical
level of activities for the underlying businesses. In addition,
the strengthening of the Canadian dollar compared to the U.S.
dollar also contributed approximately $600 million to the
decrease in assets under management.
The reduction in the wind-down portfolios is proceeding as
planned. These portfolios were reduced by $688.1 million or 16.7%
in the second quarter, for an overall decrease of 35.8% for the
first six months of the current fiscal year.
Bombardier Inc., a diversified manufacturing and services
company, is a world-leading manufacturer of business jets,
regional aircraft, rail transportation equipment and motorized
recreational products. It also provides financial services and
asset management in business areas aligned with its core
expertise. Headquartered in Montreal, Canada, the Corporation has
a workforce of some 75,000 people and manufacturing facilities in
25 countries throughout the Americas, Europe and Asia-Pacific.
Its revenues for the fiscal year ended Jan. 31, 2003 stood at
$23.7 billion Cdn. Bombardier shares are traded on the Toronto,
Brussels and Frankfurt stock exchanges (BBD, BOM and BBDd.F).
The Management's Discussion and Analysis and the Consolidated
Financial Statements are available at www.bombardier.com.
/T/
---------------------------------------------------------------------
FORWARD-LOOKING STATEMENTS
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 for
the year ended Jan. 31, 2003 under the heading Risks and
Uncertainties in the Management's Discussion and Analysis on the
Corporation's Web site.
---------------------------------------------------------------------
---------------------------------------------------------------------
CAUTION REGARDING NON-GAAP EARNINGS MEASURES
This release contains analyses based on the reported earnings in
accordance with Canadian generally accepted accounting principles
(GAAP) and analyses based on earnings measures, such as EBT and EBIT,
that do not have a standardized meaning prescribed by GAAP and are
therefore not readily comparable to similar measures presented by
other corporations.
---------------------------------------------------------------------
/T/
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Bombardier Inc.
Dominique Dionne
Vice President, Public Relations and Communication
(514) 861-9481
www.bombardier.com
-------------------------------------------------------------------------------- |
