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 ($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
"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.
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 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 $10.2 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.
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.
- 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
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.
- 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
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.
- Revenues of $172.9 million
- EBT of $18.5 million
- 16.7% reduction of wind-down portfolios for the quarter
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 Montréal, 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.
|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.
Vice President, Public Relations and Communication