Bombardier News April 2009

April 2, 2009 — Montréal
Corporate

Bombardier today reported strong financial results for the fourth quarter and the year ended January 31, 2009 showing improvements in revenues, profitability and a robust cash position. Revenues increased by 13% to reach $19.7 billion. Earnings before financing income, financing expense and income taxes (EBIT) reached $1.4 billion, up 56% compared to $902 million before special item last fiscal year ($1.2 billion before excess-over-average production cost (EOAPC) charge last fiscal year). EBIT margin at 7.2% compares to last year’s 5.2% before special item (6.7% before EOAPC charge). Diluted earnings per share (EPS) reached $0.56, compared to $0.16 ($0.26 before special item) last fiscal year. Net income reached $1 billion, compared to $317 million last fiscal year.

Free cash flow (cash flows from operating activities less net additions to property, plant and equipment and intangible assets) totalled $342 million compared to $2 billion last fiscal year. The cash position remained strong at $3.5 billion as at January 31, 2009, compared to $3.6 billion as at January 31, 2008. Last December, notwithstanding the difficult credit environment, a 3.75 billion euros letter of credit facility agreement was negotiated for Bombardier Transportation with a syndicate of first quality international financial institutions.

The overall backlog stood at $48.2 billion as at January 31, 2009 compared to $53.6 billion as at January 31, 2008. The decrease is due to the impact of the weakening of foreign currencies compared to the U.S. dollar on Bombardier Transportation’s backlog.

“During the past year, we more than held our own as the world’s financial markets tumbled and the global economy weakened. In fact, we reached a milestone with net income rising to $1 billion, for the first time in our history and our EPS more than doubled to reach $0.56 from $0.16 last fiscal year,” said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc.

“We continued to make progress with both Bombardier Aerospace and Bombardier Transportation delivering an excellent financial performance in fiscal year 2009. Our Aerospace group had an EBIT margin of 9% for the year, exceeding its goal of 8%. Transportation is well on its way to achieving its 6% target for fiscal year 2010 having reached 6.2% EBIT margin in the fourth quarter, and 5.3% for the full fiscal year.”  

“There is no doubt that we are going through challenging times and our business environment is changing fast. There’s a need for prudent execution, clear priorities and decisive action in the current context. However, we believe we are well positioned to face this difficult economic environment with a strong balance sheet, high level of liquidity as well as a large and diversified backlog, both by product and geographies,” added Mr. Beaudoin.

Bombardier Aerospace
At Bombardier Aerospace, revenues increased to $10 billion compared to $9.7 billion last fiscal year, while EBIT rose to $896 million, compared to $563 million last fiscal year. This represents an EBIT margin of 9%, versus last year’s 5.8% (8.6% before EOAPC charge).

Bombardier Aerospace’s backlog reached $23.5 billion as at January 31, 2009, compared to $22.7 billion at the same date last year. Since February 5, 2009, the number of net orders and deliveries for fiscal year ended January 31, 2009 has been revised downward. The group registered 367 net orders for business, commercial and amphibious aircraft, compared to 698 aircraft last fiscal year. Deliveries totalled 349 aircraft, versus 361 last fiscal year. In the business aircraft market, Bombardier Aerospace maintained its leadership, on a revenue basis, with 235 deliveries as well as 251 net orders, for a book-to-bill ratio of 1.1. Commercial aircraft net orders totalled 114 aircraft, while 110 aircraft were delivered during the year, for a book-to-bill ratio of 1.0.   

Although Bombardier Aerospace has the most comprehensive product line of all business aircraft manufacturers, with an offering in 95% of the total market, business aircraft demand has deteriorated rapidly during the second half of calendar 2008 and is expected to remain weak for the foreseeable future. As a result, Bombardier Aerospace now expects to deliver approximately 25% less business aircraft this fiscal year compared to fiscal year 2009, while still expecting to increase deliveries of its commercial aircraft by 10% compared to last fiscal year.

Bombardier Aerospace is revising downward all of its business and regional jets production rates and implementing measures to meet the continuing challenges facing the aviation industry. This adjustment will result in a further reduction of approximately 10 percent of Bombardier Aerospace’s total workforce, or approximately 3,000 employees, at its facilities in Canada, the United States, Mexico and Northern Ireland by the end of calendar year 2009. This latest manpower reduction is in addition to the 1,360 layoffs announced last February 5 when Bombardier adjusted the production rates of its Learjet and Challenger aircraft. Severance costs associated with these layoffs are expected to total approximately $30 million.

Bombardier Aerospace is well positioned in the regional jet and turboprop categories due to the economic advantage of its products, a large installed customer base and family commonality benefits across the CRJ and the Q-Series aircraft. While the production level for the Q400 turboprop has been increased as demand for this aircraft remains strong, the production rate for the CRJ NextGen regional jets will be reduced in the latter part of fiscal year 2010 to adjust for a slowdown in new orders and deferral requests by some customers. The impact of this reduction on employment is reflected in the above-mentioned layoffs.

Development of Bombardier’s newly launched aircraft, the CRJ1000, the Learjet 85 and CSeries aircraft programs are progressing as scheduled. In March 2009, two customers signed purchase agreements for the CSeries aircraft: Deutsche Lufthansa AG signed for 30 CS100 aircraft with options for an additional 30 CSeries aircraft and Lease Corporation International (LCI) for three CS100 and 17 CS300 jetliners with options for a further 20 CSeries aircraft. These new product developments will enable Bombardier to re-allocate as many employees as possible who meet the requirements of open positions, thereby reducing the number of layoffs resulting from the decrease in production rates.

Bombardier Aerospace believes that EBIT margin will be negatively impacted until markets return to normal economic conditions, but remains committed to its objective of an EBIT margin of 12% by fiscal year 2013.