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Bombardier Announces Solid Financial Results for the Third Quarter Ended October 31, 2008


WEBWIRE

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

* Consolidated revenues of $4.6 billion, compared to $4.2 billion last fiscal year
* EBITDA of $454 million, compared to $326 million last fiscal year
* EBIT of $315 million, compared to $201 million last fiscal year
* Net income of $245 million, compared to $91 million last fiscal year
* Earnings per share of $0.14, compared to $0.05 last fiscal year
* Strong cash position at $3.3 billion
* Backlog of $51.9 billion

Bombardier today reported solid financial results for the third quarter ended October 31, 2008. Revenues increased by 8% to reach $4.6 billion. Earnings before financing income, financing expense and income taxes (EBIT) grew by $114 million to $315 million, compared to an EBIT of $201 million last fiscal year ($269 million before an excess-over-average production cost (EOAPC) charge last fiscal year). EBIT margin reached 6.9% compared to last year’s 4.8% (6.4% before EOAPC charge).

Net income increased by $154 million, reaching $245 million, compared to $91 million for the same period last fiscal year. There was a free cash flow usage (cash flows from operating activities less net additions to property, plant and equipment) of $226 million for the third quarter, compared to a free cash flow of $560 million for the same period last fiscal year. The cash position remains strong at $3.3 billion after a negative foreign exchange translation adjustment of $495 million for the nine-month period ended October 31, 2008, compared to $3.6 billion as at January 31, 2008. The overall backlog stood at $51.9 billion, 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.

“We have delivered solid results again this quarter with increased revenues, EBIT and net income, generating a $0.14 earnings per share this quarter, compared to $0.05 last year,” said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc. “During the quarter, Bombardier Aerospace continued to improve its EBIT margin, underscoring the focus on execution. Bombardier Transportation increased its revenues and EBIT margin and received a good level of new orders at $2.8 billion for a book-to-bill ratio of 1.2. In order to meet their customers’ needs, both groups continued to invest in new products and technologies to further expand their portfolios.”

“Although it is too early to assess the severity and duration of the economic slowdown and its potential impact on both businesses, we are confident in our future, having taken significant steps in the past few years to strengthen our operations and financial position. We have a backlog totalling $51.9 billion – representing an average of 2.7 years of revenue – spread across all businesses and geographies. We have no significant long-term debt maturing before fiscal year 2013. We have $3.3 billion in cash and cash equivalents. Finally, Bombardier Transportation should be less impacted as governments, through public entities, often increase spending on infrastructure projects during economic downturns. We continue to closely monitor the situation, ” added Mr. Beaudoin.

Bombardier Aerospace
Bombardier Aerospace’s revenues totalled $2.3 billion, compared to $2.4 billion last fiscal year. EBIT came in at $199 million, compared to $122 million for the same period last year. This translates into an EBIT margin of 8.7% for the third quarter ended October 31, 2008, compared to 5.2% last fiscal year (8.1% before EOAPC charge). Bombardier Aerospace’s backlog stood at $26 billion as at October 31, 2008, compared to $22.7 billion as at January 31, 2008.

Business aircraft deliveries remained stable at 57 aircraft for the third quarter of both fiscal years 2009 and 2008. The orders in business aircraft totalled 48 aircraft, compared to 112 aircraft for the same period last year. This reflects a recent softening of demand for business aircraft in light of the current worldwide economic environment and the fact that Bombardier Aerospace received a record level of business aircraft orders in fiscal year 2008.

Bombardier Aerospace delivered 22 commercial aircraft during the three-month period ended October 31, 2008, compared to 33 for the same period last fiscal year. The lower number of deliveries is mainly due to some customers requesting deferral of deliveries to the fourth quarter, and the impact on production of the transition from the Q200 and Q300 aircraft to the Q400 turboprop. Order intake totalled 20 aircraft in the third quarter, up from 12 for the same period last fiscal year – and includes 12 orders for the Q400 NextGen turboprop. In addition, subsequent to the quarter, Bombardier Aerospace received an order for eight Q400 NextGen turboprops from Ethiopian Airlines with options for four additional aircraft.

Taking into account the current market environment, Bombardier Aerospace expects to deliver a slightly higher level of aircraft, in aggregate, this fiscal year, compared to the 361 deliveries last fiscal year.

Bombardier Aerospace has achieved its previously stated goal to improve its EBIT margin to 8% and is committed to continue to improve its financial performance to an EBIT margin of 12% by fiscal year 2013, through the effective management of operations and working capital*.

Bombardier Transportation
Bombardier Transportation revenues rose to $2.3 billion, a $401-million increase over the same period last fiscal year. EBIT came in at $116 million, up from $79 million a year ago, while EBIT margin increased to 5.1% versus 4.2%. The order backlog stood at $25.9 billion as at October 31, 2008, compared to $30.9 billion as at January 31, 2008. This decrease is due to the weakening of foreign currencies, mainly the euro and the pound sterling, compared to the U.S. dollar.

Bombardier Transportation reported new orders worth $2.8 billion, compared to $3.1 billion last fiscal year, leading to a book-to-bill ratio of 1.2 in the context of a 21% increase in revenues over the same period last fiscal year. With a proven track record for outstanding reliability, the TRAXX locomotives contributed to the order intake generating the most important order of the quarter, which came from Germany-based Railpool Leasing Company for 58 TRAXX locomotives valued at approximately $276 million.

Subsequent to the quarter, Bombardier Transportation received, among others, an order for 219 driverless MOVIA metro cars from the Land Transport Authority of Singapore, for a value of approximately $380 million.

In order to address the challenges its customers face such as volatile energy costs, the need for operating efficiencies and global climate change, Bombardier Transportation launched, during the quarter, its ECO4 modular portfolio of technologies, products and solutions that maximize energy efficient operations and total train performance for rail operators. Balancing the four cornerstones of energy, efficiency, economy and ecology into one engineering portfolio, the ECO4 offers ten product concepts ready to use.

Financial Highlights
PDF Version

FINANCIAL RESULTS FOR THE THIRD QUARTER ENDED OCTOBER 31, 2008

ANALYSIS OF RESULTS

Consolidated results
Consolidated revenues totalled $4.6 billion for the third quarter ended October 31, 2008, compared to $4.2 billion for the same period last year. For the nine-month period ended October 31, 2008, consolidated revenues reached $14.3 billion, up from $12.2 billion for the same period last year.

For the third quarter ended October 31, 2008, EBIT rose to $315 million, or 6.9% of revenues, compared to $201 million, or 4.8% (6.4% before EOAPC charge), for the same period the previous year. For the nine-month period ended October 31, 2008, EBIT amounted to $994 million, or 7% of revenues, compared to an EBIT before special item of $597 million, or 4.9% (6.5% before EOAPC charge), for the same period last fiscal year.

Net financing expense came to $25 million for the three-month period ended October 31, 2008, down from $68 million for the corresponding period last year. For the nine-month period ended October 31, 2008, net financing expense totalled $82 million, compared to $209 million for the same period last year. The $43-million and $127-million decreases are mainly due to higher interest income on cash and cash equivalents, lower interest expense on long-term debt and a financing gain on long-term debt repayment.

The special item for the nine-month period ended October 31, 2007 relates to the write-off of the carrying value of Bombardier Transportation’s investment in Metronet.

The effective income tax rates were 15.5% and 21.4% respectively for the three- and nine-month periods ending October 31, 2008, compared to the statutory income tax rate of 31.5%. 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, the release of provisions of foreign investees, as well as the lower effective income tax rates of foreign investees, partially offset by permanent differences.

As a result, net income amounted to $245 million, or $0.14 per share, for the third quarter of fiscal year 2009, compared to $91 million, or $0.05 per share, for the same period the previous year. For the nine-month period ended October 31, 2008, net income was $717 million, or $0.40 per share, compared to $99 million, or $0.04 per share ($0.14 per share before special item), for the same period the previous year.

For the three-month period ended October 31, 2008, free cash flow usage totalled $226 million, compared to free cash flow of $560 million for the corresponding period the previous year. For the nine-month period ended October 31, 2008, free cash flow totalled $433 million, compared to $1,039 million for the corresponding period the previous year.

As at October 31, 2008, Bombardier’s order backlog stood at $51.9 billion, compared to $53.6 billion as at January 31, 2008. This decrease is due to the impact on Bombardier Transportation of the weakening of foreign currencies, mainly the euro and the pound sterling, compared to the U.S. dollar.

Bombardier Aerospace

* Revenues of $2.3 billion
* EBITDA of $311 million, or 13.6% of revenues
* EBIT of $199 million, or 8.7% of revenues
* Free cash flow of $9 million
* Net orders of 68 aircraft (book-to-bill ratio of 0.9)
* Order backlog of $26 billion

Bombardier Aerospace’s revenues amounted to $2.3 billion for the three-month period ended October 31, 2008, compared to $2.4 billion for the same period the previous year. The decrease is mainly due to a decrease in manufacturing revenues reflecting lower deliveries of commercial aircraft, partially offset by a favourable mix and improved selling prices for business aircraft.

For the third quarter ended October 31, 2008, EBIT rose to $199 million, or 8.7% of revenues, up from $122 million, or 5.2% of revenues for the same period the previous year ($190 million, or 8.1% before EOAPC charge). The 3.5 percentage-point increase is mainly due to improved selling prices and a favourable mix for business aircraft, an EOAPC charge of nil, compared to $68 million for the same period last fiscal year, the positive impact in other expense (income) from the revaluation of certain balance sheet accounts in foreign currencies, and the improved selling prices for commercial aircraft; partially offset by higher cost of materials due to price escalations, higher selling, general and administrative expenses as a result of increased activities, the net impact of the variation of the Canadian dollar against the U.S. dollar on operations, and a higher amortization expense.

Free cash flow amounted to $9 million for the third quarter ended October 31, 2008, compared to $579 million for the same period last fiscal year. The free cash flow for the third quarter ended October 31, 2008 mainly reflects Bombardier Aerospace’s profitability, partially offset by an increase in inventories. Free cash flow for the corresponding period last fiscal year mainly reflected an increase in advances on aerospace programs and profitability.

For the quarter ended October 31, 2008, Bombardier Aerospace delivered 80 aircraft, compared to 90 for the same period the previous year. The 80 deliveries consisted of 57 business aircraft, 22 commercial aircraft, and one amphibious aircraft (57 business and 33 commercial aircraft for the corresponding period last fiscal year).

Bombardier Aerospace expects a slightly higher level of aircraft deliveries, in aggregate, in fiscal year 2009, compared to the 361 deliveries last fiscal year. This is mainly due to an expected increase in business aircraft deliveries of approximately 10%, partially offset by an expected decline in commercial aircraft deliveries of approximately 10%. The decrease in commercial aircraft deliveries mainly results from lower turboprop deliveries due to the impact on production of the transition from the smaller Q200 and Q300 turboprops to the larger Q400 aircraft.

Bombardier Aerospace received 68 net orders during the quarter ended October 31, 2008, compared to 124 during the corresponding period the previous year. The 68 net orders comprised 48 business aircraft and 20 commercial aircraft (112 business and 12 commercial aircraft for the corresponding period last fiscal year). Orders for commercial aircraft notably came from France-based Brit Air who converted options for six additional CRJ1000 NextGen jetliners, for a value of approximately $299 million. Porter Airlines of Toronto exercised options to acquire four 70-seat Q400 turboprop airliners for a value of approximately $104 million while Austrian Airlines of Vienna ordered four Q400 NextGen turboprops, including two options, for a value of approximately $179 million if both options are exercised.

Bombardier Aerospace’s firm order backlog reached $26 billion as at October 31, 2008, compared to $22.7 billion as at January 31, 2008. The 15% increase reflects a strong order intake, mainly in business aircraft.

Bombardier Transportation

* Revenues of $2.3 billion
* EBITDA of $143 million, or 6.3% of revenues
* EBIT of $116 million, or 5.1% of revenues
* Free cash flow usage of $243 million
* New order intake totalling $2.8 billion (book-to-bill ratio of 1.2)
* Order backlog of $25.9 billion

Bombardier Transportation’s revenues rose to $2.3 billion for the three-month period ended October 31, 2008, up from $1.9 billion for the same period last year. The $401-million improvement is mainly due to increased activity in rolling stock in the regional train segment, mainly in France, Netherlands, and Germany, and in the locomotive segment in Germany.

For the third quarter ended October 31, 2008, EBIT totalled $116 million, or 5.1% of revenues, compared to an EBIT of $79 million, or 4.2% of revenues, for the same quarter the previous year. The 0.9 percentage-point increase is mainly due to a better margin for rolling stock in Europe, better contract execution in services, and a better absorption of selling, general and administration, as well as amortization expenses due to higher revenues; partially offset by lower margin in rolling stock in North America due to the margin deterioration on a specific contract and the settlement of an outstanding customer claim.

Free cash flow usage was $243 million for the quarter ended October 31, 2008, compared to free cash flow of $35 million for the same period last fiscal year. The free cash flow usage is mainly due to a decrease in advances and progress billings in excess of related long-term contract costs, partially offset by Bombardier Transportation’s profitability. Free cash flow for the corresponding period last fiscal year is also mainly due to the group’s profitability.

The order intake for the third quarter ended October 31, 2008 was $2.8 billion, compared to $3.1 billion for the same period last fiscal year, for a book-to-bill ratio of 1.2 in the context of a 21% increase in revenues. The decrease is due to lower order intake in rolling stock in Europe and Asia, partially offset by higher order intake in rolling stock in North America and in services in Europe, as well as a positive currency impact.

Bombardier Transportation’s backlog stood at $25.9 billion as at October 31, 2008, compared to $30.9 billion as at January 31, 2008. The decrease is due to the weakening of foreign currencies, mainly the euro and the pound sterling, compared to the U.S. dollar.

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 January 31, 2009 to the shareholders of record at the close of business on January 16, 2009.

Holders of Class B Shares (Subordinate Voting) of record at the close of business on January 16, 2009 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 $0.09896 Cdn per share on Series 2 Preferred Shares has been paid on September 15 and on October 15, and of $0.09000 Cdn per share on November 15, 2008.

Series 3 Preferred Shares
A quarterly dividend of $0.32919 Cdn per share on Series 3 Preferred Shares is payable on January 31, 2009 to the shareholders of record at the close of business on January 16, 2009.

Series 4 Preferred Shares
A quarterly dividend of $0.390625 Cdn per share on Series 4 Preferred Shares is payable on January 31, 2009 to the shareholders of record at the close of business on January 16, 2009.



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