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related to operations of $961 million in fiscal year 2004, compared to $778 million the previous year and from the net changes in non-cash balances of negative $1.7 billion, compared to positive $553 million for the previous year. The change in non-cash balances for fiscal year 2004 is mainly due to the impact of the decision to cease financing activities with BC for the factoring of receivables and pre-owned business aircraft, which had an impact of $1.6 billion, and a decrease in total customer advances received, mainly in the transportation segment. Note 21 to the Consolidated Financial Statements provides information on the net changes in non-cash balances related to operations. 

Bombardier’s net additions to property, plant and equipment totalled $270 million in fiscal year 2004, compared to $636 million in fiscal year 2003. This reduction is mainly due to lower capital expenditures for aerospace program tooling and higher proceeds from the sale of property, plant and equipment, mainly in the transportation segment. Note 26 to the Consolidated Financial Statements provides the distribution of property, plant and equip- ment, intangible assets and goodwill by geographic location. 

As a result, Bombardier’s free cash flow, defined as cash flows from operations less net additions to property, plant and equipment, amounted to a use of $1.0 billion for fiscal year 2004, compared to a free cash flow of $695 million the previous fiscal year. Free cash flow is a non-GAAP measure and is derived directly from the statement of cash flows; others using the term may calculate free cash flow differently. 

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Bombardier’s cash flows from investing activities in fiscal year 2004 included net proceeds of $930 million, relating to the sale of the recreational products segment, MAS and the Belfast City Airport. 

During fiscal year 2004, BC made advances and subordinated loans to Bombardier totalling $778 million, mainly as a result of cash generated from the reduction in the wind- down portfolios. 

Bombardier’s cash flows from financing activities amounted to $483 million in fiscal year 2004, compared to cash flows used in financing activities of $249 million in fiscal 

## Free cash flow Bombardier 

(BILLIONS OF CDN$) 

year 2003. The cash flows for fiscal year 2004 reflect the net proceeds of $1.2 billion from the issuance of 370 million Class B Shares (Subordinate Voting), partially offset by the repayment of long-term debt and short-term borrowings totalling $558 million, as well as dividend payments of $189 million. The cash flows used in financing activities in fiscal year 2003 reflect the repayment of short-term borrowings of $1.1 billion and dividend pay- ments of $278 million, partially offset by the issuance of long-term debt for $893 million and the net proceeds from the issuance of 9.4 million Series 4 Cumulative Redeemable Preferred Shares of $228 million. 

Cash used by discontinued operations amounted to $227 million for fiscal year 2004, compared to cash flows from discontinued operations of $125 million for fiscal year 2003. 

As a result of the previously-mentioned items, Bombardier’s cash and cash equivalents, net of short-term borrowings, amounted to $1.6 billion as at January 31, 2004, compared to $361 million as at January 31, 2003. 

## BC 

BC’s cash flows from operating activities amounted to $163 million for the year ended January 31, 2004, compared to $491 million for the previous fiscal year. The lower cash flows from operating activities for fiscal year 2004 are mainly the result of a decrease in net changes in non-cash balances related to operations, primarily arising from changes in receivables and accounts payable and accrued liabilities. 

BC’s cash flows from investing activities amounted to $1.3 billion in fiscal year 2004, compared to $1.1 billion in fiscal year 2003. 

