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Bombardier Transportation’s segmented revenues amounted to $9.6 billion for the year ended January 31, 2004, compared to $9.4 bil- lion for the year ended January 31, 2003. Manufacturing revenues amounted to $8.7 bil- lion for the year ended January 31, 2004, compared to $8.6 billion for the preceding fiscal year. The increase was mainly due to a higher level of activity in Europe, partially off- set by a lower level of activity in North America as a result of the timing of the completion and the start-up of contracts. Service revenues amounted to $868 million for the year ended January 31, 2004, compared to $793 million for the preceding fiscal year. 

Cost of sales amounted to $8.4 billion for the year ended January 31, 2004, compared to $8.1 billion for the year ended January 31, 2003. As a result, the segmented margin was $1.1 billion or 11.9% for fiscal year 2004, com- pared to $1.3 billion or 13.7% for the previous fiscal year. The margin for fiscal year 2004 was negatively impacted by charges recorded in the fourth quarter, which are discussed below. The fiscal year 2003 margin was also nega- tively impacted due to revisions of estimates to complete certain contracts recorded during the fourth quarter. 

On March 16, 2004, the Corporation reached an agreement with Amtrak to settle all out- standing claims in connection with the Acela high-speed trainset and locomotive contracts (see also note 24 to the Consolidated Financial Statements). As a result of this agreement, the Corporation recorded a pre-tax charge of $139 million during the fourth quarter of fis- cal year 2004. This charge relates mainly to the excess of the value of receivables and an investment over the amount of the settlement. 

The investment was in a joint venture set up in connection with the Acela contracts. The charge also reflects an amount to provide for the extension of the periods covered by war- ranties, and for the remaining obligations under the contracts. 

Additional adjustments in the fourth quarter of fiscal year 2004 related to revisions in esti- mates for the completion of certain contracts also negatively impacted margins. These revi- sions in estimates relate to a limited number of contracts, and mainly arise from additional costs from unforeseen technical issues, primarily on new product development, anticipated liquidated damages and manu- facturing inefficiencies. 

Operating expenses amounted to $855 mil- lion, or 9% of segmented revenues for the year ended January 31, 2004, compared to $886 million, or 9% of segmented revenues last fiscal year. The decrease in operating expenses is mainly due to lower research and development expenses. 

Depreciation and amortization increased to $218 million for the year ended January 31, 2004, compared to $202 million for the year ended January 31, 2003. 

Net interest income was $34 million for the year ended January 31, 2004, compared to $103 million the previous fiscal year. This decrease is mainly due to an increase in average net assets mainly as a result of lower customer advances. 

As a result, EBT before special items amount- ed to $104 million, or 1.1% of segmented revenues for the year ended January 31, 2004, compared to EBT before special items of $310 million, or 3.3% of segmented revenues for the previous fiscal year. 

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In the fourth quarter of fiscal year 2004, special charges of $457 million ($434 million after tax) were recorded with respect to the previously discussed restructuring initiative. 

As a result, EBT amounted to negative $353 million, compared to $310 million for the preceding fiscal year. 

## Revenues and EBT margin before special items (BILLIONS OF CDN$) 

