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## Overview 

ALL AMOUNTS IN THIS REPORT ARE IN CANADIAN DOLLARS AND TABULAR FIGURES ARE IN MILLIONS OF CANADIAN DOLLARS, UNLESS OTHERWISE INDICATED. 

This Management’s Discussion and Analysis (MD&A) has been prepared to provide a meaningful understanding of the Corporation’s operations, performance and financial condition for the year ended January 31, 2004. The MD&A is presented in the following sections: 

<img src='content_image/10323.jpg'>

This MD&A includes “forward-looking statements” that are subject to risks and uncertainties. For information identifying legislative or regulatory, economic, currency, technological, competitive and other important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, see “Risks and uncertainties.” 

## Highlights 

## Recapitalization program 

- Net proceeds of $1.2 billion were generated on April 17, 2003 from the issue of 370 million Class B Shares (Subordinate Voting). 

- Net proceeds of $740 million, net of cash disposed, were generated on December 18, 2003 from the sale of the recreational prod- ucts segment, resulting in an after-tax gain of $101 million. 

- Net proceeds of $85 million US ($112 million) were generated on October 31, 2003 from the sale of Military Aviation Services (MAS), resulting in a gain of $98 million. 

- Net proceeds of £35 million ($78 million) were generated on May 22, 2003 from the sale of the Belfast City Airport (BCA), resulting in a gain of $3 million. 

- The wind-down portfolios were reduced by $3.0 billion, or 71%, during the current 

fiscal year. The reduction of these portfolios is proceeding as planned at Bombardier Capital (BC). 

## Restructuring initiative 

- On March 16, 2004, the Board of Directors approved a restructuring initiative in the trans- portation segment. The initiative proposes to reduce the global workforce of Bombardier Transportation by approximately 6,600 posi- tions and contemplates the closure of seven production sites in five European countries. The restructuring initiative also contemplates operational efficiency measures at five other European locations and other cost reduction programs. The Corporation is also targeting procurement and supplier base as areas offer- ing significant opportunities for cost savings and efficiency improvements. 

- The total costs of the restructuring initiative are estimated at $777 million, $457 million of which was recorded during the fourth quar- ter of fiscal year 2004, with the remainder to be recorded in fiscal years 2005 and 2006. 

## Major orders in fiscal year 2004 

- On April 4, 2003, Bombardier Transportation signed contracts amounting to approximately £3.4 billion ($7.9 billion) as part of the Metronet consortia for the supply, over 15 years, of rolling 

stock, signalling, maintenance and project management for the modernization of the London Underground. 

- On May 12, 2003, Bombardier Aerospace received an order from US Airways for the delivery of 60 Bombardier * CRJ200 * and 25 Bombardier * CRJ700 * aircraft, for a total value of approximately $2.2 billion US ($3.2 bil- lion). The 85 firm orders include the transfer of 36 Bombardier * CRJ * aircraft firm orders held by GE Capital Aviation Services, for a net backlog increase of 49 aircraft. 

- On September 15, 2003, Bombardier Aero- space received an order from SkyWest Airlines for 30 Bombardier CRJ700 aircraft, for a total value of approximately $862 mil- lion US ($1.2 billion). 

## Change of functional and reporting currencies 

- Effective February 1, 2004, the Corporation changed its functional currencies from the Canadian dollar and the sterling pound to the U.S. dollar for the Canadian and U.K. opera- tions in the aerospace segment and from the Canadian dollar and the Mexican peso to the U.S. dollar for the Canadian and Mexican operations in the transportation segment. In addition, effective the first quarter of fiscal year 2005, the Corporation will change its reporting currency to the U.S. dollar. 

