page 49 Bombardier Inc. Annual Report 2003-04 Competition Deliveries Product development Market share Business aircraft The deliveries detailed in the following table include aircraft sold to customers of the North American Bombardier Flexjet program, which enables individuals or companies to purchase a share in a Bombardier business jet.  Bombardier Aerospace’s main competitors are Embraer-Empresa Brasileira de Aeronautica S.A. (Embraer) in the regional jet segment and the European consortium Avions de Transport Régional (ATR) in the turboprop segment. Main competitors in the business jet market are Gulfstream Aerospace Corporation, a subsi- diary of General Dynamics; Dassault Aviation; Cessna Aircraft Company, a subsidiary of Textron Inc.; and Raytheon Aircraft, a subsidiary of the Raytheon Company. The Bombardier Flexjet program’s major competitors include NetJets Inc., a subsidiary of Berkshire Hathaway; Flight Options LLC, an affiliate of Raytheon Company; and CitationShares, a  joint venture of Cessna Aircraft Company  and TAG Aviation. The increase in deliveries is mainly due to  the Bombardier Challenger 300 aircraft and Bombardier Learjet 40 aircraft entering into service. Deliveries for the fourth quarter of fiscal year 2003 reflect 14 less deliveries for  the Bombardier Learjet aircraft arising from the one-time negative impact of the decision to cease recognizing revenues on the sale of nar- row-body aircraft upon green aircraft delivery. During fiscal year 2004, Bombardier Aerospace invested approximately $216 million in new program development, compared to approxi- mately $404 million in fiscal year 2003. Product development expenditures were lower during fiscal year 2004 due to development programs entering the final certification phase, in which spending is traditionally lower, as well as the maturity of the Bombardier CRJ Series and Q-Series product portfolio. market share percentages do not correspond to those published in last year’s annual report. In calendar year 2003, the worldwide  business jet market decreased by 23%, from 674 units to 518 units. The market segment  in which Bombardier Aerospace is active decreased by 22%, from 529 units in calen- dar 2002 to 411 units in calendar year 2003. Economic indicators for the U.S. economy show a slow but constant recovery since the September 11, 2001 events. According to Bureau of Economic Analysis data, published on February 27, 2004, the real gross domestic product (GDP adjusted for inflation) year-over- year change was 0.5%, 2.2% and an estimated 3.1% for calendar years 2001, 2002 and 2003, respectively. However, market studies show that there is a delay between a sustained eco- nomic growth and an impact on business jet deliveries. The decrease of total deliveries in the market for calendar year 2003 reflects the above economic conditions. Bombardier Aerospace’s unit market share  in the business jet segments in which it  competes, including deliveries to customers of the North American Bombardier Flexjet pro- gram, decreased to 17% in calendar year 2003, compared to 19% in the previous calendar year. Bombardier Aerospace’s market share Bombardier Aerospace’s narrow-body business jet product family includes the following  aircraft: Bombardier Learjet 40, Bombardier Learjet 45, Bombardier Learjet 45 XR and Bombardier Learjet 60. The wide-body  business jet product family includes the  following aircraft: Bombardier Challenger 300, Bombardier Challenger 604, Bombardier  Global 5000, Bombardier$^{*}$Global Express$^{*}$and Bombardier Global Express XRS. The last Bombardier Learjet 31A aircraft was delivered in fiscal year 2004. Assessment of market share in the business jet industry is based on delivery data for  the calendar year from the General Aviation Manufacturers Association (GAMA), and  therefore does not correspond to the number of deliveries recorded during Bombardier Aerospace’s fiscal year. For some competi- tors, GAMA only provides the information by product family. In these cases, Bombardier Aerospace estimated the deliveries by seg- ment, using the United States Federal Aviation Administration (FAA) records, other databases, historical trends and competitive intelligence. During fiscal year 2004, GAMA revised its 2003 report to reflect Bombardier Aerospace’s deci- sion to cease recognizing revenue on the sale of narrow-body business aircraft at green deliv- ery. For this reason, Bombardier Aerospace’s 2004 2003 Bombardier Learjet 31A 2 4 Bombardier Learjet 40 4 – Bombardier Learjet 45 21 20 Bombardier Learjet 60 14 14 Bombardier Challenger 300 7 – Bombardier Challenger 604 24 23 Bombardier Global Express 17 16 89 77