page 127 Bombardier Inc. Annual Report 2003-04 24 COMMITMENTS AND CONTINGENCIES Aircraft sales In addition to the commitments and contingencies described elsewhere in these Consolidated Financial Statements, the Corporation is subject to other off-balance sheet risks. The table below presents the maximum potential exposure for each major group of exposure as at January 31.  The maximum potential exposure does not reflect payments expected by the Corporation. $^{(1)}$Some of the residual value guarantees can only be exercised once the credit guarantees have expired without exercise and, therefore, must not be added together to calculate the combined maximum exposure for the Corporation.  $^{(2)}$In addition, the Corporation has also provided performance and other guarantees (see section g). The Corporation’s maximum exposure in connection with credit and residual value guarantees related to sale of aircraft represents the face value of the guarantees before giving effect to the net benefit expected from the estimated value of the aircraft and other collateral available to mitigate the Corporation’s exposure under these guarantees. The provisions for anticipated losses have been established to cover the risks from these guarantees after considering the effect of the estimated resale value of the aircraft, which is based on independent third- party evaluations, and the anticipated proceeds from other collateral covering such exposures. The anticipated proceeds from the collaterals are expected to cover the Corporation’s total credit and residual value exposure after taking into account the provisions and liabilities. a) Credit and residual value guarantees Bombardier provides credit guarantees in the form of guarantees of lease payments, as well as services related to the remarketing of aircraft. These guarantees are mainly issued for the benefit of providers of financing to customers, maturing in different periods up to 2024. Substantially all financial support involving potential credit risk lies with commercial airline customers. The credit risk relating to three commercial airline customers accounted for 43% of the total maximum credit risk as at January 31, 2004. In addition, Bombardier provides guarantees for the residual value of aircraft at the expiry date of certain financing and lease agreements. The following table summarizes the outstanding residual value guarantees as at January 31, 2004 and the period in which they can be exercised: The provisions and liabilities recorded in connection with the credit and residual value guarantee exposure totalled $1,094 million as at January 31, 2004 ($919 million as at January 31, 2003). From 1 to 5 years $ 158 From 6 to 10 years 653 From 11 to 15 years 923 Thereafter 1,454 $3,188 2004 2003 MAXIMUM MAXIMUM POTENTIAL PROVISION POTENTIAL PROVISION EXPOSURE AND LIABILITIES EXPOSURE AND LIABILITIES Aircraft sales Credit (a) $1,439 $1,049 Residual value (a) 3,188 2,871 Mutually-exclusive exposure (1) (1,148) (818) Total credit and residual value exposure 3,479 $1,094 3,102 $ 919 Trade-in options (b) 2,630 60 3,586 121 Put options (c) 776 30 1,137 32 Other (2) Credit (e) 59 – 75 – Residual value (e) 157 – 180 – Repurchase obligations (f) $ 245 $ – $ 262 $ –