page 43 Bombardier Inc. Annual Report 2003-04 Fiscal year 2004 results include special items of $429 million, $457 million of which was recorded in the transportation segment in con- nection with a restructuring initiative (see the transportation section in this MD&A). Fiscal year 2003 results include special items of $1.3 billion recorded in the aerospace segment, mainly related to revisions of program esti- mates as well as write-downs of inventories and other related provisions (see the aerospace section in this MD&A). This MD&A is based on reported earnings in accordance with GAAP. It is also based on EBT before the effect of special items, a non-GAAP measure. Special items are viewed by Man- agement as items that do not arise as part of the normal day-to-day business operations or that could potentially distort the analysis of trends. These earnings measures do not have a stan- dardized meaning prescribed by GAAP and are therefore not readily comparable to similar measures presented by other corporations. On April 2, 2003, the Board of Directors  of the Corporation approved the decision  to sell the recreational products segment. Accordingly, the results of operations, cash flows and financial position of the recreational products segment are reported as discon- tinued operations. The results of operations of the recreational products segment are presented for all periods as a single line item in the Corporation’s consolidated statements  of income.  Consolidated revenues amounted to $21.3 billion for the year ended January 31, 2004, compared to $21.2 billion for the preceding fiscal year. The increase is mainly due to higher revenues in the transportation segment. Cost of sales amounted to $18.3 billion or 85.8% of revenues for fiscal year 2004,  compared to $18.1 billion or 85.4% of rev- enues for the previous fiscal year. This increase is mainly due to higher cost of sales in the transportation segment, arising from the  settlement of claims in connection with the Acela ** contracts and revisions of estimates related to a limited number of contracts,  partially offset by lower cost of sales in the aerospace segment. Operating expenses amounted to $1.6 bil- lion for fiscal year 2004, compared to $1.7 billion for the previous fiscal year. This decrease is due to lower operating expenses in all segments. Depreciation and amortization decreased to $793 million for the year ended January 31, 2004, compared to $806 million for the year ended January 31, 2003. This decrease is  due to lower depreciation in the BC segment, partially offset by higher depreciation in the manufacturing segments. Net interest expense increased to $236 million for fiscal year 2004, compared to $216 million the previous fiscal year (BC’s interest expense is classified as cost of sales). The increase in net interest expense results mainly from higher interest expense on long-term debt.  As a result, EBT before special items was $439 million or 2.1% of revenues for the  year ended January 31, 2004, compared to $381 million or 1.8% the previous fiscal year. Analysis of results The following table presents the results of operations for the years ended January 31: $^{(1)}$Includes selling, general and administrative and research and development expenses. (BILLIONS OF CDN$) Revenues and EBT margin from continuing operations before special items 2004 2003 Revenues $ 21,321 $21,189 Cost of sales 18,297 18,097 Operating expenses (1) 1,556 1,689 Depreciation and amortization 793 806 Interest expense, net 236 216 EBT before special items 439 381 Special items (429) (1,311) EBT 10 (930) Income tax expense (recovery) 205 (221) Loss from continuing operations (195) (709) Income from discontinued operations, net of tax 106 94 Net loss $ (89) $ (615) 19.9 5.0% 1.8% 2.1% F02 21.2 F03 21.3 F04 24 20 16 12 8 4 0 Revenues EBT %