page 116 Bombardier Inc. Annual Report 2003-04 NOTE 18. SPECIAL ITEMS (CONT ’ D) 19 I NCOME TAXES The reconciliation of income taxes allocated to continuing operations computed at the Canadian statutory rates to income tax expense (recovery) was as follows for the years ended January 31: Details of income tax expense (recovery) allocated to continuing operations were as follows for the years ended January 31: SEVERANCE PROPERTY, AND OTHER PLANT AND INVOLUNTARY EQUIPMENT TERMINATION COSTS WRITE-DOWNS OTHER TOTAL Balance as at January 31, 2003 $ 148 $ – $ 21 $ 169 Current expense 285 211 34 530 Changes in estimates (5) – – (5) Non-cash items – (211) (2) (213) Purchase equation adjustment (54) – – (54) Cash paid (139) – (6) (145) Effect of foreign currency exchange rate changes 2 – 2 4 Balance as at January 31, 2004 $ 237 $ – $ 49 $ 286 The following table summarizes provisions for severance and other involuntary termination costs, write-downs and other costs for the years ended January 31: 2004 2003 $ % $ % Income taxes expense (recovery) at statutory rates 3 33.6 (334) 35.9 Increase (decrease) resulting from: Manufacturing and processing credit (6) 42 Income tax rates differential of foreign investees (35) (31) Non-recognition of tax benefits related to foreign  investees’ losses and temporary differences 292 130 Write-down of deferred income tax assets 110 75 Recognition of previously unrecorded tax benefits (45) (26) Tax-exempt items (140) (145) Effect of substantively enacted income tax rate changes 6 (11) Large corporation tax 12 10 Other 8 69 Income tax expense (recovery) 205 (221) 2004 2003 Current income taxes Canada $6 7 $9 Foreign 60 37 Recognition of previously unrecorded tax benefits – foreign (18) – 109 132 Deferred income taxes Temporary differences and operating losses carried forward 7 (391) Effect of substantively enacted income tax rate changes 6 (11) Write-down of deferred income tax assets 110 75 Recognition of previously unrecorded tax benefits (27) (26) 96 (353) Income tax expense (recovery) $ 205 $(221)