page 115 Bombardier Inc. Annual Report 2003-04 18 S PECIAL ITEMS Transportation Aerospace For the year ended January 31, 2003 The Corporation recorded the following special items: On March 16, 2004, the Board of Directors of the Corporation approved a proposed restructuring initiative to reduce the cost structure in the transportation segment. This restructuring initiative was launched as a result of significant plant manufacturing overcapacity. Bombardier proposes to reduce the global workforce of Bombardier Transportation by approximately 6,600 positions, 1,500 of which are contractual employees. In addition, seven production sites in five European countries have been identified for closure.  Additional charges of approximately $320 million related to this restructuring initiative are expected to be recorded as special items over the next two years. The Corporation completed the sale of its MAS unit for net proceeds of $85 million US ($112 million), generating a gain of $98 million. The Corporation also completed the sale of the Belfast City Airport for net proceeds of £35 million ($78 million), generating a gain of $3 million. Severance and other involuntary termination costs of $73 million were recorded, relating to reduction of employment levels at facilities in Montréal, Toronto, Belfast, Tucson and Wichita. The charges for the Tucson and Wichita facilities arise from the creation of integrated Bombardier Learjet and Challenger Series business aircraft manufacturing centres at the Wichita and Dorval facilities. Severance and other involuntary termination costs related mainly to the Corporation’s September 27, 2002 announcement to reduce employment levels at all Aerospace sites. The Corporation revised the assumptions used to estimate the average unit production cost for each program, including the reduction of accounting program quantities. As a result, special charges of $615 million were recorded mainly for the Bombardier Q-Series, Bombardier Global Express and Bombardier Learjet 45 programs. The changes in estimates, including revisions of accounting program quantities, reflected the continued uncertainty in the turboprop market and the weakness of the business aircraft segment. Special charges of $556 million were recorded, $171 million of which was mainly related to the write-down in the value of pre-owned aircraft inventories, and from lower-than-anticipated sub-lease revenues on pre-owned turboprop aircraft was recorded in the second quarter. In addition, as a result of market price declines in the pre-owned business and turboprop aircraft markets, an additional special charge of $385 million was recorded in the fourth quarter. A special charge of $32 million related to the write-down of turboprops production inventories was also recorded. The Corporation also recorded special charges of $41 million in connection with the final settlements of a lawsuit and a contractual dispute with a customer. For the year ended January 31, 2004 2004 2003 Transportation Severance and other involuntary termination costs $ 212 $ – Property, plant and equipment write-downs 211 – Other 34 – Aerospace Gains on sale of MAS and Belfast City Airport (101) – Severance and other involuntary termination costs 73 67 Revision of program estimates – 615 Write-down of inventories and other related provisions – 588 Claim settlements – 41 Special items before income tax 429 1,311 Income tax recovery (22) (351) $ 407 $ 960