Bombardier Inc. Annual Report 2003-04 page 73 created for the purpose of financing certain aircraft sales of the Corporation in return for a market fee. As at January 31, 2004, the Corporation had a net investment amounting to $42 million US ($56 million) in one of the SPEs. The Corporation’s maximum exposure from addi- tional support to the SPEs is included in note 24 to the Consolidated Financial Statements. BC services a portfolio of loans related to the manufactured housing business, currently being wound down, in return for a market fee. The outstanding amount of this portfolio as at January 31, 2004 was $1.6 billion ($2.1 billion as at January 31, 2003). foreign currency cash flows, offsetting changes in the fair values of the hedged transaction and the hedging instrument are not recognized in the Consolidated Financial Statements. Effective February 1, 2004, the Corporation changed its functional currencies for most of the operations in the aerospace segment and for the North American operations in the trans- portation segment to the U.S. dollar (see note 27 to the Consolidated Financial Statements). As a result, the forward foreign exchange con- tract portfolio used to hedge forecasted foreign currency cash flows has been realigned to the new currency exposure. counterparties, in the event of a default, set off rights against certain loans. Interest-rate cap agreements are used as a hedge against the exposure of the Corporation from interest rate increase protection granted in connection with certain sale commitments. The Corporation’s currency and interest rate hedging programs are typically unaffected  by changes in market conditions, as forward  foreign exchange contracts and interest-rate swaps are generally held to maturity consistent with the objective to lock in currency rates and interest rate spreads on the hedged item. The Corporation’s financial exposures are  managed through a central treasury in accor- dance with the Corporation’s foreign exchange policy and procedures. The derivative financial instrument counter-parties are all investment grade financial institutions. The Corporation does not use derivative instruments for trading or speculative purposes. The derivative financial instruments consist mainly of forward foreign exchange contracts, interest-rate swap agree- ments, cross-currency interest-rate swap agreements and interest-rate cap agreements used to manage currency and interest rate risks. The Corporation uses derivative financial instruments to manage currency exposure  arising from forecasted foreign currency cash flows, mainly the U.S. dollar and the sterling pound and, in the transportation segment,  various Western European currencies. Most of the forward foreign exchange contracts  are denominated in currencies of major  industrial countries (see note 22 to the Consolidated Financial Statements for details). In the North American operations, forward  foreign exchange contracts are mainly to sell U.S. dollars and buy Canadian dollars. In the European operations, forward foreign exchange contracts mainly allow the sale or purchase of U.S. dollars, sterling pounds, euros and other Western European currencies. To the extent that the forward foreign exchange contracts are used to hedge off-balance sheet forecasted The Corporation also uses derivative financial instruments to manage the impact of fluctuating interest rates, arising mainly on existing assets and liabilities and financial commitments. Bombardier’s interest-rate swap agreements convert certain financial obligations related to operating leases from variable to fixed interest rates. BC’s interest-rate swap agreements convert certain long-term debts and certain finance receivables from fixed to variable inter- est rates. BC enters into cross-currency interest-rate swap agreements in order to limit its exposure to interest rate fluctuations and manage its currency exposure. The cross- currency interest-rate swap agreements modify the characteristics of certain long-term debt, from the euro and the sterling pound to the U.S. dollar, and they also convert the interest rate from fixed to variable to match the variable interest of the corresponding finance receiv- ables. Interest-rate swaps are sensitive to changes in interest rates. Interest rate changes result in offsetting fair value gains or losses on long-term debt or financial obligations and interest-rate swaps, due to differences between current market interest rates and the stated interest rates within the instruments. A similar analogy can be made for the changes in foreign currency rates and their impact on the value of the offsetting forecasted foreign currency cash flows and forward foreign exchange contracts. Agreements governing the Corporation’s derivative transactions  contain certain standard provisions awarding Generally, gains and losses related to deriv- ative financial instruments are recorded in the same category as the hedged item. For exam- ple, when the hedged item is a forecasted foreign currency sale, gains and losses are included in revenue. When the hedged item is a forecasted foreign currency cost, gains or losses are generally included in cost of sales. Receipt and payments under interest-rate swap agreements are generally recognized in inter- est expense. The fair value of derivative financial instru- ments as at January 31, 2004 and 2003 is presented in note 22 to the Consolidated Financial Statements. Manufacturers of commercial aircraft custom- arily provide financing support to facilitate their customers’ access to capital. This support may take a variety of forms including providing assistance to customers in accessing and structuring debt and equity for aircraft acqui- sitions, or providing assurance that debt  and equity are available to finance such  acquisitions. Bombardier may provide interim financing to customers while permanent financing is being arranged. As at January 31, 2004, Bombardier had outstanding financing commitments to 10 cus- tomers amounting to $4.6 billion, net of third-party financing already arranged. It is anticipated that the aircraft related to these financing commitments will be delivered  during the next six fiscal years. Total customer Financing commitments Derivative instruments