MAKING good on our  COMMITMENTS page 20 Bombardier Inc. Annual Report 2003-04 As the cover of this document suggests, we have made a lot of progress over the course of a very challenging fiscal year—and there is a lot more progress to be made. In last year’s annual report, I outlined a rigorous action plan designed to address shareholder concerns, regain the confidence of the marketplace  and restore Bombardier to prosperity. During the past 12 months, we have demonstrated both the capability and the resolve required to execute that plan. In short, we have done what we said we would do—we’ve made good on our commitments. Let’s examine the record. Year one of the action plan entailed strength- ening Bombardier’s balance sheet and supplementing our working capital by means of a recapitalization program and the divestitures of the recreational products business and certain non-core assets. The outcome? A successful equity offering yielded total proceeds of $1.2 billion—some $400 million or 50% more than originally anticipated. Liquidity was further enhanced by the sale of our recreational products business, which was completed in December 2003, for a total consideration of $960 million. Successful divestitures, along with the sale of a significant portion of Bombardier Capital’s business aircraft portfolio, boosted total proceeds from our recapitalization initiative to some $2.5 billion. As well, we success- fully renewed the Company’s short-term bank facilities in North America and in Europe, confirming that key lenders have confidence in Bombardier. Elsewhere, we have continued with the orderly winding down of portfolios at Bombardier Capital, which is now tightly focused on two areas: inventory financing and the interim financing of commercial aircraft, within clearly defined limits on both the amount of capital that can be committed and the number of aircraft. We also delivered on our commitment to switch from program accounting to average cost accounting in Aerospace to facilitate enhanced investor understanding of the Company’s financials. And in keep- ing with our move to a simpler structure, Aerospace and Transportation have assumed the responsibilities of the former Bombardier International  unit, which essentially had accomplished its mission of helping estab- lish beachheads in the emerging markets of Asia, Eastern Europe and  Latin America.  Together, these achievements represent a tremendous start to our plan. They gave us some breathing space from a balance sheet perspective and—just as importantly—they have resulted in a much more focused enter- prise. In today’s intensely competitive global marketplace, focus is everything. The focus of today’s Bombardier is planes and trains—period. We  now are in a position to concentrate all our efforts and resources on main- taining and enhancing Bombardier’s leadership positions in the global aerospace and rail transportation industries. Moreover, we are beginning to see concrete results from the intense focus on costs and financial discipline that has been brought to bear across the entire Aerospace group. With three new corporate jets being rolled out over the course of 2004— and having already moved to streamline production—Bombardier Aerospace is positioned to derive maximum benefit from an anticipated upturn in the business aircraft segment. In the fall of 2003, we announced a consolidation of our business aircraft manufacturing operations. Final line activities and interior completions for the Bombardier Learjet and Bombardier Challenger Series business aircraft programs are being integrated at the Wichita, Kansas and Montréal, Québec sites, respectively. The creation of these integrated manufacturing centres will result in annual savings, starting with the first full year of operation. In the aerospace arena, manufacturers of commercial aircraft continue to face the fallout from September 11, 2001, which is reflected in the general fragility of the airline industry. But as creator of the regional jet—which is leading a turnaround in the airline industry’s fortunes—Bombardier offers a sought- after solution to carriers’ woes. Demand for regional jets, in fact, continues to grow and Bombardier remains the market leader in this category. Paradoxically, however, many airlines have limited access to the financial resources they need to acquire new equipment. Under the circumstances, I am particularly pleased to note that Bombardier achieved an increase in its deliveries of regional aircraft for the latest year—a feat unmatched by the competition. Going forward, we will be working to facilitate increased avail- ability of outside sources of financing for commercial aircraft customers, in order to capitalize on continuing strong demand for our market-leading Bombardier CRJ product family. Aerospace I wish to make clear, however, that the streamlining taking place at Aerospace and Transportation is not about cost cutting per se. Rather,  it’s about reinforcing the competitiveness of our core businesses in the  context of fundamental changes to the environments in which they operate. Significant as they are, the recapitalization and refocusing initiatives enu- merated above were just the beginning of a rigorous, ongoing action plan that entails several more steps and many more months of commitment and hard work before our rebuilding task will be complete. We have already embarked on the second year of that plan, which involves a consolidation of manufacturing operations at Bombardier Aerospace that has already been launched, and a comprehensive restructuring plan at Bombardier Transportation. This will improve the competitiveness of all our operations by focusing resolutely on performance and the bottom line.