Bombardier is a global leader in aviation(1), creating innovative and game-changing planes. Our products
and services provide world-class experiences that set new standards in passenger comfort, energy
efficiency, reliability and safety.
Headquartered in Montréal, Canada, Bombardier is present in more than 12 countries including its
production/engineering sites and its customer support network. The Corporation supports a worldwide
fleet of approximately 4,900 aircraft in service with a wide variety of multinational corporations, charter
and fractional ownership providers, governments and private individuals.
Revenues(2)
$6.5 billion
Order backlog(3)
$10.7 billion
Employees(4)
16,000
A VISIONARY INDUSTRY LEADER
Bombardier is powered by a proud heritage
and visionary innovation in the design,
manufacture and support of world-class
business aircraft. Its comprehensive line of
industry-leading business jets is the largest
of any original equipment manufacturer, with
three leading aircraft families – Learjet,
Challenger and Global – spanning the light
to large categories in addition to modifying
these aircraft platforms for special mission
purposes, from surveillance and
reconnaissance to medical evacuations and
dignitary transport.
With a fleet of approximately 4,900 aircraft in
service worldwide, Bombardier boasts an
extensive aftermarket and support network
of service facilities, including wholly-owned
service centers in the U.S., Europe and Asia,
regional support offices, mobile response
teams, and dedicated aircraft parts
availability sustained by parts facilities,
including depots, hubs and repair facilities.
All amounts in this financial report are in US dollars unless otherwise indicated.
(1) On January 29, 2021, the Corporation closed the sale of the Transportation Business to Alstom. Refer to Note 31 - Discontinued
(2)
operations to our Consolidated financial statements for more details.
For fiscal year 2020. Aviation revenues for 2020 also included $895 million from commercial aircraft and aerostructures activities which
were divested during the course of the year.
(3) As at December 31, 2020.
(4)
As at December 31, 2020, including contractual and 670 inactive employees. Approximately 150 Corporate office employees are not
allocated to a reportable segment.
BUILDING A NEW PATH FORWARD
Bombardier is beginning an exciting new chapter focused exclusively on designing, building and
servicing the world’s best business jets. After a year of unprecedented challenges due to the global
pandemic, we are excited to begin this new journey. With an unmatched product portfolio, a world class
customer services network and incredibly talented employees, we have a strong foundation to build on.
With clarity and focus, we are hard at work to bring the same exceptional performance that has defined
our aircraft to every aspect of our company and each customer interaction. While there is much work to
be done to achieve this goal, I’m confident we are on the right path to a brighter future.
Dear Shareholders,
Despite the unprecedented challenges that hit our
world in 2020, I am extremely proud of how the
Bombardier team responded.
At the onset of the global pandemic, which
significantly impacted nearly every aspect of our
operations, our team acted swiftly to protect the
health and safety of our employees; to support
government mandates to slow the spread of the
virus; and to support our customers to the best of
our ability. As the crisis spread and we experienced
the sharpest decline in passenger rail traffic ever,
and business jet usage fell to levels far worse than
during the 2007-08 financial crisis, we took
immediate steps to reduce costs, preserve cash and
improve liquidity. After absorbing the initial impact,
we moved quickly to reset our production rates and
global supply chains to align with the new market
conditions and customer requirements.
This was a massive undertaking, involving close
coordination with thousands of suppliers and
customers and the rapid implementation of a new
set of safety protocols across all our sites to ensure
the health and safety of our employees and
communities. At the same time, we were able to
keep all our strategic divestitures moving forward to
complete our repositioning to a pure-play business
aviation company.
While we have chosen to exit the rail and
commercial aerospace businesses, we can all be
very proud of the innovation and advances
Bombardier brought to these industries. And, I’d like
to take this opportunity to recognize all of our
employees, past and present, who contributed to
these incredible chapters in our history.
In addition to successfully navigating the pandemic,
there were many notable accomplishments and
recognitions for Bombardier in 2020. They include
the successful production ramp-up of the
Global 7500 aircraft. With nearly 50 Global 7500
aircraft now in service, including 35 delivered in
2020, the aircraft continues to set the standard in the
industry with its unmatched combination of size,
performance and cabin comfort. Further highlighting
the strength of Bombardier’s portfolio, the
Global 5500 and Global 6500 were recognized by
AIN magazine as the best new business jets in
2020.
Bombardier also continued to position itself to
capture future growth opportunities by adding
significant new capacity to its global aftermarket
customer services network with major expansion
projects underway in Singapore, London, Melbourne
and Miami. The versatility of our aircraft for
specialized missions, such as Medivac, intelligence,
surveillance and reconnaissance operations —
another growth opportunity — was also highlighted
in 2020. For example, our Global platform was part
of three winning project bids in the fourth quarter
alone, making it one of the most sought-after
platforms in this space.
None of our achievements in 2020 would have been
possible without the hard work of many talented
people across Bombardier. On behalf of all our
shareholders, I want to thank them for their many
contributions and their dedication to the company, to
each other and to our customers.
I would like to especially recognize the Bombardier
employees who supported essential workers on the
frontlines fighting the COVID-19 pandemic. This
included our colleagues out in the field, ensuring that
public transportation systems remained operational,
as well as employee volunteers who worked to
provide first responders with the critical protective
equipment and life-saving tools they needed. To go
from making rail cars and business jets to
assembling life-saving protective equipment and
ventilators in just days is a testament to the skills
and commitment of our people.
While the world changed dramatically in 2020,
Bombardier remained a company defined by its
high-performing products and its thousands of smart,
passionate and thoughtful people who want to be
part of a winning team.
As always, all our accomplishments in 2020 were
achieved with a complete commitment to the highest
ethical standards, sustainable business practices
and to supporting the communities where we
operate. One of many examples is the leading role
Bombardier has taken in educating and developing
the next generation of Canadian innovators and
business leaders by again offering more than 1,000
paid internship positions for 2021, notwithstanding
BOMBARDIER INC. / 2020 FINANCIAL REPORT 1
the ongoing health and economic crisis. In 2020, we
also reaffirmed diversity, inclusion and equality as
integral parts of Bombardier’s culture and committed
to intensifying our focus on recruiting and developing
a more diverse workforce.
Looking ahead, to our future as a smaller, more
focused company, our goals are clear: to deliver
exceptional value to our customers and predictable
financial performance to our shareholders. To
achieve this, we are resetting our culture; to become
an organization that is people and customer-centric;
that values performance; operational excellence and
team spirit. A company that is transparent and
authentic at all times and at every level.
We begin 2021 with the business aviation market
showing signs of recovery. The pandemic has also
brought new attention and customers to private air
travel and the enhanced safety it provides.
Nevertheless, we expect that a full market recovery
will take several years. This harsh market reality,
combined with the higher than expected debt load
we are carrying due to the pandemic, requires
immediate action in the coming months.
First, we’ll need an effective debt management
strategy; one that minimizes interest costs while
creating runway to execute our strategy. Second, we
need to address our cost structure to be profitable in
the current market conditions. Despite past
restructuring actions, Bombardier still has an
infrastructure that is too large for the current market
conditions. This means that we need to
fundamentally transform the way we operate; and
we have already begun to act, launching a company-
wide initiative to drive productivity.
Specific actions include optimizing Bombardier’s
manufacturing footprint with the consolidation of
Global aircraft completion work and reviewing
options for underutilized hangar and industrial space
at the company’s Québec facilities. We have also
made the difficult decision to end production of
Learjet aircraft later this year.
With more than 3,000 aircraft delivered since the
entry-into-service of the very first Learjet in 1963, the
iconic Learjet has had a remarkable and lasting
impact on business aviation. Pilots and passengers
all over the world love to fly this trailblazing aircraft
and count on its unmatched performance and
reliability. However, given the number of new
entrants into the light-jet segment and the
increasingly challenging market dynamics, we will
focus our future efforts on our more profitable
Challenger and Global aircraft families, while
continuing to fully support the Learjet fleet well into
the future.(1)
With these and other actions, we aim to generate
$400 million annually in recurring savings by 2023,
ensuring a sustainable business in the near term
and better position the company for profitable growth
when the market improves.(1)
Of course, I fully recognize that our results, not our
words, will dictate your views and confidence in our
future. Nevertheless, I’m confident that we are taking
the right steps to make Bombardier an exceptional
company – a company which can compete and win
on the global stage - ethically, responsibly and
profitably. And, we look forward to updating you on
our progress throughout the coming year.
Eric Martel
President and Chief Executive Officer
(1) Forward-looking statement. See the forward-looking statements assumptions on which the guidance is based and forward-looking
statements disclaimer in Overview.
2 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Table of Contents
MANAGEMENT’S
DISCUSSION
AND ANALYSIS
CONSOLIDATED
FINANCIAL
STATEMENTS
For the fiscal year ended
December 31, 2020
For the fiscal years ended
December 31, 2020 and 2019
4
107
BOMBARDIER INC. / 2020 FINANCIAL REPORT 3
BOMBARDIER INC.
MANAGEMENT’S DISCUSSION
AND ANALYSIS
For the fiscal year ended
December 31, 2020
Table of Contents
OVERVIEW
AVIATION
TRANSPORTATION
OTHER
6
48
66
74
All amounts in this report are expressed in U.S. dollars, and all amounts in the tables are in millions of U.S. dollars, unless
otherwise indicated.
This MD&A is the responsibility of management and has been reviewed and approved by the Board of Directors of
Bombardier Inc. (the “Corporation” or “Bombardier”). This MD&A has been prepared in accordance with the requirements of
the Canadian Securities Administrators. The Board of Directors is responsible for ensuring that we fulfill our responsibilities
for financial reporting and is ultimately responsible for reviewing and approving the MD&A. The Board of Directors carries out
this responsibility principally through its Audit and Risk Committee. The Audit and Risk Committee is appointed by the Board
of Directors and is comprised entirely of independent and financially literate directors. The Audit and Risk Committee reports
its findings to the Board of Directors for its consideration when it approves the MD&A and financial statements for issuance to
shareholders.
The data presented in this MD&A is structured by reportable segment: Aviation and Transportation.
IFRS and non-GAAP measures
This MD&A contains both IFRS and non-GAAP measures. Non-GAAP measures are defined and reconciled to the most
comparable IFRS measure (see the Non-GAAP financial measures and Liquidity and capital resources sections in Overview
and each reportable segment's Analysis of results section).
Materiality for disclosures
We determine whether information is material based on whether we believe a reasonable investor’s decision to buy, sell or
hold securities of the Corporation would likely be influenced or changed if the information were omitted or misstated.
Certain totals, subtotals and percentages may not agree due to rounding.
The Financial Report for fiscal year 2020 comprises the message from our President and Chief Executive Officer to
shareholders, this MD&A and our consolidated financial statements.
4 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
The following table shows the abbreviations used in the MD&A and the consolidated financial statements.
Term
ACLP
bps
BT
Holdco
CCTD
CDPQ
CGU
CIS
DB
DC
DDHR
DSU
EBIT
Description
Airbus Canada Limited Partnership
Basis points
Bombardier Transportation (Investment) UK
Limited
Cumulative currency translation difference
Caisse de dépôt et placement du Québec
Cash generating unit
Commonwealth of Independent States
Defined benefit
Defined contribution
Derivative designated in a hedge relationship
Deferred share unit
Earnings (loss) before financing expense,
financing income and income taxes
EBITDA Earnings (loss) before financing expense,
financing income, income taxes, amortization and
impairment charges on PP&E and intangible
assets
Earnings (loss) before income taxes
Entry-into-service
Earnings (loss) per share attributable to equity
holders of Bombardier Inc.
EBT
EIS
EPS
Euribor
Euro Interbank Offered Rate
Term
FVOCI
Description
Fair value through other comprehensive income
(loss)
FVTP&L Fair value through profit and loss
GAAP
GDP
IAS
IASB
IFRS
Libor
MD&A
N/A
NCI
nmf
OCI
PP&E
PSU
R&D
RSU
SG&A
U.K.
U.S.
Generally accepted accounting principles
Gross domestic product
International Accounting Standard(s)
International Accounting Standards Board
International Financial Reporting Standard(s)
London Interbank Offered Rate
Management’s discussion and analysis
Not applicable
Non-controlling interests
Information not meaningful
Other comprehensive income (loss)
Property, plant and equipment
Performance share unit
Research and development
Restricted share unit
Selling, general and administrative
United Kingdom
United States of America
BOMBARDIER INC. / 2020 FINANCIAL REPORT 5
OVERVIEW
Table of Contents
HIGHLIGHTS OF
THE YEAR
KEY
PERFORMANCE
MEASURES
AND METRICS
IMPACTS OF
COVID-19
PANDEMIC
GUIDANCE AND
FORWARD-
LOOKING
STATEMENTS
CONSOLIDATED
RESULTS OF
OPERATIONS
CONSOLIDATED
FINANCIAL
POSITION
6
10
12
14
18
24
LIQUIDITY AND
CAPITAL
RESOURCES
CAPITAL
STRUCTURE
RETIREMENT
BENEFITS
RISK
MANAGEMENT
NON-GAAP
FINANCIAL
MEASURES
25
32
33
39
45
HIGHLIGHTS OF THE YEAR
Focused on Bombardier as a pure-play business aviation company
On January 29, 2021, the Corporation closed the sale of the Transportation Business to Alstom. The results of the
Transportation business have been classified as discontinued operations for current and comparative periods,
and the related assets and liabilities are presented as held for sale as of December 31, 2020. Refer to Note 31 -
Discontinued operations to our Consolidated financial statements for more details.
For clarity, continuing operations for 2020 include financial results of Aviation, including those related to
aerostructures businesses which were disposed on October 30, 2020, as well as the existing corporate cost
supporting both Aviation and Transportation, and the debt service costs of the current capital structure before
applying the proceeds from the sale of Transportation. As such, continuing operations should not be interpreted as
representing the future results of Aviation following the sale of Transportation.
6 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
For the fiscal years ended December 31
RESULTS
Revenues(3)
Adjusted EBITDA(2)(3)
Adjusted EBITDA margin(2)(3)
Adjusted EBIT(2)(3)
Adjusted EBIT margin(2)(3)
EBIT(3)
EBIT margin(3)
Net loss from continuing operations
Net loss from discontinued operations
Net loss
Diluted EPS from continuing operations (in dollars)
Diluted EPS from discontinued operations (in dollars)
Adjusted net loss(2)(3)
Adjusted EPS (in dollars)(2)(3)
Cash flows from operating activities
Continuing operations
Discontinued operations
Net additions to PP&E and intangible assets
Continuing operations
Discontinued operations
Free cash flow usage(2)
Continuing operations
Discontinued operations
As at December 31
Cash and cash equivalents excluding Transportation(4)
Cash and cash equivalents from Transportation
Available short-term capital resources(5)
Aviation order backlog (in billions of dollars)
Business aircraft
Other aviation(6)
2020
$ 6,487
$
200
2019
restated(1)
$ 7,488
$
684
Variance
(13) %
(71) %
3.1 %
9.1 %
(600) bps
$
(211)
$
400
nmf
(3.3) %
5.3 %
(860) bps
$
912
$
(520)
nmf
14.1 %
(6.9) %
2100 bps
$
$
$
$
$
$
(170)
(398)
(568)
(0.08)
(0.29)
(0.37)
$ (1,115)
$
(0.47)
$ (1,672)
$ (1,149)
$ (2,821)
$
$
$
221
133
354
$ (1,893)
$ (1,282)
$ (1,541)
$
(66)
$ (1,607)
$
$
$
$
$
$
$
$
$
$
$
$
$
(0.65)
(0.11)
(0.76)
(406)
(0.18)
(253)
(427)
(680)
366
157
523
(619)
(584)
$ (3,175)
$ (1,203)
2020
$ 1,779
$
671
$ 2,450
$ 3,203
2019
$ 2,089
$
540
$ 2,629
$ 3,925
$
$
10.7
—
$ 14.4
$
1.9
89 %
(503) %
65 %
0.57
(0.18)
0.39
(175) %
$
$
$
$
(0.29)
(561) %
(169) %
(315) %
(40) %
(15) %
(32) %
(206) %
(120) %
(164) %
Variance
(15) %
24 %
(7) %
(18) %
(26) %
(100) %
(1) Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of operations have been restated
for comparative periods. Refer to Note 31 - Discontinued operations to our Consolidated financial statements for more details.
(2) Non-GAAP financial measures. Refer to the Non-GAAP financial measures section in Overview for definitions of these metrics and to the
Analysis of results section and Liquidity and capital resources section for reconciliations to the most comparable IFRS measures.
(3) Includes continuing operations only.
(4) Includes cash and cash equivalents of $51 million from the aerostructures businesses presented under Assets held for sale as of
December 31, 2019. Refer to Reshaping the portfolio section in Aviation section and Sale of Transportation business section of this MD&A,
Note 30 - Disposal of businesses and Note 31 - Discontinued operations to our Consolidated financial statements for more details on the
transaction and the accounting treatments.
(5) Defined as cash and cash equivalents including cash and cash equivalents from Transportation plus the undrawn amounts under
Transportation’s revolving credit facility and our senior secured term loan.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 7
(6) Included the firm orders amounting to $1.1 billion from the aerostructures businesses presented under Assets held for sale as of
December 31, 2019. Also included 20 firm orders for CRJ900 as of December 31, 2019. The backlog for the CRJ Series aircraft program
amounting to $0.4 billion was removed as a result of the closing of the sale of the CRJ Series aircraft program to MHI on June 1, 2020.
•
•
•
•
•
•
•
KEY HIGHLIGHTS AND EVENTS
Full year revenues of $5.6 billion from business aircraft activities, reflect a 3% year-over-year growth
driven by the ramp up of Global 7500 aircraft deliveries, notwithstanding production rate adjustments on
other platforms to align with market conditions, impacted by the COVID-19 pandemic.
2021 business aircraft revenues are expected to be better than 2020 assuming a gradual market
recovery.(1)
2020 Aviation revenues also included $895 million from commercial aircraft and aerostructures activities
which were divested during the course of the year.
Adjusted EBITDA(2) and adjusted EBIT(2) from continuing operations of $200 million and $(211) million,
respectively, reflect the impact of the COVID-19 pandemic on aircraft deliveries and services activities at
Aviation, and include the full corporate costs supporting both Aviation and Transportation. Reported EBIT
of $912 million reflects the accounting gains on disposals of the CRJ and aerostructures businesses.
Adjusted EBITDA(2) is expected to be greater than $500 million in 2021, while adjusted EBIT(2) is expected
to be greater than $100 million.(1)
◦
The adjusted EBITDA growth in 2021 is expected to be driven by the progress on the Global 7500
learning curve, potential growth in aftermarket services and the impact of the Corporation’s
actions to improve profitability and cash generation announced in February 2021. The goal of
these actions is to make the organization more efficient and agile, capable of delivering stronger
financial performance under current market conditions. Such initiatives include a workforce
reduction of 1,600 positions, the consolidation of Global aircraft completion work in Montréal, a
review of options to address underutilized hangar and industrial space at the company's Québec
facilities and the decision to end production of the Learjet in 2021. Collectively, the Corporation
aims to generate $400 million annually in recurring cash savings from these actions by 2023. The
Corporation anticipates recording a restructuring charge of approximately $50 million in 2021 in
addition to a charge of $26 million recorded in the fourth quarter of 2020, both of which will be
reported as special items.(1)
Fourth quarter free cash flow(2) generation from continuing activities before interest and taxes(3) reached
$523 million, ahead of plan. Full year free cash flow usage(2) from continuing operations of $1.9 billion
reflects pandemic-related disruptions, mainly due to unfavorable changes in working capital, and also
include the full long-term debt interest cost and corporate expenses before the deployment of cash from
the sale of Transportation. Continuing operations’ cash flow usage from operating activities of $1.7 billion
for the full year.
Free cash flow usage(2) from continuing operations in 2021 is expected to be better than $500 million
including one-time costs and investments estimated at approximately $200 million.(1)
(1) Forward-looking statement. See the forward-looking statements assumptions on which the guidance is based and forward-looking
statements disclaimer in Overview.
(2) Non-GAAP financial measures. Refer to the Non-GAAP financial measures section in Overview for definitions of these metrics and to the
Analysis of results section and Liquidity and capital resources section for reconciliations to the most comparable IFRS measures.
(3) Non-GAAP financial measure, defined as cash flow from continuing operations amounting to $316 million for the fourth quarter of 2020,
minus net additions to PP&E and intangibles from continuing operations amounting to $51 million during the fourth quarter of 2020, plus net
interest and income taxes paid for continuing operations amounting to $258 million in the fourth quarter of 2020.
8 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
•
•
Bombardier begins 2021 with pro forma cash and cash equivalents(1) of approximately $5.4 billion,
including $1.8 billion of cash and cash equivalents at Bombardier Inc. (excluding Transportation) as of
December 31, 2020 and the approximately $3.6 billion of proceeds from the recently closed sale of
Transportation once it becomes fully available, and a pro forma net debt(1) of approximately $4.7 billion.
Bombardier will be hosting its 2021 Analyst day on Thursday March 4, 2021. The event will feature
updates from Eric Martel, Chief Executive Officer and the leadership team on the market outlook, the
actions to drive profitability and productivity, and give the opportunity to meet the leadership team. This
event will be virtual and followed by a Q&A session.
Completed divestitures to re-position Bombardier as a Business Aircraft Company
• On June 1, 2020, the Corporation concluded the sale of the CRJ Series commercial aircraft program to
Mitsubishi Heavy Industries, Ltd for a gross cash consideration of $585 million at closing.
• On October 30, 2020, the Corporation closed the sale of its aerostructures activities and aftermarket
services operations in Belfast, U.K.; Casablanca, Morocco; and its aerostructures maintenance, repair
and overhaul (MRO) facility in Dallas, U.S. to Spirit AeroSystems Holding, Inc for cash consideration of
$275 million, Spirit’s assumption of liabilities, including government refundable advances, pension
obligations, as well as certain adjustments to the parties’ trading agreements favourable to Bombardier.
The total transaction value is approximately $1.2 billion.
• On January 29, 2021, Bombardier closed the sale of its Transportation business to Alstom for net
proceeds of approximately $3.6 billion, including approximately $600 million in Alstom shares.(2)
(1) Non-GAAP financial measures. Pro-forma cash and cash equivalents include cash and cash equivalents at Bombardier Inc. (excluding
Transportation) of $1.8 billion as of December 31, 2020 and net proceeds of approximately $3.6 billion from the sale of Bombardier
Transportation, which assumes the full monetization of Alstom shares worth approximately $600 million, the release of any cash not
immediately available and is before the deployment of proceeds against any debt payment. Pro-forma net debt is defined as long-term debt
of $10.1 billion less cash and cash equivalents at Bombardier Inc. (excluding Transportation) of $1.8 billion as of December 31, 2020 less
net proceeds of approximately $3.6 billion from the sale of Bombardier Transportation.
(2) Refer to Note 31 - Discontinued operations to our Consolidated financial statements for more details on the transaction and the accounting
treatments.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 9
KEY PERFORMANCE MEASURES AND METRICS
The table below summarizes key performance measures and associated metrics evaluated only on a consolidated
basis. Our reportable segments use multiple other key performance measures to evaluate various key metrics.
Refer to each reportable segment’s Key performance measures and metrics section for further details.
KEY PERFORMANCE MEASURES AND ASSOCIATED METRICS
PROFITABILITY
LIQUIDITY
EBIT, adjusted EBIT(1) and adjusted EBITDA(1) as measures of performance.
•
• Diluted EPS and adjusted EPS(1), as measures of global performance.
•
•
Available short-term capital resources(2), as a measure of liquidity adequacy.
Free cash flow(1), as a measure of liquidity generation.
CAPITAL STRUCTURE
• Debt service cost.
• Debt maturity runway.
(1) Non-GAAP financial measures. Refer to the Non-GAAP financial measures, Consolidated results of operations and Liquidity and capital
resources sections for definitions of these metrics and reconciliations to the most comparable IFRS measures.
(2) Defined as cash and cash equivalents including cash and cash equivalents from Transportation plus the undrawn amounts under
Transportation’s revolving credit facility and our senior secured term loan.
For the fiscal years ended and as at
December 31
Profitability
Revenues(2)
Adjusted EBITDA(2)(3)(4)
Adjusted EBITDA margin(2)(3)(4)
Adjusted EBIT(2)(3)(4)
Adjusted EBIT margin(2)(3)(4)
EBIT(2)
EBIT margin(2)
FIVE-YEAR SUMMARY
2020
2019
restated(1)
2018
restated(1)
2017
restated(1)
2016
restated(1)
$ 6,487
200
$
3.1 %
$
$
(211)
(3.3) %
912
14.1 %
$ 7,488
684
$
9.1 %
400
5.3 %
$
$
(520)
(6.9) %
$ 7,321
453
$
6.2 %
279
3.8 %
227
3.1 %
$
$
$ 7,648
210
$
2.7 %
(13)
(0.2) %
(144)
(1.9) %
$
$
$ 8,765
141
$
1.6 %
$
$
(133)
(1.5) %
(454)
(5.2) %
Net loss from continuing operations
$
(170)
$ (1,541)
$
$
(398)
(568)
$
(66)
$ (1,607)
$
$
$
(87)
$
(667)
$ (1,099)
405
318
$
$
142
(525)
$
$
118
(981)
Net income (loss) from discontinued
operations
Net income (loss)
Diluted EPS (in dollars)(5)
Adjusted net loss(2)(3)
Adjusted EPS (in dollars)(2)(3)
$
$
$
(1) Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of operations have been restated
$
(0.37)
$ (1,115)
(0.47)
$
(0.24)
(468)
(0.14)
(0.76)
(406)
(0.18)
(0.48)
(635)
(0.25)
0.09
(7)
0.03
$
$
$
$
$
$
$
$
$
for comparative periods. Refer to Note 31 - Discontinued operations to our Consolidated financial statements for more details.
(2) Includes continuing operations only.
(3) Non-GAAP financial measures. Refer to the Non-GAAP financial measures, Consolidated results of operations and Liquidity and capital
resources sections for definitions of these metrics and reconciliations to the most comparable IFRS measures.
(4) Refer to the Consolidated results of operations section for details of special items recorded in 2020 and 2019.
(5) Includes both continuing operations and discontinued operations.
10 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
For the fiscal years ended and as at
December 31
Liquidity
Cash flows from operating activities
Continuing operations
Discontinued operations
Net additions to PP&E and intangible
assets
Continuing operations
Discontinued operations
Free cash flow (usage)(2)
Continuing operations
Discontinued operations
Cash and cash equivalents(3)
Available short-term capital resources(4)
Current portion of long-term debt
Long-term debt
FIVE-YEAR SUMMARY
2020
2019
restated(1)
2018
restated(1)
2017
restated(1)
2016
restated(1)
$
$
$
(358)
889
531
$
$
$
(621)
758
137
$
$
$
$
$
$
$
$
$
$
$
$
$
(1,672)
(1,149)
(2,821)
221
133
354
(1,893)
(1,282)
(3,175)
2,450
3,203
1,882
8,193
$
$
$
$
$
$
(253)
(427)
(680)
366
157
523
(619)
$
(584)
$
$ (1,203)
$ 2,629
$ 3,925
8
$
$ 9,325
$
$
$
$
$
$
587
10
597
307
108
415
(5) $ 1,195
122
(5) $ 1,317
$
280
$
(98)
$
$
182
$ 3,187
$ 4,373
9
$
$ 9,093
$
(5) $
(5) $ (1,553)
767
(786)
$ 3,057
$ 4,225
18
$
$ 9,200
$ 1,085
116
$
$ 1,201
$ (1,706)
642
$
$ (1,064)
$ 3,384
$ 4,477
31
$
$ 8,738
(1) Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of operations have been restated
for comparative periods. Refer to Note 31 - Discontinued operations to our Consolidated financial statements for more details.
(2) Non-GAAP financial measures. Refer to the Non-GAAP financial measures, Consolidated results of operations and Liquidity and capital
resources sections for definitions of these metrics and reconciliations to the most comparable IFRS measures.
(3) Includes cash and cash equivalents from Transportation of $671 million presented under Assets held for sale as of December 31, 2020, and
$51 million from the aerostructures businesses as of December 31, 2019, respectively. Refer to Reshaping the portfolio section in Aviation
section and Sale of Transportation business section of this MD&A, Note 30 - Disposal of businesses and Note 31 - Discontinued operations
to our Consolidated financial statements for more details on the transaction and the accounting treatments. Also included cash and cash
equivalents of the C Series aircraft program presented under Assets held for sale amounting to $69 million as of December 31, 2017.
(4) Defined as cash and cash equivalents including cash and cash equivalents from Transportation plus the undrawn amounts under
Transportation’s revolving credit facility and our senior secured term loan.
(5) Included the proceeds from the sale of the Downsview property for approximately $600 million in 2018.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 11
IMPACTS OF COVID-19 PANDEMIC
The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and
created significant economic uncertainty and disruption of financial markets. This section aims to assist users in
better understanding the impact of the pandemic on the Corporation by aggregating the disclosure found
elsewhere in this MD&A.
COVID-19 response
The Corporation has been closely monitoring and actively implementing and updating its response to the evolving
COVID-19 pandemic and its impacts on employees, operations, the global economy and the demand for its
products and services. The Corporation has formed a committee composed of the senior leadership team and key
leaders in the organization to monitor, on a daily basis, the evolution of the pandemic, to evaluate the measures
being put in place by local and national governments and the resulting impacts on the Corporation, and to
implement necessary contingency plans in real time as the current situation continues to unfold, with a focus on
three priorities: protecting employees’ health and safety; supporting customers to the best of its abilities; and
ensuring that the Corporation can successfully navigate through this global crisis. The Corporation’s actions are in
all cases closely aligned with both the health and safety mandates and support programs that have been
announced by the local governments in every region it operates.
The COVID-19 pandemic started impacting several Bombardier operations across the globe, including key
locations in Europe and North America through the second half of March 2020 where activities were significantly
reduced or suspended for several weeks. Starting in the last weeks of April and through the month of May,
operations globally gradually resumed with new safety measures in place.
On March 24, 2020, the Corporation suspended its 2020 financial outlook(1) to reflect the uncertainty related to the
financial impact of the COVID-19 pandemic on its global operations.
On a consolidated basis, the COVID-19 pandemic had a material negative impact on free cash flow(2) for the full
year, mainly from a higher working capital balance associated with lower deliveries and lower order intake.
Impacts of COVID-19 on Aviation
Canadian operations, where Global and Challenger aircraft are assembled and delivered, were temporarily
suspended in the last week of March 2020 and through several weeks during the second quarter due to the global
COVID-19 pandemic. Key aerostructures operations in Mexico and Belfast were similarly suspended, impacting a
total of approximately 15,000 Aviation employees globally. These disruptions, combined with the impact of
reduced order intake related to the economic uncertainty, meaningfully increased free cash flow usage(2) at
Aviation.
On June 5, 2020, Bombardier Aviation announced workforce adjustments in response to the COVID-19 pandemic.
With industry-wide business jet deliveries down by approximately 20% year-over-year due to the pandemic,
Bombardier adjusted its operations and workforce to ensure that it emerges from the current crisis on solid
footing. Accordingly, Bombardier Aviation made the difficult decision to reduce its workforce by approximately
2,500 employees. The majority of these reductions impacted manufacturing operations in Canada and is carried
out progressively. Bombardier’s worldwide customer service operations have continued to operate largely
uninterrupted throughout the pandemic. Bombardier recorded a special charge of $56 million in 2020, including
$4 million in the fourth quarter of 2020 for this workforce adjustment.
(1) Refer to our 2019 Financial Report for further details.
(2) Non-GAAP financial measure. Refer to the Non-GAAP financial measures section for a definition of this metric and reconciliation to the most
comparable IFRS measures.
12 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Impacts of COVID-19 on Transportation
Production at several locations, including key sites across Transportation’s largest markets in Europe and the
Americas, was temporarily suspended in the second half of March 2020 and through several weeks during the
second quarter due to the global COVID-19 pandemic. Approximately 10,000 Transportation employees globally
were affected by these shutdowns. These disruptions, combined with the impact of deferred order intake related
to the crisis, meaningfully increased free cash flow usage(1) at Transportation.
Measures to bolster liquidity in response to the COVID-19 pandemic
The management of consolidated liquidity requires a constant monitoring of expected cash inflows and outflows,
which is achieved through a detailed forecast of the Corporation’s liquidity position, as well as long-term operating
and strategic plans, to ensure adequacy and efficient use of cash resources. The Corporation uses scenario
analyses to stress-test cash flow projections. Liquidity adequacy is continually monitored which involves the
application of judgment, taking into consideration historical volatility and seasonal needs, stress-test results, the
maturity profile of indebtedness, access to capital markets, the level of customer advances, availability of letter of
credit and similar facilities, working capital requirements, the availability of working capital financing initiatives and
the funding of product development and other financial commitments.
In response to the COVID-19 pandemic the Corporation has taken on or is pursuing the following actions to adapt
to the current environment and manage liquidity:
•
The Corporation is managing costs through aggressive company-wide actions, including workforce
reduction, cutting non-essential spending. Discretionary capital expenditures is also being deferred,
mainly improving Aviation’s free cash flow(1) outlook.(2)
• Where applicable, the Corporation is participating in various government support programs, including
•
•
wage subsidies, bonding and letter of credit facilities, tax payment deferrals, pension contribution holidays
and other measures addressing liquidity needs of corporations during the crisis.
The Corporation concluded the sale of the CRJ Series aircraft program to Mitsubishi Heavy Industries, Ltd
for a gross cash consideration of $585 million at closing on June 1, 2020.
At Aviation, production rates were aligned to market demand. This reflects the extraordinary industry
interruptions and challenges caused by COVID-19. The production ramp-up of the Global 7500 is largely
unaffected by these rate changes given its solid backlog.
During the third quarter, the Corporation obtained a three-year senior secured term loan (the "Facility") of
up to $1.0 billion from investment funds and accounts managed by HPS Investment Partners, LLC,
providing additional liquidity to operate the business through the COVID-19 pandemic as it worked to
close previously announced divestitures undertaken to reshape Bombardier’s capital structure.
• On October 30, 2020, the Corporation closed the previously announced sale of its aerostructures
•
businesses to Spirit AeroSystems Holding, Inc. (Spirit) for cash consideration of $275 million and the
assumption of liabilities by Spirit, including government refundable advances and pension obligations, as
well as certain adjustments to the parties’ trading agreements favourable to the Corporation.
• On January 29, 2021, the Corporation closed the sale of Transportation to Alstom with net proceeds of
approximately $3.6 billion.
Management believes that the net proceeds from the sale of Transportation, combined with its year end cash and
cash equivalents of $1.8 billion excluding Transportation, will enable the Corporation to meet its currently
anticipated financial requirements for a period of at least, but not limited to, twelve months from the reporting date
supporting the Corporation’s ability to continue as a going concern.
Other
Refer to the Risks and uncertainties section of this MD&A for details on risk factors related to the COVID-19
pandemic. Refer to Note 4 - Use of estimates and judgment, to our Consolidated financial statements, for details
on use of estimates and judgments in the application of accounting policies in the context of the COVID-19
pandemic.
(1) Non-GAAP financial measure. Refer to the Non-GAAP financial measures section for a definition of this metric and reconciliation to the most
comparable IFRS measures.
(2) See the forward-looking statements disclaimer.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 13
GUIDANCE AND FORWARD-LOOKING STATEMENTS
On March 24, 2020, the Corporation suspended its 2020 financial outlook(1) to reflect the uncertainty related to the
financial impact of the COVID-19 pandemic on its global operations.
2021 Guidance(2)
Continuing operations only
Revenues
Adjusted EBITDA(3)
Adjusted EBIT(3)
2021 Guidance
> $5.6B
> $500 million
> $100 million
Free cash flow usage(3)
Usage better than $500 million including ~$200 million of non-recurring outflows
Aircraft deliveries (in units)
110 - 120
Revenues from business aircraft activities in 2021 are expected to be better than 2020 based on a gradual
economic recovery scenario. Growth opportunities are expected to come from increasing market share in the
large category and higher service revenues driven by increasing flight hours as well as an expansion of the global
services network with major projects underway in Singapore, London, Melbourne and Miami.
Adjusted EBITDA(3) for continuing operations including corporate costs is expected to be greater than $500 million
in 2021. This improvement is mainly driven by the progress on the Global 7500 learning curve, potential growth in
aftermarket services and the partial impact of the actions announced in February 2021 to improve the
Corporation’s profitability and cash generation. With amortization expected to be stable year-over-year at
approximately $400 million, adjusted EBIT(3) is expected to be greater than $100 million.
Free cash flow usage(3) from continuing operations in 2021 is expected to be better than $500 million including
one-time costs and investments estimated at approximately $200 million. Free cash flow(1) from continuing
operations in 2021 is expected to be driven by:
•
•
•
•
•
adjusted EBITDA(3) of greater than $500 million;
negative changes in net working capital as customer advances are consumed, partially offset by
improving order intake activity;
net additions to PP&E and intangible assets expected to be approximately in line with prior year;
lower cash interest, reflecting the deployment of the proceeds from the sale of Transportation towards
debt pay down; and
non-recurring items totaling approximately $200 million, including legacy outflows related to credit and
residual value guarantee liabilities and reverse factoring, and approximately $50 million of restructuring
costs.
(1) Refer to our 2019 Financial Report for further details.
(2) Forward-looking statement. See the forward-looking statements assumptions on which the guidance is based and forward-looking
statements disclaimer in Overview.
(3) Non-GAAP financial measures. Refer to the Non-GAAP financial measures and Liquidity and capital resources sections for definitions of
these metrics and reconciliations to the most comparable IFRS measures.
14 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Forward-looking Statements Disclaimer
This MD&A includes forward-looking statements, which may involve, but are not limited to: statements with respect to our
objectives, anticipations and outlook or guidance in respect of various financial and global metrics and sources of contribution
thereto, targets, goals, priorities, market and strategies, financial position, financial performance, market position, capabilities,
competitive strengths, credit ratings, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general
economic and business outlook, prospects and trends of an industry; customer value; expected demand for products and
services; growth strategy; product development, including projected design, characteristics, capacity or performance; expected
or scheduled entry-into-service of products and services, orders, deliveries, testing, lead times, certifications and execution of
orders in general; competitive position; expectations regarding revenue and backlog mix; the expected impact of the legislative
and regulatory environment and legal proceedings; strength of capital profile and balance sheet, creditworthiness, available
liquidities and capital resources, expected financial requirements, and ongoing review of strategic and financial alternatives;
the introduction of, productivity enhancements, operational efficiencies, cost reduction and restructuring initiatives, and
anticipated costs, intended benefits and timing thereof; the anticipated business transition to growth cycle and cash
generation; expectations, objectives and strategies regarding debt repayment, refinancing of maturities and interest cost
reduction; expectations regarding availability of government assistance programs, compliance with restrictive debt covenants;
expectations regarding the declaration and payment of dividends on our preferred shares; intentions and objectives for our
programs, assets and operations; and the impact of the COVID-19 pandemic on the foregoing and the effectiveness of plans
and measures we have implemented in response thereto; and expectations regarding gradual market and economic recovery
in the aftermath of the COVID-19 pandemic. As it relates to the sale of the Transportation business to Alstom, this MD&A also
contains forward-looking statements with respect to the benefits of such transaction, the use of the proceeds derived from the
transaction and its impact on our outlook, guidance and targets, operations, infrastructure, opportunities, financial condition,
business plan and overall strategy.
Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “will”, “shall”,
“can”, “expect”, “estimate”, “intend”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “maintain” or “align”, the negative of
these terms, variations of them or similar terminology. Forward-looking statements are presented for the purpose of assisting
investors and others in understanding certain key elements of our current objectives, strategic priorities, expectations, outlook
and plans, and in obtaining a better understanding of our business and anticipated operating environment. Readers are
cautioned that such information may not be appropriate for other purposes.
By their nature, forward-looking statements require management to make assumptions and are subject to important known
and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecast
results set forth in forward-looking statements. While management considers these assumptions to be reasonable and
appropriate based on information currently available, there is risk that they may not be accurate. The assumptions underlying
the forward-looking statements made in this MD&A in relation to the sale of the Transportation business to Alstom discussed
herein include the following material assumptions: the realization of the intended benefits from this transaction and the
deployment of proceeds towards debt pay down. For additional information, including with respect to other assumptions
underlying the forward-looking statements made in this MD&A, refer to the Forward-looking statements — Assumptions
section below. Given the impact of the changing circumstances surrounding the COVID-19 pandemic and the related response
from the Corporation, governments (federal, provincial and municipal), regulatory authorities, businesses, suppliers,
customers, counterparties and third-party service providers, there is inherently more uncertainty associated with the
Corporation’s assumptions as compared to prior years.
Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements
include, but are not limited to, risks associated with general economic conditions, risks associated with our business
environment (such as risks associated with the financial condition of business aircraft customers; trade policy; increased
competition; political instability and force majeure events or global climate change), operational risks (such as risks related to
developing new products and services; development of new business ; order backlog; the transition to a pure-play business
aviation company; the certification of products and services; the execution of orders; pressures on cash flows and capital
expenditures based on seasonality and cyclicality; execution of our strategy, productivity enhancements, operational
efficiencies, restructuring and cost reduction initiatives; doing business with partners; product performance warranty and
casualty claim losses; regulatory and legal proceedings; environmental, health and safety risks; dependence on certain
customers, contracts and suppliers; supply chain risks; human resources; reliance on information systems; reliance on and
protection of intellectual property rights; reputation risks; risk management; tax matters; and adequacy of insurance coverage),
financing risks (such as risks related to liquidity and access to capital markets; retirement benefit plan risk; exposure to credit
risk; substantial debt and interest payment requirements; restrictive debt covenants; reliance on debt management and interest
cost reduction strategies; and reliance on government support), market risks (such as foreign currency fluctuations; changing
interest rates; increases in commodity prices; and inflation rate fluctuations). For more details, see the Risks and uncertainties
section in Other in this MD&A. Any one or more of the foregoing factors may be exacerbated by the ongoing COVID-19
outbreak and may have a significantly more severe impact on the Corporation’s business, results of operations and financial
condition than in the absence of such outbreak. As a result of the current COVID-19 pandemic, additional factors that could
cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to:
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 15
risks related to the impact and effects of the COVID-19 pandemic on economic conditions and financial markets and the
resulting impact on our business, operations, capital resources, liquidity, financial condition, margins, prospects and results;
uncertainty regarding the magnitude and length of economic disruption as a result of the COVID-19 outbreak and the resulting
effects on the demand environment for our products and services; uncertainty regarding market and economic recovery in the
aftermath of the COVID-19 pandemic; emergency measures and restrictions imposed by public health authorities or
governments, fiscal and monetary policy responses by governments and financial institutions; disruptions to global supply
chain, customers, workforce, counterparties and third-party service providers; further disruptions to operations, orders and
deliveries; technology, privacy, cyber security and reputational risks; and other unforeseen adverse events.
Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not
exhaustive and undue reliance should not be placed on forward-looking statements. Other risks and uncertainties not presently
known to us or that we presently believe are not material could also cause actual results or events to differ materially from
those expressed or implied in our forward-looking statements. The forward-looking statements set forth herein reflect
management’s expectations as at the date of this report and are subject to change after such date. Unless otherwise required
by applicable securities laws, we expressly disclaim any intention, and assume no obligation to update or revise any forward-
looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements
contained in this MD&A are expressly qualified by this cautionary statement.
16 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Forward-looking statements — Assumptions
Forward-looking statements(1) in this MD&A are based on and subject to the following material assumptions:
• normal execution and delivery of current backlog;
• the alignment of production rates to market demand, including the ability of the supply base to support product
development and planned production rates on commercially acceptable terms in a timely manner;
• the ability to manage the learning curve as we ramp up production and deliveries of the Global 7500 aircraft;
• continued deployment and execution of growth strategies, and continued growth of the aftermarket business;
• the ability to invest in our product portfolio;
• the accuracy of the analyses and assumptions underlying our business case including estimated cash flows and
revenues over the expected life of our programs and thereafter;
• the accuracy of our estimates and judgments regarding the duration, scope and impacts of the ongoing COVID-19
pandemic on the economy and financial markets, and on our business, operations, revenues, liquidity, financial
condition, margins, cash flows, prospects and results in future periods;
• the accuracy of our assessment of anticipated growth drivers and sector trends;
• new program aircraft prices, unit costs and ramp-up;
• the ability to understand customer needs and portfolio of products and services to drive market demand and secure new
orders and grow our backlog;
• continued deployment and execution of leading initiatives to improve revenue conversion into higher earnings and free
cash flow(2), through improved procurement cost, controlled spending and labour efficiency;
• delivering on our cost reduction plan, through restructurings and other initiatives addressing the direct and indirect cost
structure, focusing on sustained cost reductions and operational improvements, while reducing working capital
consumption;
• the effectiveness of disciplined capital deployment measures in new programs and products to drive revenue growth;
• our ability to offset a portion of our new Toronto Pearson Airport manufacturing facility construction costs through land
sales or other opportunities and to keep project spend on track;
• the ability to recruit and retain highly skilled resources to deploy the product development strategy;
• the stability of the competitive global environment, global economic conditions and financial markets in the aftermath of
the COVID-19 pandemic;
• the stability of foreign exchange rates at current levels;
• our ability to access the capital markets as needed or opportunistically;
• the ability to have sufficient liquidity to execute the strategic plan and to pay down long-term debt or refinance maturities;
and
• our ability to successfully defend ourselves against legal proceedings.
For a discussion of the material risk factors associated with the forward-looking information, refer to the Risks and
uncertainties section in Other.
(1) Also refer to the Guidance and forward-looking statements section for the forward-looking statements disclaimer.
(2) Non-GAAP financial measure. Refer to the Non-GAAP financial measures for definition of this metric and to the Analysis of results
section for a reconciliation to the most comparable IFRS measures.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 17
CONSOLIDATED RESULTS OF OPERATIONS
Results of operations(1)
Revenues
Cost of sales
Gross margin
SG&A
R&D
Share of income of joint ventures and associates
Other income
Adjusted EBIT(2)
Special items
EBIT
Financing expense
Financing income
EBT
Income taxes
Net loss from continuing operations
Net loss from discontinued operations
Net loss
Attributable to
Equity holders of Bombardier Inc.
NCI
EPS (in dollars)
Basic and diluted
EPS from continuing operations (in dollars)
Basic and diluted
As a percentage of total revenues
Gross margin
Adjusted EBIT(2)
EBIT
Fourth quarters ended
December 31
2019
restated(1)
2020
Fiscal years ended
December 31
2019
restated(1)
2020
$ 2,337
2,248
89
117
144
—
(7)
(165)
(598)
433
240
(28)
221
236
(15)
(322)
(337)
$
$
$
$ 2,412
2,109
303
126
65
(56)
—
168
1,628
(1,460)
236
(93)
(1,603)
(75)
$ (1,528)
$
(191)
$ (1,719)
$ 6,487
5,971
516
420
320
(2)
(11)
(211)
(1,123)
912
1,060
(27)
(121)
49
(170)
(398)
(568)
$
$
$
$ 7,488
6,447
1,041
557
156
(34)
(38)
400
920
(520)
996
(226)
(1,290)
251
$ (1,541)
$
(66)
$ (1,607)
$
$
(423)
86
$ (1,770)
51
$
$
$
(868)
300
$ (1,797)
190
$
$
(0.18)
$
(0.74)
$
(0.37)
$
(0.76)
$
(0.01)
$
(0.64)
$
(0.08)
$
(0.65)
3.8 %
(7.1) %
18.5 %
12.6 %
7.0 %
(60.5) %
8.0 %
(3.3) %
14.1 %
13.9 %
5.3 %
(6.9) %
(1) Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of operations have been restated
for comparative periods. Refer to Note 31 - Discontinued operations to our Consolidated financial statements for more details.
(2) Non-GAAP financial measure. Refer to the Non-GAAP financial measures section for a definition of this metric.
Computation of diluted EPS(1)
Net loss attributable to equity holders of Bombardier Inc.
Preferred share dividends, including taxes
Net loss attributable to common equity
holders of Bombardier Inc.
Weighted-average diluted number of common shares
(in thousands of shares)
Diluted EPS (in dollars)
2020
Fourth quarters ended
December 31
2019
restated(2)
(1,528)
(7)
(15)
1
$
$
2020
Fiscal years ended
December 31
2019
restated(2)
(1,541)
(21)
(170)
(18)
$
(14)
$
(1,535)
$
(188)
$
(1,562)
$
$
2,419,541
(0.01)
$
2,397,868
(0.64)
$
2,408,209
(0.08)
$
2,383,987
(0.65)
$
(1) Includes continuing operations only.
(2) Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of operations have been restated
for comparative periods. Refer to Note 31 - Discontinued operations to our Consolidated financial statements for more details.
18 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Other non-GAAP financial measures(1)
2020
Fourth quarters ended
December 31
2019
restated(2)
259
11
0.00
2020
Fiscal years ended
December 31
2019
restated(2)
684
(406)
(0.18)
Adjusted EBITDA
Adjusted net income (loss)
Adjusted EPS
$
$
$
(1) Includes continuing operations only. Refer to the Non-GAAP financial measures section for definitions of these metrics and reconciliations to
200
(1,115)
(0.47)
(1)
(475)
(0.20)
$
$
$
$
$
$
$
$
$
the most comparable IFRS measures.
(2) Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of operations have been restated
for comparative periods. Refer to Note 31 - Discontinued operations to our Consolidated financial statements for more details.
Reconciliation of segment to consolidated results
Fourth quarters ended
December 31
Fiscal years ended
December 31
2020
2019 (1)
2020
2019 (1)
Revenues
Aviation
Transportation(1)
Corporate and Others
Reclassification(1)
Adjusted EBIT(2)
Aviation
Transportation(1)
Corporate and Others(3)
Reclassification(1)
Special Items
Aviation
Transportation(1)
Corporate and Others
Reclassification(1)
EBIT
Aviation
Transportation(1)
Corporate and Others(3)
Reclassification(1)
$
$
$
$
$
$
$
2,337
2,076
—
4,413
(2,076)
2,337
(149)
(340)
(16)
(505)
340
(165)
(628)
(4)
30
(602)
4
(598)
479
(336)
(46)
97
336
433
$
$
$
$
$
$
$
2,413
1,793
(1)
4,205
(1,793)
2,412
143
(234)
25
(66)
234
168
49
2
1,579
1,630
(2)
1,628
94
(236)
(1,554)
(1,696)
236
(1,460)
$
$
$
$
$
$
$
6,488
7,844
(1)
14,331
(7,844)
6,487
(125)
(610)
(86)
(821)
610
(211)
(1,062)
8
(61)
(1,115)
(8)
(1,123)
937
(618)
(25)
294
618
912
$
$
$
$
$
$
$
7,501
8,269
(13)
15,757
(8,269)
7,488
531
70
(131)
470
(70)
400
(663)
48
1,583
968
(48)
920
1,194
22
(1,714)
(498)
(22)
(520)
$
(1) Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of operations have been restated
$
$
$
for comparative periods. Refer to Note 31 - Discontinued operations to our Consolidated financial statements for more details.
(2) Non-GAAP financial measure. Refer to the Non-GAAP financial measures section for a definition of this metric.
(3) Includes share of income from ACLP of $3 million for fiscal year ended December 31, 2020. ($57 million and $37 million for the fourth
quarter and fiscal year ended December 31, 2019, respectively. The share of net gains from ACLP in the fourth quarter of 2019 includes
certain provision reversals within ACLP amounting to approximately $60 million). On February 12, 2020, Bombardier transferred its
remaining interest in ACLP to Airbus and the Government of Québec.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 19
Gross margin(1)
Analysis of consolidated results
Gross margin as a percentage of revenues for the fourth quarter and fiscal year ended December 31, 2020 decreased
by 8.8% and 5.9%, respectively.
Since Transportation is classified as discontinued operations, the variance in gross margin as a percentage of
revenues for the fourth quarter and the fiscal year can be principally explained by Aviation, refer to the EBIT variance
explanations within the Aviation segment section for further details. The EBIT variance explanations provided in the
Aviation section also explain gross margin variances except for the variance in amortization of aerospace program
tooling which is recorded as R&D expense.
Detailed analyses of revenues and EBIT for Aviation and Transportation are provided in each reportable segment’s
Analysis of results section.
(1) Related to continuing operations. Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of
operations have been restated for comparative periods. Refer to Note 31 - Discontinued operations to our Consolidated financial statements for
more details.
Special items(1)
Special items comprise items which do not reflect our core performance or where their separate presentation will assist
users in understanding our results for the period. Such items include, among others, the impact of restructuring
charges, impact of business disposals and significant impairment charges and reversals.
The special items recorded as losses (gains) were as follows:
Fourth quarters ended
December 31
Fiscal years ended
December 31
Ref
2020
2019 (1)
2020
2019 (1)
$
(678)
$
Gain on disposal of a business - aerostructure business
Gain on disposal of a business - CRJ Series business
Gain on exit of ACLP and related aerostructures activities
Restructuring charges
Transaction costs
Learjet program end of production and other
Reversal of Learjet 85 aircraft program cancellation provisions
Disruption costs
Impairment on ACLP investments
Gain on disposal of a business - Training business
Gain on disposal of a business - Q Series business
Loss on repurchase of long-term debt
Pension adjustments
Primove impairment and other costs
Purchase of pension annuities
Income taxes
Of which is presented in
Special items in EBIT
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
$
$
8
3
23
20
26
—
—
—
—
—
—
—
—
—
—
—
—
13
—
—
(3)
—
1,578
—
9
—
26
1
4
$
(678)
$
(488)
(120)
85
56
26
(7)
3
—
—
—
—
—
—
—
—
—
—
51
—
—
(18)
—
1,578
(516)
(210)
84
26
5
4
148
(450)
(26)
$ 1,602
(32)
$ (1,155)
217
$ 1,221
(598)
$ 1,628
$ (1,123)
$
920
Financing expense - loss on repurchase of long-term debt
Income taxes
13
$
—
148
(450)
—
(26)
$ 1,602
—
(32)
$ (1,155)
84
217
$ 1,221
1. Restated, refer to Note 31 - Discontinued operations for more details.
20 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
2. Represents the sale of the aerostructure business for gross proceeds of $275 million. The transaction resulted in a
gain of $678 million. See Note 30 - Disposal of businesses for more details.
3. Represents the sale of the CRJ Series aircraft program assets for gross proceeds of $585 million, at closing,
including certain closing adjustments. The transaction resulted in a pre-tax accounting gain of $488 million
($440 million after tax impact). See Note 30 - Disposal of businesses for more details.
4. The sale of the Corporation’s remaining interest in ACLP and its aerostructures activities supporting A220 and
A330 resulted in a pre-tax accounting gain of $120 million for the fiscal year 2020. See Note 29 - Disposal of
investment in associate for more details.
5. For fiscal year 2020, represents severance charges of $61 million following the announcement of Aviation for
workforce adjustments in response to the COVID-19 pandemic, $38 million of impairment of right-of-use assets
related to lease contracts as a consequence of previously-announced restructuring actions, and other related
charges of $7 million, partially offset by curtailment gains of $21 million.
For fiscal year 2019, represents severance charges of $25 million partially offset by curtailment gains of
$2 million. Following the announcement that the CRJ production is expected to conclude in the second half of
2020, following the delivery of the current backlog of aircraft, the Corporation has recorded severance charges of
$7 million partially offset by curtailment gains of $3 million, and has recorded $24 million of other related charges
for fiscal year 2019. In addition, the Corporation has recorded a write down of deferred tax assets of $87 million to
reflect the expected impact of the conclusion of the CRJ announcement.
6. Represents direct and incremental costs incurred in respect of transactions for the sale of the Transportation
business to Alstom SA and for the sale of CRJ business to MHI.
7. Following the decision to end production of the Learjet aircraft in 2021 and the decision to consolidate the Global
aircraft completion work in Montréal, the Corporation has recorded $12 million of inventory write-down, $4 million of
impairment of PP&E and $10 million of other charges.
8. Based on the ongoing activities with respect to the cancellation of the Learjet 85 aircraft program, the Corporation
reduced the related provisions by $7 million in fiscal year 2020 ($18 million for fiscal year 2019). The reduction in
provisions is treated as a special item since the original provisions were also recorded as special items in 2014 and
2015.
9. Due to the COVID-19 pandemic, in the second half of March 2020, the Corporation temporarily suspended
operations at various production facilities. As a result of the pandemic, $3 million were recorded as special items in
fiscal year 2020. These costs do not represent the full impact of the COVID-19 pandemic on the results of
operations since it does not reflect the impact of lost or deferred revenues and associated margins.
10. The Corporation performed an impairment test in the fourth quarter of 2019 on its investments in ACLP since there
were indicators of impairment. The Corporation determined that the carrying amount of its investment in ACLP
exceeded its recoverable amount, and accordingly recorded an impairment charge of $1,578 million.
11. The sale of Business Aircraft’s flight and technical training activities for a total net consideration of $532 million
resulted in a pre-tax accounting gain of $516 million ($383 million after deferred tax impact of $133 million).
12. The sale of the Q Series Aircraft program assets for net proceeds of $285 million resulted in a pre-tax accounting
gain of $210 million ($184 million after tax impact).
13. Represents the loss related to the redemption of the $850-million Senior Notes due 2020, and the partial
redemption of the €780-million Senior Notes and $1,400-million Senior Notes due 2021. See Note 28 - Long-term
debt.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 21
14. On October 26, 2018, the High Court in the United Kingdom ruled that pension schemes must equalize for the
effect of unequal Guaranteed Minimum Pensions between male and female for benefits earned during specified
periods (“GMP equalization”). In fiscal year 2019, the Corporation adjusted the pension obligation related to
equalization for an Aviation plan in the U.K. The adjustments of $26 million was recorded as a past service cost
under IAS 19 - Employee Benefits.
15. Following a reassessment of the value of the Primove e-mobility technology and the status of existing contractual
obligations, the Corporation recorded in fiscal year 2019 an additional contract provision of $5 million.
16. Represents the non-cash loss on the settlement of defined benefit pension plans resulting from the purchase of
annuities with insurance companies in fiscal year 2019.
17. Following the announcement that the sale of the Transportation business to Alstom was expected to close in the
first quarter of 2021, the Corporation revised its estimated future taxable profits and recorded deferred tax assets
of $100 million based on the final proceeds of the sale. The impact of recognizing these deferred tax assets was
non-cash. The transaction closed on January 29, 2021.
Net financing expense(1)
Net financing expense amounted to $212 million and $1,033 million, respectively, for the fourth quarter and fiscal year
ended December 31, 2020, compared to $143 million(1) and $770 million(1) for the corresponding periods last fiscal year.
The $69-million increase for the fourth quarter is mainly due to:
•
•
net loss on certain financial instruments classified as FVTP&L ($51 million); and
higher interest on long-term debt, after the effect of hedges ($38 million).
The $263-million increase for the fiscal year is mainly due to:
net loss on certain financial instruments classified as FVTP&L ($301 million); and
higher interest on long-term debt, after the effect of hedges ($71 million).
Represents the loss related to the redemption of the $850-million Senior Notes due 2020, and the partial
redemption of the €780-million Senior Notes and $1,400-million Senior Notes due 2021, which was recorded
as a special item in 2019 ($84 million).
(1) Related to continuing operations. Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of
operations have been restated for comparative periods. Refer to Note 31 - Discontinued operations to our Consolidated financial statements for
more details.
Income taxes(1)
The effective income tax rates for the fourth quarter and fiscal year ended December 31, 2020 were 106.8% and
(40.5)%, respectively, compared to the statutory income tax rate in Canada of 26.5%.
The higher effective income tax rate in the fourth quarter is mainly due to:
•
•
the negative impact of the write-down of deferred income tax assets including the impact of the conclusion of
the sale of the Transportation business to Alstom ($149 million); and
the negative impact of the net non-recognition of tax benefits related to tax losses and temporary differences.
Partially offset by:
•
•
the positive impact of income tax rates differential of foreign subsidiaries; and
the positive impact of the permanent differences.
(1) Related to continuing operations. Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of
operations have been restated for comparative periods. Refer to Noted 31 - Discontinued operations to our Consolidated financial statements for
more details.
22 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
•
•
Partially offset by:
•
The effective income tax rate for the fiscal year ended December 31, 2020 is mainly due to:
•
•
the negative impact of the net non-recognition of tax benefits related to tax losses and temporary differences
partially offset by the net impact of the conclusion of the sale of the Transportation business to Alstom
($100 million) reduced by the impact related to the closing of the CRJ business and Aerostructure deals ($74
million); and
the negative impact of the write-down of deferred income tax assets .
Partially offset by:
•
•
the positive impact of the permanent differences; and
the positive impact of income tax rates differential of foreign subsidiaries.
The effective income tax rates for the fourth quarter and fiscal year ended December 31, 2019 were 4.7% and (19.5)%,
respectively, compared to the statutory income tax rate in Canada of 26.6%.
The lower effective income tax rate in the fourth quarter is mainly due to:
•
•
the negative impact of the non-recognition of tax benefits related to tax losses and temporary differences; and
the negative impact of of the permanent differences.
The effective income tax rate for the fiscal year ended December 31, 2019 is mainly due to:
•
•
•
the negative impact of the net non-recognition of tax benefits related to tax losses and temporary differences;
the negative impact of the net write-down of deferred income tax assets; and
the negative impact of the permanent differences .
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 23
CONSOLIDATED FINANCIAL POSITION
•
•
The total assets decreased by $1.9-billion in the fiscal
year(1), including a positive currency impact of
$457 million related to foreign exchange. The
$2.3-billion decrease excluding currency impacts is
mainly explained by(2):
•
a $1.2-billion net decrease in inventories in
Aviation mainly due to deliveries of business
aircraft, reset of production rates and disposal of
businesses(5);
a $472-million decrease in investments in joint
ventures and associates due to the sale of the
Corporation’s remaining interest in ACLP(3);
a $447-million decrease in trade and other
receivables;
a $432-million decrease in PP&E mainly due to
disposal of businesses(5) and amortization;
a $259-million decrease in aerospace program
tooling mainly due to amortization; and
a $141-million decrease in cash and cash
equivalents. See the Free cash flow usage and
the Variation in cash and cash equivalents tables
for details.
Partially offset by:
•
a $736-million increase in contract assets mainly
in Transportation.
•
•
•
•
The total liabilities and equity decreased by
$1.9-billion in the fiscal year(1), including a currency
impact of $457 million. The $2.3-billion decrease
excluding currency impacts is mainly explained by(2):
a $1.1-billion decrease in contract liabilities;
•
a $651-million decrease in trade and other
•
payables;
a $460-million decrease in provisions mainly due
to disposal of businesses and reversal of onerous
contract provision following the sale of the
Corporation’s remaining interest in ACLP(3) and
related aerostructures activities.
a $598-million decrease in equity mainly due to
the remeasurement of defined benefits plans of
$413-million;
a $137-million decrease in retirement benefit
liability mainly due disposal of businesses(5),
offset by remeasurement of defined benefits
plans;
•
•
Partially offset by:
•
a $697-million increase in long-term debt mainly
due to the new secured term loan.(4)
*The total assets and the total liabilities in the above graphs as at
December 31, 2020 include $10.4-billion and $10.1-billion,
respectively, related to Transportation, which are presented under
Assets held for sale and Liabilities directly associated with assets
held for sale. Refer to Note 31 - Discontinued operations in our
Consolidated financial statements for further details.
(1) For the purpose of the Consolidated financial position explanations included in this section, assets and liabilities include assets and liabilities
reclassified as Assets held for sale. See Note 31 - Discontinued operations in our Consolidated financial statements for further details.
(2) For the purpose of the Consolidated financial position explanations included in this section do not include the impact of the back-to-back
agreements the Corporation has with ACLP related to certain government refundable advances and MHI related to certain assets and
liabilities. Refer to Reshaping the Portfolio section in Aviation, Note 19 - Other financial assets.
(3) Refer to Note 29 - Disposal of investment in associate in our Consolidated financial statements for further details.
(4) Refer to Note 28 - Long-term debt in our Consolidated financial statements for further details.
(5) Refer to Note 30 - Disposal of businesses in our Consolidated financial statements for further details.
24 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
CONSOLIDATED ASSETS*(as at December 31; in millions of dollars)24,97224,97223,09023,09013,48316,64611,4896,444Current assetsNon-current assets20192020CONSOLIDATED LIABILITIES AND DEFICIT*(as at December 31; in millions of dollars)24,97224,97223,09023,09015,31516,8279,6576,263Current liabilitiesNon-current liabilities and deficit20192020 LIQUIDITY AND CAPITAL RESOURCES
Free cash flow(1)
Free cash flow usage(1)
Net loss
Non-cash items
Amortization
Impairment charges on ACLP investments
Impairment charges (reversals) on PP&E and intangible
assets
Deferred income taxes
Gains on disposals of PP&E
Losses (gains) on disposal of investment in associate and
businesses
Share of income of joint ventures and associates
Share-based expense (income)
Loss on repurchase of long-term debt
Dividends received from joint ventures and associates
Net change in non-cash balances(2)
Cash flows from operating activities
Net additions to PP&E and intangible assets
Free cash flow (usage)(1)
$
Fourth quarters ended
December 31
Fiscal years ended
December 31
2020
(337)
2019
(1,719)
$
$
2020
(568)
2019
(1,607)
$
$
166
—
17
214
(2)
(667)
(18)
17
—
25
908
323
(114)
209
129
1,578
—
(173)
(3)
9
(81)
(4)
—
29
1,308
1,073
(121)
952
510
—
42
32
(3)
(1,286)
(110)
26
—
52
(1,516)
(2,821)
(354)
(3,175)
$
422
1,578
(4)
113
(10)
(730)
(128)
30
84
49
(477)
(680)
(523)
(1,203)
$
$
(1) Non-GAAP financial measure. Refer to the Non-GAAP financial measures section for definitions of this metric.
(2) Refer to Note 35 - Net changes in non-cash balances, to our Consolidated financial statements for further details.
Cash flows from operating activities
The $750-million decrease in cash flows from operating activities for the fourth quarter is mainly due to:
lower net income before non-cash items ($346 million).
a negative period-over-period variation in net change in non-cash balances ($400 million) (see
explanations below).
•
Partially offset by:
•
The $2,141-million decrease in cash flows from operating activities for the fiscal year is mainly due to:
•
•
lower net income before non-cash items ($1,105 million); and
a negative period-over-period variation in net change in non-cash balances ($1,039 million) (see
explanations below).
Net change in non-cash balances
For the fourth quarter ended December 31, 2020, the $0.9-billion inflow is mainly due to:
a decrease in inventories in Aviation mainly due to deliveries of business aircraft in the fourth quarter;
a decrease in trade and other receivables; and
an increase in trade and other payables.
•
•
•
Partially offset by:
•
a decrease in contract liabilities in Aviation mainly driven by deliveries of business aircraft and lower order
intake.
For the fourth quarter ended December 31, 2019, the $1.3-billion inflow was mainly due to:
•
•
•
a decrease in Transportation’s net contract assets due to deliveries and advances received on new and
existing orders;
a decrease in inventories in Aviation mainly due to deliveries for business aircraft; and
an increase in trade and other payables in Aviation and Transportation.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 25
For the fiscal year ended December 31, 2020, the $1.5-billion outflow is mainly due to:
•
•
•
•
a decrease in contract liabilities in Aviation and Transportation mainly driven by deliveries of business
aircraft and lower order intake;
an increase in Transportation’s contract assets due to a ramp-up in production ahead of deliveries;
a net decrease in trade and other payables; and
a decrease in other financial liabilities in Aviation and Transportation related to revised sales assumptions
for forgivable loans and a decrease in embedded derivative liabilities.
Partially offset by:
•
•
a decrease in inventories in Aviation mainly due to deliveries of business aircraft; and
a decrease in trade and other receivables.
For the fiscal year ended December 31, 2019, the $477-million outflow was mainly due to:
•
•
•
•
an increase in inventories in Aviation mainly due to the ramp-up in production for business aircraft;
utilization of provisions in Transportation and Aviation;
an increase in trade and other receivables in Transportation and Aviation; and
a decrease in other liabilities mainly in Transportation.
Partially offset by:
•
•
•
an increase in contract liabilities in Aviation mainly related to advances received on new and existing
orders for business aircraft;
an increase in trade and other payables in Aviation; and
a decrease in Transportation’s net contract assets.
Net additions to PP&E and intangible assets
Additions to PP&E and intangible assets
Proceeds from disposals of PP&E
and intangible assets
Fourth quarters
ended December 31
2019
2020
(135)
(116)
$
2
(114)
$
14
(121)
$
$
Fiscal years
ended December 31
2019
2020
(552)
(364)
$
10
(354)
$
29
(523)
$
$
The $7-million decrease in net additions to PP&E and intangible assets for the fourth quarter is mainly due to lower
investment in aerospace program tooling.
The $169-million decrease in net additions to PP&E and intangible assets for the fiscal year is mainly due to lower
investment in aerospace program tooling.
26 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Available short-term capital resources
We continuously monitor our level of liquidity, including available short-term capital resources and cash flows from
operations, to meet expected requirements, including the support of product development initiatives and to ensure
financial flexibility. In evaluating our liquidity requirements, we take into consideration historic volatility and seasonal
needs, the maturity profile of long-term debt, the funding of product development programs, the level of customer
advances, working capital requirements, the availability of working capital financing initiatives, the economic
environment and access to capital markets. We use scenario analyses to stress-test cash flow projections.
Variation in cash and cash equivalents
Balance at the beginning of period/fiscal year
Cash flows from operating activities
Net additions to PP&E and intangible assets
Investments in non-voting units of ACLP
Net proceeds from disposal of investment in associate
and businesses
Capital injection in joint ventures and associates
Net proceeds from issuance of long-term debt
Repayments of long-term debt
Net change in short-term borrowings
Payment of lease liabilities
Dividends paid - preferred shares
Issuance of NCI
Dividends to NCI
Effect of exchange rates on cash and cash equivalents
Other
Balance at the end of period/fiscal year
Reclassified as assets held for sale(1)
Balance at the end of period/fiscal year
Available short-term capital resources
Cash and cash equivalents excluding Transportation
Available senior secured term loan(2)
Cash and cash equivalents from Transportation
Available Transportation revolving credit facilities(3)
Available short-term capital resources
Fourth quarters ended
December 31
Fiscal years ended
December 31
$
$
2020
1,870 (1)
323
(114)
—
265
—
—
(8)
11
(16)
(5)
—
—
96
28
2,450
(671)
1,779
$
$
$
$
2019
2,255
1,073
(121)
—
—
(52)
—
—
(533)
(31)
(5)
—
—
47
(4)
2,629
(51)
2,578
$
$
2020
2,629 (1)
(2,821)
(354)
(100)
1,385
—
707
(8)
742
(93)
(19)
386
(2)
(38)
36
2,450
(671)
1,779
$
$
$
$
2019
3,187
(680)
(523)
(350)
826
(64)
1,956
(1,762)
—
(112)
(20)
49
(4)
130
(4)
2,629
(51)
2,578
$
December 31, 2020
1,779
$
135
1,914
671
618
1,289
3,203
$
$
As at
December 31, 2019
2,089
$
—
2,089
540
1,296
1,836
3,925
$
$
$
(1) Includes cash and cash equivalents from Transportation amounting to $671 million presented under Assets held for sale as of
December 31, 2020, and $51 million from the aerostructures businesses presented under Assets held for sale as of December 31, 2019,
respectively. Cash and cash equivalents from Transportation as of December 31, 2019 amounted to $540 million. Refer to Reshaping the
portfolio section in Aviation section and Sale of Transportation Business section of this MD&A, Note 30 - Disposal of businesses and Note 31 -
Discontinued operations to our Consolidated financial statements for more details on the transaction and the accounting treatments.
(2) Based on collateral available at December 31, 2020.
(3) Includes undrawn amount under Transportation’s €1,154 million unsecured revolving credit facility. This facility is no longer available for the
Corporation following the sale of Transportation Business to Alstom on January 29, 2021. Refer to Note 36 - Credit facilities and Note 31 -
Discontinued operations to our Consolidated financial statements for more details.
On January 29, 2021, Bombardier closed the sale of its Transportation Business to Alstom for net proceeds of
approximately $3.6 billion, including approximately $600 million in Alstom shares.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 27
On August 19, 2020, the Corporation closed the three-
year $1.0 billion senior secured term loan (the
"Facility") with HPS Investment Partners, LLC, acting
as administrative agent, collateral agent and the lead
lender for a group that included investment funds and
accounts managed by HPS Investment Partners LLC
and Apollo Capital Management, L.P., or their
respective affiliates, and Special Opportunities and
Direct Lending Funds managed by Ares Management
LLC. The Facility provides additional liquidity for
working capital and general corporate purposes as
the Corporation realigns production rates with current
market conditions. The Facility has a minimum
utilization of $750 million and a term of three years.
The Corporation has the right to voluntarily prepay the
outstanding amount of the Facility. In addition, the
sale of Transportation requires the Corporation to
make an offer to repay 50% of the then outstanding
principal amount of the Facility. Drawings under the
Facility bear interest at an agreed margin over the
LIBOR references rate and are secured by a security
interest in certain aviation inventory and related
accounts receivable. There are no financial covenants
under the Facility. $750 million was outstanding as at
December 31, 2020 out of which $375 million was
presented as current liabilities.
In response to the COVID-19 pandemic, we are taking
several initiatives to manage liquidity. Refer to Impacts
of COVID-19 pandemic section for more details.
Some totals do not agree due to rounding.
Transportation credit facilities
On January 29, 2021, the Corporation closed the sale of the Transportation Business to Alstom.
At December 31, 2020, Transportation had a revolving credit facility which was available for cash drawings for the
general needs of Transportation. Under this facility, the same financial covenants were required to be met as for
Transportation’s letter of credit facility. Transportation’s unsecured revolving credit facility amounted to €1,154 million
($1,416 million) as at December 31, 2020 and was available for cash drawings. The facility maturity was in May 2022
and bore interest at Euribor plus a margin. €650 million ($798 million) under Transportation’s facility was used as at
December 31, 2020.
At December 31, 2020, Transportation also had a €75 million ($92 million) uncommitted Short Term credit facility.
This facility was available to Transportation for cash drawings. This facility was unused as of December 31, 2020.
28 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
AVAILABLE SHORT-TERM CAPITALRESOURCES(as at December 31; in billions of dollars)4.54.54.24.24.44.43.93.93.23.23.43.13.22.62.51.11.21.21.30.60.1Cash and cash equivalentsRevolving credit facilitiesSenior secured term loan20162017201820192020 Letter of credit facilities
Letter of credit facilities are only available for the issuance of letters of credit. As these facilities are unfunded
commitments from banks, they typically provide better pricing for the Corporation than credit facility that is
available for cash drawings. Letters of credit are generally issued in support of performance obligations and
advance payments received from customers.
At December 31, 2020, the Corporation’s letters of credit facilities were mainly in Transportation. Transportation
was sold to Alstom on January 29, 2021. The details of these facilities at December 31, 2020 were as follows.
December 31, 2020
Transportation facility(1)
Corporation excluding Transportation facility(4)
December 31, 2019
Transportation facility(1)
Corporation excluding Transportation facility(4)
Amount
committed
Letters of
credit issued
Amount
available
Maturity
$
$
$
$
5,519 (2)
n/a
5,519
5,052 (2)
n/a
5,052
$
$
$
$
5,123 $
n/a
5,123 $
4,846 $
n/a
4,846 $
396
n/a
396
206
n/a
206
2023 (3)
n/a
2023
n/a
(1) Part of the disposal group in connection with the sale of Transportation business. Refer to Sale of Transportation business section of this
MD&A and Note 31 - Discontinued operations to our Consolidated financial statements for more details on the transaction.
(2) €4,498 million as at December 31, 2020 (€4,498 million as at December 31, 2019).
(3) The facility has an initial three year availability period, when new letters of credit can be issued up to the maximum commitment amount of
the facility, plus a one year amortization period during which new letters of credit cannot be issued. The final maturity date of the facility is
2023.
(4) The Corporation voluntarily cancelled the $361 million letter of credit facility in 2019 which was replaced by various bilateral agreements.
In addition to the outstanding letters of credit shown in the above table, letters of credit of $5,572 million were
outstanding under various bilateral agreements as at December 31, 2020, out of which $5,471 million is related to
Transportation ($4,395 million were outstanding as at December 31, 2019).
The Corporation also uses numerous bilateral bonding facilities with insurance companies to support
Transportation’s operations. An amount of $3.0 billion was outstanding under such facilities as at
December 31, 2020 ($3.8 billion as at December 31, 2019).
See Note 36 – Credit facilities, to the consolidated financial statements, for additional information.
Financial covenants
Transportation was sold to Alstom on January 29, 2021. As at December 31, 2020, Transportation was subject to
various financial covenants under the Transportation letter of credit facility and its revolving credit facility, which
were required to be met on a quarterly basis. Those facilities included financial covenants requiring minimum
equity and a maximum debt to EBITDA ratio at the end of each quarter, all calculated based on Transportation
stand-alone financial data. These terms and ratios are defined in the respective agreements and do not
correspond to the Corporation’s global metrics as described in Note 37 – Capital management or to the specific
terms used in the MD&A. In addition, Transportation was required to maintain a minimum liquidity varying
between €500 million ($614 million) and €750 million ($920 million) at the end of each quarter, except for the
quarter ending December 31, 2020. Minimum liquidity required is not defined as comprising only cash and cash
equivalents as presented in the consolidated statement of financial position. For the quarter ending
December 31, 2020, these financial covenants were amended prior to year-end in order to not apply for the fourth
quarter. Transportation was in compliance with all covenants on a quarterly basis and as at December 31, 2020
and 2019 and January 1, 2019.
The Corporation regularly monitors these ratios to ensure it meets all financial covenants, and has controls in
place to ensure that contractual covenants are met.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 29
Future liquidity requirements
Our Aviation business requires capital to develop industry-leading products and to seize strategic opportunities to
increase competitiveness and execute growth strategies. On an on-going basis, we manage our liabilities by
taking into consideration expected free cash flow(1) , debt repayments and other material cash outlays expected to
occur in the future. We take advantage of favorable capital market conditions when they materialize to extend
debt maturity, reduce cost of funds and increase diversity of capital resources.
We continuously evaluate opportunities to strengthen our capital profile by improving leverage ratios, refinancing
debt maturities, and reducing the overall cost of funds by diversifying sources of capital.
The weighted average long-term debt maturity was 3.4 years as at December 31, 2020. The $1,901 million of
long-term debt due in 2021 is comprised of $375 million representing 50% of the outstanding principal amount of
our three-year term loan to be repaid, at the discretion of the lenders, upon the sale of Transportation on
January 29, 2021, €414 million ($508 million) due in May 2021, and $1,018 million due in December 2021. See
Note 28 - Long-term debt, to the consolidated financial statements, for more details.
* Excludes other long-term debt amounting to $19 million as at December 31, 2020. See Note 28 - Long-term debt, to the Consolidated
financial statements, for more details.
(1) Non-GAAP financial measures. Refer to the Non-GAAP financial measures section in Overview for definitions of these metrics and to the
Analysis of results section and Liquidity and capital resources section for reconciliations to the most comparable IFRS measures.
Expected timing of future liquidity requirements(1)
December 31, 2020
Long-term debt(1)
Interest payments
Purchase obligations(2)(3)
Trade and other payables
Other financial liabilities(4)
Derivative financial liabilities
Total
10,111
2,730
3,518
1,611
1,347
9
19,326
$
$
$
Less than
1 year
1,901
699
2,773
1,611
184
9
7,177
$
1 to 3 years
3,325
$
1,010
730
—
334
—
5,399
$
3 to 5 years
2,500
$
616
15
—
163
—
3,294
$
$
Thereafter
2,385
405
—
—
666
—
3,456
$
(1) Includes principal repayments only; before the proceeds from the sale of Transportation.
(2) Purchase obligations represent contractual agreements to purchase goods or services in the normal course of business that are legally
binding and specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, variable or indexed price
provisions; and the appropriate timing of the transaction. These agreements are generally cancellable with a substantial penalty. Purchase
obligations are generally matched with revenues over the normal course of operations.
(3) Excludes Transportation.
(4) The carrying amount of other financial assets excludes derivative financial instruments, investments in financing structures, certain aircraft
loans and the back to back agreement that the Corporation has with MHI related to lease subsidies. The carrying amount of other financial
liabilities excludes derivative financial instruments, lease liabilities, lease subsidies and the back-to-back agreement that the corporation has
with MHI related to the regional aircraft securitization program assets (RASPRO) and to certain aircraft loans.
30 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
DEBT MATURITY PROFILE* (NOTIONAL AMOUNT)(as at December 31, 2020; in millions of dollars)1,9011,7001,6251,0001,5001182,00025020212022202320242025202620272028-2034
The table above presents the expected timing of contractual liquidity requirements. Other financial assets include
a back-to-back agreement that the Corporation has with ACLP related to certain government refundable
advances. Other financial liabilities include government refundable advances. Under the respective agreements,
the Corporation is required to pay amounts to governments at the time of the delivery of aircraft. Due to
uncertainty about the number of aircraft to be delivered and the timing of delivery of aircraft, the amounts shown in
the table above may vary. Required pension contributions have not been reflected in this table as such
contributions depend on periodic actuarial valuations for funding purposes. See the Retirement benefits section of
this MD&A for more details on contributions to retirement benefit plans. The amounts presented in the table
represent the undiscounted payments and do not give effect to the related hedging instruments, if applicable.
The Corporation leases buildings and equipment. The maturity analysis of undiscounted lease liabilities, was as
follows:
Within 1 year
Between 1 to 5 years
More than 5 years
(1) Excludes Transportation.
As at December 31, 2020 (1)
$
$
56
132
311
499
Pro-forma net debt(1) is approximately $4.7 billion, which includes long-term debt of $10.1 billion, net of $1.8 billion
cash on hand at Bombardier Inc. (excluding Transportation) as of December 31, 2020, and the approximately
$3.6 billion proceeds from the Transportation sale. The Corporation intends to deploy available proceeds from the
sale of Transportation towards debt pay down and continues to evaluate the most efficient debt reduction
strategies.
(1) Non-GAAP financial measure. Pro-forma net debt is defined as long-term debt of $10.1 billion less cash and cash equivalents at Bombardier
Inc. (excluding Transportation) of $1.8 billion as of December 31, 2020 less net proceeds of approximately $3.6 billion from the sale of
Bombardier Transportation, which includes approximately $600 million of Alstom shares.
Creditworthiness
In the context of the COVID-19 pandemic, in March 2020, Standard & Poor’s Rating Services changed their issuer
credit rating from B- to CCC+. In April 2020, also in the context of the COVID-19 pandemic, Moody’s Investors
Service, Inc. changed their corporate family rating from B3 to Caa2. In January 2020, also in the context of the
COVID-19 pandemic, Fitch Ratings changed their long-term issuer default rating from B- to CCC+ and in March
they changed it to CCC from CCC+. On January 15, 2021, Fitch announced plans to withdraw its ratings of
Bombardier Inc. on or about February 15, 2021. The reason for the withdrawal is purely commercial since Fitch
had provided an unsolicited rating since 2016.
Credit Ratings
Fitch Ratings Ltd.
Moody’s Investors Service, Inc.
Standard & Poor’s Rating Services
Investment-grade rating
Bombardier Inc.’s issuer rating
BBB-
Baa3
BBB-
February 10, 2021
CCC
Caa2
CCC+
December 31, 2020
CCC
Caa2
CCC+
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 31
CAPITAL STRUCTURE
Throughout 2020, the main focus of the Corporation’s capital management was the closing of sale of business
transactions in order to allow deleveraging.
The sale of the Transportation business completed on January 29, 2021 is expected to have a significant impact
on Bombardier’s capital management, since the Corporation intends to deploy available proceeds from the sale of
Transportation towards debt pay down and continues to evaluate the most efficient debt reduction strategies.
CDPQ’s convertible shares were eliminated since they were in Transportation.
While the COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and
created significant economic uncertainty and disruption of financial markets, the Corporation has responded with
adjustments to its Aviation operations, production rates and workforce, and prudently managed liquidity in order to
adapt to the current environment.
While the Corporation is currently reviewing its strategy for deleveraging and ongoing capital management, as the
markets and business recover, the Corporation’s objective is to restore and grow earnings to achieve a lower net
debt to EBITDA multiple. The Corporation’s objective is to achieve this by executing on its cost reduction plan to
align its infrastructure to current market, by progressing on the Global 7500 learning curve and through continued
growth of the service and support network. The Corporation expects to prioritize debt repayment ahead of major
capital investments.
In addition, the Corporation separately monitors its net retirement benefit liability which amounted to $1.5 billion as
at December 31, 2020 ($2.3 billion as at December 31, 2019). The measurement of this liability is dependent on
numerous key long-term assumptions such as discount rates, future compensation increases, inflation rates and
mortality rates. In recent years, this liability has been particularly volatile due to changes in discount rates. Such
volatility is exacerbated by the long-term nature of the obligation. Furthermore, the net retirement benefit liability
has decreased meaningfully as a result of the business sales, including Transportation. The Corporation closely
monitors the impact of the net retirement benefit liability on its future cash flows and has introduced significant risk
mitigation initiatives in recent years in this respect such as buying out annuities on behalf of pensioners. See the
Retirement benefits section for further details.
In order to adjust its capital structure, the Corporation may issue or reduce long-term debt, make discretionary
contributions to pension funds, repurchase or issue share capital, or vary the amount of dividends paid to
shareholders.
32 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
RETIREMENT BENEFITS
Bombardier sponsors several Canadian and foreign
retirement benefit plans consisting of funded and
unfunded defined benefit pension plans, as well as
other unfunded defined benefit plans. Funded plans
are plans for which segregated plan assets are
invested in trusts. Unfunded plans are plans for which
there are no segregated plan assets, as the
establishment of segregated plan assets is generally
not permitted or not in line with local practice. After the
divestitures of businesses to Spirit on October 30,
2020 and to Alstom on January 29, 2021, the vast
majority of Bombardier pension plans are now in
Canada and the U.S.
Pension plans are categorized as Defined benefit (DB)
or Defined contribution (DC). DB plans specify the
amount of benefits an employee is to receive at
retirement, while DC plans specify how contributions
are determined. As a result, there is no deficit or
surplus for DC plans. Hybrid plans are a combination
of DB and DC plans.
In Canada and the U.S., since September 1, 2013, all
new non-unionized employees join DC plans (joining
DB or hybrid plans is no longer an option). Employees
who are members of a DB or hybrid plan closed to
new members continue to accrue service in their
original plan.
* Includes net retirement benefit liability amounting to
* Excludes Transportation.
$414 million reclassified as liabilities directly associated with
assets held for sale.
** Mainly comprised of changes in discount rates.
*** Refer to Note 30 - Disposal of businesses to our Consolidated
financial statements for more details.
**** Net retirement benefit liabilities amounting to $1,136 million
related to the Transportation business were reclassified as
liabilities directly associated with assets held for sale. Refer to
Note 31 - Discontinued operations to our Consolidated financial
statements for more details.
***** Other is mainly comprised of changes in other actuarial
assumptions, experience adjustments and impact of asset
ceiling and a $27 million increase in pension liabilities related to
an acquisition. See Note 32 - Acquisition for more details on the
transaction.
The value of plan assets is highly dependent on the pension funds’ asset performance and on the level of
contributions. The performance of the financial markets is a key driver in determining the funds’ asset
performance as assets in the plans are composed mostly of publicly traded equity and fixed income securities.
IFRS requires that the excess (deficit) of actual return on plan assets compared to the estimated return be
reported as an actuarial gain or loss in OCI. The estimated return on plan assets must be calculated using the
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 33
DECREASE IN NET RETIREMENT BENEFITLIABILITY(in millions of dollars)2,6661,026279102(8)(630)(81)(561)(1,136)(126)1,531Dec 312019*Change in financialassumptions**Accretion onobligationsForeign currencyService costsover contributionsActual gainson plan assetsCurtailment and settlementDisposal of businesses***Reclassified asassets held for sale****Other*****Dec 312020EVOLUTION OF WEIGHTED-AVERAGEDISCOUNT RATE(as at December 31)2.70%2.60%CanadaUSUK20162017201820192020* discount rate that is used to measure the net retirement benefit liability, which is derived using high-quality
corporate bond yields. During 2020, as the actual gains on plan assets of $630 million was above expected
return, an actuarial gain of $417 million was recognized.
* Excludes Transportation.
* Excludes Transportation.
* Includes liability arising from minimum funding requirement and
impact of asset ceiling test, if any.
** Restated to exclude net retirement benefit liability in the amount
of $99 million reclassified as liabilities directly associated with
assets held for sale.
*** Excludes net retirement benefit liability amounting to $414
million related to the aerostructures businesses reclassified as
liabilities directly associated with assets held for sale.
**** Excludes net retirement benefit liability amounting to $1,136
million related to Transportation reclassified as liabilities directly
associated with assets held for sale.
34 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
EVOLUTION OF PENSION PLAN ASSETS,FUNDED PLAN OBLIGATIONS AND DEFICIT(as at December 31; in billions of dollars)Present value of obligations - funded plansFair value of plan assetsDeficit - funded plans20162017201820192020*0.05.010.015.0EVOLUTION OF FUNDING RATIO OF FUNDEDPLANS(as at December 31)84%88%87%86%78%20162017201820192020*0%25%50%75%100%NET RETIREMENT BENEFIT LIABILITYexcluding liabilities directly associated withassets held for sale(as at December 31; in millions of dollars)2,5232,5232,3432,3432,1812,1812,2522,2521,5311,5311,5291,2551,2011,1911,176711787720788112283301260273243Pension plans (funded)*Pension plans (unfunded)Other plans (unfunded)20162017**20182019***2020**** F: Forecast
* Include contributions for the plans directly associated with the
F: Forecast
* Exclude contributions for the plans directly associated with the
aerostructures businesses and Transportation amounting to $48
million and $127 million for 2020, respectively. ($39 million and
$142 million for 2019, $40 million and $133 million for 2018, $42
million and $128 million for 2017, and $48 million and $130 million
for 2016, respectively)
** Excludes the estimated total contribution for Transportation’s
pension plans for 2021.
aerostructures businesses and Transportation.
** Excludes the estimated total contribution for Transportation’s
pension plans for 2021.
DB plan contributions were at $246 million in 2020, compared to $286 million for the previous year. DB plan
contributions are estimated at $152 million for 2021, excluding the estimated total contribution for Transportation’s
pension plans of approximately $105 million for 2021. The future level of contributions will be impacted by the
evolution of market interest rates and the actual return on plan assets.
In 2020, DC pension contributions totalled $83 million including Transportation. These contributions are estimated
at $32 million excluding Transportation for 2021.
Investment Policy and De-risking Strategies
The investment policies are established to achieve a long-term investment return so that, in conjunction with
contributions, the plans have sufficient assets to pay for the promised benefits while maintaining a level of risk that
is acceptable given the tolerance of plan stakeholders. See below for more information about risk management
initiatives.
The target asset allocation is determined based on expected economic and market conditions, the maturity profile
of the plans’ liabilities, the funded status of the respective plans and the plan stakeholders’ tolerance to risk.
The plans’ investment strategy is to invest broadly in fixed income and equity securities and to have a smaller
portion of the funds’ assets invested in real return asset securities (global infrastructure and real estate listed
securities).
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 35
RETIREMENT BENEFIT CONTRIBUTIONS*(for the fiscal years; in millions of dollars)357357355355321321372372329329184184262257217275233140848691868332111213111312DB pension contributionsDC contributionsOther DB contributions201620172018201920202021F**RETIREMENT BENEFIT CONTRIBUTIONS*(for the fiscal years; in millions of dollars)35735735535532132137237232932918418413313899147112140363738343032101011101212178170173181175DB pension contributions*DC contributions*Other DB contributions*Aerostructures and Transportation contributions201620172018201920202021F** As at December 31, 2020, the average target asset allocation, after the assets held for sale reclassification, was
as follows:
• 50.5% and 50% in fixed income securities, for Canadian and U.S. plans, respectively;
• 41% and 50% in equity securities, for Canadian and U.S. plans, respectively; and
• 8.5% in real return asset securities for Canadian plans.
In addition, to mitigate interest rate risk, interest rate hedging overlay portfolios (comprised of long-term interest
rate swaps and long-term bond forwards) will be implemented for the pension plans when the market will be
favorable and the plans’ triggers will be reached.
The plan administrators have also established dynamic risk management strategies. As a result, asset allocation
will likely become more conservative in the future and interest rate hedging overlay portfolios are likely to be
established as plan funding status and market conditions continue to improve and the plans become more
mature. Under certain pension legislations, and subject to compliance with certain conditions, the buy-out of
annuities with insurance companies would discharge the Corporation and administrators of their respective
obligations. Accordingly, in 2018 and 2019, annuities were purchased for pensioners of the three Bombardier
Aviation pension plans registered in Ontario. The buy-out of annuities payable to pensioners of other pension
plans will be contemplated in the coming years when these plans become fully funded on a buy-out basis.
Bombardier Global Pension Asset Management Inc. (BGPAM) monitors the de-risking triggers on an ongoing
basis to ensure timely and efficient implementation of these strategies.
Risk management initiatives
The Corporation’s pension plans are exposed to various risks, including equity, interest rate, inflation, foreign
exchange, liquidity and longevity risks. Several risk management strategies and policies have been put in place to
mitigate the impact these risks could have on the funded status of DB plans and on the future level of
contributions by the Corporation. The following is a description of key risks together with the mitigation measures
in place to address them.
Equity risk
Equity risk results from fluctuations in equity prices. This risk is managed by maintaining diversification of
portfolios across geographies, industry sectors and investment strategies.
Interest rate risk
Interest rate risk results from fluctuations in the fair value of plan assets and liabilities due to movements in
interest rates. This risk is managed by reducing the mismatch between the duration of plan assets and the
duration of pension obligation. This is accomplished by having a portion of the portfolio invested in long-term fixed
income securities and interest rate hedging overlay portfolios.
Inflation risk
Inflation risk is the risk that benefits indexed to inflation increase significantly as a result of changes in inflation
rates. To manage this risk, the benefit indexation has been capped in certain plans and a portion of plan assets
has been invested in real return fixed income securities and real return asset securities.
Foreign exchange risk
Currency risk exposure arises from fluctuations in the fair value of plan assets denominated in a currency other
than the currency of the plan liabilities. Currency risk is managed with foreign currency hedging strategies as per
plan investment policies.
Liquidity risk
Liquidity risk stems from holding assets which cannot be readily converted to cash when needed for the payment
of benefits or to rebalance the portfolios. Liquidity risk is managed through investments in treasury bills,
government bonds and equity futures and by having no investments in private placements or hedge funds.
36 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Longevity risk
Longevity risk is the risk that increasing life expectancy results in longer-than-expected benefit payments. This
risk is mitigated by using the most recent mortality and mortality improvement tables to set the level of
contributions. The buy-out of annuities with insurance companies transfers all of the risks listed above to insurers
for the annuities purchased.
DB plans
DC plans
Total retirement benefit cost
Related to
Funded DB plans
Unfunded DB plans
DC plans
Recorded as follows
EBIT expense or capitalized cost
Financing expense
DB plans
DC plans
Total retirement benefit cost
Related to
Funded DB plans
Unfunded DB plans
DC plans
Recorded as follows
EBIT expense or capitalized cost
Financing expense
Retirement benefit cost
Pension
benefits
121
$
$
31
152
$
Other
benefits
9
—
9
$
$
$
Total continuing
operations
130
31
161
$
$
$
Discontinued
operations
95
52
147
$
$
$
$
$
$
$
$
117
4
31
$
n/a
9
n/a
107
45
$
$
2
7
Pension
benefits
205
33
238
$
$
$
Other
benefits
(10)
—
(10)
$
$
$
$
$
$
$
$
201
4
33
$
n/a
(10)
n/a
191
47
$
$
(19)
9
$
$
$
$
$
$
$
$
$
$
$
$
$
117
13
31
109
52
(1)
Total continuing
operations
195
33
228
201
(6)
33
172
56
$
$
$
$
$
$
$
$
$
$
$
$
65
30
52
133
14
(1)
Discontinued
operations
62
$53
115
30
32
53
98
17
2020
Total
225
83
308
182
43
83
242
66
2019
Total
257
86
343
231
26
86
270
73
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(1) Restated for the sale of Transportation, refer to Note 31 - Discontinued operations to our Consolidated financial statements for more details.
The retirement benefit cost for fiscal year 2021 for DB plans(1) is estimated at $159 million, of which $117 million
relates to EBIT expense or capitalized cost and $42 million relates to net financing expense.
(1) Includes continuing operations only.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 37
Sensitivity analysis
The net retirement benefit liability is highly dependent on discount rates, expected inflation rates, expected rates
of compensation increase, life expectancy assumptions and actual return on plan assets. The discount rates
represent the market rate for high-quality corporate fixed-income investments at the end of the reporting period
consistent with the currency and estimated term of the benefit obligations. As a result, discount rates change
based on market conditions.
A 0.25 percentage point increase in one of the following weighted-average actuarial assumptions would have the
following effects, all other actuarial assumptions remaining unchanged:
Increase (decrease)
Discount rate
Inflation rate
Rate of compensation increase
(Forecast)
Continuing operations
Retirement benefit cost for fiscal year
2021
(Forecast)
Total(1)
(16)
2
4
(11) $
— $
2 $
$
$
$
Net retirement benefit liability as
at December 31, 2020
Continuing operations
$
$
$
(247) $
1 $
30 $
Total(1)
(438)
92
49
A one-year increase in life expectancy for all DB plan beneficiaries would impact plans in major countries as
follows:
Increase
Canada
U.K.
U.S.
(Forecast)
Continuing operations
Retirement benefit cost for fiscal year
2021
(Forecast)
Total(1)
6
2
2
$
6 $
n/a $
1 $
$
Net retirement benefit liability as
at December 31, 2020
Continuing operations
$
113 $
n/a $
33 $
$
Total(1)
128
87
43
Details regarding assumptions used are provided in Note 23 – Retirement benefits, to the consolidated financial
statements.
(1) Includes Transportation.
38 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
RISK MANAGEMENT
Active risk management has been one of our priorities for many years and is a key component of our corporate
strategy framework. To achieve our risk management objectives, we have embedded risk management activities
in the operational responsibilities of management and made these activities an integral part of the overall
governance, planning, decision making, organizational and accountability structure.
For each risk or category of risks, the risk management process includes activities performed in a continuous
cycle. Risk assessment, including risk identification, analysis and evaluation, ensures that each risk is analyzed to
identify the consequence and likelihood of the risk occurring and the adequacy of existing controls. Each
reportable segment is responsible for implementing the appropriate structures, processes and tools to allow
proper identification of risks. Once the risks have been identified, analyzed and evaluated, risk mitigation identifies
the actions to be implemented by management. Each reportable segment has implemented risk management
processes that are embedded in governance and activities to achieve the objectives of our Corporate Risk
Management Policy.
In addition, every year, the Corporate Audit Services and Risk Assessment (CASRA) team assesses our major
risks. Senior management reviews this risk assessment and develops action plans to address the identified risks.
The Board of Directors(1) is ultimately responsible for
reviewing the overall risks faced by the Corporation.
The Board exercises its duty through the Audit and
Risk Committee, consisting of independent directors,
which reviews material business risks and the
measures that management takes to monitor, control
and manage such risks, including the adequacy of
policies, procedures and controls designed by
management to assess and manage these risks. To
complement the annual CASRA review of major
risks, each reportable segment, in coordination with
CASRA, has implemented an annual review
process.
A primary area of focus is product development,
where our biggest opportunities to create value
reside, and also our most significant risks.
Recognizing the long-term nature of product
development activities and the significant human
and financial resources required, we follow a
rigorous gated product development process,
designed to ensure early identification and efficient
mitigation of potential risks. At the heart of this
process is our Bombardier Engineering System,
followed for all programs throughout the product
development cycle. This process is regularly refined
to integrate the lessons learned from our own
programs and from the industry. Specific milestones
must be met before a product can move from one
stage of development to another. The gates consist
of exit reviews with different levels of management
and leading experts to demonstrate technical
feasibility, customer acceptance and financial return.
(1) Refer to the Investor information section following the Notes to
the consolidated financial statements for more information on
Board members and Board Committees.
Source: International Organization for Standardization
(ISO) 31000:2009
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 39
We continuously apply what we learn on one program to the other programs, by sharing ideas and learning in our
various functional committees and through regular peer reviews, bringing together the expertise across all
platforms to drive alignment and common approaches, establish best practices and leverage the knowledge and
experience of our people. This review confirms the availability of human and financial resources, the maturity and
manufacturing readiness of new technologies and the overall strength of the business case.
We have also designed disclosure controls and procedures to provide reasonable assurance that material
information relating to the Corporation is properly communicated and that information required to be disclosed in
public filings is recorded, processed, summarized and reported within the time periods specified in securities
legislation. Refer to the Controls and procedures section in Other for more details.
Key exposures to financing and market risks
and related mitigation strategies
Our operations are exposed to various financing and market risks. The following is a description of our key
exposures to those risks together with the strategies in place to mitigate them. Market risks associated with
pension plans are discussed in the Retirement benefits section.
Exposure to foreign exchange risk
Our main exposures to foreign currencies are managed in accordance with the Foreign Exchange Risk
Management Policy in order to mitigate the impact of foreign exchange rate movements. This policy requires each
reportable segment’s management to identify all actual and potential foreign currency exposures arising from their
operations. This information is communicated to the Corporate office central treasury function, which has the
responsibility to execute hedging transactions in accordance with policy requirements. In addition, the central
treasury function manages balance sheet exposures to foreign currency movements by matching asset and
liability positions. This program consists mainly in matching long-term debt in a foreign currency with assets
denominated in the same currency.
40 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Foreign exchange management
Owner
Hedged exposures
Hedging policy(1)
Risk-mitigation strategies
AVIATION
Forecast cash outflows
denominated in a currency other
than the functional currency of the
entity incurring the cash flows,
mainly in Canadian dollars and
pounds sterling.
Hedge 85% of the identified
exposures for the first three
months, 75% for the next 15
months and up to 50% for the
following six months.
TRANSPORTATION(2)
Forecast cash inflows and outflows
denominated in a currency other
than the functional currency of the
entity incurring the cash flows.
Hedge 100% of the identified
exposures at the time of order
intake.
Use of forward foreign exchange
contracts, mainly to sell U.S.
dollars and buy Canadian dollars
and pounds sterling.
Use of forward foreign exchange
contracts, mainly to sell or
purchase Canadian dollars, euros,
U.S. dollars, Swiss francs,
Swedish krona and other Western
European currencies.
Forecast cash outflows other than
interest, denominated in a currency
other than the functional currency
of the entity incurring the cash
flows, mainly in Canadian dollars.
Hedge 85% of the identified
exposures for the first 18 months
and up to 75% for the following
six months.
Use of forward foreign exchange
contracts mainly to sell U.S.
dollars and buy Canadian dollars.
CORPORATE
OFFICE
Interest cash outflows in currencies
other than the U.S. dollar, i.e. the
euro and the Canadian dollar.
Hedge 100% of the identified
exposure unless the exposure is
recognized as an economic
hedge of an exposure arising from
the translation of financial
statements in foreign currencies
to the U.S. dollar.
Balance sheet exposures,
including long-term debt and net
investments in foreign operations
with non-U.S. dollar functional
currencies.
Hedge 100% of the identified
exposures affecting the
Corporation’s net income.
Use of forward foreign exchange
contracts mainly to sell U.S.
dollars and buy euros and
Canadian dollars.
Asset/liability management
techniques.
Designation of long-term debt as
hedges of our net investments in
foreign operations with non-U.S.
dollar functional currencies.
(1) Deviations from the policy are allowed, subject to pre-authorization and maximum pre-determined risk limits as well as market conditions.
(2) Transportation was classified as discontinued operations as of December 31, 2020. On January 29, 2021, the Transportation Business was
sold to Alstom. Refer to Note 31 - Discontinued operations to our Consolidated financial statements for more details.
Aviation
As at December 31, 2020, the hedged portion of our Aviation’s significant foreign currency denominated costs for
the fiscal years ending December 31, 2021 and 2022 was as follows:
For fiscal years
Expected costs denominated in foreign currency
Hedged portion of expected costs denominated in
foreign currency
Weighted-average hedge rates – foreign currency/USD
2021
$1,633
84 %
0.7574
Canadian dollars
2022
$1,664
7 %
0.7896
Sensitivity analysis
A U.S. one-cent change in the value of the Canadian dollar compared to the U.S. dollar would impact Aviation’s
expected costs for the year ending December 31, 2021 by approximately $16 million, before giving effect to
forward foreign exchange contracts ($3 million, after giving effect to such contracts).
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 41
Corporate office
The identified cash flow exposures at our Corporate office are not significant and mainly arise from expenses
denominated in Canadian dollars. Balance sheet exposure at Corporate office arises mainly from investments in
foreign operations and long-term debt. Despite our risk mitigation strategies, the impact of foreign currency
fluctuations on equity can be significant given the size of our investments in foreign operations with non-U.S.
dollar functional currencies, mainly the euro.
42 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
EVOLUTION OF FOREIGN EXCHANGE RATES(as at December 31)0.740.800.730.770.781.051.201.151.121.231.231.351.281.321.36CAD / USDEuro / USDGBP / USD20162017201820192020 Exposure to credit risk
The effective monitoring and controlling of credit risk is a key component of our risk management activities. Credit
risk is monitored on an ongoing basis using different systems and methodologies depending on the underlying
exposure.
Credit risk management
Owner
Key risks
Risk mitigation measures initiated by management
CORPORATE
OFFICE
Through normal treasury
activities, we are exposed to
credit risk through derivative
financial instruments and
investing instruments.
Credit risks arising from treasury activities are managed by a central treasury
function in accordance with the Corporate Foreign Exchange Risk Management
Policy and the Corporate Investment Policy. The objective of these policies is to
minimize exposure to credit risk from treasury activities by ensuring that we
transact strictly with investment-grade financial institutions and money market
funds, based on pre-established consolidated counterparty risk limits per financial
institution and fund.
BOTH
REPORTABLE
SEGMENTS
We are exposed to credit
risk through trade
receivables arising from
normal commercial
activities.
Credit risks arising from normal commercial activities are managed and controlled
by each reportable segment, in accordance with the Corporate office policy.
Customer credit ratings and credit limits are analyzed and established by internal
credit specialists, based on inputs from external rating agencies, recognized rating
methods and our experience with the customers. The credit risk and credit limits
are dynamically reviewed based on fluctuations in the customers’ financial results
and payment behaviour. These customer credit ratings and credit limits are critical
inputs in determining the conditions under which credit or financing is extended to
customers, including obtaining collateral to reduce exposure to losses. Specific
governance is in place to ensure that credit risk arising from large transactions is
analyzed and approved by the appropriate level of management before financing or
credit support is offered to the customer.
Exposure to liquidity risk
The management of consolidated liquidity requires a constant monitoring of expected cash inflows and outflows,
which is achieved through a detailed forecast of the Corporation’s liquidity position, as well as long-term operating
and strategic plans, to ensure adequacy and efficient use of cash resources. The Corporation uses scenario
analyses to stress-test cash flow projections. Liquidity adequacy is continually monitored which involves the
application of judgment, taking into consideration historical volatility and seasonal needs, stress-test results, the
maturity profile of indebtedness, access to capital markets, the level of customer advances, availability of letter of
credit and similar facilities, working capital requirements, the availability of working capital financing initiatives and
the funding of product development and other financial commitments. The Corporation engages in certain working
capital financing initiatives which impact cash flow from operating activities such as the negotiation of extended
payment terms with certain suppliers (for more details, refer to Note 38 - Financial Risk Management, to our
Consolidated financial statements). We continually monitor any financing opportunities to optimize our capital
structure and maintain appropriate financial flexibility.
Exposure to interest rate risk
The Corporation is exposed to fluctuations in its future cash flows arising from changes in interest rates through
its variable-rate financial assets and liabilities, including fixed-rate long-term debt synthetically converted to
variable interest rates (see Note 28 – Long-term debt, to our Consolidated financial statements). For these items,
cash flows could be impacted by a change in benchmark rates such as Libor, Euribor or Banker’s Acceptance.
These exposures are predominantly managed by a central treasury function as part of an overall risk
management policy, including the use of financial instruments, such as interest-rate swap agreements. Derivative
financial instruments used to synthetically convert interest-rate exposures consist mainly of interest-rate swap
agreements.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 43
In addition, the Corporation is exposed to gains and losses arising from changes in interest rates, which includes
marketability risks, through its financial instruments carried at fair value. These financial instruments include
investments in securities, and certain derivative financial instruments.
The Corporation’s interest rate hedging programs are typically unaffected by changes in market conditions, as
related derivative financial instruments are generally held to maturity to ensure proper assets/liabilities
management matching, consistent with the objective to reduce risks arising from interest rates movements. These
programs are reviewed annually and amended as necessary to reflect current market conditions or practices.
Sensitivity analysis
The interest rate risk primarily relates to financial instruments carried at fair value. Assuming a 100-basis point
increase in interest rates impacting the measurement of these financial instruments, excluding derivative financial
instruments in a hedge relationship, as of December 31, 2020, the impact on EBT from continuing operations
would have been a negative adjustment of $17 million as at December 31, 2020.
44 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
NON-GAAP FINANCIAL MEASURES
This MD&A is based on reported earnings in accordance with IFRS and on the following non-GAAP financial
measures:
Non-GAAP financial measures
Adjusted EBIT
EBIT excluding special items. Special items comprise items which do not reflect the Corporation’s
core performance or where their separate presentation will assist users of the consolidated
financial statements in understanding the Corporation’s results for the period. Such items include,
among others, the impact of restructuring charges, impact of business disposals and significant
impairment charges and reversals.
Adjusted EBITDA
Adjusted EBIT plus amortization and impairment charges on PP&E and intangible assets.
Adjusted net income
(loss)
Net income (loss) excluding special items, accretion on net retirement benefit obligations, certain
net gains and losses arising from changes in measurement of provisions and of financial
instruments carried at FVTP&L and the related tax impacts of these items.
Adjusted EPS
EPS calculated based on adjusted net income attributable to equity holders of Bombardier Inc.,
using the treasury stock method, giving effect to the exercise of all dilutive elements.
Free cash flow (usage)
Cash flows from operating activities less net additions to PP&E and intangible assets.
Non-GAAP financial measures are mainly derived from the consolidated financial statements but do not have
standardized meanings prescribed by IFRS. The exclusion of certain items from non-GAAP performance
measures does not imply that these items are necessarily non-recurring. Other entities in our industry may define
the above measures differently than we do. In those cases, it may be difficult to compare the performance of
those entities to ours based on these similarly-named non-GAAP measures.
Adjusted EBIT, adjusted EBITDA, adjusted net income (loss) and adjusted EPS
Management uses adjusted EBIT, adjusted EBITDA, adjusted net income (loss) and adjusted EPS for purposes of
evaluating underlying business performance. Management believes these non-GAAP earnings measures in
addition to IFRS measures provide users of our Financial Report with enhanced understanding of our results and
related trends and increases the transparency and clarity of the core results of our business. Adjusted EBIT,
adjusted EBITDA, adjusted net income (loss) and adjusted EPS exclude items that do not reflect our core
performance or where their exclusion will assist users in understanding our results for the period. For these
reasons, a significant number of users of the MD&A analyze our results based on these financial measures.
Management believes these measures help users of MD&A to better analyze results, enabling better
comparability of our results from one period to another and with peers.
Free cash flow (usage)
Free cash flow is defined as cash flows from operating activities less net additions to PP&E and intangible assets.
Management believes that this non-GAAP cash flow measure provides investors with an important perspective on
the Corporation’s generation of cash available for shareholders, debt repayment, and acquisitions after making
the capital investments required to support ongoing business operations and long-term value creation. This non-
GAAP cash flow measure does not represent the residual cash flow available for discretionary expenditures as it
excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow
as a measure to assess both business performance and overall liquidity generation.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 45
Reconciliations of non-GAAP financial measures to the most comparable IFRS financial measures are provided in
the tables hereafter, except for the following reconciliations:
•
•
adjusted EBIT to EBIT – see the Results of operations tables in the reporting segments and Consolidated
results of operations section; and
free cash flow usage to cash flows from operating activities – see the tables below and the Free cash flow
usage table in the Liquidity and capital resources section.
Reconciliation of adjusted EBITDA to EBIT(1)
EBIT
Amortization
Impairment charges on PP&E and intangible assets(2)
Special items excluding impairment charges on PP&E and
intangible assets(2)
Adjusted EBITDA
Fourth quarters ended
December 31
2019
(1,460)
91
2020
433
164
$
$
Fiscal years ended
December 31
2019
(520)
283
2020
912
411
$
17
—
42
(615)
(1)
1,628
259
$
$
(1,165)
200
$
$
1
920
684
Reconciliation of adjusted net income (loss) to net loss and computation of adjusted EPS(1)
Net loss from continuing operations
Adjustments to EBIT related to special items(2)
Adjustments to net financing expense related to:
Accretion on net retirement benefit obligations
Net change in provisions arising from changes in interest rates
and net loss on certain financial instruments
Tax impact of special(2) and other adjusting items
Adjusted net income (loss)
Preferred share dividends, including taxes
Fourth quarters ended December 31
2019
(per share)
2020
(per share)
$
(15)
(598)
$
(0.25)
$ (1,528)
1,628
$
0.68
13
0.01
(0.01)
0.06
(24)
149
(475)
1
17
(78)
(28)
11
(7)
—
(0.03)
(0.01)
Adjusted net income (loss) attributable to equity holders of
Bombardier Inc.
$
(474)
$
4
Weighted-average adjusted diluted number of common shares
(in thousands)
Adjusted EPS
2,419,541
(0.20)
$
2,397,868
0.00
$
Reconciliation of adjusted EPS to diluted EPS (in dollars)(1)
Diluted EPS from continuing operations
Impact of special(2) and other adjusting items
Adjusted EPS
(1) Includes continuing operations only.
(2) Refer to the Consolidated results of operations section for details regarding special items.
Fourth quarters ended December 31
2019
(0.64)
0.64
0.00
2020
(0.01)
(0.19)
(0.20)
$
$
$
$
46 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Reconciliation of adjusted net loss to net loss and computation of adjusted EPS(1)
Net loss from continuing operations
Adjustments to EBIT related to special items(2)
Adjustments to net financing expense related to:
Loss on repurchase of long-term debt(2)
Accretion on net retirement benefit obligations
Net change in provisions arising from changes in interest
rates and net loss (gain) on certain financial instruments
Tax impact of special(2) and other adjusting items
Adjusted net loss
Preferred share dividends, including taxes
Adjusted net loss attributable to equity holders of
Bombardier Inc.
Fiscal years ended December 31
2019
2020
(per share)
(per share)
$
(170)
(1,123)
$
(0.47)
$ (1,541)
920
$
0.39
—
0.02
0.07
(0.01)
—
52
159
(33)
(1,115)
(18)
84
56
(140)
215
(406)
(21)
$ (1,133)
$
(427)
0.03
0.02
(0.06)
0.09
Weighted-average adjusted diluted number of common shares
(in thousands)
Adjusted EPS
Reconciliation of adjusted EPS to diluted EPS (in dollars)(1)
2,408,209
(0.47)
$
2,383,987
(0.18)
$
Diluted EPS from continuing operations
Impact of special(2) and other adjusting items
Adjusted EPS
$
$
(1) Includes continuing operations only.
(2) Refer to the Consolidated results of operations section for details regarding special items.
Fiscal years ended December 31
2019
2020
(0.65)
(0.08)
0.47
(0.39)
(0.18)
(0.47)
$
$
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OVERVIEW 47
AVIATION
Table of Contents
KEY
PERFORMANCE
MEASURES AND
METRICS
HIGHLIGHTS
PROFILE
INDUSTRY AND
ECONOMIC
ENVIRONMENT
ANALYSIS OF
RESULTS
RESHAPING
THE
PORTFOLIO
48
49
51
55
58
64
KEY PERFORMANCE MEASURES AND METRICS
The table below summarizes our most relevant key performance measures and related metrics.
GROWTH AND
COMPETITIVE
POSITIONING
PROFITABILITY
LIQUIDITY
CUSTOMER
SATISFACTION
KEY PERFORMANCE MEASURES AND ASSOCIATED METRICS
• Order backlog, as a measure of future revenues.
• Revenues and delivery units, as measures of growth.
• Market share (in terms of revenues and units delivered), as measures of our competitive
positioning.
•
•
EBIT, EBIT margin, adjusted EBIT(1) and adjusted EBIT margin(1), as measures of performance.
Free cash flow(1), as a measure of liquidity generation.
• On-time aircraft deliveries, as a measure of meeting our commitment to customers.
•
• Regional availability of parts and technical expertise to support customer requests in a timely
Fleet dispatch reliability, as a measure of our products’ reliability.
manner, as a measure of meeting customer needs for the entire life of the aircraft.
• On-time return to service and high-quality workmanship at Bombardier-owned maintenance
facilities, as a measure of efficiency.
EXECUTION
•
Achievement of program development milestones, as a measure of flawless execution.
(1) Non-GAAP financial measures. Refer to the Non-GAAP financial measures section in Overview for definitions of these metrics and the
Analysis of results section for reconciliations to the most comparable IFRS measures.
48 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
HIGHLIGHTS
Global 7500 drives growth as production rates are aligned to current
market environment
RESULTS
For the fiscal years ended December 31
Revenues
Business aircraft
Other aviation
Total Revenues
Aircraft deliveries (in units)
Business aircraft
Commercial aircraft(1)
Adjusted EBITDA(2)
Adjusted EBITDA margin(2)
Adjusted EBIT(2)
Adjusted EBIT margin(2)
EBIT
EBIT margin
Net additions to PP&E and intangible assets
2020
2019
Variance
5,593
895
6,488
114
5
286
4.4 %
(125)
(1.9) %
937
14.4 %
221
$
$
$
$
5,417
2,084
7,501
142
33
812
10.8 %
531
7.1 %
$
$
$ 1,194
15.9 %
373
$
3 %
(57) %
(14) %
(28)
(28)
(65) %
(640) bps
(124) %
(900) bps
(22) %
(150) bps
(41) %
As at December 31
Order backlog (in billions of dollars)
Business aircraft
Other aviation(3)
(1) On May 31, 2019, the Corporation completed the sale of the Q Series aircraft program assets, including aftermarket operations and assets,
to De Havilland Aircraft of Canada Limited (formerly Longview Aircraft Company of Canada Limited). On June 1, 2020, the Corporation
completed the sale of the regional jet program to Mitsubishi Heavy Industries, Ltd (MHI).
(26) %
(100) %
14.4
1.9
10.7
—
Variance
2020
2019
$
$
$
$
(2) Non-GAAP financial measures. Refer to the Non-GAAP financial measures section in Overview for definitions of these metrics and the
Analysis of results section hereafter for reconciliations to the most comparable IFRS measures.
(3) Included the firm orders amounting to $1.1 billion from the aerostructures businesses presented under Assets held for sale as of
December 31, 2019. Also included 20 firm orders for CRJ900 as of December 31, 2019. The backlog for the CRJ Series aircraft program
amounting to $0.4 billion was removed as a result of the closing of the sale of the CRJ Series aircraft program to MHI on June 1, 2020.
KEY HIGHLIGHTS AND EVENTS
•
•
•
Revenues from Business Aircraft activities reached $5.6 billion in 2020, growing 3% year-over-year driven
by the continued ramp up of Global 7500 aircraft deliveries, notwithstanding production rate adjustments on
other platforms to align with market conditions and customer requirements in response to the COVID-19
pandemic.
◦
Business aircraft manufacturing revenues increased 11% year-over-year, driven by the Global 7500
market shares gains in the extra long-range segment.
Services revenues were $988 million, 21% lower year-over-year, as the COVID-19 pandemic drove
business jet utilization across the industry lower. The Corporation continues to position itself to capture
future growth opportunities in aftermarket services by adding significant new capacity to its global
network with major expansion projects underway in Singapore, London, Melbourne and Miami.
◦
Business aircraft delivered 114 aircraft including specialized aircraft during the year, comprised of 59 Global,
44 Challenger, and 11 Learjet.
◦
Deliveries peaked during the fourth quarter with 44 aircraft delivered, including a record 16
Global 7500 deliveries.
Other aviation revenues from commercial aircraft and aerostructures activities which were divested during
the course of the year, were $895 million.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / AVIATION 49
•
•
Adjusted EBITDA(1) and adjusted EBIT(1) of 4.4% and (1.9)%, respectively, reflect lower aircraft deliveries
and services activities, and low contribution of early Global 7500 units as the program continues to progress
on its production learning curve, combined with the impact of reshaping a commercial agreement. Reported
EBIT of $0.9 billion reflects the accounting gains on disposals of the CRJ and aerostructures businesses.
Business aircraft’s multi-year backlog totalled $10.7 billion at the end of the year, reflecting higher order
activity in the fourth quarter, net of reshaping a commercial agreement reclaiming 12 Global 7500 positions.
◦
In December, Bombardier announced a firm order for 10 Challenger 350 aircraft in a transaction
valued at $267 million, based on 2020 list prices. The firm commitment from an undisclosed customer
represents one of the largest business jet orders of 2020 and underscores the desirability of best-
selling Challenger 350 aircraft amid strong interest in business aviation and the enhanced safety it
provides.
(1) Non-GAAP financial measures. Refer to the Non-GAAP financial measures section in Overview for definitions of these metrics and the
Analysis of results section hereafter for reconciliations to the most comparable IFRS measures.
50 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
PROFILE
Strong portfolio positioned for growth
We skillfully design, develop, manufacture, market and provide aftermarket support for three class-leading
families of business jets - Learjet, Challenger and Global. Our business jet portfolio spans from the light to the
large categories, in addition to outfitting various aircraft platforms for specialized use.
With approximately 4,900 aircraft in service worldwide, Bombardier has developed an aftermarket and support
network of service facilities including wholly-owned service centres in the U.S., Europe and Asia, regional support
office (RSO) locations, mobile repair trucks and world-class aircraft parts availability sustained by parts facilities,
including depots, hubs and repair facilities worldwide.
MARKET SEGMENT: BUSINESS AIRCRAFT
LIGHT BUSINESS JETS
Models: Learjet 75 Liberty
Market category: Light business jets
Key features(1) : The class-defining Learjet aircraft
continues to set the standard by bringing large jet features
to a light jet platform. Learjet aircraft features a flat floor
throughout the cabin, offering a smooth ride and the
ultimate in comfort.
The new Learjet 75 Liberty aircraft is Bombardier’s most
accessible business jet, offering the only Executive Suite
in the light jet category featuring the option of a spacious
six- or eight-seat configuration with a standard pocket door
between the cockpit and cabin for the quietest flight
experience. The Learjet 75 Liberty aircraft is certified to
more stringent Part 25 regulations prescribed by the U.S.
Federal Aviation Administration (FAA), applicable to
commercial airliners, unlike most competitors in the light
jet category that are certified to Part 23 regulations.
Learjet 75 Liberty aircraft
(1) Under certain operating conditions, when compared to aircraft currently in service.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / AVIATION 51
MID-SIZE BUSINESS JETS
Models: Challenger 350 and Challenger 650
Market category: Medium business jets
Key features(1): A masterful expression of high-end
craftsmanship and functionality, the Challenger family of
aircraft features productivity-enhancing business tools,
with the most comfortable cabins in its category. Each
aircraft offers low operating costs, high reliability, and the
ultimate in-flight experience with industry-leading
connectivity, immersive sound system and a cabin
management system that effortlessly bring it all together.
Bombardier has continually invested in the Challenger
platform. In recent years, Bombardier announced a suite
of updates to its Challenger 350 aircraft, further
underscoring its leadership position in the super mid-size
segment. The most recent enhancements include high-
speed Ka-band connectivity and a refreshed CMS
interface that further elevate the cabin experience.
In 2020, Bombardier delivered the 350th Challenger 350
business jet, marking the aircraft’s sixth consecutive year
as world’s most delivered super mid-size business jet.
The Challenger 600 Series has been the most delivered
business jet in its segment for the last decade.
Challenger 350 aircraft
(1) Under certain operating conditions, when compared to aircraft currently in service.
performing aircraft in the industry as well as the first
business jet to receive an Environmental Product
Declaration (EPD).
Global 7500 aircraft
LARGE BUSINESS JETS
Models: Global 5000, Global 5500, Global 6000,
Global 6500, Global 7500 and Global 8000(2)
Market category: Large business jets
Key features(1): Skillfully designed to leave a lasting
impression, the flagship Global aircraft family covers the
large jet category with six aircraft models that feature a
smooth ride and intelligently crafted interiors with
redesigned cabins that balance luxury with productivity. All
Global aircraft come equipped with Pũr Air, an advanced
HEPA filter that captures up to 99.99% of allergens,
bacteria and viruses while completely replacing the cabin
air with 100% fresh air in as little as 90 seconds. In
addition, the industry’s fastest worldwide inflight internet
connectivity combined with comprehensive cabin
management systems keep passengers entertained and
connected at all times.
Featuring a new wing design and efficient Pearl engines,
the Global 5500 and Global 6500 jets boast farthest-in-
class ranges, offering unrivalled performance and
unsurpassed passenger comfort, all at exceptional
operating costs.
The segment-defining Global 7500 aircraft extends the
family with a true four-zone cabin, full crew-rest area and
the longest range to link virtually any key city pair
worldwide, non-stop. Since its entry into service in 2018,
the Global 7500 aircraft has proven itself to be the highest-
(1) Under certain operating conditions, when compared to aircraft currently in service.
(2) Currently under development. See the Global 8000 aircraft disclaimer at the end of this MD&A.
52 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
BOMBARDIER SPECIALIZED AIRCRAFT
Models: Learjet, Challenger and Global business jets
Market category: Special mission aircraft
Key features: Bombardier Specialized Aircraft designs, develops and delivers a range of capabilities to operators around the
world, with more than 500 specialized aircraft in service. Bombardier’s diverse fleet, which includes the Learjet, Challenger and
Global business aircraft platforms, represents the ideal solution for government missions, from surveillance and
reconnaissance to medical and dignitary transport. Solutions range from turnkey packages comprising the complete design,
building, testing and certification activity, through to specialist engineering support and technical oversight of customer specific
projects.
MARKET SEGMENT: CUSTOMER SERVICES
MAINTENANCE: ADDING VALUE THROUGHOUT THE LIFECYCLE
Services portfolio: Extensive, worldwide capabilities to maximize scheduled maintenance as well as value added packages,
including refurbishment and modification of business aircraft, and component repair and overhaul services. Through original
equipment manufacturer expertise, a wide variety of services can be performed in house, as well as through dispatching
mobile repair teams to customers’ aircraft.
Key features: Offering worldwide service and support through wholly-owned service centres, line maintenance stations, more
than 30 Bombardier mobile response vehicles, and a network of authorized service facilities and more than 600 aircraft
worldwide to support customers in the event of an AOG.
OFFERING PEACE OF MIND THROUGH PARTS AND SMART SERVICES
Services portfolio: Providing manufacturer approved parts backed by industry leading 2-year warranty, as well as repairs to
customer owned parts, and a growing portfolio of innovative cost-per-flight-hour parts and maintenance plans available for
Learjet, Challenger and Global aircraft. Options include the Smart Services offering, which can be tailored to include landing
gear overhaul and unscheduled maintenance coverage, among other selections.
Key features: Supporting 24/7 parts support with parts facilities worldwide anchored by three major hubs in Chicago, Frankfurt
and Singapore, as well as six regional depots. A sophisticated inventory management system ensures worldwide parts
availability throughout the depot and hub network as well as the wholly-owned service centres. Repair facilities in North
America and Europe provide repair services on customer-owned parts. Unlimited access to a network of more than 600 aircraft
to shuttle parts in support of aircraft-on-ground requirements. From coverage on exchanges and repairs of airframe
components, including flight deck avionics, Smart Services provides budget predictability and worldwide parts availability.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / AVIATION 53
24/7 CUSTOMER SUPPORT
Services portfolio: Comprehensive portfolio of business aircraft customer support including 24-hour customer response
centres, enhanced online service tools, customer services engineering, customer response team trucks, regional support
offices, technical publications, and EIS support.
Key features: Providing operators with a single point of contact, 24 hours a day, 365 days a year, for all critical and aircraft-on-
the-ground requests and supporting all customer requirements from EIS throughout ownership of the aircraft by leveraging a
global support network of strategically located teams. Bombardier is enhancing its customer support footprint around the world
with service centre footprint expansion announcements for Singapore, Miami Opa-Locka, Biggin Hill, Melbourne, Berlin, and
new line maintenance stations in the U.S. These initiatives underscore Bombardier’s ongoing, transformational commitment to
providing the most comprehensive onsite, mobile and aircraft-on-ground resolution services in the industry.
54 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
INDUSTRY AND ECONOMIC ENVIRONMENT
Short-term demand for business aviation affected by global pandemic
Recovery expected to be driven by increasing interest for private aviation
During March 2020, the World Health Organization declared a global COVID-19 pandemic resulting in travel
restriction protocols being implemented by many developed countries which saw air travel greatly affected for the
year. Industry indicators reflect the impact of the COVID-19 pandemic on the business aviation industry. On
October 13, 2020, the International Monetary Fund shared its latest projection of the global GDP decline of 4% for
2020. In this context of global recession coupled with air travel restrictions, some industry indicators remain below
2019 trends.
Business aviation deliveries dropped in 2020, driven by travel restrictions and economic uncertainty caused by the
pandemic. The impact of the pandemic was offset by strength of certain key indicators for the industry. World GDP
contracted in 2020 by 4%, from 2.5% growth in 2019.(1) After hitting a low point in Q1 2020, industry confidence,
measured by the Barclays Business Jet Indicator, ended the year at 58 points, the strongest since November
2018.(2) This coincides with a drop in used inventory, which was the lowest since the turn of the century. Pre-
owned aircraft inventory expressed as a percentage of the overall fleet has been decreasing since Q2 2020 and
remains healthy at 8.2%.(3) Forecasted U.S. corporate profits for 2020 are expected to maintain stability compared
to 2019, arriving at $2.3 trillion.(4) Business aviation utilization has decreased year-over-year in the U.S. and
Europe in 2020, as a result of widespread lockdown protocols and border closing implemented by governments to
contain the pandemic. However, in the context of gradual easing of travel restrictions, business aviation has
recorded a faster recovery than commercial aviation, as it offers better safety control and point-to-point flexibility
to travelers. According to WingX, global business aviation flight activity for December 2020 was at 89% of 2019
levels, back from the lowest point recorded in April 2020 at 21% of 2019 levels. (5)
Finally, the industry delivered an estimated total of 479 units in 2020, down 20% year-over-year. Large aircraft
category deliveries increased as a percentage of total deliveries in 2020, due to solid backlog and strong
resilience.(6) Industry revenues dropped less than deliveries, 15% down compared to 2019, following stronger
large category deliveries compared to smaller categories.(7)
The following key indicators are used to monitor the health of the business aviation market in the short term:
INDICATOR
CURRENT SITUATION
INDUSTRY
CONFIDENCE
Based on the latest Barclays Business Jet Indicator, published in December 2020, the
measure is currently at 58 points, above the threshold of market stability.
STATUS
▲
CORPORATE
PROFITS
PRE-OWNED
BUSINESS JETS
INVENTORY
LEVELS
AIRCRAFT
UTILIZATION
RATES
AIRCRAFT
SHIPMENTS AND
BILLINGS
Forecasted U.S. corporate profits are expected to maintain stability at $2.3 trillion for 2020.(4) ►
The total number of pre-owned aircraft available for sale as a percentage of the total
worldwide fleet has decreased over the past year to 8.2%, and remains at healthy levels.(3)
Business jet utilization in the U.S. decreased by 24.7% in 2020 compared to 2019.
Business jet utilization in Europe decreased by 29.3% in 2020 compared to 2019.(8)
▲
▼
In the business aircraft market categories in which we compete, we estimate that business
aircraft deliveries decreased by 20% (6) and total billings by 15% (7) in 2020 compared to 2019. ▼
▲ ►▼ Identifies a favourable, neutral or negative status, respectively, in the market categories in which we compete, based on the current
environment.
(1) According to Oxford Economics Global Economic Databank dated January 4, 2021.
(2) According to the Barclays Business Jet Survey dated January 5, 2021. Average has been calculated using the monthly data.
(3) According to JETNET and Ascend (by Cirium).
(4) According to the U.S. Bureau of Economic Analysis News Release dated December 20, 2020.
(5) According to WingX article “December Holiday Travel Provides Private Aviation Boost” dated January 7, 2021.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / AVIATION 55
(6) Based on our estimates, public disclosure records of certain competitors, the General Aviation Manufacturers Association (GAMA) shipment
reports and Ascend (by Cirium), as of January 20, 2021.
(7) Based on our estimates, public disclosure records of certain competitors, the General Aviation Manufacturers Association (GAMA) shipment
reports, Ascend (by Cirium) and B&CA Magazine list prices, as of January 20, 2021.
(8) According to the U.S. Federal Aviation Administration (FAA) and Eurocontrol websites.
Source: Barclays from the start of 2018, previously UBS
* The Business Jet Indicator is a measure of market confidence
from industry professionals, gathered through regular surveys of
brokers, dealers, manufacturers, fractional providers, financiers
and others.
Methodologies used in the calculation of the Business jet
Indicator may differ following a change in the source of the data.
UBS did not issue a survey for Q4 2017.
Sources: JETNET and Ascend (by Cirium)
* As a percentage of total business jet fleet, excluding very light
jets.
Shaded area indicates what we consider to be the normal
range of total pre-owned business jet inventory available for
sale, i.e. between 11% and 14%.
Source: U.S. Federal Aviation Administration (FAA) website
Source: Eurocontrol
56 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
BUSINESS JET INDICATOR*(for calendar quarters; average on a 100-pointscale)534953686771625549443920394958IndexStability threshold = 50Q12017Q22017Q32017Q12018Q22018Q32018Q42018Q12019Q22019Q32019Q42019Q12020Q22020Q32020Q42020U.S. BUSINESS JET UTILIZATION(for calendar years)4,1344,1734,2454,3934,4304,4384,5024,4124,3013,239Thousands of departures and arrivals for all business jets2011201220132014201520162017201820192020PRE-OWNED BUSINESS JET INVENTORY*(for calendar years)9.2%7.6%6.5%8.2%LightMediumLargeTotal201020112012201320142015201620172018201920200%4%8%12%16%20%EUROPEAN BUSINESS JET UTILIZATION(for calendar years)470451444454452450478480469331Thousands of departures and arrivals for all business jets2011201220132014201520162017201820192020 Short-term outlook
Global growth is expected to reach 5.2% in 2021(1), the highest in recent years due to the recovery of the global
pandemic. This economic outlook combined with low pre-owned inventory levels and balanced aircraft backlog
should continue to support gradual recovery of the business aviation market. The business environment for the
year is reinforced by the Barclays Business Jet Indicator which jumped 9 points to 58 points for December 2020(2),
on the back of increasing customer interest. The potential exit of certain legacy platforms in the industry should
offset the unit growth of new products. Industry revenues are expected to continue to recover driven by the
increasing contribution of large aircraft in the overall industry delivery mix.
(1) According to Oxford Economics Databank dated January 4, 2021.
(2) According to the Barclays Business Jet Survey dated January 5, 2021.
Long-term outlook
In the longer term, all demand drivers are well-oriented. Wealth creation and the continued emergence of
developing countries are expected to grow our customer base. The retirement of older models combined with the
introduction of new models will help meet the needs of new customers. The evolution of new ownership models,
such as fractional and charter businesses will make business aviation even more accessible.
Business aviation is poised for gradual recovery from 2020 levels and with the industry’s most comprehensive
product portfolio, we believe we are well positioned.
Customer services
Business Aircraft’s worldwide customer services network includes wholly owned service centres, parts hubs, parts
depots, line maintenance facilities, regional support offices, customer response centres, mobile customer
response teams, as well authorized service facilities and authorized training providers.
The demand for service and support is driven by the size of the fleet of Bombardier business aircraft, by the
number of hours flown by said fleet and the average age of the fleet. Based on the large installed base of
business aircraft, we will continue to focus on these high margin activities.
Market indicators
INDICATOR
CURRENT SITUATION
STATUS
INSTALLED BASE
The installed base for Bombardier business aircraft increased by approximately
1% to 4,930 aircraft in 2020 when compared to 2019.(1)
AVERAGE ANNUAL
FLIGHTS HOURS
Based on our estimates, Bombardier business aircraft average annual flight hours
decreased by approximately 24% in 2020 compared to last year(2) resulting from the
enforcement of worldwide travel restrictions to address the Covid-19 pandemic.
AVERAGE AGE OF
FLEET
Typically, aircraft direct maintenance costs increase as an aircraft ages. Therefore, the
average age of the fleet of Bombardier aircraft will impact the size of the maintenance
market. The average age of the Bombardier business aircraft fleet has decreased by
3.8% in 2020 when compared to 2019.(1)
▲
▼
▼
▲ ►▼ Identifies a favourable, neutral or negative status, respectively, in the market categories in which we compete, based on the current
environment.
(1) Based on data obtained from fleet database Ascend (by Cirium).
(2) Based on data from internal Bombardier FRACAS database
Short-term outlook
The COVID-19 pandemic gave rise to the enforcement of travel restrictions worldwide. As a result, overall
business jet utilization in 2020 dropped significantly below 2019 trends as did Bombardier business aircraft
average annual flight hours. Although we have seen a recovery in the flight hours during the second half of 2020,
we still see a gap versus pre-pandemic levels. We expect this trend to continue for as long as countries maintain
travel restrictions in place and come back to normal thereafter.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / AVIATION 57
Long-term outlook
Beyond the short-term impact of the pandemic, the continued growth of the installed base is expected to stimulate
demand for customer services. While traditional markets such as North America should dominate in terms of
market size, the business aircraft fleet growth in non-traditional markets should create new opportunities for
aftermarket services. We continue to actively seek out strategic locations for expansion in order to grow our share
of our aftermarket, move closer to customers to further improve response times and build stronger relationships
around the globe.
ANALYSIS OF RESULTS
Results of operations
Revenues
Business aircraft
Manufacturing and other(1)
Services(2)
Commercial aircraft(3)
Aerostructures and engineering services(4)
Total revenues
Adjusted EBITDA(5)
Amortization
Impairment reversals on PP&E and intangible assets
Adjusted EBIT(5)
Special items
EBIT
Adjusted EBITDA margin(5)
Adjusted EBIT margin(5)
EBIT margin
Fourth quarters ended
December 31
Fiscal years ended
December 31
2020
2019
2020
2019
$
$
$
$
1,996
252
8
81
2,337
15
164
—
(149)
(628)
479
0.6 %
(6.4) %
20.5 %
$ 1,640
311
231
231
$ 2,413
234
$
91
—
143
49
94
9.7 %
5.9 %
3.9 %
$
$ 4,605
988
314
581
$ 6,488
286
$
411
—
(125)
(1,062)
937
4.4 %
(1.9) %
14.4 %
$
$
$
$
$
4,163
1,254
1,227
857
7,501
812
282
(1)
531
(663)
1,194
10.8 %
7.1 %
15.9 %
(1) Represents revenues from sale of new aircraft, specialized aircraft solutions and pre-owned aircraft.
(2) Represents revenues from service and support network including parts, Smart Services, service centres, training and technical publication.
(3) Represents manufacturing, services and other.
(4) Represents external revenues.
(5) Non-GAAP financial measures. Refer to the Non-GAAP financial measures section in Overview for definitions of these metrics.
58 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Revenues
The $76-million decrease for the fourth quarter is mainly due to:
•
•
•
lower revenues from aerostructures and engineering services, mainly due to the divestiture to Spirit
AeroSystems Holding, Inc. (Spirit) on October 30, 2020 and the COVID-19 pandemic;
lower revenues from commercial aircraft, due to the divestiture to Mitsubishi Heavy Industries, Ltd (MHI)
on June 1, 2020; and
lower revenues from business aircraft services, mainly due to the COVID-19 pandemic.
Partially offset by:
•
higher revenues from business aircrafts, mainly due to higher deliveries of the large aircraft driven by
Global 7500 aircraft deliveries, partially offset by lower deliveries of the medium aircraft.
The $1,013-million decrease for the fiscal year is due to:
•
•
•
lower revenues from commercial aircraft, mainly due to ramp down of deliveries as planned in line with
the divestiture to MHI on June 1, 2020 and the sale of the Q Series aircraft program on May 31, 2019;
lower revenues from aerostructures and engineering services, mainly due to the COVID-19 pandemic and
the divestiture to Spirit on October 30, 2020; and
lower revenues from business aircraft services, mainly due to the COVID-19 pandemic and the sale of the
business aircraft training activities on March 14, 2019.
Partially offset by:
•
higher revenues from business aircrafts, mainly due to higher deliveries of the large aircraft driven by
Global 7500 aircraft deliveries, partially offset by lower deliveries of the medium aircraft..
Special items
Special items comprise items which do not reflect our core performance or where their separate presentation will
assist users in understanding our results for the period. Such items include, among others, the impact of
restructuring charges, impact of business disposals and significant impairment charges and reversals.
The special items recorded as (gains) losses in EBIT were as follows:
Fourth quarters ended
December 31
2019
2020
Fiscal years ended
December 31
2019
2020
Ref
$
(678)
$ —
$ (678)
(488)
$ —
$ —
Gain on disposal of a business - aerostructure business
Gain on disposal of a business - CRJ Series business
Reversal of Learjet 85 aircraft program cancellation
provisions
Restructuring charges
Learjet program end of production and other
Transaction costs
Disruption costs
Gain on disposal of a business - Training business
Gain on disposal of a business - Q Series business
1
2
3
4
5
6
7
8
9
Purchase of pension annuities
Pension adjustments
10
11
8
—
16
26
—
—
—
—
—
—
—
(3)
13
—
—
—
—
9
4
26
49
(7)
(18)
74
26
7
4
—
—
—
—
51
—
—
—
(516)
(210)
4
26
$ (1,062)
$ (663)
$
(628)
$
EBIT margin impact
26.9 %
(2.0) %
16.3 %
8.8 %
1. Represents the sale of the aerostructure business for gross proceeds of $275 million. The transaction resulted
in a gain of $678 million. See Note 30 - Disposal of businesses for more details.
2. Represents the sale of the CRJ Series aircraft program assets for gross proceeds of $585 million, at closing,
including certain closing adjustments. The transaction resulted in a pre-tax accounting gain of $488 million
($440 million after tax impact). See Note 30 - Disposal of businesses for more details.
3. Based on the ongoing activities with respect to the cancellation of the Learjet 85 aircraft program, the
Corporation reduced the related provisions by $7 million for the fiscal year ended December 31, 2020
BOMBARDIER INC. / 2020 FINANCIAL REPORT / AVIATION 59
($3 million and $18 million for the fourth quarter and fiscal year ended December 31, 2019). The reduction in
provisions is treated as a special item since the original provisions were also recorded as special items in
2014 and 2015.
4. For the fourth quarter and fiscal year ended December 31, 2020, represents severance charges of $4 million
and $56 million following the announcement of Aviation for workforce adjustments in response to the
COVID-19 pandemic, $13 million and $34 million of impairment of right-of-use assets related to lease
contracts as a consequence of previously-announced restructuring actions, and other related charges of $1
million and $5 million, partially offset by curtailment gains of $2 million and $21 million, respectively.
For the fourth quarter and fiscal year ended December 31, 2019, represents change in severance charges of
$(1) million and $24 million, respectively, partially offset by curtailment gains of nil and $2 million, respectively,
related to previously-announced restructuring actions.
Following the announcement that the CRJ production is expected to conclude in the second half of 2020,
following the delivery of the current backlog of aircraft, the Corporation has recorded severance charges of
$7 million partially offset by curtailment gains of $3 million in the first quarter of 2019, and has recorded
$14 million and $24 million of other related charges for the fourth quarter and the fiscal year of 2019,
respectively.
5. Following the decision to end production of the Learjet aircraft in 2021 and the decision to consolidate the
Global aircraft completion work in Montréal, the Corporation has recorded $12 million of inventory write-down,
$4 million of impairment of PP&E and $10 million of other charges.
6. Represents direct and incremental costs incurred in respect of the sale of CRJ business to MHI.
7. Due to the COVID-19 pandemic, in the second half of March 2020, the Corporation temporarily suspended
operations at various production facilities. As a result of the pandemic, nil and $4 million were recorded as
special items for Aviation in the fourth quarter and fiscal year ended December 31, 2020. These costs do not
represent the full impact of the COVID-19 pandemic on the results of operations since it does not reflect the
impact of lost or deferred revenues and associated margins.
8. The sale of Business Aircraft’s flight and technical training activities for a total net consideration of
$532 million resulted in a pre-tax accounting gain of $516 million ($383 million after deferred tax impact of
$133 million).
9. The sale of the Q Series Aircraft program assets for net proceeds of $285 million resulted in a pre-tax
accounting gain of $210 million ($184 million after tax impact).
10. Represents the non-cash loss on the settlement of defined benefit pension plans resulting from the purchase
of annuities with insurance companies. As part of its ongoing de-risking strategies, the Corporation has an
initiative for the buy-out of annuities payable to pensioners or deferred pensioners for certain plans to the
extent they are fully funded on a buy-out basis, subject to compliance with certain conditions including
applicable pension legislations.
11. On October 26, 2018, the High Court in the United Kingdom ruled that pension schemes must equalize for the
effect of unequal Guaranteed Minimum Pensions between male and female for benefits earned during
specified periods (“GMP equalization”). In fiscal year 2019, the Corporation adjusted the pension obligation
related to equalization for an Aviation plan in the U.K. The adjustments of $26 million was recorded as a past
service cost under IAS 19 - Employee Benefits.
60 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
EBIT margin
Adjusted EBIT margin(1) for the fourth quarter and the fiscal year decreased by 12.3 and 9.0 percentage points,
respectively, mainly due to:
•
•
•
lower contribution from business aircraft sales, mainly driven by lower deliveries due to the COVID-19
pandemic, the ramp-up of Global 7500 deliveries and the associated increase in amortization of
aerospace program tooling, combined with the impact of reshaping a commercial agreement;
lower contribution from aerostructures and engineering services, mainly due to the divestiture to Spirit on
October 30, 2020 and the COVID-19 pandemic; and
lower contribution from commercial aircraft, mainly due to the divestiture to MHI on June 1, 2020.
Including the impact of special items (see explanation of special items above), the EBIT margin increased by 16.6
for the fourth quarter and decreased by 1.5 percentage points for and the fiscal year compared to the same
periods last year.
(1) Non-GAAP financial measures. Refer to the Non-GAAP financial measures section in Overview for definitions of these metrics.
Investment in product development
Product development
Program tooling(1)
R&D expense(2)
Fiscal years ended
December 31
2019
280
24
304
4.1 %
(1) Represents the net amount capitalized in aerospace program tooling, as well as the amount that was paid to suppliers based on reception
of parts or delivery of the aircraft for acquired development costs carried out by them; excludes program tooling adjustments related to the
divestitures of the CRJ business and aerostructures businesses.
Fourth quarters ended
December 31
2019
62
6
68
2.8 %
2020
127
20
147
2.3 %
2020
29
5
34
1.5 %
As a percentage of revenues
$
$
$
$
$
$
$
$
(2) Excludes amortization of aerospace program tooling of $141 million and $302 million, respectively, for the fourth quarter and fiscal year
ended December 31, 2020 ($59 million and $132 million, respectively, for the fourth quarter and fiscal year ended December 31, 2019), as
the related investments are already included in aerospace program tooling.
The carrying amount of aerospace program tooling as at December 31, 2020 was $4.4 billion, compared to
$4.6 billion as at December 31, 2019. The decrease in aerospace program tooling investment is mainly due to the
entry-into-service of the Global 7500 aircraft program in December 2018, although the net carrying value of
aerospace program tooling remains stable due to completion of major development programs.
Bombardier is coming off a substantial period of heavy investment cycle that saw the company introduce
innovative technologies and industry-leading new products and services. This period included the entry into
service of the Global 7500, Global 6500, Global 5500, Learjet 75 Liberty, in addition to ongoing major
enhancements to the Challenger 350 platform. Going forward, Bombardier will continue to explore incremental,
competitive product enhancements and develop new service programs throughout its product portfolio.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / AVIATION 61
Aircraft deliveries
(in units)
Business aircraft
Light
Medium
Large
Commercial aircraft
Regional jets(1)
Turboprops(2)
Aircraft deliveries and order backlog
Fourth quarters
ended December 31
2019
2020
Fiscal years ended
December 31
2019
2020
4
12
28
44
—
—
—
44
3
28
21
52
6
—
6
58
11
44
59
114
5
—
5
119
12
76
54
142
26
7
33
175
(1) On June 1, 2020, the Corporation completed the sale of the regional jet program to MHI.
(2) On May 31, 2019, the Corporation completed the sale of the Q Series aircraft program assets, including aftermarket operations and assets,
to De Havilland Aircraft of Canada Limited (formerly Longview Aircraft Company of Canada Limited).
Order backlog
(in billions of dollars)
Business aircraft
Other aviation(1)
$
December 31, 2020
10.7
—
10.7
$
As at
December 31, 2019
14.4
$
1.9
16.3
$
(1) Included the firm orders amounting to $1.1 billion from the aerostructures businesses presented under Assets held for sale as of
December 31, 2019. Also included 20 firm orders for CRJ900 as of December 31, 2019. The backlog for the CRJ Series aircraft program
amounting to $0.4 billion was removed as a result of the closing of the sale of the CRJ Series aircraft program to MHI on June 1, 2020.
During the fourth quarter of 2020, the Corporation has engaged with a Global 7500 launch customer to reshape a
commercial agreement which includes reclaiming 12 positions for delivery in 2023, the elimination of certain trade-
in obligations and other contractual adjustments. While the contract amendments impacted the backlog and
financial results of the Corporation for the fourth quarter, the ability to remarket these aircraft at more favorable
terms provides an opportunity to improve future profitability(1).
The order backlog and the production horizon for business aircraft programs are monitored to align production
rates to reflect market demand. We maintained a strong business aircraft order backlog as at December 31, 2020.
(1) See the forward-looking statements disclaimer.
62 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Workforce
Total number of employees
Permanent(1)
Contractual(2)
Percentage of permanent employees covered by collective agreements
December 31, 2020
As at
December 31, 2019
14,600
1,200
15,800
47 %
22,150
2,200
24,350
52 %
(1) Including 670 inactive employees as at December 31, 2020 (750 inactive employees as at December 31, 2019).
(2) Including non-employees and sub-contractors personnel.
The workforce as at December 31, 2020 decreased by 8,550 employees, or 35%, when compared to the previous
year. The decrease is mainly related to the divestitures in 2020 including the sale of manufacturing activities on
A220 subassembly to Stelia Aerospace, the sale of regional jet program to MHI, and the sale of aerostructures
business to Spirit AeroSystems Holdings, Inc.
Our incentive-based compensation plan for non-unionized employees across our sites rewards the collective
efforts of our employees in achieving our objectives using performance indicator targets. A total of approximately
8,750 employees worldwide, or 60% of permanent employees, participate in the program. In 2020, as part of this
program, incentive-based compensation is linked to the achievement of targeted results, based on adjusted
EBIT(1) and free cash flow(1).
The workforce as at December 31, 2020 located in Canada amounts to 65% or 10,300 employees (9,750
permanent employees including 600 inactive employees, and 550 contractual employees).
(1) Non-GAAP financial measures. Refer to the Non-GAAP financial measures section in Overview for definitions of these metrics.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / AVIATION 63
RESHAPING THE PORTFOLIO
Closing of the sale of our regional jet program to Mitsubishi Heavy
Industries, Ltd.
On June 1, 2020, the Corporation concluded the previously announced sale of the CRJ Series aircraft program to
Mitsubishi Heavy Industries, Ltd (MHI).
Through this sale, MHI acquired the maintenance, support, refurbishment, marketing, and sales activities for the
CRJ Series aircraft, including the related services and support network located in Montréal, Québec, and Toronto,
Ontario, and its service centres located in Bridgeport, West Virginia, and Tucson, Arizona, as well as the type
certificates.
Bombardier will continue to supply components and spare parts and will assemble the remaining CRJ Series
aircraft in the backlog on behalf of MHI until the complete delivery of the current backlog, expected by the end of
the first quarter of 2021.
The Corporation has received gross proceeds of $585 million at closing, including certain closing adjustments.
The net proceeds were $574 million at closing. A pre-tax gain of $488 million for the fiscal year 2020 was
recognized in Special items, see Note 8 - Special items ($440 million after tax impact).
The Corporation has retained certain liabilities representing credit and residual value guarantees provisions and
lease subsidies for which the Corporation has a back-to-back agreement with MHI. In addition, the Corporation
has retained certain assets, mainly including the Corporation’s regional aircraft securitization program (RASPRO)
for which the Corporation has transferred the net beneficial interest through a back-to-back agreement with MHI.
For more details, refer to Note 30 - Disposal of businesses, to our Consolidated financial statements.
Sale of Belfast and Casablanca aerostructures businesses and Dallas MRO
to Spirit AeroSystems Holding, Inc. (Spirit)
On October 30, 2020, the Corporation concluded the sale of the aerostructure business to Spirit AeroSystems
Holding, Inc. (Spirit). Through this sale, Spirit acquired Bombardier’s aerostructures activities and aftermarket
services operations in Belfast, U.K.; Casablanca, Morocco; and its aerostructures maintenance, repair and
overhaul (MRO) facility in Dallas, U.S. for cash consideration of $275 million, Spirit’s assumption of liabilities,
including government refundable advances and pension obligations.
The Corporation has received gross proceeds of $275 million at closing. The net proceeds were $257 million. A
gain of $678 million for fiscal year 2020 was recognized in Special items, see Note 8 - Special items.
Following the transaction, Spirit will continue to supply structural aircraft components and spare parts to support
the production and in-service fleet of Bombardier Aviation’s Learjet, Challenger and Global families of aircraft.
For more details, refer to Note 30 - Disposal of businesses, to our Consolidated financial statements.
64 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Completion of acquisition to gain full ownership of aircraft service centre in
Berlin
On December 31, 2020, the Corporation completed the acquisition, to gain full control, of the aircraft service
center in Berlin. The Corporation purchased the shares from Lufthansa Technik AG and ExecuJet Aviation Group
AG, thereby allowing the Corporation to establish a wholly-owned service center in Berlin and further expand its
worldwide customer support footprint.
For more details, refer to Note 32 - Acquisition of a business, to our Consolidated financial statements.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / AVIATION 65
TRANSPORTATION
Table of Contents
SALE OF
TRANSPORTATION
BUSINESS
PROFILE
INDUSTRY AND
ECONOMIC
ENVIRONMENT
ANALYSIS OF RESULTS
67
68
68
69
66 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
SALE OF THE TRANSPORTATION BUSINESS TO ALSTOM SA
On September 16, 2020, the Corporation, Alstom and CDPQ and certain related parties signed a definitive sale
and purchase agreement for the sale of the Transportation business through the sale of the entire issued share
capital of BT Holdco (“SPA”). On January 29, 2021, the Corporation closed the sale of the Transportation
Business to Alstom.
Total proceeds to the vendors after the deduction of debt-like items and transferred liabilities are $6.0 billion,
including the amount paid by Alstom to redeem the Corporation and CDPQ’s capital injections of €400 million
($488 million at an exchange rate of 1.22) and €350 million ($427 million at an exchange rate of 1.22),
respectively, in Transportation made in fiscal year 2020 to support working capital. After deducting CDPQ’s equity
position of $2.5 billion, transaction costs, and including the impact from closing adjustments and obligations
related to achieving a minimum cash balance at Transportation at the end of fiscal year 2020, the Corporation
expects net proceeds of approximately $3.6 billion. This amount includes €400 million ($488 million at an
exchange rate of 1.22) of cash from the redemption of equity and €103 million ($125 million at an exchange rate
of 1.22) of intercompany loan reimbursement by Transportation, settled in conjunction with the transaction closing.
Net proceeds also include approximately $600 million of Alstom shares (€500 million representing 11.5 million
shares for a fixed subscription price of €43.46 per share), monetizable starting in late April 2021.
Proceeds from the transaction were lower than previous estimates as a result of Transportation’s lower than
expected cash generation in the fourth quarter due in part to unfavorable market conditions, as well as
disagreements between the parties as to certain closing adjustments which Bombardier intends to challenge.
The Corporation intends to direct the proceeds towards debt pay down and will evaluate the most efficient debt
reduction strategies.
For more details, refer to Note 31 - Discontinued operations, to our Consolidated financial statements.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / TRANSPORTATION 67
PROFILE
Transportation offers a wide-ranging portfolio of innovative and efficient solutions in the rail industry. We cover a
full spectrum of rail solutions, ranging from global mobility solutions to a variety of trains and sub-systems,
services, system integration and signalling to meet the market’s needs and expectations. We have won orders
across all product segments and major geographies, underlining the competitiveness of our products and services
worldwide.
We have production, engineering and service centres around the world. The global headquarter is located in
Berlin, Germany.
Transportation operates in three market segments comprised of rolling stock and systems, services and signaling.
Rolling stock and systems segment includes light rail vehicles, metros, commuter and regional trains, intercity
trains, high-speed and very high-speed trains, locomotives, propulsion and controls, bogies, mass transit and
airport systems, and mainline systems. Services segment includes fleet management, asset life management,
component re-engineering and overhaul, material solutions, and operations and maintenance of systems.
Signaling segment includes mass transit, mainline, industrial and OPTIFLO service solutions.
INDUSTRY AND ECONOMIC ENVIRONMENT
The rail market activities increased during the fourth quarter which was in line with industry seasonality, after
experiencing a slowdown in the overall order activities during the first three quarters of 2020 mainly due to the
COVID-19 pandemic.
Europe
The order volume in Europe during 2020 decreased compared to 2019, mainly due to several significant contracts
awarded last year for intercity and regional trains along with services agreements in the U.K., France and
Germany. During 2020, order volume was driven by several contracts awarded across Western Europe for
commuter, regional and intercity trains, primarily in Germany, France and Italy. In addition, significant orders were
awarded for light rail vehicles (LRVs) in the U.K. and for metro trains in Germany along with their services
agreements. In Eastern Europe, orders were mainly driven by investments in both urban and mainline mobility
solutions, with major contracts for regional trains in Czech Republic and Hungary and for metro trains in Turkey
and Greece. For signalling solutions, many orders were issued across the region with the most significant in
France and Greece for urban signalling, and in the U.K. primarily for mainline signalling.
North America
The North American market volume decreased on a year-to-date basis, mainly due to large orders awarded
during 2019 in the U.S and Canada for commuter trains along with services agreements as well as for metro
trains in the U.S. In 2020, rolling stock order volume in this region was primarily driven by tenders awarded for
metro trains in Canada and regional trains in the US. Furthermore, order volume was driven by significant
signaling contracts mainly for urban signaling modernization and service agreements granted mainly for
infrastructure maintenance and fleet management in both the U.S and Canada.
Asia-Pacific
Overall order volume in the Asia Pacific region declined in 2020 compared to last year mainly due to large
contracts awarded for commuter trains in Australia and for intercity trains in India and Taiwan as well as very high-
speed train orders in China. During 2020, market volume was mainly driven by large and significant orders
awarded for metro trains in China, Philippines, India and Singapore as well as for regional and intercity trains in
Myanmar and South Korea. Furthermore, a noteworthy order for very high-speed trains has been issued in China.
In the signalling and services segments, several medium sized orders were placed in the region with the most
significant contracts secured in India and Taiwan for signaling solutions and in China and Australia for
maintenance and fleet management services agreements.
68 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Rest of World(1)
In the Rest of World region, order volume in 2020 declined compared to 2019 mainly due to large contracts
awarded for commuter trains and intercity trains along with services agreements in Russia as well as for monorail
trains along with signaling and services agreements in Egypt. In 2020, order volume in the region was driven
mainly by investments in urban mobility solutions with large contracts awarded for metro train cars along with
signaling and services agreements in Ivory Coast, Panama and Columbia. Additionally, significant contracts were
granted for LRVs in Russia and Morocco.
(1) The Rest of World region includes South America, Central America, Africa, the Middle East and the CIS.
Results of operations(1)
ANALYSIS OF RESULTS
Fourth quarters ended
December 31
Fiscal years ended
December 31
2020
2019
2020
2019
Revenues
Rolling stock and systems(2)
Services(3)
Signalling(4)
Total revenues
Adjusted EBITDA(5)(6)
Amortization(7)
Impairment charge on PP&E and intangible assets
Adjusted EBIT(5)(6)
Special items
EBIT(5)
Adjusted EBITDA margin(5)(6)
Adjusted EBIT margin(5)(6)
EBIT margin
$ 1,227
552
297
$ 2,076
(338)
$
2
—
(340)
(4)
(336)
(16.3) %
(16.4) %
(16.2) %
$
$
890
587
316
$ 1,793
(196)
$
38
—
(234)
2
(236)
(10.9) %
(13.1) %
(13.2) %
$
$ 4,770
2,033
1,041
$ 7,844
(511)
$
99
—
(610)
8
(618)
(6.5) %
(7.8) %
(7.9) %
$
$ 5,192
2,140
937
$ 8,269
212
$
139
3
70
48
22
2.6 %
0.8 %
0.3 %
$
(1) Transportation was classified as discontinued operations as of December 31, 2020 and for comparative periods. Refer to Note 31 -
Discontinued operations to our Consolidated financial statements for more details.
(2) Comprised of revenues from light rail vehicles, metros, commuter and regional trains, intercity trains, high-speed and very high-speed trains,
locomotives, propulsion and controls, bogies, mass transit and airport systems, and mainline systems.
(3) Comprised of revenues from fleet management, asset life management, component re-engineering and overhaul, material solutions, and
operations and maintenance of systems.
(4) Comprised of signalling revenues from mass transit, mainline, industrial and OPTIFLO service solutions.
(5) Including share of income from joint ventures and associates amounting to $18 million and $108 million, respectively, for the fourth quarter
and fiscal year ended December 31, 2020 ($25 million and $94 million for the fourth quarter and fiscal year ended December 31, 2019).
(6) Non-GAAP financial measures. Refer to the Non-GAAP financial measures section in Overview for definitions of these metrics and the
Analysis of results section for reconciliations to the most comparable IFRS measures.
(7) The amortization impact for the fourth quarter ended December 31, 2020 is due to foreign exchange translation and is not an operating
amortization impact.
Revenues by geographic region
Europe(1)
North America
Asia-Pacific(1)
Rest of World(1)(2)
Fourth quarters ended December 31
2019
53 % $ 4,874
1,645
24 %
982
16 %
343
7 %
100 % $ 7,844
957
426
294
116
100 % $ 1,793
2020
60 % $
21 %
14 %
5 %
$ 1,251
440
287
98
$ 2,076
Fiscal years ended December 31
2019
59 %
24 %
12 %
5 %
100 %
2020
62 % $ 4,929
1,955
21 %
986
13 %
399
4 %
100 % $ 8,269
(1) The variances in Europe in the fourth quarter and fiscal year ended December 31, 2020 reflect positive currency impacts of $74 million and
$81 million, respectively. The decreases in Asia-Pacific and the Rest of World region in the fiscal year ended December 31, 2020 reflect
negative currency impacts of $15 million and $16 million, respectively.
(2) The Rest of World region includes South America, Central America, Africa, the Middle East and the CIS.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / TRANSPORTATION 69
Revenues
Total revenues for the fourth quarter ended December 31 2020 have increased by $283 million, while total
revenues for the fiscal year ended December 31, 2020 have decreased by $425 million compared to the same
periods last fiscal year. Excluding positive currency impacts of $74 million for the fourth quarter and $50 million for
the fiscal year, revenues for the fourth quarter have increased by $209 million, or 12%, while revenues for the
fiscal year have decreased by $475 million, or 6%, compared to the same periods last fiscal year.
The $209-million increase excluding currency impact for the fourth quarter is mainly explained by:
•
higher activities in rolling stock and systems in Europe, North America and Asia-Pacific, mostly due to
ramp-up in production related to some commuter and regional train contracts in Europe and Asia-Pacific,
some metro contracts in North America and Asia-Pacific, and some automated people movers (APMs) in
North America.
Partially offset by:
•
•
lower activities in services in North America and Asia-Pacific;
lower activities in rolling stock and systems in the Rest of World region, mostly due to some contracts
nearing completion. These contracts mainly relate to locomotives, mass transit systems and commuter
and regional trains; and
lower activities in signalling in Asia-Pacific.
•
The $475-million decrease excluding currency impact for the fiscal year is mainly explained by:
•
•
revised estimates on certain contracts in Germany, Switzerland and the U.K. that negatively affect
revenues of rolling stock in Europe in the current year;
the negative impact on activities in rolling stock in North America and Europe due to the COVID-19
pandemic and related site closures in the first half of 2020 was offset by higher activities in these regions
in the fourth quarter; and
lower activities in services mainly in North America and Europe.
•
Partially offset by:
•
higher activities in signalling in North America, Asia-Pacific and Europe.
Special items
Special items comprise items which do not reflect our core performance or where their separate presentation will
assist users in understanding our results for the period. Such items include, among others, the impact of
restructuring charges, impact of business disposals and significant impairment charges and reversals.
The special items recorded as losses (gains) in EBIT were as follows:
Restructuring charges
Disruption costs
EBIT margin impact
Fourth quarters ended
December 31
Fiscal years ended
December 31
Ref
1
2
$
$
2020
(5)
1
(4)
0.2 %
$
$
2019
2
—
2
(0.1) %
$
$
2020
1
7
8
(0.1) %
$
$
2019
48
—
48
(0.6) %
1. For the fourth quarter and fiscal year ended December 31, 2020, represents reversal of severance charges of
$5 million and severance charges of $1 million, respectively, all related to previously-announced restructuring
actions.
For the fourth quarter and fiscal year ended December 31, 2019, represents severance charges of $2 million
and $61 million, respectively and the reversal of previously-recorded impairment charges of nil and $8 million,
partially offset by curtailment gains of nil and $5 million, all related to previously-announced restructuring
actions.
2. Due to the COVID-19 pandemic, in the second half of March 2020, the Corporation temporarily suspended
operations at various production facilities. As a result of the pandemic, $1 million and $7 million were recorded
as special items for Transportation for the fourth quarter and fiscal year ended December 31, 2020. These
costs
70 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
do not represent the full impact of the COVID-19 pandemic on the results of operations since it does not
reflect the impact of lost or deferred revenues and associated margins.
•
EBIT margin
The adjusted EBIT margin(1) loss for the fourth quarter deteriorated by 3.3 percentage points, mainly as a result of:
lower margin in services, mainly due to a lower positive impact from revised estimates on certain
contracts;
lower margin in signalling, due to an unfavourable contract mix and a higher negative impact from revised
estimates on certain contracts; and
a lower share of income from joint ventures and associates.
•
•
Partially offset by:
•
•
lower R&D expenses; and
lower margin dilution from rolling stock and systems, due to a favourable contract mix.
Including the impact of special items (see explanation of special items above), the EBIT margin loss for the fourth
quarter deteriorated by 3.0 percentage points, compared to the same period last year.
The adjusted EBIT margin(1) for the fiscal year decreased by 8.6 percentage points, mainly as a result of:
•
•
lower margin in rolling stock and systems, mainly due to a higher negative impact from revised estimates
on a number of projects mainly in Germany, Switzerland and the U.K.; and
lower margin in services, mainly due to a lower positive impact from revised estimates on certain
contracts.
Partially offset by:
•
•
•
lower R&D expenses;
a higher share of income from joint ventures and associates; and
higher margin in signalling, mainly due to a favourable contract mix.
Including the impact of special items (see explanation of special items above), the EBIT margin for the fiscal year
decreased by 8.2 percentage points, compared to the same period last year.
(1) Non-GAAP financial measure. Refer to the Non-GAAP financial measures section in Overview for a definition of this metric.
Orders and backlog
Order backlog
(in billions of dollars)
Balance at the beginning of period
Order intake
Revenues
Foreign currency impact and other adjustments
Balance at the end of period
$
$
Fourth quarters ended
December 31
2019
35.1
1.8
(1.8)
0.7
35.8
2020
34.1
3.1
(2.1)
1.5
36.6
$
$
Fiscal years ended
December 31
2019
34.5
10.0
(8.3)
(0.4)
35.8
2020
35.8
7.0
(7.8)
1.6
36.6
$
$
$
$
$
$
$
The significant orders obtained during the fiscal year ended December 31, 2020 were as follows:
BOMBARDIER INC. / 2020 FINANCIAL REPORT / TRANSPORTATION 71
Customer
Fourth quarter
Country
Product or service
Number
of cars
Market
segment
Value (1)
Société Nationale des Chemins
de fer Français (SNCF), on
behalf of the Hauts-de-France
region
France
Exercise of an option for
OMNEO / Régio 2N double
deck electric multiple units
(EMUs)
330
Rolling stock and
systems
$ 688
TransLink
Canada
Rail cars for SkyTrain system
205
Société Nationale des Chemins
de Fer Belges (SNCB)
Belgium
Call-off of M7 double-deck cars
204
Rolling stock and
systems
$ 565
Rolling stock and
systems
$ 546 (2)
Arriva CrossCountry
U.K.
Zurich Public Transport (VBZ)
Switzerland
Berlin Transport Authority (BVG) Germany
Deutsche Bahn (DB) AG
Germany
Extension of a train services
agreement
Exercise of an option for
additional FLEXITY low-floor
trams
FLEXITY trams and spare parts
supply
Engineering services for
redesign and fleet
modernisation
N/A
Services
$ 320
40
20
Rolling stock and
systems
$ 194
Rolling stock and
systems and
Services
$ 140
N/A
Services
$ 125
Mosaic Transit Partners
Maintenance GP (MTM)
Third quarter
Trenitalia, on behalf of
Intermodalidad de Levante
(ILSA) joint venture
Uttar Pradesh Metro Rail
Corporation (UPMRC)
Undisclosed
Second quarter
Canada
Fleet maintenance services
N/A
Services
n.d.
Spain
India
North
America
Frecciarossa 1000 very high-
speed trains (derived from the
V300ZEFIRO platform)
184
Rolling stock and
systems
$ 378 (3)
MOVIA metro cars and
CITYFLO 650 rail control
solution
Undisclosed
201
N/A
Rolling stock and
systems and
Signalling
Rolling stock and
systems
$ 275
$ 226
Société Nationale des Chemins
de fer Français (SNCF), on
behalf of the Region Normandie
France
Exercise of two options for
OMNEO / Régio 2N double
deck EMUs
270
Rolling stock and
systems
$ 457
National Capital Region
Transport Corporation (NCRTC)
India
Transport for Victoria (TfV) and
the Victorian State Government
Australia
Commuter and intracity mass
transit cars and fleet
maintenance services
Exercise of an option for
additional VLocity diesel
multiple units (DMUs)
Central Puget Sound Regional
Transit Authority (Sound Transit)
U.S.
BiLevel commuter rail cars
Undisclosed
North
America
Undisclosed
210
36
28
Rolling stock and
systems and
Services
$ 340
Rolling stock and
systems
$ 139
Rolling stock and
systems
$ 108
N/A
Services
$ 108
(1) Contract values exclude price escalation. Exception: OMNEO / Régio 2N double deck EMUs for SNCF in the second and fourth quarters.
(2) Contract signed in consortium with Alstom. Only our share of the contract is stated above.
(3) Contract signed in partnership with Hitachi Rail SpA. The total contract is valued at $943 million, and only our share of the contract is stated
above.
72 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Customer
First quarter
Country
Product or service
Number
of cars
Market
segment
Value (1)
Société Nationale des Chemins
de fer Français (SNCF), on
behalf of the Region Auvergne-
Rhône Alpes
France
Fraport AG
Germany
Exercise of an option for
OMNEO / Régio 2N double
deck EMUs
Extension of Operations and
Maintenance (O&M) services of
INNOVIA APM 100 automated
people mover (APM) system
and modernization of its
signalling technology with
CITYFLO 650 solution
114
Rolling stock and
systems
$ 193
N/A
Services and
Signalling
$ 113
(1) Contract values exclude price escalation. Exception: OMNEO / Régio 2N double deck EMUs for SNCF in the first quarter.
During the fourth quarter and fiscal year ended December 31, 2020, the following significant orders were awarded
to our joint ventures, which are not included in our backlog since they are joint ventures:
•
•
•
in the first quarter, our Chinese joint venture Bombardier Sifang (Qingdao) Transportation Ltd. (BST), in
which we own 50% of the shares, was awarded a contract to provide maintenance services for 656 high-
speed train cars from China State Railway Group Co. Ltd., China, valued at $357 million.
in the third quarter, our Chinese joint venture Changchun Bombardier Railway Vehicles Company Ltd.
(CBRC), in which we own 50% of the shares, has signed a contract with CRRC Changchun Railway
Vehicle Co., Ltd. (CRRC Changchun), China, to manufacture 390 metro cars for Harbin Metro, valued at
$181 million.
in the fourth quarter, our Chinese joint venture Bombardier Sifang (Qingdao) Transportation Ltd. (BST), in
which we own 50% of the shares, was awarded a contract from China State Railway Group Co., Ltd. to
supply 112 CR300AF high-speed train cars valued at $248 million.
Subsequent to the end of the fiscal year, our Chinese joint venture Bombardier Sifang (Qingdao) Transportation
Ltd. (BST), in which we own 50% of the shares, was awarded a contract to provide maintenance services for 280
high-speed train cars from China State Railway Group Co. Ltd., China, valued at $192 million.
Total number of employees
Permanent(1)
Contractual
Workforce
December 31, 2020
December 31, 2019
As at
30,950
4,150
35,100
31,750
4,300
36,050
(1) Including 1,050 inactive employees as at December 31, 2020 (950 inactive employees as at December 31, 2019).
BOMBARDIER INC. / 2020 FINANCIAL REPORT / TRANSPORTATION 73
OTHER
Table of Contents
OFF-BALANCE
SHEET
ARRANGEMENTS
RISKS AND
UNCERTAINTIES
FINANCIAL
INSTRUMENTS
RELATED
PARTY
TRANSACTIONS
CRITICAL
JUDGMENTS
AND
ACCOUNTING
ESTIMATES
CONTROLS
AND
PROCEDURES
74
76
93
94
95
100
FOREIGN
EXCHANGE
RATES
SHAREHOLDER
INFORMATION
SELECTED
FINANCIAL
INFORMATION
QUARTERLY
DATA
(UNAUDITED)
HISTORICAL
FINANCIAL
SUMMARY
101
102
103
104
105
OFF-BALANCE SHEET ARRANGEMENTS
Working capital financing initiatives
The Corporation engages in certain working capital financing initiatives which impact cash flows from operating
activities such as the sale of receivables (refer to Note 15 - Trade and other receivables and Note 31 -
Discontinued operations, to our Consolidated financial statements, for more details), arrangements for advances
from third parties (refer to Note 16 - Contract balances and Note 31 - Discontinued operations, to our
Consolidated financial statements, for more details), and the negotiation of extended payment terms with certain
suppliers (refer to Note 24 - Trade and other payables and Note 31 - Discontinued operations, to our Consolidated
financial statements, for more details).
Credit and residual value guarantees
In connection with the sale of certain of our products, mainly commercial aircraft, we have provided financing
support in the form of credit and residual value guarantees to enhance the ability of certain customers to arrange
third-party financing for their acquisitions.
Credit guarantees provide support through contractually limited payments to the guaranteed party to mitigate
default-related losses. Credit guarantees are triggered if customers do not perform during the term of the
financing under the relevant financing arrangements. The remaining terms of these financing arrangements range
from 1 to 5 years. In the event of default, we usually act as an agent for the guaranteed parties for the
repossession, refurbishment and re-marketing of the underlying assets. We typically receive a fee for these
services.
74 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Residual value guarantees provide protection to the guaranteed parties in cases where the market value of the
underlying asset falls below the guaranteed value at an agreed-upon date. In most cases, these guarantees are
provided as part of a customer financing arrangement (these arrangements have remaining terms ranging from
1 to 5 years). The value of the underlying asset may be adversely affected by a number of factors. To mitigate the
exposure, the financing arrangements generally require the aircraft used as collateral to meet certain contractual
return conditions in order to exercise the guarantee. If a residual value guarantee is exercised, it provides for a
contractually limited payment to the guaranteed parties, which is typically a specified maximum amount of the first
losses incurred by the guaranteed party. A claim under the guarantee may typically be made only at the end of the
financing arrangement, upon the sale of the underlying asset to a third party.
When credit and residual value guarantees are provided in connection with a financing arrangement for the same
underlying asset, residual value guarantees can only be exercised if the credit guarantee expires without having
been exercised and, as such, the guarantees are mutually exclusive.
In connection with the sale of the CRJ business, all of the credit and residual value guarantees provisions are
included in a back-to-back agreement with MHI.
For more details, refer to Note 42 – Commitments and contingencies, to the consolidated financial statements.
Financing structures related to the sale of commercial aircraft
In connection with the sale of commercial aircraft, we have provided credit and/or residual value guarantees and
subordinated debt to, and retained residual interests in, certain entities created solely to provide financing related
to the sale of commercial aircraft. Aviation also provides administrative services to certain of these entities in
return for a market fee.
Typically, these entities are financed by third-party long-term debt and equity. The aircraft serve as collateral for
the entities’ long-term debt.
The Corporation holds investments in financing structure amounting to $150 million as at December 31, 2020
($198 million, as at December 31, 2019 and $173 million as at January 1, 2019). Following the sale of the CRJ
business, the Corporation has retained those investments and has a back-to-back agreement with MHI.
For more details, refer to Note 41 – Unconsolidated structured entities, to the consolidated financial statements.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 75
RISKS AND UNCERTAINTIES
We operate in an industry segment which presents a variety of risk factors and uncertainties. The risks and
uncertainties described below are those that we currently believe could materially affect our business activities,
financial condition, cash flows, results of operations and reputation, but are not necessarily the only risks and
uncertainties that we face. If any of these risks, or any additional risks and uncertainties presently unknown to us
or that we currently consider as being not material, actually occur or become material risks, our business
activities, financial condition, cash flows, results of operations and reputation could be materially adversely
affected. The following risk and uncertainties have been prepared giving effect to the sale of Transportation to
Alstom, completed and announced on January 29, 2021.
OPERATIONAL
RISK
Operational risk is the risk of potential loss due to the nature of our operations. Sources of operational
risk include development of new products and services, development of new business and awarding of
new contracts, order backlog, and the complexity of obtaining certification of products and services.
Furthermore, our cash flows are subject to pressures based on seasonality and our businesses are
capital intensive, which require that we regularly incur significant capital expenditures and investment
over multi-year periods prior to realizing cash flows. Other sources of operational risk include our ability
to successfully implement our strategy, productivity enhancements, operational efficiencies and
restructuring initiatives, and actions of business partners, product performance warranty and casualty
claim losses, the use of estimates and judgments in accounting, regulatory and legal conditions,
environmental, health and safety issues, as well as dependence on customers and contracts, suppliers
(including supply chain management) and human resources. We are also subject to risks related to
reliance on information systems, reliance on and protection of intellectual property rights, reputation
risks, risks of impairments and asset write-downs, risk management, tax matters and adequacy of
insurance coverage.
FINANCING RISK
Financing risk is the risk of potential loss due to the liquidity of our financial assets including
counterparty credit risk, access to capital markets, restrictive debt covenants, financing support
provided for the benefit of certain customers and government support.
COVID-19
PANDEMIC
OUTBREAK AND
GENERAL
ECONOMIC RISK
BUSINESS
ENVIRONMENT
RISK
The COVID-19 pandemic continues to negatively impact the global economy, disrupt global supply
chains and create significant economic uncertainty and disruption of financial markets. The scope and
long-term impact of the ongoing COVID-19 pandemic is still unknown at this time, as is the efficacy of
the government and central bank interventions and the pace of any subsequent recovery and
economic normalization. The extent to which the prospects of the Corporation’s business will be
impacted, including its ability to generate revenues and be profitable, cannot be assessed with a
sufficient level of certainty at this time.
General economic risk is the risk of potential loss due to unfavourable economic conditions. These
factors include, but are not limited to, government budget compression, reduced levels of public and
private capital expenditures, declining business confidence, political and economic pressures, including
those arising from increasing government deficits and sovereign debt overruns, and crises in the credit
markets.
Business environment risk is the risk of potential loss due to external risk factors. These factors may
include the financial condition of the business aircraft customers, trade policy, as well as increased
competition from other businesses including new entrants in market segments in which we compete. In
addition, political instability and force majeure events such as acts of terrorism, global climate change,
global health risks, or the outbreak of war or continued hostilities in certain regions of the world could
result in lower orders or the rescheduling or cancellation of part of the existing order backlog for some
of our products.
MARKET RISK
Market risk is the risk of potential loss due to adverse movements in market factors including foreign
currency fluctuations, changing interest rates, increases in commodity prices and inflation rate
fluctuations.
Business development
Operational risk
Our business is dependent on obtaining new orders and customers, thus continuously replenishing our order
backlog. Our results may also be negatively impacted if we are unable to effectively execute strategies to capture
growth. Although we have developed and continue to develop our presence in many geographic markets, access
to certain markets can prove to be difficult to secure.
In addition, fluctuating demand cycles are common in the industry in which we operate and can have a significant
impact on the volume of new aircraft orders. Our estimates of future performance depend on, among other
matters, whether and when we receive new orders.
76 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Our order backlog may not be indicative of future revenues
Backlog represents management’s estimate of the aggregate amount of the revenues expected to be realized in
the future. The termination, modification, delay, or suspension of any one or more major contracts may have a
material and adverse effect on future revenues and profitability. We cannot guarantee that the revenues initially
anticipated in our new orders will be realized in full, in a timely manner, or at all, or that, even if realized, such
revenues will result in profits or cash generation as expected, and any shortfall may be significant. The
materialisation of any of the risks described above could have a material adverse effect on our business, financial
condition, cash flows and results of operations.
Transition to Pure-Play Business Aviation Company
The Corporation’s plan to position the Corporation for long-term growth and enhance shareholder value through
its transition to a pure-play business aviation company is subject to risks and uncertainties. Such risks and
uncertainties include the gradual recovery from disruptions due to the COVID-19 pandemic, market conditions,
implementation of various initiatives and other factors that may cause actual results, performance or
achievements to differ materially from its plans.
Deployment and execution of strategic initiatives related to cost reductions, debt repayment and
working capital improvement
The Corporation has indicated that it was focusing on certain priorities, including improve cash generation, reduce
costs,repay debt and drive performance. As with any large, company-wide transformation, including debt
repayment measures, there are inherent risks in the timing of the deployment and in the planned value to be
achieved. The timing and magnitude of the specific initiatives and associated benefits, if any, could be affected by
a multitude of external and internal factors including, but not limited to: the evolution of the demands and
requirements of our businesses, variations in planned production volumes and schedules, the outcome of
negotiations with suppliers and unions, changing legislation, changes in socio-economic conditions in the
countries in which we operate, evolutions in the labour market for key talent, and changes in the priorities of the
business. There can be no assurance that these initiatives, or other initiatives, will enable us to reach our
objectives, or that any such measures will be implemented successfully or within the set time frame. A failure to
successfully implement our strategy and transformation initiatives, including as regards debt management and
costs reduction, or if such measures prove insufficient, could have a material adverse impact on our business
activities, financial condition, profitability and outlook.
Executing our manufacturing strategy and productivity enhancement initiatives
One of the priorities of the strategic plan and transformation initiatives established by management consists of
sustained efforts in the areas of cost reduction and productivity enhancement / operational efficiencies. This
priority aims in part at leveraging the strength of our engineering and manufacturing centres of excellence. In
addition, our cost reduction and operational efficiencies / productivity enhancement efforts also focus on further
implementing and leveraging our standardized product and service platforms. We believe that flexible
manufacturing is the key element to enable improvements in our ability to respond to customers in a cost-effective
manner. Our success in implementing this priority of our strategic plan is dependent on the involvement of
management, production employees and suppliers. Any failure to achieve cost reduction and operational
efficiencies / productivity enhancement priorities (including the anticipated levels of productivity and operational
efficiencies) in our manufacturing facilities, could have a material adverse impact on our business activities,
financial condition, profitability and outlook.
Developing new products and services
Changes resulting from global trends such as climate change, volatile fuel prices, the growth of developing
markets, population growth and demographic factors influence customer demands. To remain competitive and
meet customers’ needs, we are required to anticipate these changes and must continuously develop and design
new products, improve existing products and services and invest in and develop new technologies. Introducing
new products or technologies requires a significant commitment to R&D investment, including maintaining a
significant level of highly skilled employees.
Furthermore, our investments in new products or technologies may or may not be successful. Our results may be
impacted if we invest in products that are not accepted in the marketplace, if customer demand or preferences
change, if new products are not approved by regulatory authorities (or if we fail to design or obtain certification or
accreditation for new products or technologies), are not brought to market in a timely manner, in particular, as
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 77
compared to our competitors, or if our products become obsolete. We may incur cost overruns in developing new
products and there is the risk that our products will not meet performance specifications to which we have
committed to customers.
Our results could also be negatively impacted if we fail to design or obtain accreditation for new technologies and
platforms on budget and in a timely manner. Further, our long-term growth, competitiveness and continued
profitability are dependent on our ability to anticipate and adapt to changes in markets and to reduce the costs of
producing high-quality, new and existing products, to continue to develop our product mix and to align our global
presence with worldwide market opportunities.
In a highly competitive environment, we are and will remain exposed to the risk that more innovative or more
competitive products, services or technologies are developed by competitors or introduced on the market more
quickly or that the products we develop are not accepted by the market.
Certification process
We are subject to stringent certification and approval requirements, as well as to the ability of regulatory bodies to
perform these assessments on a timely basis, which vary by country and can delay the certification of our
products. Non-compliance with current or future regulatory requirements imposed by Transport Canada (TC), the
U.S. Federal Aviation Administration (FAA), the European Aviation Safety Agency (EASA), the Transport Safety
Institute in the U.S. or other regulatory authorities could result in service interruption of our products, fewer sales
or slower deliveries, an unplanned build-up of inventories, reduction in inventory values or impairment of assets.
Cash flows and capital expenditures
Our business is cyclical and highly capital intensive due to its nature. In the ordinary course of our business, the
structure and duration of our product development programs require us to invest significantly in engineering,
development and production for many years before deliveries are made and the product begins to generate cash
flow. In addition, we are regularly required to incur capital expenditures in order to, among other matters, maintain
equipment, increase operating efficiency, develop and design new products, improve existing products and
services, invest in and develop new technologies and maintain a significant level of highly skilled employees. Our
ability to negotiate and collect customer advances and progress payments is therefore an important element of
our cash flow and working capital management. Discrepancies between our disbursements and amounts received
on orders placed, or even any reduction in the overall number and size of orders placed have an automatic
adverse impact on the evolution in working capital requirements and results of operations.
Seasonality and cyclicality of financial results
Our cash flows are subject to periodic fluctuations and we expect a disproportionate amount of our cash flows to
be received or paid by us during any given quarter. We expect this trend to continue. In particular, as a result of
fourth quarter cash receipts, at December 31 of each year, our cash and cash equivalents balances typically
reach their highest level (other than as a result of cash flows provided by or used in investing and financing
activities). Our interim and annual results can be affected by these periodic fluctuations, including as a result of
timing variations that could push cash flows from one quarter to another.
Business partners
The failure by a business partner to comply with applicable laws, rules or regulations, or contract requirements,
could negatively impact our business and could even result in fines, penalties, suspension or even debarment
being imposed on us, which could have a material adverse impact on our reputation, business, financial condition
and results of operations.
78 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Product performance warranty and casualty claim losses
The products that we manufacture are highly complex and sophisticated and may contain defects that are difficult
to detect or correct. These products are subject to detailed specifications, which are listed in the individual
contracts with customers, as well as to stringent certification or approval requirements. Defects may be found in
products before and after they are delivered to the customer. When discovered, we may incur significant
additional costs to modify and/or retrofit our products and we may not be able to correct defects in a timely
manner or at all. The occurrence of defects and failures in our products could give rise to non-conformity costs,
including warranty and damage claims, negatively affect our reputation and profitability and result in the loss of
customers. Correcting such defects, if possible, could require significant investment.
In addition, due to the nature of our business, liability claims may arise from accidents, incidents or disasters
involving products and services that we have provided, including claims for serious personal injuries or death.
These accidents may be caused by climatic factors or human error. If any of our products is proven to have quality
issues, fails to meet the national or industrial standards or has potential risks to the safety of human and
properties, we may have to recall such products, be subject to penalties, have our operating licences or permits
revoked, suspend production and sale of our products, or be ordered to take corrective measures. A product recall
may also affect our reputation and brand name, result in a decreased demand for our products and lead to stricter
scrutiny by regulatory agencies over our operations.
We cannot be certain that current insurance coverage will be sufficient to cover one or more substantial claims.
Furthermore, there can be no assurance that we will be able to obtain insurance coverage at acceptable levels
and costs in the future.
Regulatory and legal risks
We are subject to numerous risks relating to current and future regulations, as well as legal proceedings, both
present or that may arise in the future.
Given our size and current and historical operations, including in respect of Transportation business which was
divested on January 29, 2021, investigations, claims and lawsuits seeking damages and other relief are regularly
threatened or pending against us. We are, and may become, party to lawsuits in the ordinary course of business,
including those involving allegations of late deliveries of goods or services, product liability, product defects,
quality problems and intellectual property infringement. These matters may divert financial and management
resources that would otherwise be used to benefit our operations, and the cost to defend litigation may be
significant.
Material losses may be incurred related to litigation beyond the limits or outside the coverage of current insurance
and existing provisions for litigation-related losses may not be sufficient to cover the ultimate loss or expenditure.
Moreover, legal proceedings resulting in judgments or findings against us may harm our reputation and place us
at a disadvantage for future orders or contract awards. There also may be adverse publicity associated with
litigation, including without limitation litigation related to product safety, which could negatively affect our clients or
the public perception of our business or reputation, regardless of whether the allegations are valid or whether we
are ultimately found liable. As a result, litigation could materially adversely affect our business and financial
results.
In addition, as part of the regulatory and legal environments in which we operate, we are subject to anti-bribery
laws that prohibit improper payments directly or indirectly to government officials, authorities or persons defined in
those anti-bribery laws in order to obtain business or other improper advantages in the conduct of business.
Notably, sales to foreign customers are subject to such laws. Pursuant to such laws, a company may be found
liable for violations resulting not only from actions of certain of its employees, but also in certain circumstances
from actions of its contractors and third party agents.
Our Code of Ethics and other corporate policies mandate compliance with these laws and regulations and we
have implemented training programs, internal monitoring and controls, and reviews and audits to ensure
compliance with such laws. However, there can be no assurance that our internal control policies and procedures
will protect us from recklessness, fraudulent behaviour, dishonesty or other inappropriate behaviour on the part of
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 79
our employees, contractors, suppliers, affiliates, consultants, agents, and/or partners. Misconduct or failure by our
employees, contractors, suppliers, affiliates, consultants, agents, and/or partners to comply with anti-bribery laws
and other applicable laws and regulations could impact Bombardier in various ways that include, but are not
limited to, criminal, civil and administrative legal sanctions, debarment from bidding for or performing government
contracts, and negative publicity, and could have a negative effect on our business, reputation, results of
operations, profitability, share price and financial condition. In recent years, there has been a general increase in
both the frequency of enforcement and the severity of penalties under such laws, resulting in greater scrutiny of
and punishment to companies convicted of violating anti-corruption and anti-bribery laws. See also “Supply chain
risks” below.
Also refer to Note 42 – Commitments and contingencies to our consolidated financial statements.
Environmental, health and safety risks
Our products, as well as our manufacturing and service activities, are subject to environmental laws and
regulations in each of the jurisdictions in which we operate, governing, among other things, product performance
or materials content, energy use and greenhouse gas emissions, air, water and noise pollution, the use, storage,
labelling, transportation and disposal or release of hazardous substances, human health and safety risks arising
from the exposure to hazardous or toxic materials or defective products and the remediation of soil and
groundwater contamination on or under our properties (whether or not caused by us), or on or under other
properties and caused by our current or past operations, including our disposal of hazardous wastes at third party
sites. These laws and regulations may cause us to incur costs, including fines, damages, criminal or civil
sanctions and remediation costs, or experience interruptions in our operations, and may negatively impact the
market for our products.
Environmental, health and safety regulatory requirements, or enforcement thereof, may become more stringent in
the future and we may incur additional costs to be compliant with such future requirements or enforcement. In
addition, we may have contractual or other liabilities for environmental matters relating to businesses, products or
properties that we have in the past closed, sold or otherwise disposed of, or will close, sell or dispose of in the
future.
Dependence on limited number of contracts and customers
In any given period, a limited number of contracts, orders or customers may account for a significant portion of our
revenues and cash flows for some of our products. Although we constantly seek to expand our customer base, we
believe that revenues and results for any given period may continue to be significantly affected by a limited
number of contracts, orders or customers due to the nature of some of our products. Consequently, the loss of
such a customer or changes to their orders, or cancellation of all or a portion of their contract could result in fewer
sales and/or a lower market share, and may have a material adverse impact on our business, results, cash flows
and financial position.
Supply chain risks
Our manufacturing operations are dependent on a limited number of suppliers for the delivery of raw materials
(mainly aluminum, advanced aluminum alloy and titanium) and major systems (such as engines, wings, nacelles,
landing gear, avionics, flight controls and fuselages).
Disruptions in our supply chain can impact our ability to deliver on schedule. Moreover, failure by one or more
suppliers to meet performance specifications, quality standards or delivery schedules could adversely affect our
ability to meet our commitments to customers, in particular if we are unable to purchase the key components and
parts from those suppliers upon agreed terms or in a cost-effective manner and if we cannot find alternative
suppliers on commercially acceptable terms in a timely manner. We may not be able to recover any costs or
liability we incur (including liability to our customers) as a result of any such failure from the applicable supplier,
which could have a material adverse effect on our financial condition and results of our operations.
Some of our suppliers participate in the development of products such as aircraft or platforms. The advancement
of many of our new product development programs also relies on the performance of these key suppliers and,
80 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
therefore, supplier delays which go unmitigated could result in delays to a program as a whole. These suppliers
subsequently deliver major components and own some of the intellectual property related to key components they
have developed. Our contracts with these suppliers are therefore on a long-term basis. The replacement of such
suppliers, if possible, could be costly and take a significant amount of time.
Our dependence on foreign suppliers and subcontractors and our global operations subject us to a variety of risks
and uncertainties. All of our direct suppliers must comply with our Supplier Code of Conduct, which formalizes our
expectations with respect to suppliers’ business standards, and is designed to ensure that each of our suppliers’
operations are conducted in a legal, ethical, and responsible manner. However, we do not control our independent
suppliers or those indirect suppliers and companies with whom they do business and cannot guarantee their
compliance with our Supplier Code of Conduct and with applicable laws and regulations or that violations will be
reported to us in a timely manner. Any violation of applicable laws and regulations or failure to use ethical
business practices by one or more third-party subcontractors or suppliers, including laws and regulations related
to, among other things, labour practices, health and safety, and environmental protection, could also materially
adversely affect our business and reputation and, in the case of government contracts, could result in fines,
penalties, suspension or even debarment being imposed on us.
Human resources (including collective agreements)
Our senior executives have extensive experience in the industry in which we operate and with our business,
suppliers, products and customers. The loss of management knowledge, expertise and technical proficiency as a
result of the loss of one or more members of our core management team could result in a diversion of
management resources or a temporary executive gap, and negatively affect our ability to develop and pursue
other business strategies, which could materially adversely affect our business and financial results.
Employment market competition is fierce when it comes to hiring the highly qualified managers and specialists
needed to complete the work we require, particularly in certain emerging countries. In many of our business areas
we intend to expand our business activities, for which we will need highly skilled employees. The success of our
development plans depends, in part, on our ability to develop skills, to retain employees, and to recruit and
integrate additional managers and skilled employees. Human resource risk includes the risk of delays in the
recruitment of or inability to retain and motivate highly skilled employees, including those involved in R&D and
manufacturing activities that are essential to our success. There is no guarantee that we will be successful in
recruiting, integrating and retaining such employees as needed to accompany our business development, in
particular in emerging countries. Conversely, the measures to adapt headcount to evolution in demand may result
in pressures from our workforce and social risks, which may have an adverse impact on our expected costs
reductions and production capacities.
In addition, we are party to several collective agreements that are due to expire at various times in the future. An
inability to renew these collective agreements on mutually agreeable terms, as they become subject to
renegotiation from time to time, could result in work stoppages or other labour disturbances such as strikes,
walkouts or lock-outs, and/or increased costs of labour, which could adversely affect our ability to deliver products
and services in a timely manner and on budget and could adversely affect our financial condition and results.
Additionally, as a result of our continuing review of our businesses and processes to reduce cost, improve our
manufacturing platform, and better position ourselves in the marketplace, it may be necessary to curtail
production or permanently shut down facilities, leading to the transfer of employees to new production facilities
and processes or to the reduction of our workforce. This could materially adversely impact our relationship with
our employees, as well as result in asset write-downs at affected facilities.
Reliance on information systems
Like those of other large multinational companies, our technology systems may be vulnerable to a variety of
sources of failure, interruption or misuse, including by reason of natural disasters, cyberattacks and cybersecurity
threats, network communication failures, computer viruses and other security threats to the confidentiality,
availability and integrity of our systems. Information security risks have increased in recent years due to the
proliferation of new technologies and the increased sophistication of perpetrators of cyberattacks.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 81
Information contained in our systems include proprietary or sensitive information on our customers, suppliers,
partners, employees, business information, research and development activities and our intellectual property.
Unauthorized third parties may be able to penetrate our network security and misappropriate or compromise our
confidential information, deploy viruses, worms and other malware or phishing that would exploit any security
vulnerabilities in our management information systems, create system disruptions or cause machinery or plant
shutdowns. Such attacks could potentially lead to the publication, manipulation or leakage of information,
improper use of our systems, defective products, production downtimes, and supply shortages. Our partners and
suppliers also face risks of unauthorized access to their information systems which may contain our confidential
information. The Cyber Security, Risk and Compliance team, under the direction of the Global CIO, and reporting
to the Audit and Risk Committee of the Board of Bombardier, supervises and maintains technical and process
controls, enforcement and comprehensive monitoring of systems and networks designed to prevent, detect and
respond to unauthorized activity in our systems. Considering the complexity and evolving nature of the threats, as
well as the unpredictability of the timing, nature and scope of disruptions from such threats, we cannot ensure that
the measures taken are or will be sufficient to counter any such unauthorized access to information systems, nor
that our assessment and mitigation measures are or will be sufficient to avoid, or mitigate the impact of, a system
failure.
The integrity, reliability and security of information in all forms are critical to our success. Inaccurate, incomplete or
unavailable information and/or inappropriate access to information could lead to incorrect financial and/or
operational reporting, poor decisions, delayed reaction times to the resolution of problems, privacy breaches and/
or inappropriate disclosure or leaking of sensitive information. Any system failure, cyberattack or a breach of
systems could result in disruption of activities and operational delays, information losses, significant remediation
costs, increased cyber security costs, lost revenues due to a disruption of activities, diminished competitive
advantage and/or litigation and reputational harm affecting customer and investor confidence, which could
materially adversely affect our business, financial condition, and results of our operations. Material losses may be
incurred related to the foregoing beyond the limits or outside the coverage of current insurance and existing
provisions for such losses may not be sufficient to cover the ultimate loss or expenditure. Furthermore, media or
other reports of perceived security vulnerabilities of our systems, even if no breach has been attempted or had
occurred, could adversely impact our brand and reputation and materially impact our business and financial
results.
Reliance on and protection of intellectual property
We regularly apply for new patents and actively manage our intellectual property portfolio to secure our
technological position. However, our patents and other intellectual property may not prevent competitors from
independently developing, or obtaining through licensing, alternative technologies that are substantially equivalent
or superior to ours, and we cannot provide assurance that the measures we have taken will be sufficient to
prevent any misappropriation of our intellectual property. Furthermore, we cannot assure that all our registration
applications will be successful, or our registered intellectual property rights will not be subject to any objection. If
the steps we have taken and the protection afforded by law do not adequately safeguard our intellectual property
rights, or we are not able to register or defend our intellectual property rights, and our competitors exploit our
intellectual property in the manufacture and sale of competing products in the markets we operate, such events
could materially and adversely affect our business.
We could also face claims by others that we are improperly using intellectual property owned by them or
otherwise infringing their rights in intellectual property. Irrespective of the validity or the successful assertion of
such claims, we could incur costs in either defending or settling any intellectual property disputes alleging
infringement. Adverse rulings in any litigation or proceeding could result in the loss of our proprietary rights and
subject us to significant liabilities or even business disruption. Any potential intellectual property litigation against
us could also force us to, among other things, cease selling the challenged products, develop non-infringing
alternatives or obtain licences from the owner of the infringed intellectual property. We may not be successful in
developing such alternatives or in obtaining such licences on reasonable terms or at all, which could damage our
reputation and affect our financial condition and profitability.
82 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Reputation risks
Reputational risk may arise under many situations including, among others, quality or performance issues on our
projects, product safety issues, a poor health and safety record, failure to maintain ethically and socially
responsible operations, or alleged or proven non-compliance with laws or regulations by our employees, agents,
subcontractors, suppliers and/or partners. Any negative publicity about, or significant damage to, our image and
reputation could have an adverse impact on customer perception and confidence and may cause the cancellation
of current projects and influence our ability to obtain future projects, which could materially adversely affect our
business, results of operations and financial condition. Also, the pervasiveness and viral nature of social media
could exacerbate any negative publicity with respect to our business practices and products.
Furthermore, any unethical conduct by a supplier or subcontractor or any allegations, whether or not founded, of
unfair or illegal business practices by a supplier or subcontractor, including production methods, labour practices,
health and safety and environmental protection, could also materially adversely affect our image and reputation,
which could in turn materially adversely affect our business and financial results.
Adequacy of insurance coverage for our business, products and properties
We maintain insurance policies in accordance with the needs of our business. However, we cannot guarantee that
our insurance policies will provide adequate coverage should we face extraordinary occurrences that result in
losses. We may not obtain certain insurance coverage or may experience difficulties in obtaining the insurance
coverage we need at acceptable levels and costs in the future, which could materially and adversely affect our
business, financial condition and results of operations.
Accidents or natural disasters may also result in significant property damage, disruption of our operations and
personal injuries or fatalities, and our insurance coverage may be inadequate to cover such losses. In the event of
an uninsured loss or a loss in excess of our insured limits, we could suffer damage to our reputation and/or lose
all or a portion of our production capacity as well as future revenues expected to be generated by the relevant
facilities. Any material loss not covered by our insurance could adversely affect our business, financial condition
and results of operations.
Risk management policies, procedures and strategies
We have devoted significant resources to develop our risk management policies, procedures and strategies and
expect to continue to do so in the future. Nonetheless, our policies, procedures and strategies may not be
comprehensive. Many of our methods for identifying, analyzing and managing risk and exposures are based upon
risk management processes that are embedded in governance and activities of our reportable segment, focusing
on all stages of the product development process. Risk management methods depend upon the evaluation and/or
reporting of information regarding product development, product management, industry outlooks, markets,
customers, project execution, catastrophe occurrence or other matters publicly available or otherwise accessible
to us. This information may not always be accurate, complete, up-to-date or properly evaluated or reported.
Tax matters and changes in tax laws
As a multinational company conducting operations through subsidiaries in multiple jurisdictions, we are subject to
income and other taxes, tax laws and fiscal policies in numerous jurisdictions. Our effective income tax rate in the
future could be adversely affected as a result of a number of factors, including changes in the mix of earnings in
countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes
in tax laws, treaties or regulations or their interpretation, and the outcome of income tax audits in various
jurisdictions around the world.
We regularly assess all of these matters to determine the adequacy of our tax liabilities. In determining our
provisions for income taxes and our accounting for tax-related matters in general, we are required to exercise
judgment. We regularly make estimates where the ultimate tax determination is uncertain. There can be no
assurance that the final determination of any tax audit, appeal of the decision of a taxing authority, tax litigation or
similar proceedings will not be materially different from that reflected in our historical financial statements. The
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 83
assessment of additional taxes, interest and penalties could be materially adverse to our current and future results
of operations and financial condition.
Our Canadian and foreign entities undertake certain operations with other currently existing or new subsidiaries in
different jurisdictions around the world. The tax laws of these jurisdictions, including Canada, have detailed
transfer pricing rules that require that all transactions with non-resident related parties be priced using arm’s
length pricing principles. The taxation authorities in the jurisdictions where we carry on business could challenge
our arm’s length related party transfer pricing policies. International transfer pricing is a subjective area of taxation
and generally involves a significant degree of judgment. If any of these taxation authorities were to successfully
challenge our transfer pricing policies, our income tax expense may be adversely affected and we could also be
subjected to interest and penalties. Any such increase in our income tax expense and related interest and
penalties could have a material adverse effect on our business, results of operations or financial condition.
Liquidity and access to capital markets
Financing risk
Our businesses are cyclical and highly capital intensive. In the ordinary course of our business, we rely on cash
and cash equivalents, cash flows generated by operations, capital market resources such as debt and equity and
other financing arrangements such as revolving credit facilities, and certain working capital financing initiatives
such as the sale of receivables, arrangements for advances from third parties and the negotiation of extended
payment terms with certain suppliers to satisfy our financing needs. There can be no assurance that such working
capital cash sources will be available to us in the future on acceptable terms or at all.
Our ability to achieve our business and cash generation plans is based on a number of assumptions which involve
significant judgments and estimates of future performance, borrowing capacity and credit availability, which
cannot at all times be assured.
The Corporation also routinely reviews its debt profile with a view to managing or extending maturities and/or
negotiating more favourable terms and conditions with respect to its bank facilities. The Corporation also routinely
reviews the terms and conditions of its bank facilities and seeks annual extensions of the availability periods
thereunder.
From time to time, we undertake various financing initiatives to solidify our liquidity position. We plan to continue
to explore various initiatives such as certain business activities’ potential participation in industry consolidation.
There are no assurances that we will be able to implement these or any other strategic options on favourable
terms and timing or at all, and, if implemented, that such actions would have the planned results.
There can be no assurance that our expected cash flows from operating activities, combined with available short-
term capital resources will enable the development of new products to enhance competitiveness and support
growth and will enable us to meet all other expected financial requirements in the foreseeable future.
If our cash flows and other capital resources are insufficient to fund the required work on our ongoing contracts,
programs and projects, as well as our capital expenditures and debt service obligations, we could be forced to
reduce or delay deliveries, investments and capital expenditures or to seek additional debt or equity capital. We
may not be able to obtain alternative capital resources, if necessary, on favourable terms or at all.
A decline in credit ratings, a significant reduction in the surety or financing market global capacity, widening credit
spreads, changes in our outlook or guidance, significant changes in market interest rates or general economic
conditions or an adverse perception by banks and capital markets of our financial condition or prospects could all
significantly increase our cost of financing or impede our ability to access financial markets. Our credit ratings may
be impacted by many factors, including factors outside of our control relating to our industry or countries and
regions in which we operate, and, accordingly, no assurance can be given that our credit ratings may not be
downgraded in the future. Actual or anticipated changes or downgrades in our credit ratings, including any
announcement that our ratings are under further review for a downgrade, may increase our cost of financing.
84 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Our right to convert into cash certain deposits or investments, held in financing structures to guarantee our
obligations, may be subject to restrictions. Additionally, in some countries, cash generated by operations may be
subject to restrictions on the right to convert and/or repatriate money and may thus not be available for immediate
use.
Substantial debt and significant interest payment requirements
We currently have, and expect to continue to have, a substantial amount of debt, and significant interest payment
requirements. Our level of indebtedness could have significant consequences, including the following:
it may be more difficult to satisfy our obligations with respect to our indebtedness;
our vulnerability to general adverse economic and industry conditions may be increased;
•
•
• we may be required to dedicate a substantial portion of our cash flows from operations to interest and
principal repayments on our indebtedness, reducing the availability of cash flows to fund capital
expenditures, working capital, acquisitions, new business initiatives and other general corporate
purposes;
our flexibility in planning for, or reacting to, changes in our businesses and the industry in which we
operate may be limited;
•
• we may be placed at a disadvantage compared to our competitors that have less debt or greater financial
•
resources;
it may limit, along with other covenants to which we are subject, among other things, our ability to borrow
additional funds on commercially reasonable terms, or at all;
• we may be required to monetize assets on terms that are unfavourable to us; and
• we may be required to offer debt or equity securities on terms that are not favourable to us or our
shareholders.
We have various debt maturities ranging between 2021 and 2034, and we cannot provide assurance that this
indebtedness will be refinanced on favourable terms or at all.
For more information regarding our long-term debt, see Note 28 - Long-term debt to our Consolidated financial
statements.
Restrictive and financial debt covenants
Restrictive covenants in certain agreements and instruments governing our indebtedness, including asset backed
credit facilities and outstanding senior notes, may materially adversely affect our financial flexibility or may have
other material adverse effects on our business, results of operations, financial condition, liquidity and cash flows.
Certain of our credit facilities and other asset-based and asset-backed financing arrangements contain covenants
that, among other things, restrict us and our subsidiaries’ ability to: (i) dispose of assets; (ii) incur additional
indebtedness; (iii) incur guarantee obligations; (iv) prepay other indebtedness or amend other financing
arrangements; (v) create liens on assets; (vi) sell assets; (vii) make investments, loans, advances or capital
expenditures; (viii) engage in mergers or consolidations; (ix) change the business conducted by us; and (x)
engage in certain transactions with affiliates. The breach of any of these covenants or restrictions could result in a
default under the relevant agreement, which could, in turn, cause cross-defaults under our other financing
arrangements. In such event, we may be unable to borrow under our credit facilities or certain of our other
financing arrangements and may not be able to repay the amounts due under such arrangements, which could
have a material adverse effect on our business, results of operations, financial condition, liquidity and cash flows.
Our ability to comply with these covenants may also be affected by events beyond our control. A breach of any of
these agreements or our inability to comply with these covenants could result in a default under these facilities,
which would permit our banks to request immediate defeasance or cash cover of all outstanding letters of credit,
and our bond holders and other lenders to declare amounts owed to them to be immediately payable. If any of
these facilities is accelerated, or we are subject to significant cash cover calls, we may not have access to
sufficient liquidity or credit to refinance such facilities on terms acceptable to us or at all. Furthermore, if we incur
additional debt in the future, we may be subject to additional covenants, which may be more restrictive than those
to which we are subject now. In addition, failure to comply with the obligations contained in our existing or future
indentures or loan agreements could require us to immediately cash cover, or repay debt under other agreements
that may contain cross-acceleration or cross-default provisions. There can be no assurance that we would be able
to obtain waivers or amendments of any such defaults, or be able to cash cover or refinance such facilities, on
terms acceptable to us or at all.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 85
Retirement benefit plan risk
We are required to make contributions to a number of pension plans, some of which are presently in a deficit
position. Pension funding requirements are dependent on regulatory requirements and on the valuations of plan
assets and liabilities, which are subject to a number of factors, including expected returns on plan assets, long-
term interest rates, as well as applicable actuarial practices and various other assumptions. The potential
requirement to make additional contributions as a result of changes to regulations, actuarial assumptions or other
factors may reduce the amount of funds available for operating purposes, thus limiting our financial flexibility and
weakening our financial condition.
There is no assurance that retirement benefit plan assets will earn the expected rates of return. The ability of our
retirement benefit plan assets to earn these expected rates of return depends in large part on the performance of
capital markets. Market conditions also affect the discount rates used to calculate our net retirement benefit
liabilities and could also impact our retirement benefit costs, cash funding requirements and liquidity position.
The net retirement benefit liability is highly sensitive to variations to the underlying discount rate, which represents
the market rate for high-quality corporate fixed-income investments at the end of each reporting period consistent
with the currency and estimated term of the benefit obligations. As a result, the discount rates change is based on
market conditions.
Credit risk
We are exposed to credit risk through our derivative financial instruments and other investing activities carried out
as part of our normal treasury activities, as well as through our trade receivables arising from normal commercial
activities.
We also have exposure to banks in the form of periodically placed deposits and credit commitments. In the event
the banks with which we transact are unable to withstand regulatory or liquidity pressures, credit facilities,
including letter of credit facilities, may become unavailable or we may not be able to extend such facilities upon
their maturity.
Government support
From time to time, we receive various types of government financial support. Some of these financial support
programs require the repayment of amounts to the government at the time of product delivery. The level of
government support reflects government policy and depends on fiscal spending levels and other political and
economic factors. We cannot predict if future government-sponsored support will be available. The loss of or any
substantial reduction in the availability of government support could negatively impact our liquidity assumptions
related to the development of aircraft products and services. In addition, any future government support received
by our competitors could have a negative impact on our competitiveness, sales and market share.
86 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
COVID-19 Pandemic Outbreak and General Economic Risk
The markets in which we operate may from time to time be affected by a number of local, regional and global
factors. Since our sales and operations are undertaken around the world, we may be directly or indirectly affected
by an unfavourable political conditions or economic slowdown occurring within these geographic zones and our
business may be exposed to a number of related risks.
Should the current uncertain global economic situation persist over time or deteriorate, should the economic
headwinds in certain countries, regions or key markets intensify or spread to other countries, or should the global
economic environment deteriorate, as was the case in 2020 due to the COVID-19 pandemic, this could, in
particular, result in potential buyers postponing the purchase of our products or services, lower order intake, order
cancellations or deferral of deliveries, lower availability of customer financing, an increase in our involvement in
customer financing, downward pressure on selling prices, increased inventory levels, decreased level of customer
advances, slower collection of receivables, reduction in production activities, paused or discontinued production of
certain products, termination of employees or adverse impacts on suppliers.
COVID-19 Pandemic Outbreak
On March 11, 2020, the World Health Organization recognized the outbreak of COVID-19 as a pandemic. The
COVID-19 pandemic continues to negatively impact the global economy, disrupt global supply chains and create
significant economic uncertainty and disruption of financial markets. Emergency measures being enacted by
governments worldwide to contain the spread of the virus, including the implementation of travel bans, self-
imposed quarantine periods, self-isolation, physical and social distancing and the closure of non-essential
businesses, are causing material disruption to businesses in Canada and globally which has resulted in an
uncertain and challenging economic environment. Global debt and equity capital markets have experienced
significant volatility and weakness. Governments and central banks have reacted with significant monetary and
fiscal interventions designed to stabilize economic conditions.
This uncertainty has already materialized with falling global GDP growth, causing a global financial market shock
which has directly impacted the Corporation’s share price. Uncertainties related to, and perceived or experienced
negative effects from, COVID-19 may continue to cause significant volatility or decline in the trading price of our
securities, capital market conditions and general economic conditions. In addition, severe disruption and instability
in the global financial markets and continued deteriorations in credit and financing conditions may increase the
likelihood of litigation, increase the cost of or limit or restrict our ability to access debt and equity capital or other
sources of funding on favourable terms, or at all, lead to consolidation that negatively impacts our business,
increase competition, result in reductions in our work force, cause us to further reduce our capital spend or
otherwise disrupt our business or make it more difficult to implement our strategic plans. Sustained adverse
effects may also prevent us from satisfying debt financial covenants and minimum cash requirements or result in
possible credit ratings watch or downgrades in our credit ratings.
The duration, scope and impact of the ongoing COVID-19 pandemic is unknown at this time, as is the efficacy of
the government and central bank interventions and the pace of any subsequent recovery, including worldwide
vaccination efforts, and economic normalization. Given the rapid and evolving nature of the COVID-19 pandemic,
any estimate of the length and severity of these developments is therefore subject to significant uncertainty, and
accordingly it is challenging for the Corporation to estimate or quantify the extent to which the COVID-19
pandemic may, directly or indirectly, affect the Corporation’s business activities, financial condition, cash flows,
profitability, prospects and results of operations in future periods.
Business disruptions and slowdown
The continued spread of COVID-19 around the globe and the responses of governmental authorities and
corporate entities, including through mandated or voluntary shutdowns, have led to a general slow-down in the
global economy and the Corporation’s business with temporary disruptions and slowdowns to our workforce and
production at several locations and key sites, our customers, our revenues and operations and our supply chain.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 87
Projects and contracts
Our worldwide operations have been and will likely continue in the near and medium terms (and possibly longer)
to be disrupted to varying degrees, including from project and delivery delays resulting from reduced production
activity, travel restrictions or the postponement of key production and homologation milestones, and extended or
complete operations shutdowns, which may, in each case, expose the Corporation to penalties or cancellations
and negatively affect the revenue, cash flow and profitability of these projects.
Reduction in demand and deferred order intake
The risks associated with the COVID-19 pandemic may cause significant and unpredictable reduction in the
demand for our products and services as customers divert resources and priorities.
Customer and counterparty risks
The adverse effects of the COVID-19 pandemic on the economies and financial markets of many countries
increase the risk of defaults from customers and other counterparties, delays in payments, and difficulties in
enforcing agreements and collecting receivables. Our customers and other counterparties may seek to terminate
or to amend their agreements for the purchase of our products or services in order to focus resources to meet the
increasing demands of managing COVID-19, or in response to financial distress related to COVID-19 (including
bankruptcy, lack of liquidity, lack of funding, operational failures, or other reasons).
If we or any of the third parties with whom we engage, including suppliers, service providers, customers and other
third parties with whom we conduct business, were to experience long-term effects such as prolonged or
permanent shutdowns or other business disruptions, our ability to conduct our business in the manner and on the
timelines presently planned could be materially and negatively impacted, including the impairment of our product
development activities for a period of time, which could also lead to loss of customers, as well as reputational,
competitive, or business harm.
Supply chain
Production stoppages and slowdowns resulting from government regulation and prevention measures undertaken
in response to the COVID-19 pandemic have led to supply disruptions for the Corporation. Any prolonged
disruption in the supply of raw materials and major systems could have a material adverse effect on the
Corporation’s operations, significantly increase the cost of operating its business and significantly reduce its
margins and profitability.
Work force
The risks to the Corporation of a pandemic, epidemic or other public health crisis, such as the ongoing COVID-19
pandemic, include risks to employee health and safety. Prolonged restrictive measures put in place in order to
control the COVID-19 pandemic and limitations on travel may result in temporary shortages of staff or
unavailability of certain employees or consultants with key expertise or knowledge of the Corporation, impact on
workforce productivity and increased medical costs/insurance premiums. While the Corporation has proactively
implemented measures to protect the health and safety of its employees across the world, including remote work
arrangements, these measures present logistical challenges and incremental costs to the Corporation.
Diversion of management attention
Preparing for and responding to the continuing pandemic has and may continue to divert management’s attention
from our key strategic priorities, increase costs as we prioritize health and safety matters for our personnel and
the continuation of critical ongoing projects, and cause us to reduce, delay, alter or abandon initiatives that may
otherwise increase our long-term value.
88 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
IT risks and inefficiencies
The immediate unanticipated rise in remote work arrangements implemented by the Corporation in response to
the COVID-19 pandemic may cause inefficiencies and increased pressure on the Corporation’s information
technology infrastructure, and may increase the Corporation’s vulnerability to information technology and
cybersecurity related risks and disruption to the Corporation’s information systems.
Regulatory backlog
There may be difficulties and inconsistencies relating to the enforcement of laws, rules, and regulations in
response to the COVID-19 pandemic. Regulatory authorities are heavily occupied with their response to the
pandemic. These regulators as well as other executive and legislative bodies in the jurisdictions in which we and
our counterparties operate may not be able to provide the level of support and attention to day-to-day regulatory
functions that they would otherwise have provided. Such regulatory backlog may materially hinder the
development of the Corporation’s business by delaying such activities as homologation or certification process for
new products or technologies, site openings and the completion of strategic transactions.
Heightened impact of other risks
Several of the risks and uncertainties disclosed in our Financial Report for the fiscal year ended December 31,
2020 could be particularly exacerbated by extraordinary externalities such as the COVID-19 pandemic, including,
but not limited to, risks described under “Our order book-to-bill ratio and our order backlog may not be indicative
of future revenues”, “Cash flows and capital expenditures”, “Seasonality and cyclicality of financial results”,
“Environmental, health and safety risks”, “Dependence on limited number of contracts and customers”, “Supply
chain risks”, “Liquidity and access to capital markets”, “Credit risk”, “Substantial debt and significant interest
payment requirements”, “General economic risk”, “Business environment risk”, and “Market Risk”.
Mitigation measures
While the Corporation has made efforts to manage and mitigate the aforementioned risk factors, such efforts may
be unsuccessful, and the effectiveness of these efforts and the extent to which the COVID-19 pandemic affects
the Corporation’s business will depend on factors beyond its control, including the likelihood, timing, duration and
scope of the pandemic or any subsequent waves of COVID-19, and the measures taken or necessary to contain
the spread of such outbreaks, including the worldwide vaccination efforts. Even after the COVID-19 pandemic is
over, the Corporation may experience material adverse effects to its business, operations, financial condition,
cash flows, margins, prospects and results of operations as a result of the disruption in the global economy and
any resulting recession.
Business environment risk
Financial condition of business aircraft customers
The purchase of aviation products and services may represent a significant investment for a corporation, an
individual or a government. When economic or business conditions are unfavourable, potential buyers may delay
the purchase of our aviation products and services. The availability of financing is also an important factor and
credit scarcity can cause customers to either defer deliveries or cancel orders.
An increased supply of used aircraft as companies restructure, downsize or discontinue operations could also add
downward pressure on the selling price of new and used business and commercial aircraft. We could then be
faced with the challenge of finding ways to further reduce costs and improve productivity to sustain a favourable
market position at acceptable profit margins. The loss of any major fractional ownership or charter operator as a
customer or the termination of a contract could significantly impact our financial results.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 89
Trade policy
As a globally operating organization, our businesses are subject to government policies related to import and
export restrictions and business acquisitions, support for export sales, and world trade policies including specific
regional trade practices. As a result, we are exposed to risks associated with changing priorities by government
and supranational agencies.
In addition, protectionist trade policies and changes in the political and regulatory environment in the markets in
which we operate, such as foreign exchange import and export controls, tariffs and other trade barriers, price or
exchange controls as well as potential changes to free trade arrangements could affect our business in several
national markets, impact our sales and profitability and make the repatriation of profits difficult, and may expose
us to penalties, sanctions and reputational damage.
Increased competition from other businesses
We face intense competition in the markets and geographies in which we operate. We face competition from
strong competitors, some of which are larger and may have greater resources in a given business or region, as
well as competitors from emerging markets and new entrants, which may have a better cost structure. In the
aviation market segments in which we compete, competitors are developing numerous aircraft programs, with
entries-into-service expected throughout the next decade. We face the risk that market share may be eroded if
potential customers opt for competitors’ products. We may also be negatively impacted if we are not able to meet
product support expectations or provide an international presence for our diverse customer base.
Political instability
Political instability, which may result from various factors, including social or economic factors, in certain regions
of the world may be prolonged and unpredictable. Any prolonged political instability in markets in which we
participate could lead to delays or cancellation of orders.
Geopolitical and economic risks, international sanctions and the price of oil affecting many energy-exporting
nations have raised new concerns in international economies. Beyond any immediate impact, these
developments may also negatively affect the evolution of the global economy.
Force majeure
Force majeure events are unpredictable and may have significant adverse results such as: personal injury or
fatality; damage to or destruction of ongoing projects, facilities or equipment; environmental damage; delays or
cancellations of orders and deliveries; delays in the receipt of materials from our suppliers; delays in projects; or
legal liability.
Global climate change
Global climate change could exacerbate certain of the threats facing our business, including the frequency and
severity of weather-related events, which can disrupt our operations, damage our infrastructure or properties,
create financial risk to our business or otherwise have a material adverse effect on our results of operations,
financial position or liquidity. These may result in substantial costs to respond during the event, to recover from the
event and possibly to modify existing or future infrastructure requirements to prevent recurrence. Climate changes
could also disrupt our operations by impacting the availability and cost of materials needed for manufacturing and
could increase insurance and other operating costs.
The potential physical impacts of climate change on our operations are highly uncertain, and could be particular to
the geographic circumstances in areas in which we operate and may include changes in rainfall and storm
patterns and intensities, water shortages, rising water levels and changing temperatures. These factors may
impact our decisions to construct new facilities or maintain existing facilities in areas most prone to physical
climate risks. We could also face indirect financial risks passed through the supply chain and process disruptions
due to physical climate changes could result in price modifications for our products and the resources needed to
produce them. These impacts may adversely impact the cost, production, and financial performance of our
90 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
operations. In addition, concerns about the environmental impacts of air travel and tendencies towards “green”
travel initiatives have contributed to higher levels of scrutiny with respect to emissions which could have the effect
of reducing demand for air travel and could materially adversely impact our Aviation business and reputation.
Global climate change also results in regulatory risks which vary according to the national and local requirements
implemented by each jurisdiction where we are present. Our products as well as our manufacturing and services
activities are subject to environmental regulations by federal, provincial and local authorities in Canada as well as
local regulatory authorities with jurisdiction over our operations outside of Canada. There continues to be a lack of
consistent climate legislation, which creates economic and regulatory uncertainty. Most countries where we carry
out manufacturing activities are at various stages of developing binding emission allocations and trading
schemes. During 2020, our regulatory risks associated with climate change mainly fell under our obligations to the
European Union Emission Trading Scheme, the United Kingdom Climate Change Agreement, the United
Kingdom's Carbon Reduction Commitment energy efficiency scheme (launched in April 2010), the Energy
Savings Opportunity Scheme and the Québec carbon market trading scheme. Increased public awareness and
concern regarding global climate change may result in more legislative and/or regulatory requirements to reduce
or mitigate the effects of greenhouse gas emissions. The impact to us and our industry from legislation and
increased regulation regarding climate change is likely to be adverse and could be significant, particularly if
regulators were to conclude that emissions from aircraft cause significant harm to the upper atmosphere or have a
greater impact on climate change than other industries. We may be directly exposed to such measures, which
could result in significant costs on us, on our customers and on our suppliers, including costs related to increased
energy requirements, capital equipment, environmental monitoring and reporting, and other costs necessary to
comply with such regulations that could adversely affect our business, financial condition, operating performance,
and ability to compete. In addition, such regulatory changes could necessitate us to develop new technologies,
requiring significant investments of capital and resources.
Foreign exchange risk
Market risk
Our financial results are reported in U.S. dollars and a significant portion of our sales and operating costs are
transacted in currencies other than U.S. dollars, most often Canadian dollars, Mexican pesos and euros. We have
adopted a progressive hedging strategy for our Aviation segment to limit the effect of currency movements on their
results. Such contracts hedge foreign-currency denominated transactions and any change in the fair value of the
contracts could be offset by changes in the underlying value of the transactions being hedged. The use of forward
foreign exchange contracts also contains an inherent credit risk related to default on obligations by the
counterparties to such contracts. Although we aim to have foreign-exchange hedging contracts with respect to all
currencies in which we do business, there may be situations where we do not have hedging contracts or are not
fully hedged for various reasons including regulation and market availability and accessibility. As a result, there
can be no assurance that our approach to managing our exposure to foreign-exchange rate fluctuations will be
effective in the future or that we will be able to enter into foreign-exchange hedging contracts as deemed
necessary on satisfactory terms. In situations where we are not fully hedged, our results of operations are affected
by movements in these currencies against the U.S. dollar. Significant fluctuations in relative currency values
against the U.S. dollar could thus have a significant impact on our future profitability. Additionally, the settlement
timing of foreign currency derivatives could significantly impact our liquidity. Fluctuations in foreign currency
exchange rates could also have a material adverse effect on the relative competitive position of our products in
markets where they face competition from competitors who are less affected by such fluctuations in exchange
rates.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 91
Interest rate risk
Changes in interest rates may result in fluctuations in our future cash flows related to variable-rate financial assets
and liabilities, including long-term fixed-rate debt synthetically converted to variable interest rates. Changes in
interest rates may also affect our future cash flows related to commitments to provide financing support to
facilitate customers’ access to capital. For these items, cash flows could be impacted by changes in benchmark
rates such as Libor, Euribor or Bankers’ Acceptance. In addition, we are exposed to gains and losses arising from
changes in interest rates, which includes marketability risks, through our financial instruments carried at fair value.
These financial instruments include certain aircraft loans and lease receivables, investments in securities,
investments in financing structures, lease subsidies and certain derivative financial instruments.
Commodity price risk
We are exposed to commodity price risk relating principally to fluctuations in the cost of materials used in our
supply chain, such as aluminum, advanced aluminum alloy, titanium, steel and other materials that we use to
manufacture our products, and which represent a significant portion of our cost of sales. We do not maintain
significant inventories of raw materials and components and parts. The prices and availabilities of raw materials
and components and parts may vary significantly from period to period due to factors such as consumer demand,
supply, market conditions and costs of raw materials. In particular, raw materials required for our operations, may
be subject to pricing cyclicality and periodic shortages from time to time. We cannot guarantee that corresponding
variations in cost will be fully reflected in contract prices, and we may be unable to recoup these raw material
price increases, which could affect the profitability of such contracts.
Inflation risk
Our aviation business is exposed to inflation risk relating to fluctuations in costs and revenue for aircraft orders
received but for which the delivery of the aircraft will take place several years in the future. Revenues for these
orders are adjusted for price escalation clauses linked to inflation. Fluctuations in inflation rates could
nevertheless have a significant impact on our future profitability if the inflation rate assumption used varies from
the actual inflation rate, and this is a particularly acute risk in respect of large long-term contracts which may have
an impact on our results for several years.
92 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
FINANCIAL INSTRUMENTS
An important portion of the consolidated balance sheets is composed of financial instruments. Financial assets of
the Corporation include cash and cash equivalents, trade and other receivables, aircraft loans, investments in
securities, receivable from MHI, balance of payment on disposal of investment in associate, receivables from
ACLP, investments in financing structures, long-term contract receivables, restricted cash and derivative financial
instruments with a positive fair value. Financial liabilities of the Corporation include trade and other payables,
long-term debt, short-term borrowings, lease subsidies, lease liabilities, liabilities related to RASPRO assets,
payable to MHI, government refundable advances, credit and residual value guarantees payable, vendor non-
recurring costs and derivative financial instruments with a negative fair value. Derivative financial instruments are
mainly used to manage exposure to foreign exchange and interest rate risks. They consist mostly of forward
foreign exchange contracts and interest rate swap agreements.
The use of financial instruments exposes us primarily to credit, liquidity and market risks, including foreign
exchange and interest rate risks. A description on how we manage these risks is included in the Risk
management section of Overview and in Note 38 – Financial risk management, to the consolidated financial
statements.
Fair value of financial instruments
Financial instruments are recognized in the consolidated statement of financial position when the Corporation
becomes a party to the contractual obligations of the instrument. On initial recognition, financial instruments are
recognized at their fair value plus, in the case of financial instruments not at FVTP&L, transaction costs that are
directly attributable to the acquisition or issue of financial instruments. Subsequent to initial recognition, financial
instruments are measured according to the category to which they are classified, which are: a) financial
instruments classified as FVTP&L, b) financial instruments designated as FVTP&L, c) FVOCI financial assets, or
d) amortised cost. Financial instruments are subsequently measured at amortised cost, unless they are classified
as FVOCI or FVTP&L or designated as FVTP&L, in which case they are subsequently measured at fair value. The
classification of financial instruments as well as the revenues, expenses, gains and losses associated with these
instruments are provided in Note 2 - Summary of significant accounting policies and in Note 13 – Financial
instruments, to the consolidated financial statements.
Note 39 - Fair value of financial instruments, to the consolidated financial statements, provides a detailed
description of the methods and assumptions used to determine the fair values of financial instruments. These
values are point-in-time estimates that may change in subsequent reporting periods due to market conditions or
other factors. Fair value is determined by reference to quoted prices in the principal market for that instrument to
which we have immediate access. However, there is no active market for most of our financial instruments. In the
absence of an active market, we determine fair value based on internal or external valuation models, such as
stochastic models, option-pricing models and discounted cash flow models. Fair value determined using valuation
models requires the use of assumptions concerning the amount and timing of estimated future cash flows,
discount rates, the creditworthiness of the borrower, the aircraft’s expected future value, default probability,
generic industrial bond spreads and marketability risk. In determining these assumptions, we use primarily
external, readily observable market inputs, including factors such as interest rates, credit ratings, credit spreads,
default probabilities, currency rates, and price and rate volatilities, as applicable. Assumptions or inputs that are
not based on observable market data are used when external data are unavailable. These calculations represent
management’s best estimates. Since they are based on estimates, the fair values may not be realized in an actual
sale or immediate settlement of the instruments.
Note 39 – Fair value of financial instruments, to the consolidated financial statements, also provides a three-level
fair value hierarchy, categorizing financial instruments by the inputs used to measure their fair value. The fair
value hierarchy gives the highest priority to unadjusted quoted prices in active markets (Level 1) and the lowest
priority to unobservable inputs (Level 3). In cases where the inputs used to measure fair value are categorized
within different levels of hierarchy, the fair value measurement is reported at the lowest level of the input that is
significant to the entire measurement. Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgment, taking into account factors specific to the asset or liability. The fair
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 93
value hierarchy is not meant to provide insight on the liquidity characteristics of a particular asset or on the degree
of sensitivity of an asset or liability to other market inputs or factors.
We consider gains and losses arising from certain changes in fair value of financial instruments incidental to our
core performance, such as those arising from changes in market yields, as our intention is to continue to hold
these instruments for the foreseeable future. These gains and losses are excluded from adjusted net income and
adjusted EPS to provide users of the financial statements a better understanding of the core results of our
business and enable better comparability of results from one period to another and with peers.
In connection with the sale of commercial aircraft, we hold financial assets and have incurred financial liabilities,
measured at fair value, some of which are reported as Level 3 financial instruments, including certain aircraft
loans, derivative financial instruments, receivable from ACLP, receivable from MHI, investment in financing
structures, lease subsidies, government refundable advance, liabilities related to RASPRO, and payable to MHI.
The fair values of these financial instruments are determined using various assumptions, with the assumption on
marketability risk being the most likely to change the fair value significantly from period to period. These
assumptions, not derived from an observable market, are established by management using estimates and
judgments that can have a significant effect on revenues, expenses, assets and liabilities.
Receivable from ACLP represents a back-to-back agreement that the Corporation has with ACLP related to
certain government refundable advances. Receivable from MHI represents a back to back agreement that the
Corporation has with MHI related to lease subsidies. The liabilities related to RASPRO includes a back-to-back
agreement that the Corporation has with MHI related to the transfer of the net beneficial interest related to the
investments in financing structures. The payable to MHI represents a back-to-back agreement that the
Corporation has with MHI related to certain aircraft loans. Refer to Note 39 - Fair value of Financial instruments
for detailed sensitivity analysis on those financial instruments.
Sensitivity analysis
Our main exposures to changes in fair value of financial instruments are related to changes in foreign exchange,
and interest rates. Note 38 – Financial risk management and Note 39 – Fair value of financial instruments, to the
consolidated financial statements, present sensitivity analyses assuming variations in foreign exchange and
interest rates.
RELATED PARTY TRANSACTIONS
Related parties, as defined by IFRS, are our joint ventures, associates and key management personnel. A
description of our transactions with these related parties is included in Note 40 – Transactions with related parties,
to the consolidated financial statements.
94 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
CRITICAL JUDGMENTS AND ACCOUNTING ESTIMATES
Our significant accounting policies and use of estimates and judgment are described in Note 2 – Summary of
significant accounting policies and Note 4 – Use of estimates and judgment, to our Consolidated financial
statements. The preparation of financial statements in conformity with IFRS requires the use of estimates and
judgment. Critical accounting estimates, which are evaluated on a regular ongoing basis and can change from
period to period, are described in this section. Estimates and judgments are significant when:
•
•
the outcome is highly uncertain at the time the estimates and judgments are made; and
if different estimates or judgments could reasonably have been used that would have had a material
impact on the consolidated financial statements.
Our best estimates regarding the future are based on the facts and circumstances available at the time estimates
are made. We use historical experience, general economic conditions and trends, as well as assumptions
regarding probable future outcomes as the basis for determining estimates. Estimates and their underlying
assumptions are reviewed periodically and the effects of any changes are recognized immediately. Actual results
will differ from the estimates used, and such differences could be material.
Our budget and strategic plan cover a five-year period and are fundamental information used as a basis for many
estimates necessary to prepare financial information. We prepare a budget and a strategic plan covering a five-
year period, on an annual basis, using a process whereby a detailed one-year budget and four-year strategic plan
are prepared by each reportable segment and then consolidated. Cash flows and profitability included in the
budget and strategic plan are based on existing and future contracts and orders, general market conditions,
current cost structures, anticipated cost variations and in-force collective agreements. The budget and strategic
plan are subject to approval at various levels, including senior management and the Board of Directors. We use
the budget and strategic plan, as well as additional projections or assumptions, to derive the expected results for
periods thereafter. We then track performance as compared to the budget and strategic plan at various levels
within the Corporation. Significant variances in actual performance are a key trigger to assess whether certain
estimates used in the preparation of financial information must be revised.
The following areas require management’s most critical estimates and judgments. The sensitivity analyses below
should be used with caution as the changes are hypothetical and the impact of changes in each key assumption
may not be linear.
Long-term contracts
Transportation conducts most of its business under long-term manufacturing and service contracts and Aviation
has some long-term maintenance service contracts, as well as design and development contracts for third parties.
Revenues and margins from long-term contracts relating to the designing, engineering or manufacturing of
specially designed products (including rail vehicles, vehicle overhaul and signalling contracts) and service
contracts are recognized over time. The long-term nature of these contracts requires estimates of total contract
costs and the transaction price. The measure of progress toward complete satisfaction of the performance
obligation is generally determined by comparing the actual costs incurred to the total costs anticipated for the
entire contract, excluding costs that are not representative of the measure of performance.
The contract transaction price includes adjustments for change orders, claims, performance incentives, price
escalation clauses and other contract terms that provide for the adjustment of prices to the extent they represent
enforceable rights for the Corporation. Variable consideration such as assumptions for price escalation clauses,
performance incentives and claims is only included in the transaction price to the extent it is highly probable that a
significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty
associated with the variable consideration is subsequently resolved.
Contract costs include material, direct labour, manufacturing overhead and other costs, such as warranty and
freight. Estimated contract costs at completion incorporate forecasts for material usage and costs, including
escalation clauses, labour hours and costs, foreign exchange rates (including the effect of hedges) and labour
productivity. These costs are influenced by the nature and complexity of the work to be performed, as well as the
impact of change orders and potential delays in delivery. Cost estimates are based mainly on historical
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 95
performance trends, economic trends, collective agreements and contracts signed with suppliers. Management
applies judgment to determine the probability that the Corporation will incur additional costs from delays or other
penalties, and such costs, if probable, are included in estimated costs at completion, unless there is an
adjustment to the transaction price in which case it is recorded as a reduction of estimated revenues at
completion.
Recognized revenues and margins are subject to revisions as contracts progress towards completion.
Management conducts quarterly reviews of estimated costs and revenues to completion on a contract-by-contract
basis, including a review of escalation assumptions. In addition, a detailed annual review is performed on a
contract-by-contract basis as part of the budget and strategic plan process. The effect of any revision may be
significant and is recorded by way of a cumulative catch-up adjustment in the period in which the estimates are
revised.
As part of its financial statement close process, Transportation updated its long-term contract accounting for
identified changes in estimated contract revenues, contract costs and progress toward completion. During fiscal
year 2020, Transportation revised its estimates on a number of projects leading to a charge of $1.1 billion, mainly
in Germany, U.K. and Switzerland. Manufacturing overheads during the shut-down as well as incremental costs
required as a result of the pandemic were recorded as expenses for the fiscal year 2020.
Sensitivity analysis
A 1% increase in the estimated future costs to complete all ongoing long-term contracts would have decreased
Transportation’s gross margin for fiscal year 2020 by approximately $124 million.
Aerospace program tooling
Aerospace program tooling amortization and the calculation of recoverable amounts used in impairment testing
require estimates of the expected number of aircraft to be delivered over the life of each program. The expected
number of aircraft is based on management’s aircraft market forecasts and the Corporation’s expected share of
each market. Such estimates are reviewed in detail as part of the budget and strategic plan process. For
purposes of impairment testing, management exercises judgment to identify independent cash inflows to identify
CGUs by family of aircraft. Other key estimates used to determine the recoverable amount include the applicable
discount rate, the expected future cash flows over the remaining life of each program, which include costs to
complete the development activities, if any, as well as potential upgrades, and derivatives expected over the life of
the program. The estimated cost of potential upgrades and derivatives is based on past experience with previous
programs. The expected future cash flows also include cash flows from aftermarket activities. The inputs used in
the discounted cash flow model are Level 3 inputs (inputs that are not based on observable market data).
The recoverable amounts of aerospace assets or CGUs are based on fair value less costs of disposal. The
recoverable amounts were established during the fourth quarter of 2020. The fair value measurements are
categorized within Level 3 of the fair value hierarchy. The estimate of the fair value less costs of disposal was
determined using forecast future cash flows. The estimated future cash flows for the first five years are based on
the budget and strategic plan. After the initial five years, long-range forecasts prepared by management are used.
Forecast future cash flows are based on management’s best estimate of future sales under existing firm orders,
expected future orders, timing of payments based on expected delivery schedules, revenues from related
services, procurement costs based on existing contracts with suppliers, future labour costs, general market
conditions, foreign exchange rates and applicable long-range forecast income tax rates and a post-tax discount
rate of 9% based on a weighted average cost of capital calculated using market-based inputs, available directly
from financial markets or based on a benchmark sampling of representative publicly-traded companies in the
aerospace sector.
An impairment test was performed for the Global 7500 in the fourth quarter of 2020, and following this
assessment the Corporation concluded there was no impairment.
96 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Sensitivity analysis
The following analyses are presented in isolation from one another, i.e. all other estimates left unchanged:
A 10% decrease, evenly distributed over future periods, in the expected future net cash inflows for the
Global 7500 aircraft program would not have resulted in an impairment charge in fiscal year 2020.
An increase of 100-basis points in the discount rate used to perform the impairment tests would not have resulted
in an impairment charge in fiscal year 2020 for the Global 7500 aircraft program.
Goodwill
The recoverable amount of the Transportation operating segment, the group of CGUs at which level goodwill is
monitored by management, is based on fair value less costs of disposal using the transaction price. During the
fourth quarter of 2020, the Corporation performed an impairment test. Following this assessment the Corporation
concluded there was no impairment. The fair value measurement is categorized within Level 3 of the fair value
hierarchy.
Sensitivity analysis
A 100-basis point change in the post-tax discount rate would not have resulted in an impairment charge in 2020.
Valuation of deferred income tax assets
To determine the extent to which deferred income tax assets can be recognized, we estimate the amount of
probable future taxable profits that will be available against which deductible temporary differences and unused
tax losses can be utilized. Such estimates are made as part of the budget and strategic plan by tax jurisdiction on
an undiscounted basis and are reviewed on a quarterly basis. We exercise judgment to determine the extent to
which realization of future taxable benefits is probable, considering factors such as the number of years to include
in the forecast period, the history of taxable profits and availability of prudent tax planning strategies. See
Note 11 - Income taxes for more details.
Tax contingencies
Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the
amount and timing of future taxable income. Given the wide range of our international business relationships and
the long-term nature and complexity of existing contractual agreements, differences arising between our actual
results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments
to tax expense or recovery already recorded. We establish tax provisions for possible consequences of audits by
the tax authorities of each country in which we operate. The amount of such provisions is based on various
factors, such as experience from previous tax audits and differing interpretations of tax regulations by the taxable
entity and the relevant tax authority. Such differences in interpretation may arise for a wide variety of issues
depending on the conditions prevailing in the domicile of each legal entity.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 97
Retirement and other long-term employee benefits
The actuarial valuation process used to measure pension and other post-employment benefit costs, assets and
obligations is dependent on assumptions regarding discount rates, compensation and pre-retirement benefit
increases, inflation rates, health-care cost trends, as well as demographic factors such as employee turnover,
retirement and mortality rates. The impacts from changes in discount rates and, when significant, from key events
and other circumstances, are recorded quarterly.
Discount rates are used to determine the present value of the expected future benefit payments and represent the
market rates for high-quality corporate fixed-income investments consistent with the currency and the estimated
term of the retirement benefit liabilities.
As the Canadian high-quality corporate bond market, as defined under IFRS, includes relatively few medium- and
long-term maturity bonds, the discount rate for the Corporation’s Canadian pension and other post-employment
plans is established by constructing a yield curve using three maturity ranges. The first maturity range of the curve
is based on observed market rates for AA-rated corporate bonds with maturities of less than five years. In the
longer maturity ranges, due to the smaller number of high-quality bonds available, the curve is derived using
market observations and extrapolated data. The extrapolated data points were created by adding a term-based
yield spread over long-term provincial bond yields. This term-based spread is extrapolated between a base
spread and a long spread. The base spread is based on the observed spreads between AA-rated corporate bonds
and AA-rated provincial bonds for the 4 to 10 years to maturity range. The long spread is determined as the
spread required at the point of average maturity of AA-rated provincial bonds in the 11 to 30 years to maturity
range such that the average AA-rated corporate bond spread above AA-rated provincial bonds is equal to the
extrapolated spread derived by applying the ratio of the observed spreads between A-rated corporate bonds and
AA-rated provincial bonds for the 11 to 30 years to maturity range over the 4 to 10 years to maturity range, to the
base spread. For maturities longer than the average maturity of AA-rated provincial bonds in the 11 to 30 years to
maturity range, the spread is assumed to remain constant at the level of the long spread.
Expected rates of compensation increases are determined considering the current salary structure, as well as
historical and anticipated wage increases, in the context of current economic conditions.
See Note 23 – Retirement benefits, to the consolidated financial statements, for further details regarding
assumptions used and sensitivity analysis to changes in critical actuarial assumptions.
Consolidation
From time to time, the Corporation participates in structured entities where voting rights are not the dominant
factor in determining control. In these situations, management may use a variety of complex estimation processes
involving both qualitative and quantitative factors to determine whether the Corporation is exposed to, or has
rights to, significant variable returns. The quantitative analyses involve estimating the future cash flows and
performance of the investee and analyzing the variability in those cash flows. The qualitative analyses involve
consideration of factors such as the purpose and design of the investee and whether the Corporation is acting as
an agent or principal. There is a significant amount of judgment exercised in evaluating the results of these
analyses as well as in determining if the Corporation has power to affect the investee’s returns, including an
assessment of the impact of potential voting rights, contractual agreements and de facto control.
Onerous contract provision
An onerous contract provision is recorded if it is more likely than not that the unavoidable costs of meeting the
obligations under a firm contract exceed the economic benefits expected to be received under it. In most cases
the economic benefits expected to be received under the contract consist of contract revenue. The calculation of
the unavoidable costs requires estimates of expected future costs, including anticipated future cost reductions
related to performance improvements and transformation initiatives, anticipated cost overruns, expected costs
associated with late delivery penalties and technological problems, as well as allocations of costs that relate
directly to the contract. The measurement of the provision is impacted by anticipated delivery schedules since for
98 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
new aircraft programs early production units require higher cost than units produced later in the process, and for
long-term train manufacturing contracts delays result in penalties.
Sensitivity analysis
A 1% increase in the expected costs over the life of the contract would have decreased EBIT from discontinued
operations for fiscal year 2020 by approximately $57 million.
CDPQ investment equity and derivative liability components
The convertible shares issued to the CDPQ contain no obligation for the Corporation to deliver cash or other
financial assets to the CDPQ. Judgment was used to conclude that the CDPQ’s convertible share investment in
BT Holdco is considered a compound instrument comprised of an equity component, representing the
discretionary dividends and liquidation preference, and a liability component that reflects a derivative to settle the
instrument by delivering a variable number of common shares of BT Holdco, as opposed to the entire instrument
being characterized as a liability. The Corporation presents convertible shares in its equity (NCI) and derivative
component as a liability held for sale.
The fair value of the convertible shares at issuance was assigned to its respective equity and derivative liability
components so that no gain or loss arose from recognizing each component separately, the fair value of the
derivative liability being established first and the residual amount allocated to the equity component. The liability
component is remeasured quarterly. The Corporation uses an internal valuation model to estimate the fair value of
the conversion option embedded in the BT Holdco convertible shares. The fair value of the embedded conversion
option is based on discounted value of the difference between the CDPQ’s share of proceeds from the sale of
Transportation to Alstom, and the carrying value of CDPQ’s non-controlling interest in Transportation.
See Note 39 - Fair value of financial instruments for more details on the fair value of the conversion option.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 99
CONTROLS AND PROCEDURES
In compliance with the Canadian Securities Administrators’ Regulation 52‑109, we have filed certificates signed by
the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) that, among other things, report on the
design and effectiveness of disclosure controls and procedures and the design and effectiveness of internal
controls over financial reporting.
Disclosure controls and procedures
The CEO and the CFO have designed disclosure controls and procedures, or have caused them to be designed
under their supervision, in order to provide reasonable assurance that:
• material information relating to the Corporation has been made known to them; and
• information required to be disclosed in the Corporation’s filings is recorded, processed, summarized and
reported within the time periods specified in securities legislation.
An evaluation was carried out, under the supervision of the CEO and the CFO, of the design and effectiveness of
our disclosure controls and procedures. Based on this evaluation, the CEO and the CFO concluded that the
disclosure controls and procedures are effective.
Internal controls over financial reporting
The CEO and the CFO have also designed internal controls over financial reporting, or have caused them to be
designed under their supervision, in order to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with IFRS.
An evaluation was carried out, under the supervision of the CEO and the CFO, of the design and effectiveness of
our internal controls over financial reporting. Based on this evaluation, the CEO and the CFO concluded that the
internal controls over financial reporting are effective, using the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) on Internal Control – Integrated Framework (2013
Framework).
Changes in internal controls over financial reporting
No changes were made to our internal controls over financial reporting that occurred during the quarter and fiscal
year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our
internal controls over financial reporting.
100 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
FOREIGN EXCHANGE RATES
We are subject to currency fluctuations from the translation of revenues, expenses, assets and liabilities of foreign
operations with non-U.S. dollar functional currencies, mainly the euro, pound sterling and other European
currencies, and from transactions denominated in foreign currencies, mainly the Canadian dollar and pound
sterling.
The foreign exchange rates used to translate assets and liabilities into U.S. dollars were as follows, as at:
Euro
Canadian dollar
Pound sterling
December 31, 2020
December 31, 2019
Increase
1.2271
0.7849
1.3649
1.1234
0.7696
1.3204
9%
2%
3%
The average foreign exchange rates used to translate revenues and expenses into U.S. dollars were as follows,
for the fourth quarters ended:
Euro
Canadian dollar
Pound sterling
December 31, 2020
December 31, 2019
Increase
1.1922
0.7672
1.3200
1.1069
0.7574
1.2849
8%
1%
3%
The average foreign exchange rates used to translate revenues and expenses into U.S. dollars were as follows,
for the fiscal years ended:
Euro
Canadian dollar
Pound sterling
December 31, 2020
December 31, 2019
Increase (Decrease)
1.1409
0.7461
1.2834
1.1200
0.7537
1.2763
2%
(1%)
1%
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 101
SHAREHOLDER INFORMATION
Authorized, issued and outstanding share data, as at February 9, 2021
Class A Shares (multiple voting)(1)
Class B Shares (subordinate voting)(2)
Series 2 Cumulative Redeemable Preferred Shares
Series 3 Cumulative Redeemable Preferred Shares
Series 4 Cumulative Redeemable Preferred Shares
Authorized
3,592,000,000
3,592,000,000
12,000,000
12,000,000
9,400,000
Issued and
outstanding
308,735,929
2,111,045,001 (3)
5,811,736
6,188,264
9,400,000
(1) Ten votes each, convertible at the option of the holder into one Class B Subordinate Voting Share.
(2) Convertible at the option of the holder into one Class A Share under certain conditions.
(3) Net of 17,047,941 Class B Subordinate Voting Shares purchased and held in trust in connection with the PSU and RSU plans.
Warrant, share option, PSU and DSU data as at December 31, 2020
Warrants issued and outstanding
Options issued and outstanding under the share option plans
PSUs and DSUs issued and outstanding under the PSU and DSU plans
Class B Subordinate Voting Shares held in trust to satisfy PSU obligations
205,851,872
134,061,653
175,217,572
17,047,941
Information
Bombardier Inc.
Investor Relations
800 René-Lévesque Blvd. West
Montréal, Québec, Canada H3B 1Y8
Telephone: +1 514 861 9481, extension 13273
Fax: +1 514 861 2420
Email: investors@bombardier.com
Additional information relating to the Corporation, including the annual information form, are available on SEDAR
at sedar.com or on Bombardier’s dedicated investor relations website at ir.bombardier.com.
The Global 8000 aircraft is currently in development, and as such is subject to changes in family strategy, branding, capacity, performance,
design and/or systems. All specifications and data are approximate, may change without notice and are subject to certain operating rules,
assumptions and other conditions. This document does not constitute an offer, commitment, representation, guarantee or warranty of any kind.
Bombardier, Challenger, Challenger 300, Challenger 350, Challenger 600, Challenger 604, Challenger 605, Challenger 650, Exceptional by
Design, Global, Global 5000, Global 5500, Global 6000, Global 6500, Global 7500, Global 8000, Global Express, Global Vision, Global XRS,
La Définition de l’Exceptionnel, Learjet, Learjet 40, Learjet 45, Learjet 70, Learjet 75 Liberty, Smart Parts, Smart Parts Maintenance Plus,
Smart Parts Plus, Smart Parts Preferred, Smart Services, Smartfix, Smartfix Plus, Smartlink, Smartlink Plus, and Vision Flight Deck are
trademarks of Bombardier Inc. or its subsidiaries.
The printed version of this financial report uses Rolland Opaque paper, containing 30% post-consumer fibres, certified Eco-Logo, processed
chlorine free, using renewable energy - Biogas. Using this paper, instead of virgin paper, saves the equivalent of 9 mature trees, 1,653 kg of
CO2 emissions (equivalent to 6,587 kilometres driven) and 9,000 litres of water.
Bombardier Inc., 800 René-Lévesque Blvd. West, Montréal, Québec, Canada H3B 1Y8
Telephone: +1 514 861 9481; fax: +1 514 861 2420; website: bombardier.com
Un exemplaire en français est disponible sur demande adressée auprès du service des Relations avec les investisseurs ou sur le site Internet
de la Société dédié aux relations avec les investisseurs, à l’adresse ri.bombardier.com.
102 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
SELECTED FINANCIAL INFORMATION
The following selected financial information has been derived from, and should be read in conjunction with, the
consolidated financial statements for fiscal years ended December 31, 2020, 2019 and 2018.
The following table provides selected financial information for the last three fiscal years.
Fiscal years ended December 31
Revenues
Net income (loss) attributable to
equity holders of Bombardier Inc.
Continuing operations
Discontinued operations
Total
EPS (in dollars)
Continuing operations - basic
Continuing operations - diluted
Discontinued operations - basic
Discontinued operations - diluted
Total basic
Total diluted
Cash dividends declared per share (in Canadian dollars)
Class A Shares (multiple voting)
Class B Shares (subordinate voting)
Series 2 Preferred Shares
Series 3 Preferred Shares
Series 4 Preferred Shares
As at December 31
Total assets
Non-current financial liabilities
2020 (1)
2019
2018
restated(1)
restated(1)
$
6,487
$
7,488
$
7,321
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(170)
(698)
(868)
(0.08)
(0.08)
(0.29)
(0.29)
(0.37)
(0.37)
—
—
0.72
1.00
1.56
2020
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(1,541)
(256)
(1,797)
(0.65)
(0.65)
(0.11)
(0.11)
(0.76)
(0.76)
—
—
0.99
1.00
1.56
2019
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(12)
244
232
0.00
0.00
0.10
0.09
0.10
0.09
—
—
0.90
1.00
1.56
2018
$ 23,090
$ 9,418
$ 24,972
$ 10,930
$ 24,958
$ 10,619
(1) Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of operations have been restated
for comparative periods. Refer to Note 31 - Discontinued operations to our Consolidated financial statements for more details.
The quarterly data table is shown hereafter.
February 10, 2021
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 103
BOMBARDIER INC.
QUARTERLY DATA (UNAUDITED)
(the quarterly data has been prepared in accordance with IAS 34, Interim financial reporting, except market price ranges)
(in millions of U.S. dollars, except per share amounts)
Fiscal years
Total
Fourth
quarter
Third
quarter
Second
quarter
restated(1)
Total
restated(1)
Fourth
quarter
restated(1)
Third
quarter
restated(1)
Second
quarter
restated(1)
2020
First
quarter
restated(1)
2019
First
quarter
restated(1)
Revenues
Aviation
Transportation(1)
Corporate and Others
Reclassified(1)
EBIT
Aviation
Transportation(1)
Corporate and Others
Reclassified(1)
Financing expense(2)
Financing income(2)
EBT
Income taxes
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Net income (loss)
Attributable to
Equity holders of Bombardier Inc.
NCI
EPS (in dollars)
Continuing operations
basic and diluted
Discontinued operations
basic and diluted
$
$
$
$
$
$ 6,488
7,844
(1)
14,331
(7,844)
$ 2,337 $ 1,405
2,120
2,076
—
—
3,525
4,413
(2,120)
(2,076)
$ 1,223
1,479
—
2,702
(1,479)
$ 1,523 $ 7,501
8,269
2,169
(13)
(1)
15,757
3,691
(8,269)
(2,169)
$ 2,413
1,793
(1)
4,205
(1,793)
$ 1,558
2,175
(11)
3,722
(2,175)
$ 2,120
2,194
—
4,314
(2,194)
$ 1,410
2,107
(1)
3,516
(2,107)
$ 6,487
$ 2,337 $ 1,405
$ 1,223
$ 1,522 $ 7,488
$ 2,412
$ 1,547
$ 2,120
$ 1,409
$
$
937
(618)
(25)
294
618
912
1,060
(27)
(121)
49
$
$
479 $
(336)
(46)
97
336
433 $
240
(28)
221
236
$
9
44
(38)
15
(44)
(29) $
234
(7)
(256)
(232)
442
(377)
(39)
26
377
403
213
(9)
199
49
$
7 $ 1,194
22
(1,714)
(498)
(22)
51
98
156
(51)
$
94
(236)
(1,554)
(1,696)
236
105 $
402
(12)
(285)
(4)
(520) $ (1,460) $
996
(226)
(1,290)
251
236
(93)
(1,603)
(75)
96
88
(41)
143
(88)
55
246
(28)
(163)
5
$
$
(170) $
(398)
(568) $
(15) $
(322)
(337) $
(24) $
216
192
$
$
150
(373)
(223) $
(281) $ (1,541) $ (1,528) $
(168) $
81
(66)
(191)
(200) $ (1,607) $ (1,719) $
77
(91) $
(868) $
300
(423) $
86
$
(298) $
(258) $ (1,797) $ (1,770) $
(139) $
75
58
190
51
48
$
(568) $
(337) $
$
(223) $
(200) $ (1,607) $ (1,719) $
(91) $
(36) $
111
81
192
$
$
340
87
(56)
371
(87)
284
240
(20)
64
124
(60) $
24
(36)
(83) $
47
664
83
(63)
684
(83)
601
293
(104)
412
197
215
24
$239
195
44
239
$
$
(0.08) $ (0.01) $ (0.01) $ 0.06
$ (0.12) $
(0.65) $
(0.64) $ (0.07) $ (0.03) $ 0.09
(0.29) $ (0.17) $ 0.06
$ (0.19) $ 0.01 $
(0.11) $
(0.10) $ 0.01
$ (0.01) $
(0.01)
Total basic and diluted
Market price range of Class B Subordinate Voting Shares (in Canadian dollars)
(0.37) $ (0.18) $ 0.05
$
$ (0.13) $ (0.11) $
(0.76) $
(0.74) $ (0.06) $ (0.04) $ 0.08
High
Low
$
$
1.97
0.26
$ 0.58 $ 0.51
$ 0.26 $ 0.33
$ 0.69
$ 0.39
$ 1.97 $
$ 0.38 $
3.03
1.53
$ 2.15
$ 1.53
$ 2.34
$ 1.53
$ 2.92
$ 1.96
$ 3.03
$ 1.85
(1) Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of operations have been restated for comparative periods. Refer to Note 31 -
Discontinued operations to our Consolidated financial statements for more details.
(2) The amounts presented on a yearly basis may not correspond to the sum of the four quarters as certain reclassifications to quarterly figures to or from financing income and financing expense
may be required on a cumulative basis.
104 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
BOMBARDIER INC.
HISTORICAL FINANCIAL SUMMARY
(in millions of U.S. dollars, except per share amounts and number of common shares)
For the fiscal years ended December 31
2020 (1)
2019
2018
2017
2016
Revenues
Adjusted EBIT(2)
Special items
EBIT
Financing expense
Financing income
EBT
Income taxes
Net loss from continuing operations
Net income (loss) from discontinued operations
Net income (loss)
Attributable to
$
$
$
Equity holders of Bombardier Inc.
NCI
$
$
Adjusted net loss from continuing operations(2) $
EPS (in dollars)
Continuing operations - basic and diluted
Discontinued operations - basic
Discontinued operations - diluted
Continuing operations - adjusted(2)
General information
Export revenues from Canada(3)
Net additions to PP&E and intangible assets(4)
Amortization(4)
Impairment charges (reversals) on PP&E
and intangible assets(4)
Dividend per common share (in Canadian dollars)
Class A
Class B Subordinate Voting
Dividend per preferred share (in Canadian dollars)
Series 2
Series 3
Series 4
Market price ranges (in Canadian dollars)
Class A Shares
High
Low
Close
Class B Subordinate Voting Shares
High
Low
Close
As at December 31
Number of common shares (in millions)
Book value per common share (in dollars)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
6,487
(211)
(1,123)
912
1,060
(27)
(121)
49
(170)
(398)
(568)
(868)
300
(1,115)
(0.08)
(0.29)
(0.29)
(0.47)
5,182
354
510
42
0.00
0.00
0.72
1.00
1.56
2.02
0.38
0.82
1.97
0.26
0.48
2,420
(3.96)
restated(1)
7,488
$
restated(1)
7,321
$
restated(1)
7,648
$
restated(1)
8,765
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
400
920
(520)
996
(226)
(1,290)
251
(1,541)
(66)
(1,607)
(1,797)
190
(406)
(0.65)
(0.11)
(0.11)
(0.18)
5,187
523
422
(4)
0.00
0.00
0.99
1.00
1.56
3.08
1.57
1.94
3.03
1.53
1.93
2,398
(3.49)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
279
52
227
593
(87)
(279)
(192)
(87)
405
318
232
86
(7)
0.00
0.10
0.09
0.03
5,803
415
272
11
0.00
0.00
0.90
1.00
1.56
5.60
1.70
2.08
5.58
1.59
2.03
2,373
(2.63)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(13)
131
(144)
594
(56)
(682)
(15)
(667)
142
(525)
(494)
(31)
(468)
(0.23)
(0.01)
(0.01)
(0.14)
6,498
1,317
314
51
0.00
0.00
0.72
0.89
1.56
3.25
1.87
3.05
3.24
1.96
3.03
2,194
(3.20)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(133)
321
(454)
668
(61)
(1,061)
38
(1,099)
118
(981)
(1,022)
41
(635)
(0.46)
(0.02)
(0.02)
(0.25)
6,383
1,201
371
10
0.00
0.00
0.68
0.78
1.56
3.35
0.89
2.33
2.28
0.72
2.16
2,193
(2.95)
(1) Transportation was classified as discontinued operations as of December 31, 2020. As a result, the results of operations have been restated
for comparative periods. Refer to Note 31 - Discontinued operations to our Consolidated financial statements for more details.
(2) Non-GAAP financial measures. Refer to the Non-GAAP financial measures for definitions of these metrics and reconciliations to the most
comparable IFRS measures in 2020 and 2019.
(3) Includes Transportation.
(4) As per the consolidated statement of cash flows of our Consolidated financial statements.
BOMBARDIER INC. / 2020 FINANCIAL REPORT / OTHER 105
BOMBARDIER INC.
HISTORICAL FINANCIAL SUMMARY (CONTINUED)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31
Assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Other financial assets
Other assets
Assets held for sale
Current assets
PP&E
Aerospace program tooling
Goodwill
Deferred income taxes
Investments in joint ventures and
associates
Other financial assets
Other assets
Non-current assets
2020
2019
2018 (1)
2017
2016
$
1,779
294
61
3,650
227
218
10,417
16,646
668
4,396
—
111
$
2,578
1,844
2,485
4,599
195
473
1,309
13,483
1,781
4,616
1,936
546
$
3,187
1,575
2,617
4,402
210
357
—
12,348
1,557
4,519
1,948
746
$
2,988
1,174
2,460
3,429
415
427
4,150
15,043
1,696
3,581
2,042
595
$
3,384
1,220
1,631
4,286
336
427
—
11,284
1,949
5,174
1,855
698
—
912
357
6,444
$ 23,090
1,059
989
562
11,489
$ 24,972
2,211
1,030
599
12,610
$ 24,958
491
825
643
9,873
$ 24,916
332
915
588
11,511
$ 22,795
$
Liabilities
Trade and other payables
Provisions
Contract liabilities
Current portion of long-term debt
Other financial liabilities
Other liabilities
Liabilities directly associated with assets
held for sale
Current liabilities
Provisions
Contract liabilities
Long-term debt
Retirement benefits
Other financial liabilities
Other liabilities
Non-current liabilities
Equity (deficit)
Attributable to equity holders
of Bombardier Inc.
Attributable to NCI
1,611
146
2,356
1,882
239
447
10,146
16,827
289
1,219
8,193
1,606
1,225
388
12,920
29,747
$
4,682
1,060
5,739
8
617
1,441
1,768
15,315
311
1,417
9,325
2,445
1,605
465
15,568
30,883
$
4,634
1,390
4,262
9
598
1,499
—
12,392
1,110
1,933
9,093
2,381
1,526
537
16,580
28,972
$
3,964
1,630
3,820
18
324
1,723
2,686
14,165
781
1,272
9,200
2,633
965
595
15,446
29,611
$
3,045
1,542
3,840
31
577
1,634
—
10,669
1,561
1,673
8,738
2,647
999
891
16,509
27,178
(9,325)
2,668
(6,657)
$ 23,090
(7,667)
1,756
(5,911)
$ 24,972
(5,563)
1,549
(4,014)
$ 24,958
(6,608)
1,913
(4,695)
$ 24,916
(6,054)
1,671
(4,383)
$ 22,795
(1) Balances do not include the impact of the adoption of IFRS 16, Leases which resulted in the recognition of right-of-use assets, in PP&E, and
lease liabilities, in Other financial liabilities, amounting to $554 million and $568 million, respectively as of January 1, 2019.
106 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
BOMBARDIER INC.
CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal years ended
December 31, 2020 and 2019
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 - FINANCIAL STATEMENTS 107
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
The consolidated financial statements and MD&A of Bombardier Inc. and all other information in the financial
report are the responsibility of management and have been reviewed and approved by the Board of Directors.
The consolidated financial statements have been prepared by management in accordance with IFRS as issued by
the International Accounting Standards Board. The MD&A has been prepared in accordance with the
requirements of Canadian Securities Administrators. The financial statements and MD&A include items that are
based on best estimates and judgments of the expected effects of current events and transactions. Management
has determined such items on a reasonable basis in order to ensure that the financial statements and MD&A are
presented fairly in all material respects. Financial information presented in the MD&A is consistent with that in the
consolidated financial statements.
Bombardier Inc.’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO) have designed disclosure
controls and procedures and internal controls over financial reporting, or have caused them to be designed under
their supervision, to provide reasonable assurance that material information relating to Bombardier Inc. has been
made known to them; and information required to be disclosed in Bombardier Inc.’s filings is recorded, processed,
summarized and reported within the time periods specified in Canadian securities legislation.
Bombardier Inc.’s CEO and CFO have also evaluated the effectiveness of Bombardier Inc.’s disclosure controls
and procedures and internal controls over financial reporting as of the end of the fiscal year 2020. Based on this
evaluation, the CEO and the CFO concluded that the disclosure controls and procedures and internal controls
over financial reporting were effective as of that date, using the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) on Internal Control – Integrated Framework (2013
framework). In addition, based on this assessment, they determined that there were no material weaknesses in
internal control over financial reporting as of the end of the fiscal year 2020. In compliance with the Canadian
Securities Administrators’ National Instrument 52-109, Bombardier Inc.’s CEO and CFO have provided a
certification related to Bombardier Inc.’s annual disclosure to the Canadian Securities Administrators, including the
consolidated financial statements and MD&A.
The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial
reporting and is ultimately responsible for reviewing and approving the consolidated financial statements and
MD&A. The Board of Directors carries out this responsibility principally through its Audit and Risk Committee.
The Audit and Risk Committee is appointed by the Board of Directors and is comprised entirely of independent
and financially literate directors. The Audit and Risk Committee meets periodically with management, as well as
with the internal and independent auditors, to review the consolidated financial statements, independent auditors’
report, MD&A, auditing matters and financial reporting issues, to discuss internal controls over the financial
reporting process, and to satisfy itself that each party is properly discharging its responsibilities. In addition, the
Audit and Risk Committee has the duty to review the appropriateness of the accounting policies and significant
estimates and judgments underlying the consolidated financial statements as presented by management, and to
review and make recommendations to the Board of Directors with respect to the independence and the fees of the
independent auditors. The Audit and Risk Committee reports its findings to the Board of Directors for its
consideration when it approves the consolidated financial statements and MD&A for issuance to shareholders.
The consolidated financial statements have been audited by Ernst & Young LLP, the independent auditors, in
accordance with Canadian generally accepted auditing standards on behalf of the shareholders. The independent
auditors have full and free access to the Audit and Risk Committee to discuss their audit and related matters.
Eric Martel Bart Demosky
President and Chief Executive Officer Executive Vice President and Chief Financial Officer
February 10, 2021
108 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF BOMBARDIER INC.
Opinion
We have audited the consolidated financial statements of Bombardier Inc. and its subsidiaries (the Group), which
comprise the consolidated statements of financial position as at December 31, 2020, 2019 and January 1, 2019,
and the consolidated statements of income, consolidated statements of comprehensive income, consolidated
statements of changes in equity and consolidated statements of cash flows for the years ended December 31,
2020 and 2019, and notes to the consolidated financial statements, including a summary of significant accounting
policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at December 31, 2020, 2019 and January 1, 2019, and its
consolidated financial performance and its consolidated cash flows for the years ended December 31, 2020 and
2019 in accordance with International Financial Reporting Standards (IFRSs).
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated
financial statements section of our report. We are independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of
the consolidated financial statements of the current period. These matters were addressed in the context of the
audit of the consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do
not provide a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated
financial statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement of the
consolidated financial statements. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial
statements.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 - AUDITORS’ REPORT 109
Key audit matter
How our audit addresses the key audit matter
Revenue and gross margin recognition on
long-term contracts
For the fiscal year ended December 31, 2020,
revenues and gross margin for Transportation
presented within net loss from discontinued
operations, amounted to $7,844 million and
$(179) million respectively. Moreover, as at
December 31, 2020, contract assets and contract
liabilities presented as assets held for sale
amounted to $3,260 million and $2,749 million
respectively.
Transportation conducts most of its business
under long-term manufacturing contracts which
require estimates of total contract costs and the
transaction price, as disclosed in Note 4 of the
consolidated financial statements. We believe
that the measurement of revenue and gross
margin and related contract assets and liabilities
on long-term manufacturing contracts in
Transportation is a key audit matter, because of
the degree of required estimates and judgments
which significantly impact the determination of the
extent of progress towards completion. Key
judgments and estimates related to contract costs
at completion are forecasts for material usage
and costs, labour hours and costs, labour
productivity and the probability of additional costs
from delays or penalties. Key judgments and
estimates related to the transaction price are
change orders and claims.
As part of our audit, we obtained an understanding of the Group’s
controls for managing and monitoring long-term contracts. More
specifically, we assessed the design and operating effectiveness of
internal controls related to the measurement of revenues and costs
and the stage of completion.
For a sample of contracts, including those selected based on
individual contract risks or size, we:
• Obtained an understanding of contract performance
•
•
•
•
•
•
•
•
•
through discussion with project management;
Examined the terms and conditions of the contracts,
including contract amendments and change orders;
Performed inquiries of project management with respect to
the reasons for deviations between planned and actual
material usage and costs, labour hours and costs, labour
productivity, claims delays and penalties and corroborated
such information by comparing to other available
information, including prior period experience for the same
or similar projects;
Corroborated the main assumptions of revenue and costs
at completion including provision for onerous contracts, if
any, with costs incurred to date, with the focus being on
material usage and costs, labor hours and costs, labor
productivity, change orders and claims;
Inquired with internal and/or external counsel to
corroborate management’s representations with respect to
the status of claims and penalties;
Assessed, through discussions with project management
and past performance of the contract, the probabilities that
contract risks and opportunities will materialize;
Recalculated stage of completion of the contract based on
costs incurred to date and estimated total costs;
Examined externally available evidence, such as regulatory
approval, customer correspondence and/or acceptance, or
status of claims;
Reviewed the general ledger data to identify anomalies in
margin through the contracts’ execution;
Evaluated the information presented in Notes 4 and 31 of
the notes to the consolidated financial statements.
110 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Valuation of Global 7500 aircraft program
tooling
As at December 31, 2020, the net carrying value
of aerospace program tooling amounted to
$4,396 million, of which a significant portion
related to the Global 7500 CGU. As stated in Note
4 of the notes to the consolidated financial
statements, the recoverable amount of the Global
7500 CGU is based on its fair value less costs of
disposal. The fair value measurement is
categorized within Level 3 of the fair value
hierarchy and is determined using forecasted
future cash flows. We believe that the
determination of the recoverable amount of the
Global 7500 aircraft program tooling is a key audit
matter given management’s estimates and
judgments required in estimating the fair value
less costs of disposal of the balances recorded in
the consolidated financial statements.
The key drivers of the forecasted future cash
flows are based on management’s best estimate
of future sales under existing firm orders,
expected future orders, timing of payments based
on expected delivery schedules, revenues from
related services, procurement costs based on
existing contracts with suppliers, future labour
costs, and post-tax discount rate.
rformation
Other information
To evaluate the appropriateness of the valuation of the Global 7500
program tooling, our audit procedures included the following,
among others:
•
•
•
•
•
Reviewed the impairment model prepared by management
and assessed key assumptions used with internally or
externally available evidence with the focus on future sales
under existing firm orders, expected future orders, timing of
payments based on expected delivery schedules, revenues
from related services, procurement costs based on existing
contracts with suppliers and future labour costs;
Evaluated the Group’s post-tax discount rate with the
assistance of our valuation specialists;
Agreed the underlying cash flows to the budget approved
by the Board of Directors;
Evaluated the changes in the above-mentioned
assumptions compared to the prior year impairment
assessment as well as evaluated the absence of such
changes;
Evaluated the information presented in Note 4 of the notes
to the consolidated financial statements.
Management is responsible for the other information. The other information comprises:
• Management’s discussion and analysis
•
The information, other than the consolidated financial statements and our auditor’s report thereon, in the
Financial Report
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information, and in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
We obtained Management’s Discussion & Analysis and the Financial Report prior to the date of this auditor’s
report. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 - AUDITORS’ REPORT 111
Responsibilities of management and those charged with governance for the consolidated financial
statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRSs, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or
has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a
going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
112 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Zahid Fazal.
(1)
Ernst & Young LLP
Montréal, Canada
February 10, 2021
(1) CPA auditor, CA, public accountancy permit no. A122227
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 - AUDITORS’ REPORT 113
CONSOLIDATED FINANCIAL STATEMENTS
For fiscal years 2020 and 2019
(Tabular figures are in millions of U.S. dollars, unless otherwise indicated)
Consolidated financial statements
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
BASIS OF PREPARATION
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
IMPACTS OF COVID-19 PANDEMIC
USE OF ESTIMATES AND JUDGMENT
SEGMENT DISCLOSURE
RESEARCH AND DEVELOPMENT
OTHER INCOME
SPECIAL ITEMS
FINANCING EXPENSE AND FINANCING INCOME
EMPLOYEE BENEFITS COSTS
INCOME TAXES
EARNINGS PER SHARE
FINANCIAL INSTRUMENTS
CASH AND CASH EQUIVALENTS
TRADE AND OTHER RECEIVABLES
CONTRACT BALANCES
INVENTORIES
BACKLOG
OTHER FINANCIAL ASSETS
OTHER ASSETS
PROPERTY, PLANT AND EQUIPMENT
INTANGIBLE ASSETS
RETIREMENT BENEFITS
TRADE AND OTHER PAYABLES
PROVISIONS
OTHER FINANCIAL LIABILITIES
OTHER LIABILITIES
LONG-TERM DEBT
DISPOSAL OF INVESTMENT IN ASSOCIATE
DISPOSAL OF BUSINESSES
DISCONTINUED OPERATIONS
ACQUISITION
SHARE CAPITAL
SHARE-BASED PLANS
NET CHANGE IN NON-CASH BALANCES
CREDIT FACILITIES
CAPITAL MANAGEMENT
FINANCIAL RISK MANAGEMENT
FAIR VALUE OF FINANCIAL INSTRUMENTS
TRANSACTIONS WITH RELATED PARTIES
UNCONSOLIDATED STRUCTURED ENTITIES
COMMITMENTS AND CONTINGENCIES
RECLASSIFICATION
114 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
116
121
121
134
136
140
145
145
146
148
148
149
152
152
155
156
157
158
158
159
159
160
162
163
174
175
176
177
178
179
180
180
183
184
187
189
190
191
192
197
201
202
203
209
The following table shows the abbreviations used in the consolidated financial statements.
Term
ACLP
Description
Airbus Canada Limited Partnership
BT Holdco Bombardier Transportation (Investment) UK
Limited
CCTD
CDPQ
CGU
DB
DC
DDHR
DSU
EBIT
Cumulative currency translation difference
Caisse de dépôt et placement du Québec
Cash generating unit
Defined benefit
Defined contribution
Derivative designated in a hedge relationship
Deferred share unit
Earnings (loss) before financing expense, financing
income and income taxes
EBITDA
Earnings (loss) before financing expense, financing
income, income taxes, amortization and impairment
charges on PP&E and intangible assets
EBT
EPS
Earnings (loss) before income taxes
Earnings (loss) per share attributable to equity
holders of Bombardier Inc.
Term
FVOCI
Description
Fair value through other comprehensive income
(loss)
FVTP&L Fair value through profit and loss
IAS
IASB
IFRIC
International Accounting Standard(s)
International Accounting Standards Board
International Financial Reporting Interpretation
Committee
IFRS
MD&A
NCI
OCI
PP&E
PSU
R&D
RSU
SG&A
U.K.
U.S.
International Financial Reporting Standard(s)
Management’s discussion and analysis
Non-controlling interests
Other comprehensive income (loss)
Property, plant and equipment
Performance share unit
Research and development
Restricted share unit
Selling, general and administrative
United Kingdom
United States of America
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 - FINANCIAL STATEMENTS 115
BOMBARDIER INC.
CONSOLIDATED STATEMENTS OF INCOME
For the fiscal years ended December 31
(in millions of U.S. dollars, except per share amounts)
Revenues
Cost of sales
Gross margin
SG&A
R&D
Share of income of joint ventures and associates
Other income
Special items
EBIT
Financing expense
Financing income
EBT
Income taxes
Net loss from continuing operations
Net loss from discontinued operations
Net loss
Attributable to
Equity holders of Bombardier Inc.
NCI(2)
Net loss attributable to equity
holders of Bombardier Inc.
Continuing operations
Discontinued operations
EPS (in dollars)
Continuing operations
basic and diluted
Discontinued operations
basic and diluted
Total basic and diluted
Notes
17
$
6
7
8
9
9
11
31
31
12
31
$
$
$
$
$
$
$
$
2020
6,487
5,971
516
420
320
(2)
(11)
(1,123)
912
1,060
(27)
(121)
49
(170)
(398)
(568)
(868)
300
(568)
(170)
(698)
(868)
(0.08)
(0.29)
(0.37)
2019 (1)
7,488
6,447
1,041
557
156
(34)
(38)
920
(520)
996
(226)
(1,290)
251
(1,541)
(66)
(1,607)
(1,797)
190
(1,607)
(1,541)
(256)
(1,797)
(0.65)
(0.11)
(0.76)
$
$
$
$
$
$
$
$
$
(1) Restated for the sale of Transportation, refer to Note 31 - Discontinued operations for more details.
(2) Net income attributable to NCI is related to discontinued operations, refer to Note 31 - Discontinued operations.
The notes are an integral part of these consolidated financial statements.
116 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
BOMBARDIER INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the fiscal years ended December 31
(in millions of U.S. dollars)
Net loss
OCI
Items that may be reclassified to net income
Net change in cash flow hedges
Foreign exchange re-evaluation
Net loss on derivative financial instruments
Reclassification to income or to the related non-financial asset(1)(2)
Income taxes
FVOCI financial assets
Net unrealized gain
CCTD
Net investments in foreign operations
Items that are never reclassified to net income
FVOCI equity instruments
Net unrealized gain
Retirement benefits
Remeasurement of defined benefit plans
Income taxes
Total OCI
Total comprehensive loss
Attributable to
Equity holders of Bombardier Inc.
NCI
Total comprehensive loss attributable to
equity holders of Bombardier Inc.
Continuing operations
Discontinued operations(3)
Notes
2020
(568)
2019
(1,607)
$
$
(3)
(21)
26
18
20
7
(148)
4
(456)
43
(409)
(530)
(1,098)
(1,626)
528
(1,098)
(509)
(1,117)
$
$
$
$
(4)
(1)
39
(17)
17
5
95
5
(520)
50
(465)
(348)
(1,955)
(2,117)
162
(1,955)
(1,705)
(412)
$
$
$
$
$
(1,626)
$
(2,117)
11
23
11
31
(1) Includes $19 million of loss reclassified to the related non-financial asset for fiscal year 2020 ($56 million of loss for fiscal year 2019).
(2) $20 million of net deferred loss is expected to be reclassified from OCI to the carrying amount of the related non-financial asset or to
expense during fiscal year 2021.
(3) Refer to Note 31 - Discontinued operations for more details.
The notes are an integral part of these consolidated financial statements.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 - FINANCIAL STATEMENTS 117
BOMBARDIER INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at
(in millions of U.S. dollars)
Assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Other financial assets
Other assets
Assets held for sale(2)
Current assets
PP&E
Aerospace program tooling
Goodwill
Deferred income taxes
Investments in joint ventures and associates
Other financial assets
Other assets
Non-current assets
Liabilities
Trade and other payables
Provisions
Contract liabilities
Current portion of long-term debt
Other financial liabilities(3)
Other liabilities(3)
Liabilities directly associated with assets held for sale(2)
Current liabilities
Provisions
Contract liabilities
Long-term debt
Retirement benefits
Other financial liabilities(3)
Other liabilities(3)
Non-current liabilities
Equity (deficit)
Attributable to equity holders of Bombardier Inc.
Attributable to NCI
Commitments and contingencies
Notes
December 31 December 31
2019
2020
January 1
2019 (1)
14
15
16
17
19
20
31
21
22
22
11
19
20
24
25
16
28
26
27
31
25
16
28
23
26
27
42
$
1,779
294
61
3,650
227
218
10,417
16,646
668
4,396
—
111
—
912
357
6,444
$ 23,090
$
1,611
146
2,356
1,882
239
447
10,146
16,827
289
1,219
8,193
1,606
1,225
388
12,920
29,747
$
2,578
1,844
2,485
4,599
195
473
1,309
13,483
1,781
4,616
1,936
546
1,059
989
562
11,489
$ 24,972
$
4,682
1,060
5,739
8
617
1,441
1,768
15,315
311
1,417
9,325
2,445
1,605
465
15,568
30,883
$
3,187
1,575
2,617
4,402
210
357
—
12,348
2,111
4,519
1,948
746
2,211
1,030
599
13,164
$ 25,512
$
4,634
1,390
4,262
9
701
1,499
—
12,495
1,110
1,933
9,052
2,381
2,032
523
17,031
29,526
(9,325)
2,668
(6,657)
$ 23,090
(7,667)
1,756
(5,911)
$ 24,972
(5,563)
1,549
(4,014)
$ 25,512
(1) Includes the impact of the adoption of IFRS 16, Leases which resulted in the recognition of right-of-use assets, in PP&E, and lease
liabilities, in Other financial liabilities, amounting to $554 million and $568 million, respectively as of January 1, 2019.
(2) Assets held for sale and liabilities directly associated with assets held for sale as at December 31, 2019 include $476 million and $447
million, respectively related to the sale of the CRJ business and $833 million and $1,321 million, respectively related to the sale of
the aerostructure business.
(3) Lease liabilities were reclassified from Other liabilities to Other financial liabilities. Refer to Note 43 - Reclassification.
The notes are an integral part of these consolidated financial statements.
On behalf of the Board of Directors
Pierre Beaudoin
Director
Diane Giard
Director
118 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
BOMBARDIER INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the fiscal years ended
(in millions of U.S. dollars)
Attributable to equity holders of Bombardier Inc.
Share capital
Preferred
shares
Common
shares Warrants
Retained earnings
(deficit)
Other
retained
earnings
(deficit)
Remea-
surement
losses
Accumulated OCI
Contributed
surplus
FVOCI
Cash
flow
hedges
CCTD
Total
NCI
Total
equity
(deficit)
As at January 1, 2019
$
347 $ 2,596 $
343 $ (6,294) $
(2,305)
$
203 $
(1) $
(68) $ (384) $ (5,563) $ 1,549 $ (4,014)
Total comprehensive income (loss)
Net income (loss)
OCI
Options exercised
Issuance of NCI(1)
Dividends - preferred shares, net of
taxes
Dividends to NCI
Shares distributed - PSU plan
Share-based expense
As at December 31, 2019
Total comprehensive income (loss)
Net income (loss)
OCI
Cancellation of warrants(2)
Issuance of NCI(3)
Dividends - preferred shares, net of
taxes
Dividends to NCI
Shares distributed - PSU plan
Share-based expense
—
—
—
—
—
—
—
—
—
—
—
—
5
—
—
—
33
—
—
—
—
—
—
—
—
—
—
(1,797)
—
(1,797)
—
(470)
(470)
—
—
(21)
—
—
—
—
—
—
—
—
—
—
—
—
(1)
—
—
—
(33)
30
—
10
10
—
—
—
—
—
—
—
17
17
—
—
—
—
—
—
—
(1,797)
123
123
—
—
—
—
—
—
(320)
(2,117)
4
—
(21)
—
—
30
190
(28)
162
—
49
—
(4)
—
—
(1,607)
(348)
(1,955)
4
49
(21)
(4)
—
30
$
347 $ 2,634 $
343 $ (8,112) $
(2,775)
$
199 $
9 $
(51) $ (261) $ (7,667) $ 1,756 $ (5,911)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
42
—
—
—
—
(270)
—
—
—
—
—
(868)
—
(868)
—
—
(18)
—
—
—
—
(413)
(413)
—
—
—
—
—
—
—
—
—
230
—
—
—
(42)
26
—
11
11
—
—
—
—
—
—
—
20
20
—
—
—
—
—
—
—
(376)
(376)
—
—
—
—
—
—
(868)
(758)
(1,626)
(40)
—
(18)
—
—
26
300
228
528
—
386
—
(2)
—
—
(568)
(530)
(1,098)
(40)
386
(18)
(2)
—
26
As at December 31, 2020
(1) The Corporation and CDPQ made a capital injection of €150 million ($164 million) at their respective pro-rata share of equity as at September 26, 2019.
(2)
347 $ 2,676 $
73 $ (8,998) $
413 $
(3,188)
20 $
$
$
Following the sale of its remaining interests in ACLP, the Corporation cancelled the warrants held by Airbus, see Note 29 - Disposal of investment in associate for more details.
(31) $ (637) $ (9,325) $ 2,668 $ (6,657)
(3) CDPQ made a capital injection of €350 million ($386 million) in BT Holdco. See Note 31 - Discontinued operations for more details.
The notes are an integral part of these consolidated financial statements.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 - FINANCIAL STATEMENTS 119
BOMBARDIER INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the fiscal years ended December 31
(in millions of U.S. dollars)
Operating activities
Net loss
Non-cash items
Amortization(1)
Impairment charges on ACLP investments
Impairment charges (reversals) on PP&E and intangible assets
Deferred income taxes
Gains on disposals of PP&E
Gains on disposal of investment in associate and businesses
Share of income of joint ventures and associates
Share-based expense
Loss on repurchase of long-term debt
Dividends received from joint ventures and associates
Net change in non-cash balances
Cash flows from operating activities(2)
Investing activities
Additions to PP&E and intangible assets
Proceeds from disposals of PP&E and intangible assets
Investments in non-voting units of ACLP
Net proceeds from disposal of investment in associate and businesses
Capital injection in joint ventures and associates
Other
Cash flows from investing activities(2)
Financing activities
Net proceeds from issuance of long-term debt
Repayments of long-term debt
Net variation in short-term borrowings
Payment of lease liabilities(3)
Dividends paid - preferred shares
Issuance of NCI
Dividends to NCI
Other
Cash flows from financing activities(2)
Effect of exchange rates on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year(4)
Cash and cash equivalents at end of year(4)
Supplemental information(5)(6)
Cash paid for
Interest
Income taxes
Cash received for
Interest
Income taxes
Notes
2020
2019
$
(568)
$
(1,607)
21, 22
8
7, 8, 21
11
7
8, 21, 22
8, 9
35
29, 30
28
28
33
14
14
510
—
42
32
(3)
(1,286)
(110)
26
—
52
(1,516)
(2,821)
(364)
10
(100)
1,385
—
36
967
707
(8)
742
(93)
(19)
386
(2)
—
1,713
(38)
(179)
2,629
2,450
787
103
18
23
$
$
$
$
$
422
1,578
(4)
113
(10)
(730)
(128)
30
84
49
(477)
(680)
(552)
29
(350)
826
(64)
(7)
(118)
1,956
(1,762)
—
(112)
(20)
49
(4)
3
110
130
(558)
3,187
2,629
732
172
25
7
$
$
$
$
$
(1) Includes $83 million of amortization charge related to right-of-use of assets for fiscal year 2020 ($109 million for the fiscal year 2019).
(2) See Note 31 - Discontinued operations for more details on cash flows from discontinued operations.
(3) Lease payments related to the interest portion, short term leases, low value assets and variable lease payments not included in lease liabilities are
classified as cash outflows from operating activities. The total cash outflows for fiscal year 2020 amounted to $151 million ($168 million for the fiscal
year 2019).
(4) For the purpose of the statement of cash flows, cash and cash equivalents comprise the cash reclassified as assets held for sale. See Note 31 -
Discontinued operations for more details. Cash reclassified as assets held for sale as at December 31, 2019 are related to the Aerostructure
business.
(5) Amounts paid or received for interest are reflected as cash flows from operating activities, except if they were capitalized in PP&E or intangible
assets, in which case they are reflected as cash flows from investing activities. Amounts paid or received for income taxes are reflected as cash flows
from operating activities.
(6) Interest paid comprises interest on long-term debt after the effect of hedges, if any, excluding up-front costs paid related to the negotiation of debts or
credit facilities, interest paid on lease liabilities and interest paid on extended payment terms for trade payables. Interest received comprises interest
received related to cash and cash equivalents, investments in securities, loans and lease receivables after the effect of hedges and the interest
portion related to the settlement of an interest-rate swap, if any.
The notes are an integral part of these consolidated financial statements.
120 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
For the fiscal years ended December 31, 2020 and 2019
(Tabular figures are in millions of U.S. dollars, unless otherwise indicated)
1.
BASIS OF PREPARATION
Bombardier Inc. (“the Corporation” or “our” or “we”) is incorporated under the laws of Canada. The Corporation is
a manufacturer of transportation equipment, including business and commercial aircraft, as well as major aircraft
structural components, and rail transportation equipment and systems, and is a provider of related services. The
Corporation carries out its operations in two distinct segments: Aviation and Transportation. On September 16,
2020, the Corporation, Alstom and CDPQ and certain related parties signed a definitive sale and purchase
agreement for the sale of the Transportation business to Alstom. As a result, Transportation was classified as
discontinued operations and the related assets and liabilities are presented as held for sale. Refer to Note 31 -
Discontinued operations for more details. In that respect, comparative information for prior periods presented in
the consolidated statement of income were restated. On January 29, 2021, the Corporation closed the sale of
Transportation to Alstom.
The Corporation’s consolidated financial statements for fiscal years 2020 and 2019 were authorized for issuance
by the Board of Directors on February 10, 2021.
Statement of compliance
The Corporation’s consolidated financial statements are expressed in U.S. dollars and have been prepared in
accordance with IFRS, as issued by the IASB.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements, unless otherwise stated.
Basis of consolidation
Subsidiaries – Subsidiaries are fully consolidated from the date of acquisition and continue to be consolidated
until the date control over the subsidiaries ceases.
The Corporation consolidates investees, including structured entities when, based on the evaluation of the
substance of the relationship with the Corporation, it concludes that it controls the investees. The Corporation
controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over the investee.
The Corporation’s principal subsidiaries, whose revenues or assets represent more than 10% of total revenues or
more than 10% of total assets of Aviation or Transportation segments, are as follows:
Subsidiary
Bombardier Transportation GmbH(1)
Bombardier Transportation (Holdings) UK Ltd(1)
Bombardier Transportation France S.A.S.(1)
Learjet Inc.
(1) Part of the disposal group, refer to Note 31 - Discontinued operations for more details.
Location
Germany
U.K.
France
U.S.
Revenues and assets of these subsidiaries combined with those of Bombardier Inc. totalled 68% of consolidated
revenues and 75% of consolidated assets, including Transportation for fiscal year 2020 (72% and 78% for fiscal
year 2019).
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 121
Joint ventures – Joint ventures are those entities over which the Corporation exercises joint control, requiring
unanimous consent of the parties sharing control of relevant activities such as, strategic financial and operating
decision making and where the parties have rights to the net assets of the arrangement. The Corporation
recognizes its interest in joint ventures using the equity method of accounting.
Associates – Associates are entities in which the Corporation has the ability to exercise significant influence over
the financial and operating policies. Investments in associates are accounted for using the equity method of
accounting.
Foreign currency translation
The consolidated financial statements are expressed in U.S. dollars, the functional currency of Bombardier Inc.
The functional currency is the currency of the primary economic environment in which an entity operates. The
functional currency of most foreign subsidiaries is their local currency, mainly the euro, Pound sterling, various
other European currencies and the U.S. dollar in Transportation, and mainly the U.S. dollar in Aviation.
Foreign currency transactions – Transactions denominated in foreign currencies are initially recorded in the
functional currency of the related entity using the exchange rates in effect at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are translated using the closing exchange rates. Any
resulting exchange difference is recognized in income except for exchange differences related to retirement
benefits asset and liability, as well as financial liabilities designated as hedges of the Corporation’s net
investments in foreign operations, which are recognized in OCI. Non-monetary assets and liabilities denominated
in foreign currencies and measured at historical cost are translated using historical exchange rates, and those
measured at fair value are translated using the exchange rate in effect at the date the fair value is determined.
Revenues and expenses are translated using the average exchange rates for the period or the exchange rate at
the date of the transaction for significant items.
Foreign operations – Assets and liabilities of foreign operations whose functional currency is other than the U.S.
dollar are translated into U.S. dollars using closing exchange rates. Revenues and expenses, as well as cash
flows, are translated using the average exchange rates for the period. Translation gains or losses are recognized
in OCI and are reclassified in income on disposal or partial disposal of the investment in the related foreign
operation.
The exchange rates for the major currencies used in the preparation of the consolidated financial statements were
as follows:
Euro
Canadian dollar
Pound sterling
December 31
2020
1.2271
0.7849
1.3649
December 31
2019
1.1234
0.7696
1.3204
Exchange rates
as at
January 1
2019
1.1450
0.7337
1.2800
Average exchange rates
for fiscal years
2020
1.1409
0.7461
1.2834
2019
1.1200
0.7537
1.2763
Revenue recognition
Long-term contracts – Revenues from long-term contracts related to designing, engineering or manufacturing
specifically designed products (including rail vehicles, vehicles overhaul and signalling contracts) and service
contracts are generally recognized over time. The measure of progress toward complete satisfaction of the
performance obligation is generally determined by comparing the actual costs incurred to the total costs
anticipated for the entire contract, excluding costs that are not representative of the measure of performance. The
contract transaction price is adjusted for change orders, claims, performance incentives and other contract terms
that provide for the adjustment of prices to the extent they represent enforceable rights for the Corporation.
Variable considerations such as assumptions for price escalation clauses, performance incentives and claims are
only included in the transaction price to the extent that it is highly probable that a significant reversal in the amount
of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is
subsequently resolved. Customer options are only included in the transaction price of the contract when they
become legally enforceable as a result of the customer exercising its right to purchase the additional goods or
services. If a contract review indicates the expected costs to fulfill the contract exceed the expected economic
122 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
benefits expected to be received under it, the entire expected loss on the contract is recognized as an onerous
contract provision with the corresponding expense recorded in cost of sales. The expected benefits to be received
are generally limited to the revenues from the associated contract.
Options or variation orders for additional assets are treated as contract modifications when exercised.
Modifications of the Corporation’s long term contracts in Transportation are generally accounted as part of the
existing contract to the extent the remaining goods and services are considered to form part of a single
performance obligation that is partially satisfied at the date of contract modification. The effect that the contract
modification has on the transaction price and the existing progress toward satisfaction of the single performance
obligation is recognized as an adjustment to revenue at the date of the contract modification on a cumulative
catch-up basis.
Aerospace programs – Revenues from the sale of new aircraft are considered a single performance obligation
and are recognized at delivery, which is the point in time when the customer has obtained control of the aircraft
and the Corporation has satisfied its performance obligation. All costs incurred or to be incurred in connection with
the sale, including warranty costs and sales incentives, are charged to cost of sales or as a deduction from
revenues at the time revenue is recognized.
For the bill-and-hold arrangements in respect of new aircraft, revenue is recognized when the customer has
obtained control of the aircraft and the customer has requested the arrangement, the aircraft is separately
identified as belonging to the customer, the aircraft is ready for physical transfer to the customer and the
Corporation does not have the ability to use the product or direct it to another customer.
Other – Revenues from the sale of pre-owned aircraft and spare parts are recognized at the point in time when
the customer has obtained control of the promised asset and the Corporation has satisfied the performance
obligation. Aftermarket services are generally recorded over time.
Revenues earned by the Aviation market segment on its contract with ACLP for the A220 program are recognized
at delivery.
The Corporation accounts for a significant financing component on orders where timing of cash receipts and
revenue recognition differ substantially. Most of the Corporation’s contracts do not have a significant financing
component. However, there are certain orders in the Aviation market segment where advances were received well
before expected delivery and therefore a financing component has been accounted for separately. The result is
that interest expense is accrued during the advance period and the transaction price will be increased by a
corresponding amount.
Non-current assets (or disposal group) held for sale and discontinued operations- Non-current assets (or
disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use. The criteria for held for sale classification is regarded as met only
when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present
condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the
sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell
the asset and the sale expected to be completed within one year from the date of the classification.
Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value
less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset or a
disposal group, excluding finance costs and income tax expense.
Property, plant and equipment and intangible assets are not depreciated or amortized once classified as held for
sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale
continue to be recognized.
The assets and liabilities of a disposal group classified as held for sale are presented separately as current items
in the statement of financial position.
A discontinued operation is a component of the entity that has been disposed of or is classified as held
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 123
for sale and that represents a separate major line of business or geographical area of operations, is
part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a
subsidiary acquired exclusively with a view to resale. Discontinued operations are excluded from the results of
continuing operations and are presented as a single amount as net income (loss) after tax from discontinued
operations in the consolidated statements of income.
Contract balances
Contract related balances comprise of contract assets and contract liabilities presented separately in the
consolidated statements of financial position.
Contract assets – Are recognized when goods or services are transferred to customers before consideration is
received or before the Corporation has an unconditional right to payment for performance completed to date.
Contract assets are subsequently transferred to receivables when the right of payment becomes unconditional.
Contract assets comprise cost incurred and recorded margins in excess of advances and progress billings on
long-term production and service contracts.
Contract liabilities – Are recognized when amounts are received from customers in advance of transfer of goods
or services. Contract liabilities are subsequently recognized in revenue as or when the Corporation performs
under contracts. Contract liabilities comprise advances on aerospace programs, advances and progress billings in
excess of long-term contract cost incurred and recorded margin on long-term production and service contracts,
and other deferred revenues related to operation and maintenance of systems.
A net position of contract asset or contract liability is determined for each contract. The cash flows in respect of
advances and progress billings, including amounts received from third party advance providers, are classified as
cash flows from operating activities.
Government assistance and refundable advances
Government assistance, including wage subsidies and investment tax credits, is recognized when there is a
reasonable assurance that the assistance will be received and that the Corporation will comply with all relevant
conditions. Government assistance related to the acquisition of inventories, PP&E and intangible assets is
recorded as a reduction of the cost of the related asset. Government assistance related to incurred expenses is
recorded as a reduction of the related expenses. Wage subsidies are recorded as a reduction of inventories or
the related wage expenses.
Government refundable advances are recorded as a financial liability if there is reasonable assurance that the
amount will be repaid. Government refundable advances are adjusted if there is a change in the number of aircraft
to be delivered and the timing of delivery of aircraft. Government refundable advances provided to the Corporation
to finance research and development activities on a risk-sharing basis are considered part of the Corporation’s
operating activities and are therefore presented as cash flows from operating activities in the statement of cash
flows.
Special items
Special items comprise items which do not reflect the Corporation’s core performance or where their separate
presentation will assist users of the consolidated financial statements in understanding the Corporation’s results
for the period. Such items include, among others, the impact of restructuring charges, business disposals and
significant impairment charges and reversals.
Income taxes
The Corporation applies the liability method of accounting for income taxes. Deferred income tax assets and
liabilities are recognized for the future income tax consequences of temporary differences between the carrying
amounts of assets and liabilities and their respective tax bases, and for tax losses carried forward. Deferred
income tax assets and liabilities are measured using the substantively enacted tax rates that will be in effect for
the year in which the differences are expected to reverse.
Deferred income tax assets are recognized to the extent that it is probable that future taxable income will be
available against which the deductible temporary differences and unused tax losses can be utilized.
124 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Deferred income tax assets and liabilities are recognized directly in income, OCI or equity based on the
classification of the item to which they relate.
Earnings per share
Basic EPS is computed based on net income attributable to equity holders of Bombardier Inc. less dividends on
preferred shares, including taxes, divided by the weighted-average number of Class A Shares (multiple voting)
and Class B Shares (subordinate voting) outstanding during the fiscal year.
Diluted EPS are computed using the treasury stock method, giving effect to the exercise of all dilutive elements.
CDPQ’s convertible share investment in BT Holdco is factored into diluted EPS from discontinued operations by
adjusting net income attributable to equity holders of Bombardier Inc. from discontinued operations to reflect their
share of Transportation’s earnings on an as converted basis.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one party and a financial liability or
equity instrument of another party. Financial assets of the Corporation include cash and cash equivalents, trade
and other receivables, aircraft loans, investments in securities, receivable from MHI, balance of payment on
disposal of investment in associate, receivables from ACLP, investments in financing structures, long-term
contract receivables, restricted cash and derivative financial instruments with a positive fair value. Financial
liabilities of the Corporation include trade and other payables, long-term debt, short-term borrowings, lease
subsidies, lease liabilities, liabilities related to RASPRO assets, payable to MHI, government refundable
advances, credit and residual value guarantees payable, vendor non-recurring costs and derivative financial
instruments with a negative fair value.
Financial instruments are recognized in the consolidated statement of financial position when the Corporation
becomes a party to the contractual obligations of the instrument. On initial recognition, financial instruments are
recognized at their fair value plus, in the case of financial instruments not at FVTP&L, transaction costs that are
directly attributable to the acquisition or issue of financial instruments. Subsequent to initial recognition, financial
instruments are measured according to the category to which they are classified, which are: a) financial
instruments classified as FVTP&L, b) financial instruments designated as FVTP&L, c) FVOCI financial assets, or
d) amortized cost. Financial instruments are subsequently measured at amortized cost, unless they are classified
as FVOCI or FVTP&L or designated as FVTP&L, in which case they are subsequently measured at fair value.
A financial asset is derecognized when the rights to receive cash flows from the asset have expired, or the
Corporation has transferred its rights to receive cash flows from the asset and either (a) the Corporation has
transferred substantially all the risks and rewards of the asset, or (b) the Corporation has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
For transactions where it is not obvious whether the Corporation has transferred or retained substantially all the
risks and rewards of ownership, the Corporation performs a quantitative analysis to compare its exposure to the
variability in asset cash flows before and after the transfer. Judgment is applied in determining a number of
reasonably possible scenarios that reflect the expected variability in the amount and timing of net cash flows, and
then in assigning each scenario a probability with greater weighting being given to those outcomes which are
considered more likely to occur.
When the transfer of a customer receivable results in the derecognition of the asset, the corresponding cash
proceeds are classified as cash flows from operating activities.
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
When an existing liability is replaced by another from the same creditor on substantially different terms, or the
terms of the liability are substantially modified, such an exchange or modification is treated as the derecognition of
the original liability and the recognition of a new liability. The difference in the respective carrying amounts is
recognized in the statement of income.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 125
a) Financial instruments classified at amortized cost
Cash and cash equivalents – Cash and cash equivalents consist of cash and highly liquid investments
held with investment-grade financial institutions and money market funds, with maturities of three months
or less from the date of acquisition.
Other Financial instruments – Trade and other receivables, restricted cash, certain aircraft loans, and
certain other financial assets are all financial assets measured at amortized cost using the effective
interest rate method less any impairment losses. Trade and other payables, short-term borrowings, long-
term debt, certain government refundable advances, vendor non-recurring costs and certain other
financial liabilities are measured at amortized cost using the effective interest rate method.
Trade receivables as well as other financial assets are subject to impairment review. Trade receivables,
contract assets and lease receivables are reviewed for impairment based on the simplified approach
which measures the loss allowance at an amount equal to the lifetime expected credit losses. For other
financial assets for which the credit risk has not increased significantly since initial recognition, the loss
allowance is measured at an amount equal to 12-month expected credit losses. For other financial assets
for which the credit risk has increased significantly since initial recognition, the loss allowance is
measured at an amount equal to the lifetime expected credit losses.
b) Financial instruments designated as FVTP&L
Financial instruments may be designated on initial recognition as FVTP&L if either of the following criteria
are met: (i) the designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise from measuring the financial asset or liability or recognizing the
gains and losses on them on a different basis; or (ii) a group of financial liabilities or financial assets and
financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a
documented risk management or investment strategy. The Corporation has designated as FVTP&L,
trade-in commitments, lease subsidies, liabilities related to RASPRO assets, payable to MHI and certain
Government refundable advances.
Subsequent changes in fair value of such financial instruments are recorded in other expense (income),
except for the fair value changes arising from a change in interest rates which are recorded in financing
expense or financing income.
c) Financial instruments classified as FVTP&L
Receivables from ACLP, investments in financing structures, long-term contract receivables, receivable
from MHI and certain aircraft loans are all required to be classified as FVTP&L.
Subsequent changes in fair value of such financial instruments are recorded in other expense (income),
except for the fair value changes arising from a change in interest rates or when the instrument is held for
investing purposes which are recorded in financing expense or financing income.
Derivative financial instruments – Derivative financial instruments are mainly used to manage the
Corporation’s exposure to foreign exchange and interest-rate market risks, generally through forward
foreign exchange contracts and interest rate swap agreements. Derivative financial instruments include
derivatives that are embedded in financial or non-financial contracts that are not closely related to the
host contracts.
Derivative financial instruments are classified as FVTP&L, unless they are designated as hedging
instruments for which hedge accounting is applied (see below). Changes in the fair value of derivative
financial instruments not designated in a hedging relationship, excluding embedded derivatives, are
recognized in cost of sales or financing expense or financing income, based on the nature of the
exposure.
Embedded derivatives of the Corporation include call options, prepayment options, floor and put options
on long-term debt, CDPQ’s conversion option as well as foreign exchange instruments not closely related
126 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
to sale or purchase agreements. Call options, prepayment options, floor and put options on long-term
debt that are not closely related to the host contract are measured at fair value, with the initial value
recognized as an increase of the related long-term debt and amortized to net income using the effective
interest method. Upon initial recognition, the fair value of the foreign exchange instruments not
designated in a hedge relationship is recognized in cost of sales. Subsequent changes in fair value of
embedded derivatives are recorded in cost of sales, other expense (income) or financing expense or
financing income, based on the nature of the exposure.
d) FVOCI financial assets
Investments in securities are classified as FVOCI. Investments in securities, excluding equity instruments,
are accounted for at fair value with unrealized gains and losses included in OCI, except for impairment
gains or losses and foreign exchange gains and losses on monetary investments, such as fixed income
investments, which are recognized in income. Equity instruments, included in investments in securities,
were designated, on initial recognition, at FVOCI, where the subsequent changes in the fair value are
recognized in OCI with no recycling to net income. Dividend income is recognized in financing income.
Hedge accounting
Designation as a hedge is only allowed if, both at the inception of the hedge and throughout the hedge period, the
changes in the fair value of the derivative and non-derivative hedging financial instruments are expected to
substantially offset the changes in the fair value of the hedged item attributable to the underlying risk exposure.
The Corporation formally documents all relationships between the hedging instruments and hedged items, as well
as its risk management objectives and strategy for undertaking various hedge transactions. This process includes
linking all derivatives to forecasted cash flows or to a specific asset or liability. The Corporation also formally
documents and assesses, both at the hedge’s inception and on an ongoing basis, whether the hedging
instruments are effective in offsetting the changes in the fair value or cash flows of the hedged items. There are
three permitted hedging strategies.
Fair value hedges – The Corporation generally applies fair value hedge accounting to certain interest-rate
derivatives and forward foreign exchange contracts hedging the exposures to changes in the fair value of
recognised financial assets and financial liabilities. In a fair value hedge relationship, gains or losses from the
measurement of derivative hedging instruments at fair value are recorded in net income, while gains or losses
on hedged items attributable to the hedged risks are accounted for as an adjustment to the carrying amount
of hedged items and are recorded in net income.
Cash flow hedges – The Corporation generally applies cash flow hedge accounting to forward foreign
exchange contracts and interest-rate derivatives entered into to hedge foreign exchange risks on forecasted
transactions and recognized assets and liabilities. In a cash flow hedge relationship, the portion of gains or
losses on the hedging item that is determined to be an effective hedge is recognized in OCI, while the
ineffective portion is recorded in net income. The amounts recognized in OCI are reclassified in net income as
a reclassification adjustment when the hedged item affects net income. However, when an anticipated
transaction is subsequently recorded as a non-financial asset, the amounts recognized in OCI are reclassified
in the initial carrying amount of the related asset.
Hedge of net investments in foreign operations – The Corporation generally designates certain long-term
debt as hedges of its net investments in foreign operations. The portion of gains or losses on the hedging
instrument that is determined to be an effective hedge is recognized in OCI, while the ineffective portion is
recorded in net income. The amounts recognized in OCI are reclassified in net income when corresponding
exchange gains or losses arising from the translation of the foreign operations are recorded in net income.
Aviation hedges its foreign currency exposure using foreign exchange contracts. There is an economic
relationship between the hedged items and the hedging instruments as the terms of the foreign exchange
contracts match the terms of the expected highly probable forecast transaction (i.e. notional amount and expected
payment date). For Transportation, foreign currency exposure, arising from its long-term contracts, spreads over
many years. Such exposures are generally entirely hedged at the time of order intake, contract-by-contract, for a
period that is often shorter than the maturity of the cash flow exposure. Upon maturity of the hedges,
Transportation enters into new hedges in a rollover strategy for periods up to the maturity of the cash flow
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 127
exposure. There is an economic relationship between the hedged items and the hedging instruments as the
critical terms, under a spot designation, are closely aligned. The critical terms are the nominal amount and the
currency.
To test the hedge effectiveness, the Corporation uses the hypothetical derivative method and compares the
changes in the fair value of the hedging instruments against the changes in the fair value of the hedged items
attributable to the hedged risks. The hedge ineffectiveness can arise due to the time value of money, under a spot
designation, as the expected timing between the forecasted transaction and the forward contract are not aligned,
due to different indexes, and changes to the forecasted amount of cash flow of hedged items and hedging
instruments. The Corporation has established a hedge ratio of 1:1.
The portion of gains or losses on the hedging instrument that is determined to be an effective hedge is recorded
as an adjustment of the cost or revenue of the related hedged item. Gains and losses on derivatives not
designated in a hedge relationship and gains and losses on the ineffective portion of effective hedges are
recorded in cost of sales or financing expense or financing income for the interest component of the derivatives or
when the derivatives were entered into for interest rate management purposes.
Hedge accounting is discontinued prospectively when it is determined that the hedging instrument is no longer
effective as a hedge, the hedging instrument is terminated or sold, or upon the sale or early termination of the
hedged item.
Leases accounting
When the Corporation is the lessee - Leases are recognized as a right-of-use asset in PP&E and a
corresponding lease liability in other financial liabilities at the date at which the leased asset is available for use by
the Corporation. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct
costs incurred, and lease payments made at or before the commencement date less any lease incentives
received. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a
straight-line basis. Right-of-use assets are subject to impairment.
The lease liability is measured at the present value of lease payments to be made over the lease term, discounted
using the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is
not readily available. Lease payments include fixed payments less any lease incentives receivable, variable lease
payments that depend on an index or a rate and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by
the Corporation and payment of penalties for termination of a lease when the lease term reflects the lessee
exercising a termination option. Each lease payment is allocated between the repayment of the principal portion of
lease liability and the interest portion. The interest expense is charged to profit or loss over the lease period so as
to produce a constant periodic rate of interest on the remaining balance of the liability for each period and is
recorded in financing expense. Payments associated with short-term leases and leases of low-value assets are
recognized on a straight-line basis as an expense in the consolidated statement of income.
The Corporation periodically enters into sale and leaseback transactions, typically for aircraft, whereby the
Corporation sells an asset to a lessor and immediately leases it back. In a sale and leaseback transaction the
transfer of an asset is recognized as a sale when the customer has obtained control of the aircraft, which is
aligned with the Corporation’s revenue recognition policy, otherwise the Corporation continues to recognize the
transferred asset on the statement of financial position and records a financial liability equal to the proceeds
transferred. When the transfer of an asset satisfies the Corporation’s revenue recognition policy to be accounted
for as a sale, a partial recognition of the profit from the sale is recorded in revenue immediately after the sale,
which is equivalent to the proportion of the asset not retained by the Corporation through the lease. The
proportion of the asset retained by the Corporation through the lease is recognized as a right-of-use asset and the
lease liability is generally measured as the present value of future lease payments. The portion of the proceeds
related to the retained interest is classified as cash flow related to financing activities whereas the remainder is
treated either as cash flow from operating activities or cash flow from investing activities depending on the nature
of the asset sold.
When the Corporation is the lessor – Assets subject to finance leases, mainly commercial aircraft, are initially
recognized at an amount equal to the net investment in the lease and are included in aircraft lease receivables.
128 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Interest income is recognized over the term of the applicable leases based on the effective interest rate method.
Assets under operating leases, mostly pre-owned regional and business aircraft, are included in PP&E. Lease
income from operating leases is recognized on a straight-line basis over the term of the lease and is included in
revenues.
Inventory valuation
Aerospace program and finished products – Aerospace program work in progress, raw materials, and finished
product inventories are valued at the lower of cost or net realizable value. Cost is generally determined using the
unit cost method, except for the cost of spare part inventory that is determined using the moving average method.
The cost of manufactured inventories comprises all costs that are directly attributable to the manufacturing
process, such as materials, direct labour, manufacturing overhead, and other costs incurred in bringing the
inventories to their present location and condition. Net realizable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the estimated selling costs, except for raw
materials for which it is determined using replacement cost. The Corporation estimates the net realizable value
using both external and internal aircraft valuations, including information developed from the sale of similar aircraft
in the secondary market.
Impairment of inventories – Inventories are written down to net realizable value when the cost of inventories is
determined not to be recoverable. When the circumstances that previously caused inventories to be written down
no longer exist or when there is clear evidence of an increase in net realizable value because of changed
economic circumstances, the amount of the write-down is reversed.
Retirement and other long-term employee benefits
Retirement benefit plans are classified as either defined benefit plans or defined contribution plans.
Defined benefit plans
Retirement benefit liability or asset recognized on the consolidated statement of financial position is measured at
the difference between the present value of the defined benefit obligation and the fair value of plan asset at the
reporting date. When the Corporation has a surplus in a defined benefit plan, the value of any plan asset
recognized is restricted to the asset ceiling - i.e. the present value of economic benefits available in the form of
refunds from the plan or reductions in future contributions to the plan (“asset ceiling test”). A minimum liability is
recorded when legal minimum funding requirements for past services exceed economic benefits available in the
form of refunds from the plan or reductions in future contributions to the plan. A constructive obligation is recorded
as a defined benefit obligation when there is no realistic alternative but to pay employee benefits. Retirement
benefit liability or asset includes the effect of any asset ceiling, minimum liability and constructive obligation.
The cost of pension and other benefits earned by employees is actuarially determined for each plan using the
projected unit credit method, and management’s best estimate of salary escalation, retirement ages, life
expectancy, inflation, discount rates and health care costs. Plan assets are assets that are held by a long-term
employee benefit fund or qualifying insurance policies. These assets are measured at fair value at the end of the
reporting period, which is based on published market mid-price information in the case of quoted securities. The
discount rates are determined at each reporting date by reference to market yields at the end of the reporting
period on high quality corporate fixed-income investments consistent with the currency and the estimated terms of
the related retirement benefit liability. Past service costs are recognized in income at the earlier of i) the date of
the plan amendment or curtailment or ii) the date that the Corporation recognized the restructuring costs. When
plan amendments, curtailments and settlements occur, the Corporation uses updated actuarial assumptions to
determine current service cost and net interest for the period after the plan amendment, curtailment or settlement.
The remeasurement gains and losses (including the foreign exchange impact) arising on the plan assets and
defined benefit obligation and the effect of any asset ceiling and minimum liability are recognized directly in OCI in
the period in which they occur and are never reclassified to net income. Past service costs (credits) are
recognized directly in income in the period in which they occur.
The accretion on net retirement benefit obligations is included in financing income or financing expense. The
remaining components of the benefit cost are either capitalized as part of labour costs and included in inventories
and in certain PP&E and intangible assets during their construction, or are recognized directly in income. The
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 129
benefit cost recorded in net income is allocated to labour costs based on the function of the employee accruing
the benefits.
Defined contribution plans
Contributions to defined contribution plans are recognized in net income as incurred or are either capitalized as
part of labour costs and included in inventories and in certain PP&E and intangible assets during their
construction. The benefit cost recorded in net income is allocated to labour costs based on the function of the
employee accruing the benefits.
Other long-term employee benefits – The accounting method is similar to the method used for defined benefit
plans, except that all actuarial gains and losses are recognized immediately in income. Other long-term employee
benefits are included in other liabilities.
Property, plant and equipment
PP&E are carried at cost less accumulated amortization and impairment losses. The cost of an item of PP&E
includes its purchase price or manufacturing cost, borrowing costs as well as other costs incurred in bringing the
asset to its present location and condition. If the cost of certain components of an item of PP&E is significant in
relation to the total cost of the item, the total cost is allocated between the various components, which are then
separately depreciated over the estimated useful lives of each respective component. The amortization of PP&E
is computed on a straight-line basis over the following useful lives:
Buildings
Equipment
Other
5 to 75 years
2 to 15 years
3 to 20 years
The amortization method and useful lives are reviewed on a regular basis, at least annually, and changes are
accounted for prospectively. The amortization expense and impairments are recorded in cost of sales, SG&A or
R&D expenses based on the function of the underlying asset or in special items. Amortization of assets under
construction begins when the asset is ready for its intended use.
When a significant part is replaced or a major inspection or overhaul is performed, its cost is recognized in the
carrying amount of the PP&E if the recognition criteria are satisfied, and the carrying amount of the replaced part
or previous inspection or overhaul is derecognized. All other repair and maintenance costs are charged to income
when incurred.
Intangible assets
Internally generated intangible assets include development costs (such as aircraft prototype design and testing
costs for Aviation, and platform development costs for Transportation) and internally developed or modified
application software. These costs are capitalized when certain criteria such as proven technical feasibility are met.
The costs of internally generated intangible assets include the cost of materials, direct labour, manufacturing
overheads and borrowing costs and exclude costs which were not necessary to create the asset, such as
identified inefficiencies.
Acquired intangible assets include the cost of development activities carried out by vendors for which the
Corporation controls the underlying output from the usage of the technology, as well as the cost related to
externally acquired licences, patents and trademarks.
Intangible assets are recorded at cost less accumulated amortization and impairment losses and include goodwill,
aerospace program tooling, as well as other intangible assets such as licenses, patents and trademarks. Other
intangible assets are included in other assets.
130 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Amortization of aerospace program tooling begins at the date of completion of the first aircraft of the program.
Amortization of other intangibles begins when the asset is ready for its intended use. Amortization expense is
recognized as follows:
Aerospace program tooling
Other intangible assets
Method
Unit of production
Estimated useful life
Expected number of aircraft to be produced(1)
Licenses, patents and trademarks
Other
Straight-line
Straight-line
3 to 20 years
3 to 8 years
(1) As at December 31, 2020, the remaining number of units to fully amortize the aerospace program tooling is expected to be produced over
the next 13 years.
The amortization methods and estimated useful lives are reviewed on a regular basis, at least annually, and
changes are accounted for prospectively. The amortization expense for aerospace program tooling and
Transportation platform development costs is recorded in R&D expense and for other intangible assets is
recorded in cost of sales, SG&A or R&D expense based on the function of the underlying asset.
The Corporation does not have indefinite-life intangible assets, other than goodwill. Goodwill represents the
excess of the purchase price over the fair value of the identifiable net assets acquired in a business acquisition.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Borrowing costs
Borrowing costs consist of interest on long-term debt and other costs that the Corporation incurs in connection
with the borrowing of funds. Borrowing costs directly attributable to the acquisition, construction or production of a
qualifying asset are capitalised as part of the cost of that asset and are deducted from the financing expense to
which they relate. The Corporation suspends the capitalisation of borrowing costs during extended periods in
which it suspends active development of a qualifying asset. All other borrowing costs are expensed in the period
they occur.
Impairment of PP&E, right-of-use assets and intangible assets
The Corporation assesses at each reporting date whether there is an indication that an item of PP&E, right-of-use
asset or intangible asset may be impaired. If any indication exists, the Corporation estimates the recoverable
amount of the individual asset, when possible.
When the asset does not generate cash inflows that are largely independent of those from other assets or group
of assets, the asset is tested at the CGU level. Most of the Corporation’s non-financial assets are tested for
impairment at the CGU level. The recoverable amount of an asset or CGU is the higher of its fair value less costs
to sell and its value in use.
•
•
The fair value less costs to sell reflects the amount the Corporation could obtain from the asset’s disposal
in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of
disposal. If there is no binding sales agreement or active market for the asset, the fair value is assessed
by using appropriate valuation models dependent on the nature of the asset or CGU, such as discounted
cash flow models.
The value in use is calculated using estimated net cash flows, with detailed projections generally over a
five-year period and subsequent years being extrapolated using a growth assumption. The estimated net
cash flows are discounted to their present value using a discount rate before income taxes that reflects
current market assessments of the time value of money and the risk specific to the asset or CGU.
When the recoverable amount is less than the carrying value of the related asset or CGU, the related assets are
written down to their recoverable amount and an impairment loss is recognized in net income.
For PP&E and intangible assets other than goodwill, an assessment is made at each reporting date as to whether
there is any indication that previously recognized impairment losses may no longer exist or may have decreased.
If such indication exists, the Corporation estimates the recoverable amount of the asset or CGU. A previously
recognized impairment loss is reversed only if there has been a change in the estimates used to determine the
recoverable amount since the last impairment loss was recognized. A reversal of an impairment loss reflects an
increase in the estimated service potential of an asset. The reversal of impairment losses is limited to the amount
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 131
that would bring the carrying value of the asset or CGU to the amount that would have been recorded, net of
amortization, had no impairment loss been recognized for the asset or CGU in prior years. Such reversal is
recognized to income in the same line item where the original impairment was recognized.
Intangible assets not yet available for use and goodwill are reviewed for impairment at least annually or more
frequently if circumstances such as significant declines in expected sales, earnings or cash flows indicate that it is
more likely than not that the asset or CGU might be impaired. Impairment losses relating to goodwill are not
reversed in future periods.
Impairment of investments in joint ventures and associates
The Corporation’s investments in its joint ventures and associates are accounted for using the equity method
subsequent to initial recognition. The carrying amount of the investment is adjusted to recognize changes in the
Corporation’s share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to
the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment
separately.
The Corporation’s share of net income of joint ventures and associates is included in the consolidated statement
of income.
After application of the equity method, the Corporation determines whether it is necessary to recognize an
impairment loss on its investment in its associate or joint venture. At each reporting date, the Corporation
determines whether there is objective evidence that the investment in joint venture or associate is impaired. If
there is such evidence, the Corporation calculates the amount of impairment as the difference between the
recoverable amount of the joint venture or associate and its carrying value, and then recognizes the loss in
income.
Provisions
Provisions are recognized when the Corporation has a present legal or constructive obligation as a result of a past
event, it is probable that an outflow of resources will be required to settle the obligation and the cost can be
reliably estimated. These liabilities are presented as provisions when they are of uncertain timing or amount.
Provisions are measured at their present value.
Product warranties – A provision for assurance type warranties is recorded in cost of sales when the revenue for
the related product is recognized. The interest component associated with product warranties, when applicable, is
recorded in financing expense. The cost is estimated based on a number of factors, including the historical
warranty claims and cost experience, the type and duration of warranty coverage, the nature of products sold and
in service and counter-warranty coverage available from the Corporation’s suppliers. Claims for reimbursement
from third parties are recorded if their realization is virtually certain. Product warranties typically range from one to
five years, except for aircraft structural and bogie warranties that extend up to 20 years.
Credit and residual value guarantees – Credit and residual value guarantees related to the sale of aircraft are
recorded at the amount the Corporation expects to pay under these guarantees when the revenue for the related
product is recognized. Subsequent to initial recognition, changes in the value of these guarantees are recorded in
other expense (income), except for the changes in value arising from a change in interest rates, which are
recorded in financing expense or financing income.
Credit guarantees provide support through contractually limited payments to the guaranteed party to mitigate
default-related losses. Credit guarantees are triggered if customers do not perform during the term of the
financing.
Residual value guarantees provide protection, through contractually limited payments, to the guaranteed parties in
cases where the market value of the underlying asset falls below the guaranteed value. In most cases, these
guarantees are provided as part of a financing arrangement.
132 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Restructuring provisions – Restructuring provisions are recognized only when the Corporation has an actual or
a constructive obligation. The Corporation has a constructive obligation when a detailed formal plan identifies the
business or part of the business concerned, the location and number of employees affected, a detailed estimate
of the associated costs and an appropriate timeline. Furthermore, the affected employees or worker councils must
have been notified of the plan’s main features.
Onerous contracts – If it is more likely than not that the unavoidable costs of meeting the obligations under a
firm contract exceed the economic benefits expected to be received under it, a provision for onerous contracts is
recorded in cost of sales, except for the interest component, which is recorded in financing expense. Unavoidable
costs include the costs that relate directly to the contract such as anticipated cost overruns, expected costs
associated with late delivery penalties and technological problems, as well as allocations of costs that relate
directly to the contract. Provisions for onerous contracts are measured at the lower of the expected cost of
fulfilling the contract and the expected cost of terminating the contract.
Termination benefits – Termination benefits are usually paid when employment is terminated before the normal
retirement date or when an employee accepts voluntary redundancy in exchange for these benefits. The
Corporation recognizes termination benefits when it is demonstrably committed, through a detailed formal plan
without possibility of withdrawal, to terminate the employment of current employees.
Environmental costs – A provision for environmental costs is recorded when environmental claims or remedial
efforts are probable and the costs can be reasonably estimated. Legal asset retirement obligations and
environmental costs of a capital nature that extend the life, increase the capacity or improve the safety of an asset
or that mitigate, or prevent environmental contamination that has yet to occur, are included in PP&E and are
generally amortized over the remaining useful life of the underlying asset. Costs that relate to an existing condition
caused by past operations and that do not contribute to future revenue generation are expensed and included in
cost of sales.
Litigation – A provision for litigation is recorded in case of legal actions, governmental investigations or
proceedings when it is probable that an outflow of resources will be required to settle the obligation and the cost
can be reliably estimated.
Share-based payments
Equity-settled share-based payment plans – Equity-settled share-based payments are measured at fair value
at the grant date. For the PSUs, DSUs and RSUs, the value of the compensation is measured based on the
closing price of a Class B Share (subordinate voting) of the Corporation on the Toronto Stock Exchange adjusted
to take into account the terms and conditions upon which the shares were granted, if any, and is based on the
PSUs, DSUs and RSUs that are expected to vest. For share option plans, the value of the compensation is
measured using a Black-Scholes option pricing model. The effect of any change in the number of options, PSUs,
DSUs and RSUs that are expected to vest is accounted for in the period in which the estimate is revised.
Compensation expense is recognized on a straight-line basis over the vesting period, with a corresponding
increase in contributed surplus. Any consideration paid by plan participants on the exercise of stock options is
credited to share capital.
Cash-settled share-based payments – Cash-settled share-based payments are measured at fair value at the
grant date with a corresponding liability. Until the liability is settled, the fair value of the liability is remeasured at
the end of each reporting period and at the date of settlement, with any changes in fair value recognized in
income. Limited PSUs, DSUs and RSUs are cash-settled share-based payments, for which the value of the
compensation is measured based on the closing price of a Class B Share (subordinate voting) of the Corporation
on the Toronto Stock Exchange adjusted to take into account the terms and conditions upon which the shares
were granted, if any, and is based on the PSUs, DSUs and RSUs that are expected to vest.
Employee share purchase plan – The Corporation’s contributions to the employee share purchase plan are
measured at cost and accounted for in the same manner as the related employee payroll costs. Compensation
expense is recorded at the time of the employee contribution.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 133
3.
IMPACTS OF COVID-19 PANDEMIC
The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and
created significant economic uncertainty and disruption of financial markets.
COVID-19 response
The Corporation has been closely monitoring and actively implementing and updating its response to the evolving
COVID-19 pandemic and its impacts on employees, operations, the global economy and the demand for its
products and services. The Corporation has formed a committee composed of the senior leadership team and key
leaders in the organization to monitor, on a daily basis, the evolution of the pandemic, to evaluate the measures
being put in place by local and national governments and the resulting impacts on the Corporation, and to
implement necessary contingency plans in real time as the current situation continues to unfold, with a focus on
three priorities: protecting employees’ health and safety; supporting customers to the best of its abilities; and
ensuring that the Corporation can successfully navigate through this global crisis. The Corporation’s actions are in
all cases closely aligned with both the health and safety mandates and support programs that have been
announced by the local governments in every region it operates.
The COVID-19 pandemic started impacting several Bombardier operations across the globe, including key
locations in Europe and North America through the second half of March 2020 where activities were significantly
reduced or suspended for several weeks. Starting in the last weeks of April and through the month of May,
operations globally gradually resumed with new safety measures in place.
Impacts of COVID-19 on Aviation
Canadian operations, where Global and Challenger aircraft are assembled and delivered, were temporarily
suspended in the last week of March 2020 and through several weeks during the second quarter due to the global
COVID-19 pandemic. Key aerostructures operations in Mexico and Belfast were similarly suspended, impacting a
total of approximately 15,000 Aviation employees globally.
On June 5, 2020, Bombardier Aviation announced workforce adjustments in response to the COVID-19 pandemic.
With industry-wide business jet deliveries down by approximately 20% year-over-year due to the pandemic,
Bombardier adjusted its operations and workforce to ensure that it emerges from the current crisis on solid
footing. Accordingly, Bombardier Aviation made the difficult decision to reduce its workforce by approximately
2,500 employees. The majority of these reductions impacted manufacturing operations in Canada and is carried
out progressively. Bombardier’s worldwide customer service operations have continued to operate largely
uninterrupted throughout the pandemic. Bombardier recorded a special charge of $56 million in 2020 for this
workforce adjustment.
Impacts of COVID-19 on Transportation
Production at several locations, including key sites across Transportation’s largest markets in Europe and the
Americas, was temporarily suspended in the second half of March 2020 and through several weeks during the
second quarter due to the global COVID-19 pandemic. Approximately 10,000 Transportation employees globally
were affected by these shutdowns.
Measures to bolster liquidity in response to the COVID-19 pandemic
The management of consolidated liquidity requires a constant monitoring of expected cash inflows and outflows,
which is achieved through a detailed forecast of the Corporation’s liquidity position, as well as long-term operating
and strategic plans, to ensure adequacy and efficient use of cash resources. The Corporation uses scenario
analyses to stress-test cash flow projections. Liquidity adequacy is continually monitored which involves the
application of judgment, taking into consideration historical volatility and seasonal needs, stress-test results, the
maturity profile of indebtedness, access to capital markets, the level of customer advances, availability of letter of
credit and similar facilities, working capital requirements, compliance with financial covenants in the
134 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Transportation credit facilities, the availability of working capital financing initiatives and the funding of product
development and other financial commitments.
In response to the COVID-19 pandemic the Corporation has taken on or is pursuing the following actions to adapt
to the current environment and manage liquidity:
•
The Corporation is managing costs through aggressive company-wide actions, including workforce
reduction, cutting non-essential spending and deferring discretionary capital expenditures.
• Where applicable, the Corporation is participating in various government support programs, including
wage subsidies, bonding and letter of credit facilities, tax payment deferrals, pension contribution holidays
and other measures addressing liquidity needs of corporations during the crisis. For fiscal year 2020,
EBIT was negatively impacted by disruption costs related to the COVID-19 pandemic against which the
Corporation recorded wage subsidies with EBIT impact of $209 million, of which $87 million related to
Transportation. The Corporation also recorded wage subsidies of $73 million in inventories.
The Corporation concluded the sale of the CRJ Series aircraft program to Mitsubishi Heavy Industries, Ltd
for a gross cash consideration of $585 million at closing on June 1, 2020.
At Aviation, production rates were aligned to market demand. This reflects the extraordinary industry
interruptions and challenges caused by COVID-19. The production ramp-up of the Global 7500 is largely
unaffected by these rate changes given its solid backlog.
During the third quarter, the Corporation obtained a three-year senior secured term loan (the "Facility") of
up to $1.0 billion from investment funds and accounts managed by HPS Investment Partners, LLC,
providing additional liquidity to operate the business through the COVID-19 pandemic as it works to close
previously announced divestitures undertaken to reshape Bombardier’s capital structure.
•
•
•
• On October 30, 2020, the Corporation closed the previously announced sale of its aerostructures
businesses to Spirit AeroSystems Holding, Inc. (Spirit) for cash consideration of $275 million and the
assumption of liabilities by Spirit, including government refundable advances and pension obligations, as
well as certain adjustments to the parties’ trading agreements favourable to the Corporation.
• On January 29, 2021, the Corporation closed the sale of Transportation to Alstom with expected net
proceeds of approximately $3.6 billion. Refer to Note 31 - Discontinued operations for more details.
Management believes that the net proceeds from the sale of Transportation, combined with its year end cash and
cash equivalents of $1.8 billion excluding Transportation, will enable the Corporation to meet its currently
anticipated financial requirements for a period of at least, but not limited to, twelve months from the reporting date
supporting the Corporation’s ability to continue as a going concern.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 135
4.
USE OF ESTIMATES AND JUDGMENT
The application of the Corporation’s accounting policies requires management to use estimates and judgments
that can have a significant effect on the revenues, expenses, comprehensive income, assets and liabilities
recognized and disclosures made in the consolidated financial statements. An accounting estimate and judgement
is considered critical if:
•
the estimate requires us to make assumptions about matters that are highly uncertain at the time the
estimate is made; and
• we could have reasonably used different estimates in the current period, or changes in the estimate are
reasonably likely to occur from period to period that would have a material impact on our financial
condition, our changes in financial condition or our results of operations.
Management’s best estimates regarding the future are based on the facts and circumstances available at the time
estimates are made. Management uses historical experience, general economic conditions and trends, as well as
assumptions regarding probable future outcomes as the basis for determining estimates. Estimates and their
underlying assumptions are reviewed periodically and the effects of any changes are recognized immediately.
Actual results will differ from the estimates used, and such differences could be material.
Management’s budget and strategic plan cover a five-year period and are fundamental information used as a
basis for many estimates necessary to prepare financial information. Management prepares a budget and a
strategic plan covering a five-year period, on an annual basis, using a process whereby a detailed one-year
budget and four-year strategic plan are prepared by each reportable segment and then consolidated. Cash flows
and profitability included in the budget and strategic plan are based on existing and future contracts and orders,
general market conditions, current cost structures, anticipated cost variations and in-force collective agreements.
The budget and strategic plan are subject to approval at various levels, including senior management and the
Board of Directors. Management uses the budget and strategic plan, as well as additional projections or
assumptions, to derive the expected results for periods thereafter. Management then tracks performance as
compared to the budget and strategic plan at various levels within the Corporation. Significant variances in actual
performance are a key trigger to assess whether certain estimates used in the preparation of financial information
must be revised.
The following areas require management’s most critical estimates and judgments, including the impact of the
COVID-19 pandemic, if any. The sensitivity analyses below should be used with caution as the changes are
hypothetical and the impact of changes in each key assumption may not be linear.
Long-term contracts – Transportation conducts most of its business under long-term manufacturing and service
contracts and Aviation has some long-term maintenance service contracts, as well as design and development
contracts for third parties. Revenues and margins from long-term contracts relating to the designing, engineering
or manufacturing of specially designed products (including rail vehicles, vehicle overhaul and signalling contracts)
and service contracts are recognized over time. The long-term nature of these contracts requires estimates of
total contract costs and the transaction price. The measure of progress toward complete satisfaction of the
performance obligation is generally determined by comparing the actual costs incurred to the total costs
anticipated for the entire contract, excluding costs that are not representative of the measure of performance.
The contract transaction price includes adjustments for change orders, claims, performance incentives, price
escalation clauses and other contract terms that provide for the adjustment of prices to the extent they represent
enforceable rights for the Corporation. Variable consideration such as assumptions for price escalation clauses,
performance incentives and claims is only included in the transaction price to the extent it is highly probable that a
significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty
associated with the variable consideration is subsequently resolved.
Contract costs include material, direct labour, manufacturing overhead and other costs, such as warranty and
freight. Estimated contract costs at completion incorporate forecasts for material usage and costs, including
escalation clauses, labour hours and costs, foreign exchange rates (including the effect of hedges) and labour
productivity. These costs are influenced by the nature and complexity of the work to be performed, as well as the
impact of change orders and potential delays in delivery. Cost estimates are based mainly on historical
136 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
performance trends, economic trends, collective agreements and contracts signed with suppliers. Management
applies judgment to determine the probability that the Corporation will incur additional costs from delays or other
penalties, and such costs, if probable, are included in estimated costs at completion, unless there is an
adjustment to the transaction price in which case it is recorded as a reduction of estimated revenues at
completion.
Recognized revenues and margins are subject to revisions as contracts progress towards completion.
Management conducts quarterly reviews of estimated costs and revenues to completion on a contract-by-contract
basis, including a review of escalation assumptions. In addition, a detailed annual review is performed on a
contract-by-contract basis as part of the budget and strategic plan process. The effect of any revision may be
significant and is recorded by way of a cumulative catch-up adjustment in the period in which the estimates are
revised.
As part of its financial statement close process, Transportation updated its long-term contract accounting for
identified changes in estimated contract revenues, contract costs and progress toward completion. During fiscal
year 2020, Transportation revised its estimates on a number of projects leading to a charge of $1.1 billion, mainly
in Germany, U.K. and Switzerland. Manufacturing overheads during the shut-down as well as incremental costs
required as a result of the pandemic were recorded as expenses for the fiscal year 2020.
Sensitivity analysis
A 1% increase in the estimated future costs to complete all ongoing long-term contracts would have decreased
gross margin from discontinued operations for fiscal year 2020 by approximately $124 million.
Aerospace program tooling – Aerospace program tooling amortization and the calculation of recoverable
amounts used in impairment testing require estimates of the expected number of aircraft to be delivered over the
life of each program. The expected number of aircraft is based on management’s aircraft market forecasts and the
Corporation’s expected share of each market. Such estimates are reviewed in detail as part of the budget and
strategic plan process. For purposes of impairment testing, management exercises judgment to identify
independent cash inflows to identify CGUs by family of aircraft. Other key estimates used to determine the
recoverable amount include the applicable discount rate, the expected future cash flows over the remaining life of
each program, which include costs to complete the development activities, if any, as well as potential upgrades,
and derivatives expected over the life of the program. The estimated cost of potential upgrades and derivatives is
based on past experience with previous programs. The expected future cash flows also include cash flows from
aftermarket activities. The inputs used in the discounted cash flow model are Level 3 inputs (inputs that are not
based on observable market data).
The recoverable amounts of aerospace assets or CGUs are based on fair value less costs of disposal. The
recoverable amounts were established during the fourth quarter of 2020. The fair value measurements are
categorized within Level 3 of the fair value hierarchy. The estimate of the fair value less costs of disposal was
determined using forecast future cash flows. The estimated future cash flows for the first five years are based on
the budget and strategic plan. After the initial five years, long-range forecasts prepared by management are used.
Forecast future cash flows are based on management’s best estimate of future sales under existing firm orders,
expected future orders, timing of payments based on expected delivery schedules, revenues from related
services, procurement costs based on existing contracts with suppliers, future labour costs, general market
conditions, foreign exchange rates and applicable long-range forecast income tax rates and a post-tax discount
rate of 9% based on a weighted average cost of capital calculated using market-based inputs, available directly
from financial markets or based on a benchmark sampling of representative publicly-traded companies in the
aerospace sector.
An impairment test was performed for the Global 7500 in the fourth quarter of 2020, and following this
assessment the Corporation concluded there was no impairment.
Sensitivity analysis
The following analyses are presented in isolation from one another, i.e. all other estimates left unchanged:
A 10% decrease, evenly distributed over future periods, in the expected future net cash inflows for the
Global 7500 aircraft program would not have resulted in an impairment charge in fiscal year 2020.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 137
An increase of 100-basis points in the discount rate used to perform the impairment tests would not have resulted
in an impairment charge in fiscal year 2020 for the Global 7500 aircraft program.
Goodwill – The recoverable amount of the Transportation operating segment, the group of CGUs at which level
goodwill is monitored by management, is based on fair value less costs of disposal using the transaction price.
During the fourth quarter of 2020, the Corporation performed an impairment test. Following this assessment the
Corporation concluded there was no impairment.
Valuation of deferred income tax assets – To determine the extent to which deferred income tax assets can be
recognized, management estimates the amount of probable future taxable profits that will be available against
which deductible temporary differences and unused tax losses can be utilized. Such estimates are made as part
of the budget and strategic plan by tax jurisdiction on an undiscounted basis and are reviewed on a quarterly
basis. Management exercises judgment to determine the extent to which realization of future taxable benefits is
probable, considering factors such as the number of years to include in the forecast period, forecasted taxable
gain on closing of transactions, the history of taxable profits and availability of prudent tax planning strategies.
See Note 11 - Income taxes for more details.
Tax contingencies – Uncertainties exist with respect to the interpretation of complex tax regulations, changes in
tax laws, and the amount and timing of future taxable income. Given the wide range of international business
relationships and the long-term nature and complexity of existing contractual agreements, differences arising
between the actual results and the assumptions made, or future changes to such assumptions, could necessitate
future adjustments to tax expense or recovery already recorded. The Corporation establishes tax provisions for
possible consequences of audits by the tax authorities of each country in which it operates. The amount of such
provisions is based on various factors, such as experience from previous tax audits and differing interpretations of
tax regulations by the taxable entity and the relevant tax authority. Such differences in interpretation may arise for
a wide variety of issues depending on the conditions prevailing in the domicile of each legal entity.
Retirement and other long-term employee benefits – The actuarial valuation process used to measure pension
and other post-employment benefit costs, assets and obligations is dependent on assumptions regarding discount
rates, compensation and pre-retirement benefit increases, inflation rates, health-care cost trends, as well as
demographic factors such as employee turnover, retirement and mortality rates. The impacts from changes in
discount rates and, when significant, from key events and other circumstances, are recorded quarterly.
Discount rates are used to determine the present value of the expected future benefit payments and represent the
market rates for high-quality corporate fixed-income investments consistent with the currency and the estimated
term of the retirement benefit liabilities. As the Canadian high-quality corporate bond market, as defined under
IFRS, includes relatively few medium- and long-term maturity bonds, the discount rate for the Corporation’s
Canadian pension and other post-employment plans is established by constructing a yield curve using three
maturity ranges. The first maturity range of the curve is based on observed market rates for AA-rated corporate
bonds with maturities of less than five years. In the longer maturity ranges, due to the smaller number of high-
quality bonds available, the curve is derived using market observations and extrapolated data. The extrapolated
data points were created by adding a term-based yield spread over long-term provincial bond yields. This term-
based spread is extrapolated between a base spread and a long spread. The base spread is based on the
observed spreads between AA-rated corporate bonds and AA-rated provincial bonds for the 4 to 10 years to
maturity range. The long spread is determined as the spread required at the point of average maturity of AA-rated
provincial bonds in the 11 to 30 years to maturity range such that the average AA-rated corporate bond spread
above AA-rated provincial bonds is equal to the extrapolated spread derived by applying the ratio of the observed
spreads between A-rated corporate bonds and AA-rated provincial bonds for the 11 to 30 years to maturity range
over the 4 to 10 years to maturity range, to the base spread. For maturities longer than the average maturity of
AA-rated provincial bonds in the 11 to 30 years to maturity range, the spread is assumed to remain constant at the
level of the long spread.
As the U.K. high-quality corporate bond market, as defined under IFRS, includes relatively few long-term maturity
bonds, the discount rate for the Corporation’s U.K. pension and other post-employment plans is established by
constructing a yield curve. The yield curve is developed from corporate bond yield information for corporate bonds
rated AA or equivalent quality and excluding bonds which have a “corporate” BCLASS assignment but which have
138 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
actual or implied government backing. Target yields are developed from bonds across a range of maturity points,
and a curve is fitted to those targets. Spot rates (zero coupon bond yields) are developed from the yield curve and
used to discount benefit payment amounts associated with each future year. Since corporate bonds are generally
not available for very long maturities, an assumption is made that spot rates remain level beyond the term of the
longest data target point. The term of the longest data target point as at December 31, 2020 was 32 years.
Expected rates of compensation increases are determined considering the current salary structure, as well as
historical and anticipated wage increases, in the context of current economic conditions. For some Canadian
pension plans, the merit and promotion component of the compensation increases was refined by using an age
scale following experience studies performed in 2020.
See Note 23 - Retirement benefits for further details regarding assumptions used and sensitivity analysis to
changes in critical actuarial assumptions.
Onerous contract provision – An onerous contract provision is recorded if it is more likely than not that the
unavoidable costs of meeting the obligations under a firm contract exceed the economic benefits expected to be
received under it. In most cases the economic benefits expected to be received under the contract consist of
contract revenue. The calculation of the unavoidable costs requires estimates of expected future costs, including
anticipated future cost reductions related to performance improvements and transformation initiatives, anticipated
cost overruns, expected costs associated with late delivery penalties and technological problems, as well as
allocations of costs that relate directly to the contract. The measurement of the provision is impacted by
anticipated delivery schedules since for new aircraft programs early production units require higher cost than units
produced later in the process, and for long-term train manufacturing contracts delays result in penalties.
Sensitivity analysis
A 1% increase in the expected costs over the life of the contract would have decreased EBIT from discontinued
operations for fiscal year 2020 by approximately $57 million.
CDPQ investments equity and derivative liability components – The convertible shares issued to the CDPQ
contain no obligation for the Corporation to deliver cash or other financial assets to the CDPQ. Judgment was
used to conclude that the CDPQ’s convertible share investment in BT Holdco is considered a compound
instrument comprised of an equity component, representing the discretionary dividends and liquidation
preference, and a liability component that reflects a derivative to settle the instrument by delivering a variable
number of common shares of BT Holdco, as opposed to the entire instrument being characterized as a liability.
The Corporation presents convertible shares in its equity (NCI) and derivative component as a liability held for
sale.
The fair value of the convertible shares at issuance was assigned to its respective equity and derivative liability
components so that no gain or loss arose from recognizing each component separately, the fair value of the
derivative liability being established first and the residual amount allocated to the equity component. The liability
component is remeasured quarterly. The Corporation uses an internal valuation model to estimate the fair value of
the conversion option embedded in the BT Holdco convertible shares. The fair value of the embedded conversion
option is based on discounted value of the difference between the CDPQ’s share of proceeds from the sale of
Transportation to Alstom, and the carrying value of CDPQ’s non-controlling interest in Transportation.
Consolidation – From time to time, the Corporation participates in structured entities where voting rights are not
the dominant factor in determining control. In these situations, management may use a variety of complex
estimation processes involving both qualitative and quantitative factors to determine whether the Corporation is
exposed to, or has rights to, significant variable returns. The quantitative analyses involve estimating the future
cash flows and performance of the investee and analyzing the variability in those cash flows. The qualitative
analyses involve consideration of factors such as the purpose and design of the investee and whether the
Corporation is acting as an agent or principal. There is a significant amount of judgment exercised in evaluating
the results of these analyses as well as in determining if the Corporation has power to affect the investee’s
returns, including an assessment of the impact of potential voting rights, contractual agreements and de facto
control.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 139
Also, the Corporation uses judgment to determine whether rights held by NCI, such as the CDPQ’s rights in
respect of Transportation, are protective in nature as opposed to substantive. The Corporation reassesses the
initial determination of control if facts or circumstances indicate that there may be changes to one or more
elements of control.
5.
SEGMENT DISCLOSURE
The Corporation has two reportable segments: Aviation and Transportation. Each reportable segment offers
different products and services and mostly requires different technology and marketing strategies.
Aviation
Aviation designs, manufactures, markets and provides aftermarket support for three families of business jets
(Learjet, Challenger and Global), spanning from the light to large categories; designs, manufactures and provides
aftermarket support for a broad portfolio of commercial aircraft in the 50- to 100-seat categories, including the
CRJ550, CRJ700, CRJ900, CRJ1000 regional jets and the Q400 turboprop until the disposal of the businesses on
June 1, 2020 and on May 31, 2019, respectively; and designs, develops and manufactures certain major aircraft
structural components for the business jets families (such as fuselages and wings) and provides aftermarket
component repair and overhaul as well as other engineering services for both internal and external clients. Refer
to Note 30 - Disposal of businesses for additional information.
Transportation
Transportation offers a wide-ranging portfolio of innovative and efficient solutions in the rail industry and cover the
full spectrum of rail solutions, ranging from global mobility solutions to a variety of trains and sub-systems,
services, system integration and signalling to meet the market’s needs and expectations. On September 16, 2020,
the Corporation, Alstom and CDPQ and certain related parties signed a definitive sale and purchase agreement
for the sale of the Transportation business to Alstom. As a result, Transportation was classified as discontinued
operations and the related assets and liabilities are presented as held for sale, refer to Note 31 - Discontinued
operations for more details. Transportation remains a reportable segment until the closing of the sale transaction
as the Corporation’s management including its chief operating decision maker continues to regularly review and
monitor its operating results. On January 29, 2021, the Corporation closed the sale of Transportation to Alstom.
Corporate and Others
Corporate and Others comprise corporate charges that are not allocated to segments, elimination of profit on
intercompany transactions between the segments, participation in a partnership with Airbus on the A220 Family
aircraft until disposal of the participation on February 12, 2020 and other adjustments. Refer to Note 29 - Disposal
of investment in associate for additional information.
The segmented information is prepared using the accounting policies described in Note 2 – Summary of
significant accounting policies.
140 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Management assesses segment performance based on EBIT and EBIT before special items. The segmented
results of operations and other information are as follows, for fiscal years:
Transportation
Aviation
Corporate
and Others
Sub-total Reclassed (1)
Total
2020
Results of operations
External revenues
Intersegment revenues
Total revenues
EBIT before special items
Special items(2)
EBIT
Financing expense(3)
Financing income(3)
EBT
Income taxes
Loss from continuing operations
Loss from discontinued operations
Net loss
Other information
R&D(4)
Share of loss (income) of
joint ventures and associates
Net additions to PP&E
and intangible assets(5)
Amortization
Impairment charges on PP&E(6)
$
$
$
$
$
$
$
7,843
1
7,844
(610)
8
(618)
$
$
6,488
—
6,488
(125)
(1,062)
937
$
$
—
(1)
(1)
(86)
(61)
(25)
95
(108)
133
99
—
$
$
$
$
$
320
2
221
411
38
$
$
$
$
$
—
(4)
—
—
4
$
$
$
$
$
$
$
$
14,331
—
14,331
(821)
(1,115)
294
1,009
(214)
(501)
67
(7,843)
(1)
(7,844)
610
(8)
618
(91)
329
380
(18)
$
398
$
$
$
$
6,488
(1)
6,487
(211)
(1,123)
912
1,060
(27)
(121)
49
(170)
(398)
(568)
(568)
415
(110)
354
510
42
$
$
$
$
$
(95)
$
320
108
(133)
(99)
—
$
$
$
$
(2)
221
411
42
(1) Refer to Note 31 – Discontinued operations for more details.
(2) See Note 8 – Special items for more details.
(3) The amounts presented as sub-totals may not correspond to the sum of the amounts reclassed to discontinued operations and to the total as
certain reclassifications to or from financing income and financing expense are required.
(4) Includes tooling amortization. See Note 6 – Research and development for more details.
(5) As per the consolidated statements of cash flows.
(6) Includes impairment charges related to right-of-use assets. See Note 8 – Special items and Note 21 – Property, plant and equipment for
more details.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 141
Results of operations
External revenues
Intersegment revenues
Total revenues
EBIT before special items
Special items(3)
EBIT
Financing expense(4)
Financing income(4)
EBT
Income taxes
Loss from continuing operations
Loss from discontinued operations
Net loss
Other information
R&D(5)
Share of loss (income) of
joint ventures and associates
Net additions (proceeds) to
PP&E and intangible assets(6)
Amortization
Impairment charges on ACLP
investments(3)
Impairment charges (reversals)
on PP&E(7)
Impairment charges
on intangible assets(8)
Transportation
Aviation
Corporate
and Others
Sub-total
Reclassed(1)
Total(2)
$
8,266
$
7,491
$
—
$
15,757
$
(8,266)
$
7,491
2019
3
8,269
70
48
22
10
7,501
531
(663)
(13)
(13)
(131)
1,583
$
1,194
$
(1,714)
—
15,757
470
968
(498)
1,072
(230)
(1,340)
267
$
(1,607)
—
(37)
(7)
1
1,578
2
—
$
$
$
$
$
$
$
292
(128)
523
422
1,578
(7)
3
$
$
$
$
$
$
$
$
136
(94)
157
139
—
(8)
3
$
$
$
$
$
$
$
156
3
373
282
—
(1)
—
$
$
$
$
$
$
$
(3)
(8,269)
(70)
(48)
(22)
(87)
15
50
(16)
66
(136)
94
(157)
(139)
—
8
(3)
(3)
7,488
400
920
(520)
996
(226)
(1,290)
251
(1,541)
(66)
(1,607)
156
(34)
366
283
1,578
1
—
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(1) Refer to Note 31 – Discontinued operations for more details.
(2) Restated for the sale of Transportation, refer to Note 31 – Discontinued operations for more details.
(3) See Note 8 – Special items for more details.
(4) The amounts presented as sub-totals may not correspond to the sum of the amounts reclassed to discontinued operations and to the total as
certain reclassifications to or from financing income and financing expense are required.
(5) Includes tooling amortization. See Note 6 – Research and development for more details.
(6) As per the consolidated statements of cash flows.
(7) See Note 21 – Property, plant and equipment for more details.
(8) See Note 22 – Intangibles assets for more details.
142 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
The reconciliation of total assets and total liabilities to segmented assets and liabilities, before the assets held for
sale reclassification, is as follows, as at:
December 31, 2020
December 31, 2019
January 1, 2019
$
23,090
$
24,972
$
25,512
Assets
Total assets
Assets not allocated to segments
Cash and cash equivalents(1)
Income tax receivable(2)
Deferred income taxes(3)
Segmented assets
Liabilities
Total liabilities
Liabilities not allocated to segments
Interest payable(4)
Income taxes payable(5)
Long-term debt
Deferred income taxes(3)
Segmented liabilities
Net segmented assets
Transportation(6)
Aviation
Corporate and Others
2,450
77
573
19,990
29,747
154
198
10,075
15
19,305
(393)
1,510
(432)
$
$
$
$
(1) Refer to Note 14 – Cash and cash equivalents.
(2) Refer to Note 20 – Other assets.
(3) Refer to Note 11 – Income taxes for more details.
(4) Refer to Note 24 – Trade and other payables.
(5) Refer to Note 27 – Other liabilities.
(6) Refer to Note 31 – Discontinued operations for more details.
The Corporation’s revenues by market segment were as follows:
Aviation
Business Aircraft
Manufacturing and Other(1)
Services(2)
Commercial Aircraft(3)
Aerostructures and Engineering Services
Transportation(7)
Rolling stock and systems(4)
Services(5)
Signalling(6)
Corporate and Others
Continuing operations
Discontinued operations(7)
Total
2,629
90
677
21,576
30,883
150
202
9,333
—
21,198
(385)
577
186
$
$
$
$
3,187
49
746
21,530
29,526
138
173
9,061
—
20,154
(440)
835
981
2020
2019
4,605
988
314
581
6,488
4,770
2,033
1,041
7,844
(1)
6,487
7,844
14,331
$
$
$
$
4,163
1,254
1,227
857
7,501
5,192
2,140
937
8,269
(13)
7,488
8,269
15,757
$
$
$
$
$
$
$
$
(1) Includes revenues from sale of new aircraft, specialized aircraft solutions and pre-owned aircraft.
(2) Includes revenues from service and support network including parts, Smart Services, service centers, training and technical publication.
(3) Includes manufacturing, services and other.
(4) Comprised of revenues from light rail vehicles, metros, commuter and regional trains, intercity trains, high speed and very high speed trains,
locomotives, propulsion and controls, bogies, mass transit and airport systems, and mainline systems.
(5) Comprised of revenues from fleet management, asset life management, component re-engineering and overhaul, material solutions, and
operations and maintenance of systems.
(6) Comprised of signalling revenues from mass transit, mainline, industrial and OPTIFLO service solutions.
(7) Refer to Note 31 – Discontinued operations for more details.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 143
The Corporation’s revenues are allocated to countries based on the location of the customer, as follows:
North America
United States
Canada
Mexico
Europe
Switzerland
France
United Kingdom
Germany
Other
Asia-Pacific
Australia
China
India
Other
Other
Continuing operations
Discontinued operations
Total
(1) Restated for the sale of Transportation, refer to Note 31 - Discontinued operations for more details.
The Corporation’s PP&E and intangible assets are allocated to countries, as follows:
2020
2019 (1)
$ 3,134
599
38
3,771
$ 3,506
936
35
4,477
266
153
143
57
685
1,304
129
120
16
196
461
136
101
238
386
778
1,639
66
80
171
309
626
951
951
$ 6,487
$ 7,844
$ 14,331
746
746
$ 7,488
$ 8,269
$ 15,757
North America
Canada
United States
Mexico
Europe
Germany
United Kingdom
France
Switzerland
Other
Asia-Pacific
Australia
China
India
Other
Other
December 31
December 31
2020 (1)
2019 (1)
January 1
2019 (1)
$
$
4,832
87
7
4,926
18
—
—
—
2
20
—
—
—
3
3
$
5,137
229
33
5,399
1,058
428
34
392
725
2,637
11
—
20
3
34
—
—
4,949
$
6
6
8,076
$
$
5,057
239
40
5,336
1,045
658
32
381
708
2,824
11
2
21
1
35
24
24
8,219
(1) PP&E and intangible assets, excluding goodwill, are attributed to countries based on the location of the assets. Goodwill is attributed
to countries based on the Corporation’s allocation of the related purchase price. PP&E is excluding right-of-use assets.
144 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
6. RESEARCH AND DEVELOPMENT
R&D expense, net of government assistance, was as follows, for fiscal years:
R&D expenditures
Less: development expenditures capitalized to aerospace program tooling
Add: amortization of aerospace program tooling
(1) Restated, refer to Note 31 - Discontinued operations for more details.
7.
OTHER INCOME
Other income was as follows, for fiscal years:
Changes in estimates and fair value(2)
Gains on disposals of PP&E(3)
Impairment of PP&E and intangible assets(3)
Other
2020
121
(103)
18
302
320
$
$
2020
(8)
(3)
—
—
(11)
$
$
2019 (1)
299
(275)
24
132
156
2019 (1)
(40)
(2)
1
3
(38)
$
$
$
$
(1) Restated, refer to Note 31 - Discontinued operations for more details.
(2) Includes net loss (gain) on certain financial instruments measured at fair value and changes in estimates related to certain provisions or
certain financial instruments, excluding losses (gains) arising from changes in interest rates.
(3) Excludes those presented in special items.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 145
8.
SPECIAL ITEMS
Special items comprise items which do not reflect the Corporation’s core performance or where their separate
presentation will assist users of the consolidated financial statements in understanding the Corporation’s results
for the period. Such items include, among others, the impact of restructuring charges, business disposals and
significant impairment charges and reversals.
Special items were as follows, for fiscal years:
Gain on disposal of a business - aerostructure business(2)
Gain on disposal of a business - CRJ Series business(3)
Gain on exit of ACLP and related aerostructures activities(4)
Restructuring charges(5)
Transaction costs(6)
Learjet program end of production and other(7)
Reversal of Learjet 85 aircraft program cancellation provisions(8)
Disruption costs(9)
Impairment on ACLP investments(10)
Gain on disposal of a business - Training business(11)
Gain on disposal of a business - Q Series business(12)
Loss on repurchase of long-term debt(13)
Pension adjustments(14)
Primove impairment and other costs(15)
Purchase of pension annuities(16)
Income taxes(17)
Of which is presented in
Special items in EBIT
Financing expense - loss on repurchase of long-term debt(13)
Income taxes
2020
(678)
(488)
(120)
85
56
26
(7)
3
—
—
—
—
—
—
—
(32)
(1,155)
(1,123)
—
(32)
(1,155)
$
$
$
$
2019 (1)
—
$
—
—
51
—
—
(18)
—
1,578
(516)
(210)
84
26
5
4
217
1,221
920
84
217
1,221
$
$
$
1. Restated, refer to Note 31 - Discontinued operations for more details.
2. Represents the sale of the aerostructure business for gross proceeds of $275 million. The transaction resulted
in a gain of $678 million. See Note 30 - Disposal of businesses for more details.
3. Represents the sale of the CRJ Series aircraft program assets for gross proceeds of $585 million, at closing,
including certain closing adjustments. The transaction resulted in a pre-tax accounting gain of $488 million
($440 million after tax impact). See Note 30 - Disposal of businesses for more details.
4. The sale of the Corporation’s remaining interest in ACLP and its aerostructures activities supporting A220 and
A330 resulted in a pre-tax accounting gain of $120 million for the fiscal year 2020. See Note 29 - Disposal of
investment in associate for more details.
5. For fiscal year 2020, represents severance charges of $61 million following the announcement of Aviation for
workforce adjustments in response to the COVID-19 pandemic, $38 million of impairment of right-of-use assets
related to lease contracts as a consequence of previously-announced restructuring actions, and other related
charges of $7 million, partially offset by curtailment gains of $21 million.
For fiscal year 2019, represents severance charges of $25 million partially offset by curtailment gains of
$2 million. Following the announcement that the CRJ production is expected to conclude in the second half of
2020, following the delivery of the current backlog of aircraft, the Corporation has recorded severance charges
of $7 million partially offset by curtailment gains of $3 million, and has recorded $24 million of other related
charges for fiscal year 2019. In addition, the Corporation has recorded a write down of deferred tax assets of
$87 million to reflect the expected impact of the conclusion of the CRJ announcement.
6. Represents direct and incremental costs incurred in respect of transactions for the sale of the Transportation
business to Alstom SA and for the sale of CRJ business to MHI.
146 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
7. Following the decision to end production of the Learjet aircraft in 2021 and the decision to consolidate the
Global aircraft completion work in Montréal, the Corporation has recorded $12 million of inventory write-down,
$4 million of impairment of PP&E and $10 million of other charges.
8. Based on the ongoing activities with respect to the cancellation of the Learjet 85 aircraft program, the
Corporation reduced the related provisions by $7 million in fiscal year 2020 ($18 million for fiscal year 2019).
The reduction in provisions is treated as a special item since the original provisions were also recorded as
special items in 2014 and 2015.
9. Due to the COVID-19 pandemic, in the second half of March 2020, the Corporation temporarily suspended
operations at various production facilities. As a result of the pandemic, $3 million were recorded as special
items in fiscal year 2020. These costs do not represent the full impact of the COVID-19 pandemic on the
results of operations since it does not reflect the impact of lost or deferred revenues and associated margins.
10. The Corporation performed an impairment test in the fourth quarter of 2019 on its investments in ACLP since
there were indicators of impairment. The Corporation determined that the carrying amount of its investment in
ACLP exceeded its recoverable amount, and accordingly recorded an impairment charge of $1,578 million.
11. The sale of Business Aircraft’s flight and technical training activities for a total net consideration of $532 million
resulted in a pre-tax accounting gain of $516 million ($383 million after deferred tax impact of $133 million).
12. The sale of the Q Series Aircraft program assets for net proceeds of $285 million resulted in a pre-tax
accounting gain of $210 million ($184 million after tax impact).
13. Represents the loss related to the redemption of the $850-million Senior Notes due 2020, and the partial
redemption of the €780-million Senior Notes and $1,400-million Senior Notes due 2021. See Note 28 - Long-
term debt.
14. On October 26, 2018, the High Court in the United Kingdom ruled that pension schemes must equalize for the
effect of unequal Guaranteed Minimum Pensions between male and female for benefits earned during
specified periods (“GMP equalization”). In fiscal year 2019, the Corporation adjusted the pension obligation
related to equalization for an Aviation plan in the U.K. The adjustments of $26 million was recorded as a past
service cost under IAS 19 - Employee Benefits.
15. Following a reassessment of the value of the Primove e-mobility technology and the status of existing
contractual obligations, the Corporation recorded in fiscal year 2019 an additional contract provision of
$5 million.
16. Represents the non-cash loss on the settlement of defined benefit pension plans resulting from the purchase
of annuities with insurance companies in fiscal year 2019.
17. Following the announcement that the sale of the Transportation business to Alstom was expected to close in
the first quarter of 2021, the Corporation revised its estimated future taxable profits and recorded deferred tax
assets of $100 million based on the final proceeds of the sale. The impact of recognizing these deferred tax
assets was non-cash. The transaction closed on January 29, 2021.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 147
9.
FINANCING EXPENSE AND FINANCING INCOME
Financing expense and financing income were as follows, for fiscal years:
Financing expense
Net loss on certain financial instruments(2)
Accretion on other financial liabilities
Accretion on net retirement benefit obligations
Accretion on advances
Interest expense on lease liabilities
Changes in discount rates of provisions
Accretion on provisions
Amortization of letter of credit facility costs
Loss on repurchase of long-term debt(3)
Other
Interest on long-term debt, after effect of hedges
Financing income
Net gain on certain financial instruments(2)
Other
Income from investment in securities
Interest on cash and cash equivalents
Interest on loans and lease receivables, after effect of hedges
$
$
$
2020
2019 (1)
$
142
54
52
41
23
17
8
—
—
15
352
708
—
56
56
37
28
19
14
14
84
51
359
637
1,060 (4) $
996 (4)
$
—
(10)
(10)
(9)
(6)
(2)
(17)
(159)
(23)
(182)
(9)
(32)
(3)
(44)
$
(27) (5) $
(226) (5)
(1) Restated, refer to Note 31 – Discontinued operations for more details.
(2) Net losses (gains) on certain financial instruments classified as FVTP&L, including losses (gains) arising from changes in interest rates.
(3) Represents the loss related to the redemption of the $850-million Senior Notes due 2020, and the partial redemption of the €780-million
Senior Notes and $1,400-million Senior Notes due 2021, which was recorded as a special item. See Note 8 – Special items and
Note 28 - Long-term debt.
(4) Of which $762 million representing the interest expense calculated using the effective interest rate method for financial liabilities classified
as amortized cost for fiscal year 2020 ($712 million for fiscal year 2019).
(5) Of which $6 million representing the interest income calculated using the effective interest rate method for financial assets classified as
amortized cost and FVOCI, for fiscal year 2020 ($32 million for fiscal year 2019).
Borrowing costs capitalized to PP&E and intangible assets totalled $8 million for fiscal year 2020, using an
average capitalization rate of 7.04% ($13 million and 6.76% for fiscal year 2019). Capitalized borrowing costs are
deducted from the related interest on long-term debt or accretion on other financial liabilities, if any.
10.
EMPLOYEE BENEFIT COSTS
Employee benefit costs(1) were as follows, for fiscal years:
Wages, salaries and other employee benefits
Retirement benefits(3)
Share-based expense
Restructuring, severance and other involuntary termination costs
Notes
23
34
8
2020
1,426
161
20
61
1,668
$
$
2019 (2)
1,854
228
27
32
2,141
$
$
(1) Employee benefit costs include costs capitalized as part of the cost of inventories and other self-constructed assets and exclude the impact
of the wage subsidies.
(2) Restated, refer to Note 31 - Discontinued operations for more details.
(3) Includes defined benefit and defined contribution plans.
148 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
11. INCOME TAXES
Analysis of income tax expense
Details of income tax expense (recovery) from continuing operations were as follows, for fiscal years:
Current income taxes
Deferred income taxes
(1) Restated, refer to Note 31 - Discontinued operations for more details.
2020
(27)
76
49
$
$
$
$
2019 (1)
11
240
251
The reconciliation of income taxes, computed at the Canadian statutory rates, to income tax expense (recovery)
was as follows, for fiscal years:
EBT from continuing operations
Canadian statutory tax rate
Income tax recovery at statutory rate
Increase (decrease) resulting from
Non-recognition of tax benefits related to tax losses and temporary differences
Write-down of deferred income tax assets
Income tax rates differential of foreign subsidiaries and other investees
Recognition of previously unrecognized tax losses or temporary differences
Permanent differences
Prior period adjustments
Effect of substantively enacted income tax rate changes
Other
Income tax expense from continuing operations
Effective tax rate
(1) Restated, refer to Note 31 - Discontinued operations for more details.
2020
$ (121)
26.5 %
(32)
2019 (1)
$ (1,290)
26.6 %
(343)
177
79
(24)
(27)
(128)
9
(2)
(3)
49
(40.5) %
$
419
113
(8)
(11)
104
—
2
(25)
$ 251
(19.5) %
The Corporation’s applicable Canadian statutory tax rate is the Federal and Provincial combined tax rate
applicable in the jurisdiction in which the Corporation operates.
Details of deferred income tax expense (recovery) from continuing operations were as follows, for fiscal years:
Non-recognition of tax benefits related to tax losses and temporary differences
Origination and reversal of temporary differences
Write-down of deferred income tax assets
Recognition of previously unrecognized tax losses or temporary differences
Effect of substantively enacted income tax rate changes
(1) Restated, refer to Note 31 - Discontinued operations for more details.
2020
177
(151)
79
(27)
(2)
76
$
$
2019 (1)
419
(283)
113
(11)
2
240
$
$
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 149
Deferred income taxes
The significant components of the Corporation’s deferred income tax asset and liability were as follows, as at:
December 31, 2020
Liability
Operating tax losses carried forward
Retirement benefits
Contract liabilities
Inventories
Provisions
Other financial assets and other assets
Investment in affiliate equity
PP&E
Other financial liabilities and other
liabilities
Intangible assets
Contract assets
Other
Unrecognized deferred tax assets
$
$
Asset
3,526
856
27
614
426
331
—
(22)
(3)
(28)
311
19
6,057
(5,499)
558
$
$
— $
—
—
—
—
—
—
—
—
—
—
—
—
— $
December 31, 2019
Asset
Liability
2,712 $
591
416
394
609
244
53
(4)
— $
—
—
—
—
—
—
—
January 1, 2019
Liability
—
—
—
—
—
—
—
—
Asset
2,247 $
547
179
705
754
264
(131)
6
1
1
79
19
5,115
(4,438)
677 $
—
—
—
—
—
— $
6
16
157
39
4,789
(4,043)
746 $
—
—
—
—
—
—
—
—
Reclassified as assets
held for sale(1)
— $
746 $
(1) Includes net deferred income tax asset of $447 million related to operating tax losses carried forward amounting to $1,726 million,
(131) $
546 $
— $
— $
— $
— $
(447)
111
$
$
$
$
retirement benefits amounting to $192 million, valuation allowance amounting to $(1,901) million and other amounting to $430 million, which
is presented under assets held for sale as at December 31, 2020 (includes deferred income tax asset of $131 million related to retirement
benefits amounting to $64 million, operating tax losses carried forward amounting to $61 million and other amounting to $6 million, which
were presented under assets held for sale as at December 31, 2019 related to the CRJ and the aerostructure businesses). See Note 31 -
Discontinued operations for more details
The changes in the net deferred income tax asset were as follows for the fiscal years:
Balance at beginning of year, net
In net loss
In OCI
$
2020
677
(32)
(1) $
2019
746
(113)
Retirement benefits
Cash flow hedges
Disposal of businesses(2)
Reclassified as assets held for sale(3)
Other(4)
Balance at end of year, net
(1) Opening balance is before the assets held for sale reclassification.
(2) Related to the aerostructure business. See Note 30 - Disposal of businesses.
(3) Related to Transportation, refer to Note 31 - Discontinued operations for more details for fiscal year 2020 (related to CRJ and aerostructure
43
18
(190)
(447)
42
111
50
(17)
—
(131)
11
546
$
$
businesses for fiscal year 2019).
(4) Includes deferred income tax impact recorded in equity amounting to $8 million and foreign exchange rate effects as at December 31, 2020
($7 million and foreign exchange rate effects as at December 31, 2019).
The net operating losses carried forward and deductible temporary differences for which deferred tax assets have
not been recognized amounted to $20,760 million as at December 31, 2020 (including $6,957 million related to
Transportation), of which $1,948 million relates to retirement benefits that will reverse through OCI (including
$241 million related to Transportation) ($17,264 million as at December 31, 2019 of which $1,538 million relates to
retirement benefits that will reverse through OCI and $15,315 million as at January 1, 2019 of which
$1,297 million relates to retirement benefits that will reverse through OCI). Of these amounts, approximately
$12,832 million as at December 31, 2020 has no expiration date (including $5,779 million related to
Transportation) ($10,477 million as at December 31, 2019 and $10,015 million as at January 1, 2019) and
approximately $4,307 million relates to the Corporation’s operations in Germany where a minimum income tax is
payable on 40% of taxable income (including $4,115 million related to Transportation) ($3,295 million as at
150 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
December 31, 2019 and $3,087 million as at January 1, 2019), $725 million relate to the Corporation’s operations
in France where a minimum income tax is payable on 50% of taxable income (including $723 million related to
Transportation) ($553 million as at December 31, 2019 and $437 million as at January 1, 2019), $247 million
relate to Transportation’s operations in U.K. where a minimum income tax is payable on 50% of taxable income
and $113 million related to the Transportation’s operations in Spain where limitations apply.
In addition, the Corporation has $1,625 million of unused investment tax credits (including $166 million related to
Transportation), most of which can be carried forward for 20 years and $46 million of net capital losses carried
forward (including $44 million related to Transportation) for which deferred tax assets have not been recognized
($1,621 million and $47 million as at December 31, 2019 and $1,614 million and $43 million as at January 1,
2019). Net capital losses can be carried forward indefinitely and can only be used against future taxable capital
gains.
Net deferred tax assets of $313 million were recognized as at December 31, 2020 (including $204 million related
to Transportation) ($161 million as at December 31, 2019 and $321 million as at January 1, 2019) in jurisdictions
that incurred losses this fiscal year or the preceding fiscal year. Based upon the level of historical taxable income,
projections for future taxable income, forecasted taxable gain on closing of transactions and prudent tax planning
strategies, management believes it is probable the Corporation will realize the benefits of these deductible
differences and operating tax losses carried forward. See Note 4 – Use of estimates and judgment for more
information on how the Corporation determines the extent to which deferred income tax assets are recognized.
No deferred tax liabilities have been recognized on undistributed earnings of the Corporation’s foreign
subsidiaries, joint ventures and associates when they are considered to be indefinitely reinvested, as the
Corporation has control or joint control over the dividend policy, unless it is probable that these temporary
differences will reverse. Upon distribution of these earnings in the form of dividends or otherwise, the Corporation
may be subject to corporation and/or withholding taxes. Taxable temporary differences for which a deferred tax
liability was not recognized amount to approximately $818 million as at December 31, 2020 (including $709 million
related to Transportation) ($664 million as at December 31, 2019 and $682 million as at January 1, 2019).
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 151
12. EARNINGS PER SHARE
Basic and diluted EPS were computed as follows, for fiscal years:
(Number of shares, stock options, PSUs, DSUs, RSUs and warrants in thousands)
Net loss attributable to equity holders of Bombardier Inc.
Continuing operations
Discontinued operations
Preferred share dividends, including taxes
Net loss attributable to common equity holders of Bombardier Inc.
Weighted-average number of common shares outstanding
Net effect of stock options, PSUs, DSUs, RSUs and warrants
Weighted-average diluted number of common shares
EPS (in dollars)
Continuing operations
basic and diluted
Discontinued operations
basic and diluted
Total basic and diluted
(1) Restated, refer to Note 31 - Discontinued operations for more details.
2020
2019 (1)
$
(170)
(698)
(18)
(886)
$
2,408,209
—
2,408,209
$
(1,541)
(256)
(21)
(1,818)
$
2,383,987
—
2,383,987
$
(0.08)
$
(0.65)
(0.29)
(0.37)
$
(0.11)
(0.76)
$
The effect of the exercise of stock options, PSUs, DSUs, RSUs and warrants was included in the calculation of
diluted EPS in the above table, except for 448,713,247 for fiscal year 2020 (524,442,736 for fiscal year 2019)
since the average market value of the underlying shares was lower than the exercise price, or because the
predetermined target market price thresholds of the Corporation’s Class B Shares (subordinate voting) or
predetermined financial performance targets had not been met or the effect of the exercise would be antidilutive.
The calculation of diluted EPS did not include the impact of the CDPQ conversion option as this was antidilutive.
This is because CDPQ’s minimum return entitlement was greater than their share of the BT Holdco net income on
an as converted basis assuming the maximum CDPQ ownership on conversion if Transportation does not achieve
its performance targets.
13.
FINANCIAL INSTRUMENTS
Net gains (losses) on financial instruments recognized in income were as follows, for fiscal years:
Financial instruments measured at amortized cost
Financial assets - expected credit loss allowance (impairment charges)
Interest on cash and cash equivalents
Financial instruments measured at fair value
FVTP&L - changes in fair value
Designated as FVTP&L
Financial liabilities(2)
Required to be classified as FVTP&L
Financial assets(2)(3)
Derivatives not designated in hedging relationships(4)
Other
2020
2019 (1)
$
$
$
$
$
$
(18)
6
14
17
2
(168)
$
$
$
$
$
$
(5)
32
(2)
(389)
106
133
(1) Restated, refer to Note 31 – Discontinued operations for more details.
(2) Gains (losses) related to the regional aircraft securitization program assets (RASPRO), certain aircraft loans, lease subsidies
and their related back-to-back agreement with MHI are presented on a net basis in financial liabilities designated as FVTP&L.
(3) Includes loss recorded on ACLP non-voting units related to the impairment charges of ACLP investments for fiscal year 2019,
see Note 8 – Special items for more details.
(4) Includes a gain recorded on funding commitments related to the impairment charges of ACLP investments for fiscal year 2019, see
Note 8 – Special items for more details.
152 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Carrying amounts and fair value of financial instruments
The classification of financial instruments and their carrying amounts and fair value of financial instruments were
as follows as at:
FVTP&L
FVTP&L Designated
FVOCI(1)
Amortized
cost
Total
carrying
DDHR
value Fair value
December 31, 2020
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Long-term debt
Other financial liabilities
December 31, 2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Long-term debt
Other financial liabilities
January 1, 2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
$
$
$
$
$
$
$
$
$
$
—
—
664
664
—
—
40
40
—
—
723
723
—
—
378
378
—
—
846
846
$
$
$
$
$
$
$
$
$
$
$
$
$
$
—
—
—
—
—
—
629
629
—
—
—
—
—
—
468
468
—
—
—
—
$
$
Financial liabilities
Trade and other payables
Long-term debt
Other financial liabilities
—
—
438
438
(1) Includes investments in equity instruments designated at FVOCI.
—
—
597
597
$
$
$
$
—
—
266
266
n/a
n/a
n/a
n/a
—
—
250
250
n/a
n/a
n/a
n/a
—
—
230
230
n/a
n/a
n/a
n/a
$ 1,779
294
140
$ 2,213
$ 1,611
10,075
793
$ 12,479
$ —
—
69
69
$
$ —
—
2
2
$
$ 1,779
294
1,139
$ 3,212
$ 1,611
10,075
1,464
$ 13,150
$ 2,578
1,844
101
$ 4,523
$ 4,682
9,333
1,219
$ 15,234
$ —
—
110
110
$
$ —
—
157
157
$
$ 2,578
1,844
1,184
$ 5,606
$ 4,682
9,333
2,222
$ 16,237
$ 3,187
1,575
35
$ 4,797
$ 4,634
9,061
1,410
$ 15,105
$ —
—
129
129
$
$ —
—
288
288
$
$ 3,187
1,575
1,240
$ 6,002
$ 4,634
9,061
2,733
$ 16,428
$ 1,779
294
1,139
$ 3,212
$ 1,611
9,812
1,466
$ 12,889
$ 2,578
1,844
1,184
$ 5,606
$ 4,682
9,660
2,239
$ 16,581
$ 3,187
1,575
1,237
$ 5,999
$ 4,634
8,750
3,021
$ 16,405
n/a: Not applicable
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 153
Offsetting financial assets and financial liabilities
The Corporation is subject to enforceable master netting agreements related mainly to its derivative financial
instruments and cash and cash equivalents which contain a right of set-off in case of default, insolvency or
bankruptcy. The amounts that are subject to the enforceable master netting agreements, but which do not meet
some or all of the offsetting criteria, are as follows as at:
Description of recognized financial assets
and liabilities
Amount recognized
in the financial
statements
Amounts subject
to master netting
agreements
Net amount not
subject to master
netting
agreements
December 31, 2020
Derivative financial instruments - assets
Derivative financial instruments - liabilities
Cash and cash equivalents
December 31, 2019
Derivative financial instruments - assets
Derivative financial instruments - liabilities
Cash and cash equivalents
January 1, 2019
Derivative financial instruments - assets
Derivative financial instruments - liabilities
Cash and cash equivalents
$
$
$
$
$
$
$
$
$
103
(42)
1,779
287
(535)
2,629
168
(885)
3,187
$
$
$
$
$
$
$
$
$
(9)
9
—
(97)
117
(19)
(104)
232
(127)
$
$
$
$
$
$
$
$
$
94
(33)
1,779
190
(418)
2,610
64
(653)
3,060
Derivatives and hedging activities
The carrying amounts of all derivative and non-derivative financial instruments in a hedge relationship were as
follows, as at:
December 31, 2020
Liabilities
Assets
December 31, 2019
Liabilities
Assets
January 1, 2019
Liabilities
Assets
Derivative financial instruments
designated as fair value hedges
Interest-rate swaps
$
Derivative financial instruments
designated as cash flow hedges(1)
Forward foreign exchange contracts
Derivative financial instruments
classified as FVTP&L(2)
Forward foreign exchange contracts
Funding commitments
Embedded derivative financial instruments
Conversion option
Put option on long-term debt
Call options on long-term debt
Prepayment option
on long-term debt
Floor on long-term debt
$
15
15
54
9
—
—
—
—
25
—
34
—
—
2
10
—
—
22
—
—
8
40
$
$
7
7
$
—
—
$
—
—
1
1
103
157
129
287
18
—
—
—
158
—
1
177
50
—
325
—
—
—
3
378
33
—
—
—
4
—
2
39
48
235
314
—
—
—
—
597
103
$
42
$
287
$
535
$
168
$
885
Total derivative financial
instruments
Non-derivative financial instruments
designated as hedges of net investment
Long-term debt
$
$
308
(1) The maximum length of time of derivative financial instruments hedging the Corporation’s exposure to the variability in future cash flows for
526
355
—
—
—
$
$
$
$
$
anticipated transactions is 12 months as at December 31, 2020.
(2) Held as economic hedges, except for embedded derivative financial instruments and funding commitments.
The net gains on hedging instruments designated in fair value hedge relationships and net losses on the related
hedged items attributable to the hedged risk recognized in financing expense, amounted to $6 million and $6 million
154 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
respectively for fiscal year 2020 (net gains of $7 million and net losses of $7 million respectively for fiscal year 2019).
The ineffectiveness recognized in net income that relates to cash flow hedges, amounted to a net loss of $2 million
for fiscal year 2020 (nil for fiscal year 2019). The methods and assumptions used to measure the fair value of
financial instruments are described in Note 39 – Fair value of financial instruments.
14.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents were as follows, as at:
December 31, 2020
1,559
$
December 31, 2019
1,306
$
January 1, 2019
1,296
$
Cash
Cash equivalents
Term deposits
Money market funds
461
430
2,450
(671)
1,779
547
776
2,629
(51)
2,578
892
999
3,187
—
3,187
Cash and cash equivalents(1)
Reclassified as assets held for sale(1)
Cash and cash equivalents
(1) For the purpose of the statement of cash flows, cash and cash equivalents comprise the cash reclassified as asset held for sale. See Note
$
$
$
$
$
$
31 – Discontinued operations for more details. Cash reclassified as assets held for sale as at December 31, 2019 are related to the
aerostructure business.
See Note 36 – Credit facilities for details on covenants related to cash and cash equivalents.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 155
15.
TRADE AND OTHER RECEIVABLES
Trade and other receivables were as follows, as at:
Total
Not past
due
Past due but not impaired
more than
less than
90 days
90 days
Impaired (4)
December 31, 2020(1)
Trade receivables, gross
Allowance for doubtful accounts
$
Other
Total
December 31, 2019(1)(2)
Trade receivables, gross
Allowance for doubtful accounts
Other
Total
January 1, 2019(1)(2)
Trade receivables, gross
Allowance for doubtful accounts
Other
Total
$
$
$
$
$
$
$
$
$
$
$
301
(23)
278
16
294
1,773
(49)
1,724
120
1,844
1,508
(42)
1,466
109
1,575
110
—
110
1,176
—
1,176
764
—
764
$
$
$
$
$
$
114
—
114
146
—
146
339
—
339
$
$
$
$
$
$
32
—
32
$
$
45
(23)
22
231
—
231 (3)
$
$
220
(49)
171
245
—
245 (3)
$
$
160
(42)
118
(1) Of which $29 million and $17 million are denominated in euros and other foreign currencies, respectively, as at December 31, 2020
($506 million and $574 million, respectively, as at December 31, 2019 and $334 million and $564 million, respectively, as at
January 1, 2019).
(2) Of which $485 million represents customer retentions relating to long-term contracts as at December 31, 2019 based on normal terms and
conditions ($400 million as at January 1, 2019).
(3) Of which $ 186 million of trade receivables relates to Transportation long-term contracts as at December 31, 2019, of which $179 million
were more than 90 days past due ($464 million as at January 1, 2019, of which $229 million were more than 90 days past due).
(4) Of which a gross amount of $9 million of trade receivables are individually impaired as at December 31, 2020 ($52 million as at
December 31, 2019 and $40 million as at January 1, 2019).
The factors that the Corporation considers to classify trade receivables as impaired are as follows: the customer is
in bankruptcy or under administration, payments are in dispute, or payments are in arrears. Further information on
financial risk is provided in Note 38 – Financial risk management.
Allowance for doubtful accounts – Changes in the allowance for doubtful accounts were as follows, for fiscal
years:
Balance at beginning of year(1)
Provision for doubtful accounts
Amounts written-off
Recoveries
Disposal of businesses(2)
Reclassified as assets held for sale(3)
Effect of foreign currency exchange rate changes
$
$
2020
(56)
(30)
13
3
7
42
(2)
(23)
2019
(42)
(19)
7
—
—
7
(2)
(49)
Balance at end of year
(1) Opening balances are before the assets held for sale reclassification related to the disposal of CRJ and aerostructure businesses.
(2) See Note 30 – Disposal of businesses.
(3) See Note 31 – Discontinued operations for more details. For fiscal year 2019, represents assets held for sale related to the sale of the CRJ
and aerostructure businesses.
$
$
156 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
16.
CONTRACT BALANCES
Contract assets were as follows, as at:
Long-term contracts
Production contracts
Cost incurred and recorded margins
Less: advances and progress billings
Service contracts
Cost incurred and recorded margins
Less: advances and progress billings
December 31, 2020
December 31, 2019
January 1, 2019
$
$
—
—
—
61
—
61
61
$
$
9,930
(7,983)
1,947
674
(136)
538
2,485
$
$
8,882
(6,707)
2,175
506
(64)
442
2,617
Contract liabilities were as follows, as at:
Advances on aerospace programs
Advances and progress billings in excess of long-
term contract cost incurred and recorded margin
Other deferred revenues
Of which current
Of which non-current
December 31, 2020
3,187
$
December 31, 2019
4,018
$
January 1, 2019
3,075
$
3
385
3,575
2,356
1,219
3,575
$
$
$
2,286
852
7,156
5,739
1,417
7,156
$
$
$
2,124
996
6,195
4,262
1,933
6,195
$
$
$
Under certain contracts, title to contract balances is vested to the customer as the work is performed in
accordance with contractual arrangements and industry practice. In addition, in the normal course of business, the
Corporation provides performance bonds, bank guarantees and other forms of guarantees to customers, mainly in
Transportation, as security for advances received from customers pending performance under certain contracts.
In accordance with industry practice, the Corporation remains liable to the purchasers for the usual contractor’s
obligations relating to contract completion in accordance with predetermined specifications, timely delivery and
product performance.
Revenues recognized were as follows for fiscal years:
Revenue recognized from:
Contract liability balance at the beginning of the period
Long term service contracts
Advances on aerospace programs
(1) Restated, refer to Note 31 – Discontinued operations for more details.
2020
2019 (1)
$
$
—
2,057
2,057
$
$
7
815
822
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 157
17.
INVENTORIES
Inventories were as follows, as at:
Aerospace programs
Finished products(1)
Other
$
December 31, 2020
3,254
396
—
3,650
$
$
December 31, 2019
3,990
468
141
4,599
$
January 1, 2019
3,546
733
123
4,402
$
$
(1) Finished products include nil new aircraft not associated with a firm order and pre-owned aircraft as at December 31, 2020 ($58 million as at
December 31, 2019 and $53 million as at January 1, 2019).
The amount of inventories recognized as cost of sales totalled $5,350 million for fiscal year 2020 ($5,632 million
for fiscal year 2019). These amounts include $265 million of write-downs for fiscal year 2020 ($180 million for
fiscal year 2019) and $13 million of reversal of write-downs for fiscal year 2020 ($7 million for fiscal year 2019).
18.
BACKLOG
The following table presents the aggregate amount of the revenues expected to be realized in the future from
partially or fully unsatisfied performance obligations as we perform under contracts at delivery or recognized over
time. The amounts disclosed below represent the value of firm orders only. Such orders may be subject to future
modifications that might impact the amount and/or timing of revenue recognition. The amounts disclosed below do
not include constrained variable consideration, unexercised options or letters of intent.
Revenues from continuing operations expected to be recognized in:
(In billions of $)
Less than 24 months
Thereafter
Total
(1) Restated, refer to Note 31 – Discontinued operations for more details.
December 31, 2020
6.9
3.8
10.7
$
$
$
December 31, 2019 (1)
$
10.7
5.6
16.3
Revenues expected to be realized in the future from partially or fully unsatisfied performance obligations related to
Transportation amounted to $36.6 million as at December 31, 2020 ($35.8 million as at December 31, 2019 ).
158 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
19.
OTHER FINANCIAL ASSETS
Other financial assets were as follows, as at:
Receivables from ACLP(1)
Investments in securities(2)
Investments in financing structures(3)
Derivative financial instruments(4)
Restricted cash
Balance of payment on disposal of investment
in associate(5)
Aircraft loans(3)
Receivable from MHI(6)
Long-term contract receivables
ACLP non-voting units(7)
Other
Of which current
Of which non-current
$
December 31, 2020
439
266
150
103
89
38
December 31, 2019
468
250
$
—
287
62
—
$
January 1, 2019
385
230
173
168
21
—
32
18
—
—
4
1,139
227
912
1,139
$
$
$
2
—
99
—
16
1,184
195
989
1,184
$
$
$
26
—
75
150
12
1,240
210
1,030
1,240
$
$
$
(1) This receivable from ACLP represents a back-to-back agreement that the Corporation has with ACLP related to certain government
refundable advances. See Note 26 – Other financial liabilities for more information.
(2) Includes $35 million of equity instruments designated as FVOCI as at December 31, 2020 ($35 million as at December 31, 2019).
(3) Following the sale of the CRJ business, the Corporation has retained a portion of those other financial assets and has a
back-to-back agreement with MHI. See Note 26 – Other financial liabilities and Note 30 – Disposal of businesses for more
information. As of December 31, 2019, those assets were presented as Assets held for sale as part of the sale of the CRJ business.
(4) See Note 13 – Financial instruments.
(5) The balance of payment on disposal of investment in associate represents an amount owed by Stelia Aerospace. See Note 29 – Disposal of
investment in associate.
(6) This receivable represents a back-to-back agreement that the Corporation has with MHI on lease subsidies of $11 million and certain
other financial liabilities. See Note 26 – Other financial liabilities and Note 30 – Disposal of businesses for more information.
(7) See Note 29 – Disposal of investment in associate.
20.
OTHER ASSETS
Other assets were as follows, as at:
December 31, 2020
December 31, 2019
January 1, 2019
Prepaid sales concessions and deferred contract
costs
Sales tax and other taxes
Prepaid expenses
Receivable from MHI(1)
Retirement benefits(2)
Intangible assets other than aerospace program
tooling and goodwill(3)
Income taxes receivable
Deferred financing charges
Other
Of which current
Of which non-current
$
$
$
$
124
106
101
80
75
72
3
—
14
575
218
357
575
$
$
$
$
105
249
141
—
193
217
90
27
13
1,035
473
562
1,035
$
$
$
$
131
212
107
—
200
195
49
38
24
956
357
599
956
(1) This receivable represents a back-to-back agreement that the Corporation has with MHI on credit and residual value guarantees provisions.
See Note 25 – Provisions and Note 30 – Disposal of businesses for more information.
(2) See Note 23 – Retirement benefits.
(3) See Note 22 – Intangible assets.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 159
21.
PROPERTY, PLANT AND EQUIPMENT
PP&E were as follows, as at:
Land
Buildings
Equipment
Construction
in progress
Other
Total
Right-of-
use
assets
Total
Cost
Balance as at
December 31, 2019(1)
Additions
Disposals
Transfers
Disposal of businesses(2)
Reclassified as assets
held for sale(3)
Effect of foreign currency
exchange rate changes
73 $
$
—
(9)
—
—
2,102 $
34
(11)
16
(339)
1,253 $
74
(33)
24
(433)
215 $ 351 $ 3,994 $
8
(5)
2
(18)
157
(58)
1
(886)
41
—
(41)
(96)
675
70
(51)
(1)
(75)
$ 4,669
227
(109)
—
(961)
(56)
(1,176)
(537)
(54)
(49)
(1,872)
(333)
(2,205)
3
82
12
3
8
108
22
130
Balance as at
December 31, 2020
$
11 $
708 $
360 $
68 $ 297 $ 1,444 $
307
$ 1,751
Accumulated amortization and impairment
(17) $
Balance as at
December 31, 2019(1)
$
—
—
—
—
—
Amortization
Impairments
Disposals
Transfers
Disposal of businesses(2)
Reclassified as assets
held for sale(3)
Effect of foreign currency
exchange rate changes —
17
(1,223) $
(41)
(4)
1
—
168
774
(57)
(911) $
(70)
—
32
(13)
397
236
(1)
(13) $ (282) $ (2,446) $
—
—
—
13
—
(115)
(4)
33
—
579
(4)
—
—
—
14
(153)
(83)
(38)
26
—
18
$ (2,599)
(198)
(42)
59
—
597
—
—
21
1,048
116
1,164
—
(58)
(6)
(64)
Balance as at
December 31, 2020
Net carrying value
$ — $
11 $
$
(382) $
326 $
(330) $
30 $
— $ (251) $
68 $
(963) $
46 $ 481 $
(120)
187
$ (1,083)
$ 668
(1) Opening balances are before the assets held for sale reclassification related to the disposal of CRJ and aerostructure businesses.
(2) See Note 30 – Disposal of businesses for more details.
(3) See Note 31 – Discontinued operations for more details.
160 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Land
Buildings
Equipment
Construction
in progress
Other
Total
Right-of-
use of
assets
Total
Cost
Balance as at
January 1, 2019
$
79 $
2
(8)
—
Additions
Disposals
Transfers
Reclassified as assets
held for sale(1)
Effect of foreign currency
exchange rate changes —
(8)
2,067 $
24
(20)
44
1,282 $
75
(165)
62
184 $
137
(1)
(105)
359 $ 3,971
238
(206)
5
—
(12)
4
675 $ 4,646
341
103
(301)
(95)
—
(5)
(329)
(13)
(374)
(1)
(47)
(16)
(774)
(69)
(843)
—
—
(14)
(3)
(17)
Balance as at December
31, 2019
$
65 $
1,773 $
879 $
168 $
335 $ 3,220 $
606 $ 3,826
Accumulated amortization and impairment
(18) $
Balance as at
January 1, 2019
Amortization
Impairments (reversals)
Disposals
Transfers
Reclassified as assets
held for sale(1)
Effect of foreign currency
exchange rate changes —
$
—
1
—
—
—
(1,199) $
(56)
2
21
(2)
162
11
(967) $
(99)
5
155
(3)
362
(2)
(11) $
—
(2)
—
—
—
—
(279) $ (2,474)
(161)
7
(6)
1
3
—
179
(5)
(61) $ (2,535)
(270)
7
191
—
(109)
—
12
5
9
(1)
533
21
554
8
—
8
Balance as at December
31, 2019
Net carrying value
(273) $ (1,913) $
62 $ 1,307 $
(1) Represents assets and liabilities reclassified as held for sale related to the sale of CRJ and aerostructure businesses.
(1,061) $
712 $
(549) $
330 $
(13) $
155 $
(17) $
48 $
$
$
(132) $ (2,045)
474 $ 1,781
The carrying value of right-of-use assets, after assets held for sale reclassification, was as follows, as at:
Buildings
Equipment
Land
Others
$
$
December 31, 2020 December 31, 2019
332
85
50
7
474
96
38
53
—
187
$
$
Depreciation expense, including impairment, of right-of-use assets from continuing operations was as follows, for
fiscal years:
Buildings
Equipment
Land
Others
2020
2019 (1)
$
$
(58) $
(26)
(2)
—
(86) $
(22)
(34)
(2)
(4)
(62)
(1) Restated, refer to Note 31 – Discontinued operations for more details.
The expense related to short term leases and low value leases amounted to $19 million for fiscal year 2020 ($14
million for fiscal year 2019).
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 161
22.
INTANGIBLE ASSETS
Intangible assets were as follows, as at:
Aerospace program tooling
Goodwill
Other
(1)(2)
Total
Acquired
Internally
generated
Total
Cost
Balance as at December 31, 2019(3)
$
Additions
Transfers
Disposal of businesses(4)
Reclassified as assets held for sale(5)
Effect of foreign currency
exchange rate changes
Balance as at December 31, 2020
Accumulated amortization and impairment
Balance as at December 31, 2019(3)
Amortization
Transfers
Disposal of businesses(4)
Reclassified as assets held for sale(5)
Effect of foreign currency
exchange rate changes
Balance as at December 31, 2020
Net carrying value
$
$
$
$
2,029 $
19
—
(286)
—
9,154 $ 11,183
103
(24)
(1,640)
—
84
(24)
(1,354)
—
$
1,936 $
—
—
—
(2,101)
—
1,762 $
—
—
7,860 $ 9,622
165
$
— $
(999) $
(5,528) $ (6,527) $
(59)
—
281
—
(243)
1
1,321
—
(302)
1
1,602
—
—
(777) $
—
—
(4,449) $ (5,226) $
985 $
3,411 $ 4,396
$
— $
—
—
—
—
—
— $
— $
916
93
24
(66)
(708)
53
312
(671)
(10)
(1)
36
436
(30)
(240)
72
$ 14,035
196
—
(1,706)
(2,809)
218
$ 9,934
$ (7,198)
(312)
—
1,638
436
(30)
$ (5,466)
$ 4,468
Aerospace program tooling
Goodwill
Other
(1)(2)
Total
Acquired
Internally
generated
Total
Cost
Balance as at January 1, 2019
$
1,930 $
Additions
Disposals
Reclassified as assets held for sale(6)
Effect of foreign currency
exchange rate changes
Balance as at December 31, 2019
112
(13)
(287)
$
8,999 $ 10,929
275
(21)
(1,639)
163
(8)
(1,352)
1,948 $
—
—
—
—
1,742 $
—
—
7,802 $ 9,544
(12)
1,936 $
$
$
891
83
(50)
(66)
(8)
850
Accumulated amortization and impairment
Balance as at January 1, 2019
$
(981) $
(5,429) $ (6,410) $
(18)
—
281
(114)
—
15
1,318
(132)
—
15
1,599
— $
—
—
—
—
(696)
(20)
(3)
43
38
$ 13,768
358
(71)
(1,705)
(20)
$ 12,330
$ (7,106)
(152)
(3)
58
1,637
Amortization
Impairment
Disposals
Reclassified as assets held for sale(6)
Effect of foreign currency
exchange rate changes
Balance as at December 31, 2019
Net carrying value
—
(718) $
—
—
(4,210) $ (4,928) $
—
— $
5
(633)
5
$ (5,561)
1,024 $
3,592 $ 4,616
$
1,936 $
217 (7)
$ 6,769
$
$
(1) Presented in Note 20 – Other assets.
(2) Includes internally generated intangible assets with a cost and accumulated amortization of $235 million and $176 million, respectively, as at
December 31, 2020 ($552 million and $306 million, respectively, as at December 31, 2019 and $511 million and $324 million, respectively,
as at January 1, 2019).
(3) Opening balances are before the assets held for sale reclassification related to the sale of CRJ and aerostructure businesses.
(4) See Note 30 – Disposal of businesses.
(5) See Note 31 – Discontinued operations for more details.
(6) Represents assets reclassified as held for sale related to the sale of CRJ and aerostructure businesses.
(7) Includes Transportation platform development costs amounting to $103 million as at December 31, 2019.
162 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Goodwill
Goodwill is related primarily to the DaimlerChrysler Rail Systems GmbH (Adtranz) acquisition in May 2001.
Goodwill is monitored by management at the Transportation operating segment level. During the fourth quarter of
2020, the Corporation performed an impairment test. The Corporation did not identify any impairment. See Note 4
– Use of estimates and judgment for more details.
23.
RETIREMENT BENEFITS
The Corporation sponsors several funded and unfunded defined benefit pension plans as well as defined
contribution pension plans in Canada and abroad, covering a majority of its employees. The Corporation also
provides other unfunded defined benefit plans, covering certain groups of employees mainly in Canada and the
U.S.
Pension plans are categorized as defined benefit (“DB”) or defined contribution (“DC”). DB plans specify the
amount of benefits an employee is to receive at retirement, while DC plans specify how contributions are
determined. As a result, there is no deficit or surplus for DC plans. Hybrid plans are a combination of DB and DC
plans.
Funded plans are plans for which segregated plan assets are invested in a trust. Unfunded plans are plans for
which there are no segregated plan assets, as the establishment of segregated plan assets is generally not
permitted or not in line with local practice.
FUNDED DB PLANS
The Corporation’s major DB plans reside in Canada and the U.S., therefore very significant portions of the DB
pension plan assets and benefit obligation are located in those countries. The following text focuses mainly on
plans registered in these two countries.
Governance
Under applicable pension legislations, the administrator of each plan is either the Corporation, in the case of U.S.
plans and Canadian plans registered outside of Québec, or a pension committee in the case of plans registered in
Québec.
Plan administrators are responsible for the management of plan assets and the establishment of investment
policies, which define, for each plan, investment objectives, target asset allocation, risk mitigation strategies, and
other elements required by pension legislation.
Plan assets are pooled in two common investment funds (CIFs) for Canadian and U.S. plans, respectively, in
order to achieve economies of scale and greater efficiency, diversification and liquidity. The CIFs are broken down
by sub-funds or asset classes in order to allow each plan to have its own asset allocation given its associated
pension obligation liability profile.
The management of the CIFs has been delegated to two (Canadian and U.S.) investment committees (ICs). The
ICs are responsible for allocating assets among various sub-funds and asset classes in accordance with each
plan’s investment policy. They are also responsible for hiring, monitoring and terminating investment managers
and have established a multi-manager structure for each sub-fund and asset class. They are supported by
Bombardier Global Pension Asset Management Inc. (BGPAM), a subsidiary of Bombardier Inc. who oversees the
management of the plans’ assets and of the CIFs on a daily basis. Daily administration of the plans is delegated to
either Bombardier Inc. or to external pension administration service providers. The administrators, the ICs,
Bombardier Inc. and BGPAM also rely on the expertise of external legal advisors, actuaries, auditors and
investment consultants.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 163
Benefit Policy
DB plan benefits are usually based on salary and years of service. In Canada and the U.S., since September 1,
2013, all new non-unionized employees join DC plans (i.e. they no longer have the option of joining DB or hybrid
plans). Employees who are members of a DB or hybrid plan closed to new members continue to accrue service in
their original plan.
Funding requirements
Actuarial valuations are conducted by independent firms hired by the Corporation or the administrators, as
required by pension legislation. The purpose of the valuations is to determine the plans’ financial position and the
annual contributions to be made by the Corporation to fund both benefits accruing in the year (normal cost) and
deficits accumulated over prior years. Minimum funding requirements are set out by applicable pension
legislations.
Pension plans in Canada are notably governed under the Supplemental Pension Plans Act in Québec, the
Pension Benefits Act in Ontario and the Income Tax Act. Actuarial valuations are required at least every three
years. Depending on the jurisdiction and the funded status of the plan, actuarial valuations may be required
annually. Contributions are determined by the appointed actuary and cover future service costs and deficits, as
prescribed by laws and actuarial practices.
For Québec pension plans, minimum contributions are required to amortize the going-concern deficits
(established under the assumption that the plan will continue to be in force) over a period up to fifteen years
(which is gradually decreasing to 10 years as of December 31, 2020). Funding is based on an “enhanced” going-
concern valuation, including a stabilization provision. This provision is funded by special amortization and current
service contributions, and by actuarial gains.
For Ontario pension plans, minimum contributions are required to amortize the going-concern deficits (established
under the assumption that the plan will continue to be in force) over a period up to ten years. Solvency
deficiencies up to 85% of solvency liabilities are required to be funded over a period of 5 years. An explicit margin
called a provision for adverse deviations (PFAD) is added to both the going concern liabilities and future service
cost when determining minimum contributions.
Pension plans in the U.S. are mainly governed under the Employee Retirement Income Security Act, the Internal
Revenue Code and the Pension Protection Act of 2006. Actuarial valuations are required annually. Contributions
are determined by appointed actuaries and cover future service costs and deficits, as prescribed by law. Funding
deficits are generally amortized over a period of 7 years.
Investment Policy and de-risking strategies
The investment policies are established to achieve a long-term investment return so that, in conjunction with
contributions, the plans have sufficient assets to pay for the promised benefits while maintaining a level of risk that
is acceptable given the tolerance of plan stakeholders. See below for more information about risk management
initiatives.
The target asset allocation is determined based on expected economic and market conditions, the maturity profile
of the plans’ liabilities, the funded status of the respective plans and the plan stakeholders’ tolerance to risk.
The plans’ investment strategy is to invest broadly in fixed income and equity securities and to have a smaller
portion of the funds’ assets invested in real return asset securities (global infrastructure and real estate listed
securities).
164 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
As at December 31, 2020, the average target asset allocation, after the assets held for sale reclassification, was
as follows:
- 50.5% and 50% in fixed income securities, for Canadian and U.S. plans, respectively;
- 41% and 50% in equity securities, for Canadian and U.S. plans, respectively; and
- 8.5% in real return asset securities for Canadian plans.
In addition, to mitigate interest rate risk, interest rate hedging overlay portfolios (comprised of long-term interest
rate swaps and long-term bond forwards) will be implemented for the pension plans when the market will be
favorable and the plans’ triggers will be reached.
The plan administrators have also established dynamic risk management strategies. As a result, asset allocation
will likely become more conservative in the future and interest rate hedging overlay portfolios are likely to be
established as plan funding status and market conditions continue to improve and the plans become more
mature. Under certain pension legislations, and subject to compliance with certain conditions, the buy-out of
annuities with insurance companies would discharge the Corporation and administrators of their respective
obligations. Accordingly, in 2018 and 2019, annuities were purchased for pensioners of the three Bombardier
Aviation pension plans registered in Ontario. The buy-out of annuities payable to pensioners of other pension
plans will be contemplated in the coming years when these plans become fully funded on a buy-out basis.
Bombardier Global Pension Asset Management Inc. (BGPAM) monitors the de-risking triggers on an ongoing
basis to ensure timely and efficient implementation of these strategies.
Risk management initiatives
The Corporation’s pension plans are exposed to various risks, including equity, interest rate, inflation, foreign
exchange, liquidity and longevity risks. Several risk management strategies and policies have been put in place to
mitigate the impact these risks could have on the funded status of DB plans and on the future level of
contributions by the Corporation. The following is a description of key risks together with the mitigation measures
in place to address them.
Equity risk
Equity risk results from fluctuations in equity prices. This risk is managed by maintaining diversification of
portfolios across geographies, industry sectors and investment strategies.
Interest rate risk
Interest rate risk results from fluctuations in the fair value of plan assets and liabilities due to movements in
interest rates. This risk is managed by reducing the mismatch between the duration of plan assets and the
duration of pension obligation. This is accomplished by having a portion of the portfolio invested in long-term fixed
income securities and interest rate hedging overlay portfolios.
Inflation risk
Inflation risk is the risk that benefits indexed to inflation increase significantly as a result of changes in inflation
rates. To manage this risk, the benefit indexation has been capped in certain plans and a portion of plan assets
has been invested in real return fixed income securities and real return asset securities.
Foreign exchange risk
Currency risk exposure arises from fluctuations in the fair value of plan assets denominated in a currency other
than the currency of the plan liabilities. Currency risk is managed with foreign currency hedging strategies as per
plan investment policies.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 165
Liquidity risk
Liquidity risk stems from holding assets which cannot be readily converted to cash when needed for the payment
of benefits or to rebalance the portfolios. Liquidity risk is managed through investments in treasury bills,
government bonds and equity futures and by having no investments in private placements or hedge funds.
Longevity risk
Longevity risk is the risk that increasing life expectancy results in longer-than-expected benefit payments. This
risk is mitigated by using the most recent mortality and mortality improvement tables to set the level of
contributions. The buy-out of annuities with insurance companies transfers all of the risks listed above to insurers
for the annuities purchased.
UNFUNDED DB PLANS
Unfunded plans are located in countries where the establishment of funds for segregated plan assets is generally
not permitted or not in line with local practice.
DC PLANS
A growing proportion of employees are participating in DC plans. The largest DC plans are located in Canada and
in the U.S. The plan administrators and ICs oversee the management of DC plan assets.
OTHER PLANS
The Corporation also provides other unfunded defined benefit plans, consisting essentially of post-retirement
healthcare coverage, life insurance benefits and retirement allowances. The Corporation provides post-retirement
life insurance and post-retirement health care, with provisions that vary between groups of employees in Canada
and the U.S. New non-unionized hires are generally no longer offered post-retirement health care.
166 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
RETIREMENT BENEFITS PLANS
The following table provides the components of the retirement benefit cost, for fiscal years:
Current service cost
Accretion expense
Past service costs
Curtailment
Settlement
Termination benefits
DB plans
DC plans
Total retirement benefit cost
Related to
Funded DB plans
Unfunded DB plans
DC plans
Recorded as follows
EBIT expense or capitalized cost
Financing expense
Current service cost
Accretion expense
Past service costs
Curtailment
Settlement
DB plans
DC plans
Total retirement benefit cost
Related to
Funded DB plans
Unfunded DB plans
DC plans
Recorded as follows
EBIT expense or capitalized cost
Financing expense
Pension
benefits
149
$
45
—
(56)
(19)
2
121
31
152
$
$
$
$
$
$
117
4
31
107
45
Pension
benefits
154
47
34
(35)
5
205
33
238
$
$
$
$
$
$
$
201
4
33
191
47
Other
benefits
4
7
—
(2)
—
—
9
—
9
$
$
$
Total continuing
operations
153
52
—
(58)
(19)
2
130
31
161
$
$
Discontinued
operations
78
14
7
(4)
—
—
95
52
147
$
n/a
9
n/a
2
7
Other
benefits
3
9
—
(22)
—
(10)
—
(10)
n/a
(10)
n/a
(19)
9
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
117
13
31
109
52
Total continuing
operations
157
56
34
(57)
5
195
33
228
201
(6)
33
172
56
$
$
$
$
$
$
$
$
$
$
$
65
30
52
133
14
Discontinued
operations
74
17
(24)
(5)
—
62
53
115
30
32
53
98
17
2020
Total
231
66
7
(62) (1)
(19) (2)
2
225
83
308
182
43
83
242
66
2019 (3)
Total
231
73
10 (4)
(62) (1)
5 (2)
257
86
343
231
26
86
270
73
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(1) Includes $21 million of curtailment gain related to the announcement of Aviation for workforce adjustments in response to the COVID-19
pandemic for fiscal year 2020 ($5 million of curtailment gain related to previously-announced restructuring actions from continuing
operations for fiscal year 2019). Also, includes $33 million of curtailment gain related to the disposal of investment in associate and
businesses for fiscal year 2020 ($23 million of curtailment gain related to the disposal of a business - Q Series business for fiscal year
2019). See Note 8 – Special items, Note 29 – Disposal of investment in associate and Note 30 – Disposal of businesses for more details.
(2) Includes $19 million of settlement gain related to the disposal of businesses for fiscal year 2020. Includes the loss related to the purchase of
pension annuities for fiscal year 2019. See Note 8 – Special items and Note 30 – Disposal of businesses for more details.
(3)Restated for the sale of Transportation, refer to Note 31 – Discontinued operations for more details.
(4) Includes loss related to the pension adjustments of $26 million from continuing operations for fiscal year 2019. See Note 8 – Special items
for more details.
n/a: Not applicable
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 167
Changes in the cumulative amount of remeasurements gains (losses) of defined benefit plans recognized in OCI,
and presented as a separate component of deficit, were as follows, for fiscal years:
Gains (losses)
Balance as at January 1, 2019
Actuarial losses, net
Effect of exchange rate changes
Income taxes
Balance as at December 31, 2019
Impact of asset ceiling and minimum liability
Actuarial losses, net
Effect of exchange rate changes
Income taxes
$
Balance as at December 31, 2020
(1) Includes the changes in cumulative amount of remeasurement gains (losses) of defined benefit plans recognized in OCI related to
Transportation, refer to Note 31 – Discontinued operations for more details.
$
(2,305)
(453)
(67)
50
(2,775)
(13)
(419)
(24)
43
(3,188) (1)
168 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
The following tables present the changes in the defined benefit obligation and fair value of pension plan assets,
for fiscal years:
Pension
benefits
Other
benefits
2020
Total
Pension
benefits
Other
benefits
$ 11,722 (1) $
271
226
17
7
273 (1) $ 11,995 (1) $ 9,817
325
279
227
231
23
17
10
7
8
5
—
—
$
1,005
(106)
(68)
(359)
(60)
(527)
2
(2,573)
313
(4,562)
252
$ 5,560
$ 2,969
451
2,140
$ 5,560
$
$
$
$ 9,329 (1) $
233
17
213
417
(359)
(508)
(25)
(2,013)
286
21
(6)
—
(13)
(2)
—
—
(1)
—
1,026
1,447
(112)
6
(68)
(372)
(62)
(527)
2
(2,574)
313
(66)
(354)
(40)
(14)
—
—
—
(48)
6
243
(4,610)
258
$ 5,803
(2,421)
341
$ 9,301
107
—
136
243
$ 3,076
451
2,276
$ 5,803
$ 3,217
1,785
4,299
$ 9,301
— (1) $ 9,329 (1) $ 7,896
275
246
13
23
17
—
262
213
—
954
417
—
(354)
(372)
(13)
(19)
(508)
—
(20)
(25)
—
—
(2,013)
—
—
286
—
$
$
$
$
260
10
4
—
—
30
(9)
(1)
(11)
(22)
—
—
—
—
—
12
273
117
—
156
273
—
11
—
—
—
(11)
—
—
—
—
2019
Total
$ 10,077
335
231
23
10
1,477
(3)
(67)
(365)
(62)
(14)
—
—
—
(2,421)
353
$ 9,574
$ 3,334
1,785
4,455
$ 9,574
$ 7,896
286
23
262
954
(365)
(19)
(20)
—
—
Change in benefit obligation
Obligation at beginning of year
Accretion
Current service cost
Plan participants’ contributions
Past service costs(2)
Actuarial losses - changes in
financial assumptions
Actuarial (gains) losses - changes in
experience adjustments
Actuarial gains - changes in
demographic assumptions
Benefits paid
Curtailment(3)
Settlement
Termination benefits
Disposal of businesses(4)
Other(6)
Reclassified as liabilities directly
associated with assets held for
sale(5)
Effect of exchange rate changes
Obligation at end of year
Obligation is attributable to
Active members
Deferred members
Retirees
Change in plan assets
Fair value at beginning of year
Employer contributions
Plan participants’ contributions
Interest income on plan assets
Actuarial (losses) gains
Benefits paid
Settlement
Administration costs
Disposal of businesses(4)
Other
Reclassified as liabilities directly
associated with assets held for
sale(5)
(3,474)
156
$ 4,272
Effect of exchange rate changes
Fair value at end of year
$
(1) Opening balances are before the assets held for sale reclassification related to the disposal of CRJ and aerostructure businesses.
(2) Includes loss related to the pension adjustments of $26 million for fiscal year 2019. See note 8 – Special items for more details.
(3) Includes $21 million of curtailment gain related to the announcement of Aviation for workforce adjustments in response to the COVID-19
pandemic and $33 million of curtailment gain related to the disposal of investment in associate and businesses for fiscal year 2020 ($5
million of curtailment gain related to previously-announced restructuring actions from continuing operations and $23 million related to the
disposal of a business - Q Series business for fiscal year 2019). See note 8 – Special items for more details.
$
—
—
—
(3,474)
156
$ 4,272
(2,007)
312
$ 7,322
—
—
—
(2,007)
312
$ 7,322
(4) See Note 30 - Disposal of businesses for more details.
(5) See Note 31 - Discontinued operations for more details.
(6) Includes retirement benefit liabilities related to acquisition, see Note 32 - Acquisition for more details.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 169
The following table presents the reconciliation of plan assets and obligations to the amount recognized in the
consolidated statements of financial position, as at:
Present value of defined benefit
obligation
Fair value of plan assets
Net amount recognized
Amounts included in:
Retirement benefit
Liability
Asset(1)
Net liability
(1) Presented in Note 20 – Other assets.
December 31, 2020
Other
benefits
Pension
benefits
December 31, 2019
Other
benefits
Pension
benefits
January 1, 2019
Other
benefits
Pension
benefits
$ 5,560
(4,272)
$ 1,288
$ 1,363
(75)
$ 1,288
$
$
$
$
243
—
243
243
—
243
$ 9,301
(7,322)
$ 1,979
$ 2,172
(193)
$ 1,979
$
$
$
$
273
—
273
273
—
273
$ 9,817
(7,896)
$ 1,921
$ 2,121
(200)
$ 1,921
$
$
$
$
260
—
260
260
—
260
The following table presents the allocation of the net retirement benefit liability by major countries, as at:
Funded pension plans
Canada
U.S.
U.K.
Other
Unfunded pension plans
Germany
Canada
U.S.
Other
Net liability
December 31, 2020
Other
benefits
Pension
benefits
December 31, 2019
Other
benefits
Pension
benefits
January 1, 2019
Other
benefits
Pension
benefits
$
915
261
—
—
1,176
41
28
37
6
112
$ 1,288
$
$
—
—
—
—
—
—
234
9
—
243
243
$
783
370
(10)
48
1,191
571
27
41
149
788
$ 1,979
$
$
—
—
—
—
—
—
245
16
12
273
273
$
695
332
102
72
1,201
526
24
35
135
720
$ 1,921
$
$
—
—
—
—
—
—
232
18
10
260
260
The following table presents the allocation of benefit obligation and plan assets by major countries, as at:
Funded pension plans
Canada
U.S.
U.K.
Other
Unfunded pension plans
December 31, 2020
December 31, 2019
January 1, 2019
Benefit
obligation
Plan
assets
Benefit
obligation
Plan
assets
Benefit
obligation
Plan
assets
$
$
4,558
890
—
—
5,448
355
5,803
$ 3,643
629
—
—
4,272
—
$ 4,272
$
$
4,822
1,081
2,235
375
8,513
1,061
9,574
$ 4,039
711
2,245
327
7,322
—
$ 7,322
$
4,069
891
3,752
385
9,097
980
$ 10,077
$ 3,374
559
3,650
313
7,896
—
$ 7,896
170 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
The fair value of plan assets by level of hierarchy, was as follows, as at:
Cash and cash equivalents
Equity securities
U.S.
U.K.
Canada
Other
Fixed-income securities
Corporate
Government
Other
Real return asset securities
Other
Cash and cash equivalents
Equity securities
U.S.
U.K.
Canada
Other
Fixed-income securities
Corporate
Government
Other
Real return asset securities
Other
Cash and cash equivalents
Equity securities
U.S.
U.K.
Canada
Other
Fixed-income securities
Corporate
Government
Other
Real return asset securities
Other
Total
396
669
104
291
568
1,632
471
1,396
10
1,877
310
57
4,272
Total
618
873
215
334
1,071
2,493
853
2,536
17
3,406
682
123
7,322
Total
707
832
228
259
1,089
2,408
1,038
2,766
22
3,826
895
60
7,896
Level 1
246
$
$
669
104
291
568
1,632
—
—
—
—
310
—
2,188
Level 1
471
867
207
334
1,068
2,476
—
—
—
—
622
—
3,569
Level 1
513
826
220
259
1,086
2,391
—
—
—
—
840
—
3,744
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
December 31, 2020
Level 3
—
$
Level 2
150
—
—
—
—
—
471
1,396
10
1,877
—
57
2,084
$
—
—
—
—
—
—
—
—
—
—
—
—
December 31, 2019
Level 3
—
$
Level 2
147
—
8
—
—
8
853
2,536
17
3,406
—
123
3,684
$
6
—
—
3
9
—
—
—
—
60
—
69
Level 2
194
January 1, 2019
Level 3
—
$
—
8
—
—
8
1,038
2,766
22
3,826
—
60
4,088
$
6
—
—
3
9
—
—
—
—
55
—
64
Plan assets did not include any of the Corporation’s shares, nor any property occupied by the Corporation or other
assets used by the Corporation as at December 31, 2020, 2019 and January 1, 2019.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 171
The following table presents the contributions made for fiscal year 2020 and 2019 as well as the estimated
contributions, excluding Transportation, for fiscal year 2021:
2021
Estimated
2020
2019
Contribution to
Funded pension plans
Unfunded pension plans
Other benefits
Total defined benefits plans
DC pension plans
$
$
137
3
12
152
32
184
$
(1)
(1)
204
29
13
246
83
329
248
27
11
286
86
372
(1)
(1)
Total contributions
(1) Contributions for the fiscal years 2020 and 2019 includes Transportation. Contributions made by Transportation to DB and DC pension
plans in fiscal year 2020 were in the amount of $75 million and $52 million, respectively.
$
$
$
The following table presents information about the maturity profile of the defined benefit obligation, excluding
Transportation, expected to be paid, as at:
Benefits expected to be paid
Within 1 year
Between 1 and 5 years
Between 5 and 10 years
Between 10 and 15 years
Between 15 and 20 years
December 31, 2020
$
$
182
828
1,295
1,540
1,721
5,566
The following table provides the weighted average duration of the defined benefit obligations related to pension
plans, excluding Transportation, as at:
Duration in years as at
Funded pension plans
Canada
U.S.
Unfunded pension plans
Germany
Canada
U.S.
Other
December 31, 2020
17.4
15.4
20.8
13.8
14.1
16.1
The following table provides the expected payments to be made under the unfunded plans, as at December 31,
2020, excluding Transportation:
Benefits expected to be paid
Within 1 year
Between 1 and 5 years
Between 5 and 10 years
Between 10 and 15 years
Between 15 and 20 years
Germany
Other
Total
$
$
—
2
4
7
11
24
$
$
12
52
76
82
88
310
$
$
12
54
80
89
99
334
172 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
The significant actuarial assumptions reflect the economic situation of each country. The weighted-average
assumptions used to determine the benefit cost and obligation, including Transportation, were as follows as at:
(in percentage)
Benefit cost
Discount rate
Rate of compensation increase
Inflation rate
Ultimate health care cost trend rate
Benefit obligation
Discount rate
Rate of compensation increase
Inflation rate
Initial health care cost trend rate
Ultimate health care cost trend rate
n/a: Not applicable
December 31, 2020
Other
benefits
Pension
benefits
December 31, 2019
Other
benefits
Pension
benefits
January 1, 2019
Other
benefits
Pension
benefits
2.51 %
2.91 %
2.23 %
n/a
2.13 %
2.86 %
2.04 %
n/a
n/a
3.15 %
2.75 %
2.10 %
5.07 %
2.65 %
2.75 %
2.30 %
5.17 %
5.07 %
3.29 %
2.99 %
2.28 %
n/a
2.51 %
2.91 %
2.23 %
n/a
n/a
3.88 %
3.00 %
2.20 %
5.08 %
3.15 %
2.75 %
2.10 %
5.21 %
5.07 %
3.03 %
3.00 %
2.28 %
n/a
3.29 %
2.99 %
2.28 %
n/a
n/a
3.56 %
3.00 %
2.20 %
5.08 %
3.88 %
3.00 %
2.20 %
5.24 %
5.08 %
The weighted-average assumptions used to determine the benefit cost and obligation from continuing operations
were as follows as at:
(in percentage)
Benefit cost
Discount rate
Rate of compensation increase
Inflation rate
Ultimate health care cost trend rate
December 31, 2020
Pension
benefits
Other
benefits
2.83 %
2.95 %
2.22 %
n/a
3.20 %
2.75 %
n/a
5.04 %
The mortality tables and the average life expectancy in years of a member at age 45 or 65, including
Transportation, is as follows as at December 31:
(in years)
Country
Mortality tables
Life expectancy over 65 for a male member currently
Aged 45 on December
2019
Aged 65 on December
2019
2020
2020
Canada
U.K.
U.S.
2014 Private Sector Mortality Table ("CPM2014Priv")
projected generationally using CPM Improvement
Scale B ("CPM-B")
SPA07M_CMI 2016(1)
Pri-2012 mortality table projected generationally
using the MP-2020 improvement scale(2)
Germany
Dr. K Heubeck 2018
22.1
22.1
20.4
20.5
21.9
21.6
20.6
20.3
23.1
23.9
21.9
23.2
22.9
23.1
22.2
23.1
Country
Mortality tables
Life expectancy over 65 for a female member currently
Aged 45 on December
2019
Aged 65 on December
2019
2020
2020
Canada
U.K.
U.S.
2014 Private Sector Mortality Table ("CPM2014Priv")
projected generationally using CPM Improvement
Scale B ("CPM-B")
SPA07M_CMI 2016(1)
Pri-2012 mortality table projected generationally
using the MP-2020 improvement scale(2)
Germany
Dr. K Heubeck 2018
24.5
24.0
22.4
23.9
24.3
23.4
22.6
23.8
25.4
25.9
23.8
26.1
25.2
25.0
24.2
26.0
(1)SNA07M_CMI 2016 and S2P(M/F)A CMI 2016 as at December 31, 2019.
(2) Pri-2012 mortality table projected generationally using the MP-2019 improvement scale as at December 31, 2019.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 173
A 0.25 percentage point increase in one of the following actuarial assumptions would have the following effects,
all other actuarial assumptions remaining unchanged, for the fiscal year 2020 and as at December 31, 2020:
Assumption
Discount rate
Rate of compensation increase
Inflation rate
(1) Includes Transportation.
Retirement benefit cost
Net retirement
benefit liability
Continuing
operations
(1)
Total
Continuing
operations
(14)
4
2
(20)
5
4
(247)
30
1
(1)
Total
(438)
49
92
A one year additional life expectancy as at December 31, 2020 for all DB plans would increase the net retirement
benefit liability by $284 million and the retirement benefit cost by $18 million. The net retirement benefit liability
from continuing operations would increase by $148 million and the retirement benefit cost by $14 million for fiscal
year 2020, all other actuarial assumptions remaining unchanged.
As at December 31, 2020, the health care cost trend rate for retirement benefits other than pension, which is a
weighted-average annual rate of increase in the per capita cost of covered health and dental care benefits, is
assumed to be 5.17% and to decrease progressively to 5.07% by calendar year 2027 and then remain at that
level for all participants. A one percentage point change in assumed health care cost trend rates would have the
following effects, for the fiscal year 2020 and as at December 31, 2020:
Retirement benefit cost
Net retirement
benefit liability
Continuing
operations
(1) Continuing
operations
Total
1
(1)
1
(1)
19
(17)
(1)
Total
19
(17)
One percentage point increase
One percentage point decrease
(1) Includes Transportation.
24.
TRADE AND OTHER PAYABLES
Trade and other payables were as follows, as at:
Trade payables
Accrued liabilities
Interest payable
Other
$
December 31, 2020
1,134
81
154
242
1,611
$
$
December 31, 2019
3,259
813
150
460
4,682
$
January 1, 2019
3,502
756
138
238
4,634
$
$
The Corporation negotiated extended payment terms for Aviation of 180 to 360 days after delivery with certain of
its suppliers. Trade payables with these extended terms totalled $56 million and bore interest at a weighted
average rate of 8.25% as at December 31, 2020 ($308 million and 6.70%, respectively, as at December 31, 2019
and $279 million and 6.84%, respectively, as at January 1, 2019). The amount of payables extended may
fluctuate over time based on availability, cost, and requirements, and suppliers generally have the right to return to
original payment terms for future payables upon providing a minimum notice period. Financial market conditions
currently preclude the extension of payment terms of new Aviation trade payables.
See Note 31 – Discontinued operations for more details regarding Transportation payment terms.
174 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
25. PROVISIONS
Changes in provisions were as follows, for fiscal years 2020 and 2019:
Balance as at December 31, 2019(2) $
Additions
Utilization
Reversals
Accretion expense
Effect of changes in
discount rates
Disposal of businesses(5)
Reclassified as liabilities
directly associated with
assets held for sale(6)
Effect of foreign currency
exchange rate changes
Balance as at December 31, 2020 $
Of which current
$
Of which non-current
$
Restructuring,
severance
and other
termination
benefits
134
$
Product
warranties
432
207
(146)
(44)
1
$
Credit and
residual
value
guarantees
90
7
(4) (10)
(5)
2
1
(8)
2
(12)
Onerous
contracts
$ 1,008
284
(180)
(208) (4)(9)
Other(1)
130
$
51
(18)
(25)
—
Total
$ 1,794
647
(459)
(315)
8
98 (3)
(111)
(33) (3)
—
—
(35)
5
14
(289)
—
(14)
17
(358)
(311)
—
(51)
(554)
(43)
(959)
22
154
45
109
154
$
$
$
—
80 (7) $
$
—
80
80
$
3
5
5
—
5
31
111
13
98
111
$
$
$
4
85
83
2
85
$
$
$
60
435
146
289
435
$
$
$
Credit and
residual
value
guarantees
Restructuring,
severance
and other
termination
benefits
Product
warranties
Balance as at January 1, 2019
Additions
Utilization
Reversals
Accretion expense
Effect of changes in
discount rates
Reclassified as liabilities
directly associated with
assets held for sale(11)
Effect of foreign currency
exchange rate changes
Balance as at December 31, 2019
Of which current
Of which non-current
$
$
$
$
515
180
(182)
(78)
1
1
(7)
(5)
425
343
82
425
$
456
—
$
(336) (10)
(39)
7
2
(90)
—
—
—
—
—
$
$
$
$
$
$
226
120 (3)
(185)
(26) (3)
—
—
(3)
(1)
131
130
1
131
Onerous
contracts
Other(1)
Total
$ 1,146
$
242 (8)
(333)
(76) (8)(9)
6
16
157
44
(50)
(20)
—
$ 2,500
586
(1,086)
(239)
14
—
19
(304)
(19)
(423)
7
704
495
209
704
$
$
$
(1)
111
92
19
111
—
$ 1,371
$ 1,060
311
$ 1,371
$
$
$
(1) Mainly comprised of claims and litigations.
(2) Opening balances are before the assets held for sale reclassification related to the disposal of CRJ and aerostructure businesses.
(3) See Note 8 – Special items and Note 31 – Discontinued operations for more details on additions and reversals related to
restructuring charges.
(4) Related to disposal of the Corporation’s remaining interest in ACLP and its aerostructures activities supporting A220 and A330 and the
reversal of Learjet 85 aircraft program cancellation provisions. See Note 8 – Special items for more details.
(5) See Note 30 – Disposal of businesses.
(6) See Note 31 – Discontinued operations for more details.
(7) Following the sale of the CRJ business, the Corporation retains those provisions and has a back-to-back agreement with MHI.
See Note 20 – Other Assets and Note 30 – Disposal of businesses for more information.
(8) See Note 8 – Special items for more details on the addition and reversals related to the Primove impairment and other costs.
(9) See Note 8 – Special items for more details on the reversal of Learjet 85 aircraft program cancellation provisions
(10)When Credit and residual value guarantees become due, the respective amounts are reclassified to credit and residual value guarantees
payable within other financial liabilities.
(11)Represents liabilities directly associated with assets held for sale related to the sale of CRJ and aerostructure businesses.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 175
26. OTHER FINANCIAL LIABILITIES
Other financial liabilities were as follows, as at:
Government refundable advances(1)
Lease liabilities(2)
Credit and residual value guarantees payable
Liabilities related to RASPRO assets(3)
Vendor non-recurring costs
Derivative financial instruments(4)
Payable to MHI(5)
Lease subsidies(6)
Other
Of which current
Of which non-current
$
December 31, 2020
595
232
223
149
81
42
30
11
101
1,464
239
1,225
1,464
$
$
$
December 31, 2019
585
$
January 1, 2019
759
$
487
378
—
112
535
—
—
125
2,222
617
1,605
2,222
$
$
$
609
172
—
136
885
—
53
119
2,733
701
2,032
2,733
$
$
$
(1) Of which $439 million has a back-to-back agreement with ACLP ($468 million as at December 31, 2019 and $385 million as at
January 1, 2019). Refer to Note 19 – Other financial assets for the receivables from ACLP. The Corporation is required to pay amounts to
governments based on the number of deliveries of aircraft.
(2) Lease liabilities were reclassified from Other liabilities to Other financial liabilities. Refer to Note 43 – Reclassification.
(3) The Corporation has retained the regional aircraft securitization program assets (RASPRO) for which the Corporation has transferred the net
beneficial interest through a back-to-back agreement with MHI. Refer to Note 19 – Other financial assets and to Note 30 – Disposal of
businesses for more information.
(4) See Note 13 – Financial instruments
(5) This payable to MHI represents a back-to-back agreement that the Corporation has with MHI related to certain aircraft loans. Refer to Note
19 – Other financial assets and to Note 30 – Disposal of businesses for more information.
(6) Following the sale of the CRJ business, the Corporation retained those lease subsidies and has a back-to-back agreement with MHI. Refer
to Note 19 – Other financial assets and to Note 30 – Disposal of businesses for more information. As of December 31, 2019, those liabilities
were presented as liabilities directly associated with assets held for sale as part of the sale of the CRJ business.
The Corporation has entered into leases for which the asset is still under construction, and therefore the right-of-
use assets and the lease liabilities related to these leases are not recorded, as at December 31, 2020, since the
lease has not yet commenced. The Corporation’s undiscounted lease commitments were as follows, as at:
Less than 1 year
From 1 to 3 years
Thereafter
(1) of which nil are related to Transportation.
December 31, 2020
$
$
—
12
574
586
(1)
176 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
27. OTHER LIABILITIES
Other liabilities were as follows, as at:
Supplier contributions to aerospace programs
Employee benefits(2)
Income taxes payable
Other taxes payable
Accruals for long-term contract costs
Other
Of which current
Of which non-current
$
December 31, 2020
332
253
31
1
—
218
835
447
388
835
$
$
$
December 31, 2019 (1)
$
$
$
$
389
532
202
165
398
220
1,906
1,441
465
1,906
January 1, 2019
389
643
173
181
443
193
2,022
1,499
523
2,022
$
$
$
$
(1) Lease liabilities were reclassified from Other liabilities to Other financial liabilities. Refer to Note 43 - Reclassification.
(2) Comprises all employee benefits excluding those related to retirement benefits, which are reported in the line items Retirement benefits and
in Other assets (see Note 23 – Retirement benefits).
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 177
28.
LONG-TERM DEBT
Long-term debt was as follows, as at:
Amount in
currency of
origin Currency Contractual
Interest rate
After effect
of fair value
hedges
(1)
Maturity
Amount
Amount
Amount
December 31
2020
December 31
2019
January 1
2019
414(2)
1018(2)
500
EUR
USD
USD
6.13 %
8.75 %
5.75 %
1,200
USD
6.00 %
1,250
USD
6.13 %
1,000
1,500
2,000
850
750
250
150
Various(5)
USD
USD
USD
USD
USD
USD
CAD
Various
7.50 %
7.50 %
7.88 %
7.75 %
n/d
7.45 %
7.35 %
Various(5)
Senior notes
Secured term loan(4)
Notes
Debentures
Other
Of which current
Of which non-current
3-month
Libor + 3.36(3)
3-month
Libor + 3.57(3)
3-month
Libor + 3.48(3)
n/a May 2021 $
513 $
483 $
952
n/a Dec. 2021
Mar. 2022
1,013
503
1,008
1,380
504
504
Oct. 2022
1,212
1,215
1,217
Jan. 2023
1,269
1,272
1,273
n/a Dec. 2024
n/a Mar. 2025
n/a
Apr. 2027
n/a
n/a
n/a Aug. 2023
n/a May 2034
n/a Dec. 2026
n/a
Apr. 2026
994
1,494
1,981
—
712
248
117
19
992
990
1,492
1,491
1,978
—
—
248
115
26
—
869
—
248
110
27
$
$
$
10,075 $
9,333 $
9,061
1,882 $
8,193
8 $
9
9,325
9,052
10,075 $
9,333 $
9,061
(1) Interest on long-term debt as at December 31, 2020 is payable semi-annually, except for the other debts for which the timing of interest
payments is variable.
(2) The Corporation redeemed €366 million aggregate principal amount of the 6.13% Notes due 2021 of €780 million and $382 million
aggregate principal amount of the 8.75% Notes due 2021 of $1,400 million, in fiscal year 2019.
(3) The interest-rate swap agreement related to these Senior Notes were partially settled in prior fiscal years. As these interest-rate swaps were
in a fair value hedge relationship, the related deferred gains recorded in the hedged item will be amortized in interest expense up to the
maturity of these debts.
(4) The facility has a minimum utilization of $750 million and a maximum of $1,000 million and will bear an interest at an agreed margin over the
LIBOR references rate.
(5) The notional amount of other long-term debt is $19 million as at December 31, 2020 ($26 million as at December 31, 2019 and $27 million
as at January 1, 2019). The contractual interest rate is 7.95% as at December 31, 2020 (a weighted average rate of 7.8% as at December
31, 2019 and 7.8% as at January 1, 2019).
n/a: Not applicable
n/d: Not disclosed
All Senior notes and Notes rank pari-passu and are unsecured. Transportation is subject to various financial
covenants under the Transportation’s letter of credit facility and the unsecured revolving credit facility, which must
be met on a quarterly basis, see Note 36 - Credit facilities for more details. A breach of any of these agreements
or the inability to comply with these covenants could result in a default under these facilities, which would permit
the Corporation’s banks to request immediate defeasance or cash cover of all outstanding letters of credit, and
bond holders and other lenders to declare amounts owed to them to be immediately payable. The Corporation
was in compliance with all covenants as at December 31, 2020 and 2019 and January 1, 2019.
Under the Secured term loan, the Corporation has the right to voluntarily prepay the outstanding amount of the
Facility. In addition, the sale of Transportation will require the Corporation to make an offer to repay 50% of the
then outstanding principal amount of the Facility. The prepayment of the outstanding amount of the Facility is
subject to prepayment fees, which decreases after the first year. Drawings under the Facility will be secured by a
178 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
security interest in certain aviation inventory and related accounts receivable. There are no financial covenants
under the Facility.
The carrying value of long-term debt includes principal repayments, transaction costs, unamortized discounts and
the basis adjustments related to derivatives designated in fair value hedge relationships. The following table
presents the contractual principal repayments of the long-term debt, as at:
Within 1 year
Between 1 and 5 years
More than 5 years
$
December 31, 2020
1,901
5,825
2,385
10,111
$
$
December 31, 2019
8
5,433
3,883
9,324
$
January 1, 2019
9
6,135
2,878
9,022
$
$
29. DISPOSAL OF INVESTMENT IN ASSOCIATE
On February 12, 2020, Bombardier transferred its remaining interest in ACLP to Airbus and the Government of
Québec. Airbus holds, as of February 12, 2020, 75% of ACLP with the Government of Québec increasing its
holding to 25% for no cash consideration. The Corporation’s work packages for the A220 and A330, in St-Laurent,
Québec was transferred to Airbus, through its subsidiary Stelia Aerospace.
The Corporation will receive $591 million, net of adjustments, of which $531 million was received at closing, and is
released of its future funding capital requirement to Airbus Canada. Finally, the agreement provided for the
cancellation of 100,000,000 Bombardier warrants by Airbus.
These non-core assets were previously reported in Bombardier Corporate and Others segment.
The cumulative net proceeds received were $554 million as at December 31, 2020. A gain of $120 million was
recognized in Special items for the fiscal year 2020, see Note 8 - Special items.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 179
30. DISPOSAL OF BUSINESSES
CRJ series aircraft program
On June 1, 2020, the Corporation concluded the previously announced sale of the CRJ Series aircraft program to
Mitsubishi Heavy Industries, Ltd (MHI).
Through this sale, MHI acquired the maintenance, support, refurbishment, marketing, and sales activities for the
CRJ Series aircraft, including the related services and support network located in Montréal, Québec, and Toronto,
Ontario, and its service centres located in Bridgeport, West Virginia, and Tucson, Arizona, as well as the type
certificates.
Bombardier will continue to supply components and spare parts and will assemble the remaining CRJ Series
aircraft in the backlog on behalf of MHI until the complete delivery of the current backlog, expected by the end of
the first quarter of 2021.
The Corporation has received gross proceeds of $585 million at closing, including certain closing adjustments.
The net proceeds were $574 million at closing. A pre-tax gain of $488 million for the fiscal year 2020 was
recognized in Special items, see Note 8 - Special items ($440 million after tax impact).
The Corporation has retained certain liabilities representing credit and residual value guarantees provisions and
lease subsidies for which the Corporation has a back-to-back agreement with MHI. In addition, the Corporation
has retained certain assets, mainly including the Corporation’s regional aircraft securitization program (RASPRO)
for which the Corporation has transferred the net beneficial interest through a back-to-back agreement with MHI.
These non-core assets were previously reported in the Aviation segment.
Aerostructure Business
On October 30, 2020, the Corporation concluded the sale of the aerostructure business to Spirit AeroSystems
Holding, Inc. (Spirit). Through this sale, Spirit acquired Bombardier’s aerostructures activities and aftermarket
services operations in Belfast, U.K.; Casablanca, Morocco; and its aerostructures maintenance, repair and
overhaul (MRO) facility in Dallas, U.S. for cash consideration of $275 million, Spirit’s assumption of liabilities,
including government refundable advances and pension obligations.
The Corporation has received gross proceeds of $275 million at closing. The net proceeds were $257 million. A
gain of $678 million for fiscal year 2020 was recognized in Special items, see Note 8 - Special items.
Following the transaction, Spirit will continue to supply structural aircraft components and spare parts to support
the production and in-service fleet of Bombardier Aviation’s Learjet, Challenger and Global families of aircraft.
These non-core assets were previously reported in the Aviation segment.
31. DISCONTINUED OPERATIONS
On September 16, 2020, the Corporation, Alstom and CDPQ and certain related parties signed a definitive sale
and purchase agreement for the sale of the Transportation business through the sale of the entire issued share
capital of BT Holdco (“SPA”). On January 29, 2021, the Corporation closed the sale of the Transportation
Business to Alstom.
Total proceeds to the vendors after the deduction of debt-like items and transferred liabilities are $6.0 billion,
including the amount paid by Alstom to redeem the Corporation and CDPQ’s capital injections of €400 million
($488 million at an exchange rate of 1.22) and €350 million ($427 million at an exchange rate of 1.22),
respectively, in Transportation made in fiscal year 2020 to support working capital. After deducting CDPQ’s equity
position of $2.5 billion, transaction costs, and including the impact from closing adjustments and obligations
related to achieving a minimum cash balance at Transportation at the end of fiscal year 2020, the Corporation
expects net proceeds of approximately $3.6 billion. This amount includes €400 million ($488 million at an
exchange rate of 1.22) of cash from the redemption of equity and €103 million ($125 million at an exchange rate
180 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
of 1.22) of intercompany loan reimbursement by Transportation, settled in conjunction with the transaction closing.
Net proceeds also include approximately $600 million of Alstom shares (€500 million representing 11.5 million
shares for a fixed subscription price of €43.46 per share), monetizable starting in late April 2021.
See Note 42 - Commitments and contingencies for more information on indemnification.
Transportation was classified as discontinued operations and the related assets and liabilities are held for sale.
The results of Transportation were as follows, for fiscal years:
Revenues
Cost of sales
Gross margin
SG&A
R&D
Share of income of joint ventures and associates
Other income
Special items
EBIT(1)
Financing expense(2)
Financing income(2)
EBT
Income taxes
Net loss from discontinued operations
EPS from discontinued operations(in dollars)
Basic and diluted(3)
2020
7,844
8,023
(179)
442
95
(108)
2
8
(618)
91
(329)
(380)
18
(398)
$
$
2019
8,269
7,710
559
456
136
(94)
(9)
48
22
87
(15)
(50)
16
(66)
$
$
(0.29)
(0.11)
(1) For fiscal year 2020, includes $87 million of wage subsidies from the Canadian Government and other countries.
(2) For fiscal year 2020, includes accretion on net retirement benefit obligations in the amount of $14 million ($17 million for fiscal year 2019),
and net gain on certain financial instruments in the amount of $325 million (net loss of $10 million for fiscal year 2019).
(3) For the total number of ordinary shares used in the calculation of basic and diluted EPS from discontinued operations, refer to Note 12-
Earnings per share.
Special items were as follows, for fiscal years:
Restructuring charges (reversals)(1)
Disruption costs(2)
Income taxes
Of which is presented in
Special items in EBIT
Income taxes - effect of special items
2020
2019
1
7
1
9
8
1
9
$
$
$
48
—
—
48
48
—
48
$
$
$
$
1. For fiscal year 2020, represents severance charges of $1 million related to previously-announced restructuring actions.
For fiscal year 2019, represents severance charges of $61 million partially offset by curtailment gains of $5 million, and
the reversal of previously-recorded impairment charges of $8 million, related to previously-announced restructuring
actions.
2. Due to the COVID-19 pandemic, in the second half of March 2020, the Corporation temporarily suspended operations at
various production facilities. As a result of the pandemic, $7 million were recorded as special items for fiscal year 2020.
These costs do not represent the full impact of the COVID-19 pandemic on the results of operations of Transportation
since it does not reflect the impact of lost or deferred revenues and associated margins.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 181
Assets held for sale
The major classes of assets held for sale or liabilities directly associated with assets held for sale was as follows,
as at:
December 31, 2020
Cash and cash equivalents
Trade and other receivables
Contract assets(1)
PP&E
Goodwill(2)
Investments in joint ventures and associates
Deferred income taxes
Other assets(3)
Total assets
Borrowings
Trade and other payables
Contract liabilities
Provisions
Retirement benefits
Other liabilities(4)
Total liabilities
$
$
$
$
671
1,217
3,260
1,041
2,101
626
462
1,039
10,417
798
2,831
2,749
959
1,202
1,607
10,146
(1) Includes $7,792 million of advances and progress billings.
(2) See Note 22 – Intangible assets and Note 4 – Use of estimates and judgment for more details.
(3) Mainly comprised of inventories, long-term contract receivables, derivative financial instruments and retirement benefit assets of
$49 million.
(4) Mainly comprised of employee benefits, accruals for long-term contract costs, lease liabilities, derivative financial instruments and
deferred income tax liability of $15 million.
Accumulated OCI was as follows as at:
CCTD
Cash flow hedges
Net loss on derivative financial instruments
Income taxes
Retirement benefits
Retirement benefits remeasurement
Income taxes
Accumulated OCI
The net cash flows were as follows, for fiscal years:
Cash flows from operating
Cash flows from investing
Cash flows from financing
Net cash outflow
December 31, 2020
(530)
(64)
6
(58)
(961)
115
(846)
(1,434)
$
$
2020
(1,149)
(137)
1,083
(203)
$
$
$
$
2019
(427)
(127)
(3)
(557)
182 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Additional information
Long-Term contracts
In connection with certain long-term contracts, Transportation enters into arrangements whereby amounts are
received from third-party advance providers in exchange for the rights to customer payments. There is no
recourse to Transportation if the customer defaults on its payment obligations assigned to the third-party advance
provider. Amounts received under these arrangements are included as advances and progress billings in
reduction of long-term contracts (production contracts) in contract assets and amounted to €256 million
($314 million) as at December 31, 2020 (€503 million ($565 million) as at December 31, 2019 and €624 million
($714 million) as at January 1, 2019). The third-party advance providers could request repayment of these
amounts if Transportation fails to perform its contractual obligations such as delivery by a specified date.
Off-balance sheet sale of receivables
In the normal course of its business, Transportation has facilities, to which it can sell, without credit recourse,
qualifying receivables. Receivables of €557 million ($684 million) were outstanding under such facilities as at
December 31, 2020 (€809 million ($909 million) as at December 31, 2019 and €799 million ($914 million) as at
January 1, 2019). Receivables of € 1,167 million ($1,331 million) were sold to these facilities during fiscal year
2020 (€1,691 million ($1,894 million) during fiscal year 2019).
Trade and other payables
Transportation negotiated extended payment terms of 150 to 240 days after delivery with certain of its suppliers.
Trade payables with these extended terms totaled €517 million ($634 million) and bore interest at a weighted
average rate of 1.83% as at December 31, 2020 (€488 million ($548 million) and 2.50%, respectively, as at
December 31, 2019 and €474 million ($543 million) and 2.41%, respectively, as at January 1, 2019). Suppliers
generally have the right to return to original payment terms for future payables upon providing a minimum notice
period.
CDPQ investment in BT Holdco
On February 11, 2016, Bombardier closed the sale to the CDPQ of a $1.5-billion convertible share investment in
Bombardier Transportation’s newly-created holding company, Bombardier Transportation (Investment) UK Limited
(BT Holdco). Under the terms of the investment, Bombardier Inc. sold voting shares convertible into a 30%
common equity stake of BT Holdco to the CDPQ, subject to annual adjustments related to performance.
BT Holdco owns essentially all of the assets and liabilities of Bombardier’s Transportation business segment, its
operational headquarters remains in Germany.
Capital injection
In fiscal year 2020, CDPQ and the Corporation made capital injections of €350 million ($386 million) and
€400 million ($456 million), respectively, in BT Holdco in consideration for the issuance of additional convertible
shares. These additional convertible shares are redeemable at the option of BT Holdco and otherwise having
substantially the same terms as the previously issued convertible shares held by CDPQ and the Corporation.
In fiscal year 2019, the Corporation and CDPQ (through its affiliates) made a capital injection of €105 million
($115 million) and €45 million ($49 million) in BT Holdco.
As such, the equity ownership percentage of the Corporation and of CDPQ in Transportation as at December 31,
2020 is 65.88% and 34.12%, respectively.
32. ACQUISITION
On December 31, 2020, the Corporation completed the acquisition, to gain full control, of the aircraft service
center in Berlin. The Corporation purchased the shares from Lufthansa Technik AG and ExecuJet Aviation Group
AG, thereby allowing the Corporation to establish a wholly-owned service center in Berlin and further expand its
worldwide customer support footprint.
The Corporation acquired net liabilities valued at $15 million, consisting primarily of right of use assets,
inventories, receivables, retirement benefits liability, lease liability and payables. Based on a preliminary purchase
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 183
price allocation, a goodwill of $15 million was recognized. The assets acquired and liabilities assumed by the
Corporation were measured at their estimated fair value.
33. SHARE CAPITAL
Preferred shares
The preferred shares authorized were as follows, as at December 31, 2020, and 2019 and January 1, 2019:
Series 2 Cumulative Redeemable Preferred Shares
Series 3 Cumulative Redeemable Preferred Shares
Series 4 Cumulative Redeemable Preferred Shares
Authorized for the
specific series
12,000,000
12,000,000
9,400,000
The preferred shares issued and fully paid were as follows, as at:
Series 2 Cumulative Redeemable Preferred Shares
Series 3 Cumulative Redeemable Preferred Shares
Series 4 Cumulative Redeemable Preferred Shares
5,811,736
6,188,264
9,400,000
5,811,736
6,188,264
9,400,000
5,811,736
6,188,264
9,400,000
December 31, 2020
December 31, 2019
January 1, 2019
Series 2 Cumulative Redeemable Preferred Shares
Redemption: Redeemable, at the Corporation’s option, at $25.50 Cdn per share.
Conversion: Convertible on a one-for-one basis, at the option of the holder, on August 1, 2022 and on August 1 of every
fifth year thereafter into Series 3 Cumulative Redeemable Preferred Shares. Fourteen days before the
conversion date, if the Corporation determines, after having taken into account all shares tendered for
conversion by holders, that there would be less than 1,000,000 outstanding Series 2 Cumulative Redeemable
Preferred Shares, such remaining number shall automatically be converted into an equal number of Series 3
Cumulative Redeemable Preferred Shares. Likewise, if the Corporation determines fourteen days before the
conversion date that, at such time, there would be less than 1,000,000 outstanding Series 3 Cumulative
Redeemable Preferred Shares, then no Series 2 Cumulative Redeemable Preferred Shares may be
converted.
Since August 1, 2002, the variable cumulative preferential cash dividends are payable monthly on the
15th day of each month, if declared, with the annual variable dividend rate being set between 50% to 100% of
the Canadian prime rate, and adjusted as follows. The dividend rate will vary in relation to changes in the
prime rate and will be adjusted upwards or downwards on a monthly basis to a monthly maximum of 4% if the
trading price of Series 2 Cumulative Redeemable Preferred Shares is less than $24.90 Cdn per share or more
than $25.10 Cdn per share.
Dividend:
Series 3 Cumulative Redeemable Preferred Shares
Redemption: Redeemable, at the Corporation’s option, at $25.00 Cdn per share on August 1, 2022 and on August 1 of
every fifth year thereafter.
Conversion: Convertible on a one-for-one basis, at the option of the holder, on August 1, 2022 and on August 1 of every
fifth year thereafter into Series 2 Cumulative Redeemable Preferred Shares. Fourteen days before the
conversion date, if the Corporation determines, after having taken into account all shares tendered for
conversion by holders, that there would be less than 1,000,000 outstanding Series 3 Cumulative Redeemable
Preferred Shares, such remaining number shall automatically be converted into an equal number of Series 2
Cumulative Redeemable Preferred Shares. Likewise, if the Corporation determines fourteen days before the
conversion date that, at such time, there would be less than 1,000,000 outstanding Series 2 Cumulative
Redeemable Preferred Shares, then no Series 3 Cumulative Redeemable Preferred Shares may be
converted.
Dividend:
For the five-year period from August 1, 2017 and including July 31, 2022, the Series 3 Cumulative
Redeemable Preferred Shares carry fixed cumulative preferential cash dividends at a rate of 3.983% or
$0.99575 Cdn per share per annum, payable quarterly on the last day of January, April, July and October of
each year at a rate of $0.2489375 Cdn, if declared. For each succeeding five-year period, the applicable fixed
annual rate of the cumulative preferential cash dividends calculated by the Corporation shall not be less than
80% of the Government of Canada bond yield, as defined in the Restated Articles of Incorporation.
184 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Series 4 Cumulative Redeemable Preferred Shares
Redemption: The Corporation may, subject to certain provisions, on not less than 30 nor more than 60 days’ notice, redeem
for cash the Series 4 Cumulative Redeemable Preferred Shares at $25.00 Cdn.
Conversion:
The Corporation may, subject to the approval of the Toronto Stock Exchange and such other stock exchanges
on which the Series 4 Cumulative Redeemable Preferred Shares are then listed, at any time convert all or any
of the outstanding Series 4 Cumulative Redeemable Preferred Shares into fully paid and non-assessable
Class B Shares (subordinate voting) of the Corporation. The number of Class B Shares (subordinate voting)
into which each Series 4 Cumulative Redeemable Preferred Shares may be so converted will be determined
by dividing the then applicable redemption price together with all accrued and unpaid dividends to, but
excluding the date of conversion, by the greater of $2.00 Cdn and 95% of the weighted-average trading price
of such Class B Shares (subordinate voting) on the Toronto Stock Exchange for the period of 20 consecutive
trading days, which ends on the fourth day prior to the date specified for conversion or, if that fourth day is not
a trading day, on the trading day immediately preceding such fourth day. The Corporation may, at its option, at
any time, create one or more further series of Preferred Shares of the Corporation, into which the holders of
Series 4 Cumulative Redeemable Preferred Shares could have the right, but not the obligation, to convert
their shares on a share-for-share basis.
Dividend:
The holders of Series 4 Cumulative Redeemable Preferred Shares are entitled to fixed cumulative preferential
cash dividends, if declared, at a rate of 6.25% or $1.5625 Cdn per share per annum, payable quarterly on the
last day of January, April, July and October of each year at a rate of $0.390625 Cdn per share.
Common shares
All common shares are without nominal or par value.
Class A Shares (multiple voting)
Voting rights: Ten votes each.
Conversion: Convertible, at any time, at the option of the holder, into one Class B Share (subordinate voting).
Dividend:
After payment of the priority dividend on the Class B Shares (subordinate voting) mentioned below, the Class
A Shares (multiple voting) shall share equally, share for share, with respect to any additional dividends which
may be declared in respect of the Class A Shares (multiple voting) and Class B Shares (subordinate voting).
These dividends, if declared, shall be payable quarterly on the last day of March, June, September and
December of each year.
Class B Shares (subordinate voting)
Voting rights: One vote each.
Conversion: Convertible, at the option of the holder, into one Class A Share (multiple voting): (i) if an offer made to Class A
(multiple voting) shareholders is accepted by the present controlling shareholder (the Bombardier family); or
(ii) if such controlling shareholder ceases to hold more than 50% of all outstanding Class A Shares (multiple
voting) of the Corporation.
Dividend:
The holders of Class B Shares (subordinate voting) are entitled, in priority to the holders of Class A Shares
(multiple voting) to non-cumulative dividends of $0.0015625 Cdn per share, payable quarterly on the last day
of March, June, September and December of each year at a rate of $0.000390625 Cdn per share, if declared.
After payment of said priority dividend, the Class B Shares (subordinate voting) shall share equally, share for
share, with respect to any additional dividends which may be declared in respect of the Class A Shares
(multiple voting) and the Class B Shares (subordinate voting). These dividends, if declared, shall be payable
quarterly on the last day of March, June, September and December of each year.
The change in the number of common shares issued and fully paid and in the number of common shares
authorized was as follows as at:
Class A Shares (multiple voting)
Issued and fully paid
Balance at beginning of year
Converted to Class B
Balance at end of year
Authorized
December 31, 2020 December 31, 2019
308,746,929
(10,000)
308,736,929
3,592,000,000
308,750,749
(3,820)
308,746,929
3,592,000,000
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 185
Class B Shares (subordinate voting)
Issued and fully paid
Balance at beginning of year
Issuance of shares
Converted from Class A
Held in trust under the PSU and RSU plans
Balance at beginning of year
Distributed
Balance at end of year
Authorized
The change in the number of warrants exercisable was as follows as at:
Balance at beginning of year
Cancellation of warrants
Balance at end of year
Dividends
Dividends declared were as follows:
December 31, 2020 December 31, 2019
2,128,017,205
64,737
10,000
2,128,091,942
(39,160,485)
22,112,544
(17,047,941)
2,111,044,001
3,592,000,000
2,125,232,847
2,780,538
3,820
2,128,017,205
(60,541,394)
21,380,909
(39,160,485)
2,088,856,720
3,592,000,000
December 31, 2020 December 31, 2019
305,851,872
—
305,851,872
305,851,872
(100,000,000)
205,851,872
Per share
(Cdn$)
0.00 $
0.00
Dividends declared after
December 31, 2020
Total
(in millions
of U.S.$)
—
—
—
—
1
3
4
4
0.05
0.25
0.39
$
Class A common shares
Class B common shares
Series 2 Preferred Shares
Series 3 Preferred Shares
Series 4 Preferred Shares
Per share
(Cdn$)
0.00 $
0.00
Per share
(Cdn$)
December 31, 2020
Total
(in millions
of U.S.$)
—
—
—
3
5
11
19
19
Dividends declared for fiscal years
December 31, 2019
Total
(in millions
of U.S.$)
—
—
—
4
5
11
20
20
0.72
1.00
1.56
0.99
1.00
1.56
0.00 $
0.00
$
$
186 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
34. SHARE-BASED PLANS
PSU, DSU and RSU plans
The Board of Directors of the Corporation approved a PSU and a RSU plan under which PSUs and RSUs may be
granted to executives and other designated employees. The PSUs and the RSUs give recipients the right, upon
vesting, to receive a certain number of the Corporation’s Class B Shares (subordinate voting). The PSUs and
RSUs also give certain recipients the right to receive a cash payment equal to the value of the RSUs. The Board
of Directors of the Corporation has also approved a DSU plan under which DSUs may be granted to senior
officers. The DSU plan is similar to the PSU plan, except that their exercise can only occur upon retirement or
termination of employment. During fiscal year 2020, a combined value of $31 million of DSUs, PSUs and RSUs
were authorized for issuance ($44 million during fiscal year 2019).
The number of PSUs, DSUs and RSUs has varied as follows, for fiscal years:
PSU
DSU
2020
RSU
PSU
DSU
Balance at beginning
of year
Granted(1)
Exercised
Forfeited
95,207,904
—
(22,655,561)
(25,061,310)
1,101,849
—
(117,355)
—
—
130,831,625
—
(4,089,580)
88,243,098
40,885,619
(22,773,124)
(11,147,689)
1,101,849
—
—
—
2019
RSU
—
—
—
—
Balance at end of year
—
(1) Of which approximately 57,105,000 RSUs granted to Transportation in fiscal year 2020 were cancelled following the closing of the sale of
126,742,045
47,491,033
95,207,904
1,101,849 (1)
984,494 (2)
the Transportation business to Alstom on January 29, 2021. See Note 31 – discontinued operations for more details.
(2) Of which 984,494 DSUs are vested as at December 31, 2020 (1,101,849 as at December 31, 2019).
PSUs and DSUs granted will vest if a financial performance threshold is met. The conversion ratio for vested
PSUs and DSUs ranges from 0% to 100%. PSUs and DSUs generally vest three years following the grant date if
the financial performance thresholds are met. RSUs generally vest three years following the grant date regardless
of the performance. For grants issued and outstanding between January 1, 2018 and December 31, 2020, the
vesting dates range from May 2021 to November 2023.
The weighted-average grant date fair value of RSUs granted during fiscal year 2020 was $0.40 (for PSUs was
$1.53 during fiscal year 2019). The fair value of each PSUs and RSUs granted was measured based on the
closing price of a Class B Share (subordinate voting) of the Corporation on the Toronto Stock Exchange.
From time to time, the Corporation provides instructions to a trustee under the terms of a Trust Agreement to
purchase Class B Shares (subordinate voting) of the Corporation in the open market (see Note 33 – Share
capital) in connection with the PSU and/or RSU plan. These shares are held in trust for the benefit of the
beneficiaries until the PSUs and RSUs become vested or are cancelled. The cost of these purchases has been
deducted from share capital.
A compensation expense, excluding Transportation, of $5 million was recorded during fiscal year 2020 with
respect to the PSU, DSU and RSU plans ($9 million during fiscal year 2019).
Share option plans
Under share option plans, options are granted to key employees to purchase Class B Shares (subordinate
voting). Of the 224,641,195 Class B Shares (subordinate voting) reserved for issuance, 25,108,283 were
available for issuance under these share option plans, as at December 31, 2020.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 187
Current share option plan - Effective June 1, 2009, the Corporation amended the share option plan for key
employees for options granted after this date. The most significant terms and conditions of the amended plan are
as follows:
•
the exercise price is equal to the weighted-average trading prices on the stock exchange during the five
trading days preceding the date on which the options were granted;
the options vest at the expiration of the third year following the grant date; and
the options terminate no later than seven years after the grant date.
•
•
The summarized information on the current share option plan is as follows as at December 31, 2020:
Exercise price range (Cdn$)
0 to 2
2 to 4
4 to 6
Issued and outstanding
Weighted-
average
exercise
price (Cdn$)
1.60
2.47
4.20
Weighted-
average
remaining
life (years)
4.79
6.14
6.02
Exercisable
Weighted-
average
exercise
price (Cdn$)
1.77
2.68
4.88
Number of
options
48,335,796
31,840,807
1,081,156
81,257,759
Number of
options
57,049,674
61,830,687
15,181,292
134,061,653
The number of options issued and outstanding under the current share option plan has varied as follows, for fiscal
years:
Balance at beginning of year
Granted
Exercised
Forfeited
Expired
Balance at end of year
Options exercisable at end of year
2020
Weighted-
average
exercise
price (Cdn$)
2.41
0.39
—
2.48
4.87
2.30
Number of
options
111,545,290
31,012,132
(2,780,538)
(6,872,398)
(1,898,148)
131,006,338
2019
Weighted-
average
exercise
price (Cdn$)
2.52
2.20
1.62
3.20
3.63
2.41
2.17
58,702,474
2.03
Number of
options
131,006,338
6,871,662
—
(3,022,046)
(794,301)
134,061,653
81,257,759
Share-based compensation expense for options
The weighted-average grant date fair value of stock options granted during fiscal year 2020 was $0.16 per option
($0.86 per option for fiscal year 2019). The fair value of each option granted was determined using a Black-
Scholes option pricing model, which incorporates the share price at the grant date, and the following weighted-
average assumptions, for fiscal years:
Risk-free interest rate
Expected life
Expected volatility in market price of shares
Expected dividend yield
2020
0.40 %
5 years
69.82 %
0 %
2019
1.54 %
5 years
60.82 %
0 %
A compensation expense, excluding Transportation, of $15 million was recorded during fiscal year 2020 with
respect to share option plans ($18 million during fiscal year 2019).
188 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
35. NET CHANGE IN NON-CASH BALANCES
Net change in non-cash balances was as follows, for fiscal years:
Trade and other receivables
Inventories
Contract assets
Contract liabilities
Other financial assets and liabilities, net
Other assets
Trade and other payables
Provisions
Retirement benefits liability
Other liabilities
2020 (1)
396
682
(736)
(945)
(442)
151
(583)
57
(110)
14
(1,516)
$
$
$
$
2019 (1)
(345)
(976)
141
1,186
(11)
(75)
414
(707)
53
(157)
(477)
(1) Includes net change in non-cash balances related to Transportation, refer to Note 31 - Discontinued operations for more details.
The following table presents the reconciliation of movements of liabilities to cash flows arising from financing
activities:
Balance as at January 1, 2019(1)
Changes from financing cash flows
Proceeds from long-term debt
Repayment of long-term debt
Transaction costs
Total changes from financing cash flows
The effect of changes in foreign exchange rates
Other
Balance as at December 31, 2019
Changes from financing cash flows
Proceeds from long-term debt
Repayment of long-term debt
Transaction costs
Total changes from financing cash flows
The effect of changes in foreign exchange rates
Other
Balance as at December 31, 2020
(1) Obligations under finance leases reclassified to lease liabilities under IFRS 16 on January 1, 2019.
Long-term debt
9,061
$
2,000
(1,647)
(45)
308
(8)
(28)
9,333
750
(8)
(43)
699
45
(2)
10,075
$
$
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 189
36. CREDIT FACILITIES
Letter of credit facilities
The letter of credit facilities and their maturities were as follows, as at:
December 31, 2020
Transportation facility(3)
Corporation excluding Transportation facility(4)
December 31, 2019
Transportation facility
Corporation excluding Transportation facility(4)
January 1, 2019
Transportation facility
Corporation excluding Transportation facility
Amount
committed
Letters of
credit
issued
Amount
available
Maturity
$
$
$
$
$
$
5,519 (1)
n/a
5,519
5,052 (1)
n/a
5,052
4,511 (1)
361
4,872
$
$
$
$
$
$
5,123 $
n/a
5,123 $
4,846 $
n/a
4,846 $
4,024 $
188
4,212 $
396
n/a
396
206
n/a
206
487
173
660
2023 (2)
n/a
2023
n/a
2022
2021
(1) €4,498 million as at December 31, 2020 (€4,498 million as at December 31, 2019 and €3,940 million as at January 1, 2019).
(2) The facility has an initial three year availability period, when new letters of credit can be issued up to the maximum commitment amount of
the facility, plus a one year amortization period during which new letters of credit cannot be issued. The final maturity date of the facility is
2023.
(3) Part of the sale of Transportation. refer to Note 31 - Discontinued operations for more details.
(4) The Corporation voluntarily cancelled the $361 million letter of credit facility in 2019 which was replaced by various bilateral agreements.
In addition to the outstanding letters of credit shown in the above table, letters of credit of $5,572 million were
outstanding under various bilateral agreements as at December 31, 2020, out of which $5,471 million is related to
Transportation ($4,395 million as at December 31, 2019 and $3,874 million as at January 1, 2019).
The Corporation also uses numerous bilateral bonding facilities with insurance companies to support
Transportation’s operations. An amount of $3 billion was outstanding under such facilities as at December 31,
2020 ($3.8 billion as at December 31, 2019 and $3.7 billion as at January 1, 2019).
Revolving credit facilities
Transportation has an unsecured revolving credit facility amounting to €1,154 million ($1,416 million), available to
Transportation for cash drawings. The facility matures in May 2022 and bears interest at Euribor plus a margin.
That facility was used as at December 31, 2020 for an amount of €650 million ($798 million).
Uncommitted short term credit facilities
Transportation has a €75 million ($92 million) uncommitted short term credit facility. This facility is available to
Transportation for cash drawings. This facility was unused as of December 31, 2020.
Financial covenants
Transportation is subject to various financial covenants under the Transportation letter of credit facility and its
revolving credit facility, which must be met on a quarterly basis. Those facilities include financial covenants
requiring minimum equity and a maximum debt to EBITDA ratio at the end of each quarter, all calculated based on
Transportation stand-alone financial data. These terms and ratios are defined in the respective agreements and
do not correspond to the Corporation’s global metrics as described in Note 37 – Capital management or to the
specific terms used in the MD&A. In addition, Transportation must now maintain a minimum liquidity varying
between €500 million ($614 million) and €750 million ($920 million) at the end of each quarter, except for the
quarter ending December 31, 2020. Minimum liquidity required is not defined as comprising only cash and cash
equivalents as presented in the consolidated statement of financial position. For the quarter ending December 31,
2020 these financial covenants were amended prior to year-end in order to not apply for the fourth quarter.
Transportation was in compliance with all covenants on a quarterly basis and as at December 31, 2020 and 2019
and January 1, 2019.
190 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
The Corporation regularly monitors these ratios to ensure it meets all financial covenants, and has controls in
place to ensure that contractual covenants are met.
37. CAPITAL MANAGEMENT
The Corporation analyzes its capital structure using global metrics, which are based on a broad economic view of
the Corporation, in order to assess the creditworthiness of the Corporation. However, throughout 2020 the main
focus of the Corporation’s capital management was the closing of the sale of business transactions in order to
allow deleveraging and closely monitoring and actively implementing and updating its response to the evolving
COVID-19 pandemic and its impacts on employees, operations, the global economy and the demand for its
products and services.
While the Corporation is currently reviewing its strategy for deleveraging and ongoing capital management, as the
markets and business recover, the Corporation’s objective is to restore and grow earnings to achieve a lower net
debt to EBITDA multiple. The Corporation objective is to achieve this by executing on its cost reduction plan to
align its infrastructure to current market, by progressing on the Global 7500 learning curve and through continued
growth of the service and support network.
While the COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and
created significant economic uncertainty and disruption of financial markets, the Corporation has responded with
adjustments to its Aviation operations, production rates and workforce, and prudently managed liquidity in order to
adapt to the current environment.
The sale of the Transportation business completed on January 29, 2021 is expected to have a significant impact
on Bombardier’s capital management, since the Corporation intends to deploy available proceeds from the sale of
Transportation towards debt paydown and continues to evaluate the most efficient debt reduction strategies.
In addition, the Corporation separately monitors its net retirement benefit liability which amounted to $1.5 billion as
at December 31, 2020 ($2.3 billion as at December 31, 2019). The measurement of this liability is dependent on
numerous key long-term assumptions such as discount rates, future compensation increases, inflation rates and
mortality rates. In recent years, this liability has been particularly volatile due to changes in discount rates. Such
volatility is exacerbated by the long-term nature of the obligation. Furthermore, the net retirement benefit liability
has decreased meaningfully as a result of the business sales, including Transportation. The Corporation closely
monitors the impact of the net retirement benefit liability on its future cash flows and has introduced significant risk
mitigation initiatives in recent years in this respect such as buying out annuities on behalf of pensioners.
See note 23 – Retirement benefits for more details.
In order to adjust its capital structure, the Corporation may issue or reduce long-term debt, make discretionary
contributions to pension funds, repurchase or issue share capital, or vary the amount of dividends paid to
shareholders.
See Note 36 – Credit facilities for a description of bank covenants.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 191
38.
FINANCIAL RISK MANAGEMENT
The Corporation is primarily exposed to credit risk, liquidity risk and market risk as a result of holding financial
instruments.
Credit risk
Risk that one party to a financial instrument will cause a financial loss for the other party by failing to
discharge an obligation.
Liquidity risk
Risk that an entity will encounter difficulty in meeting its obligations associated with financial liabilities.
Market risk
Risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices, whether those changes are caused by factors specific to the individual financial instrument
or its issuer, or factors affecting all similar financial instruments traded in the market. The Corporation is
primarily exposed to foreign exchange risk and interest rate risk.
Credit risk
The Corporation is exposed to credit risk through its normal treasury activities on its derivative financial
instruments and other investing activities. The Corporation is also exposed to credit risk through its trade
receivables arising from its normal commercial activities.
The effective monitoring and controlling of credit risks is a key component of the Corporation’s risk management
activities. Credit risks arising from the treasury activities are managed by a central treasury function in accordance
with the Corporate Foreign Exchange Risk Management Policy and Corporate Investment Policy (the “Policy”).
The objective of the policy is to minimize the Corporation’s exposure to credit risk from its treasury activities by
ensuring that the Corporation transacts strictly with investment-grade financial institutions and money market
funds based on pre-established consolidated counterparty risk limits per financial institution and fund.
Credit risks arising from the Corporation’s normal commercial activities, are managed and controlled by the two
reportable segments, Aviation and Transportation. The main credit exposure managed by the segments arises
from customer credit risk. Customer credit ratings and credit limits are analyzed and established by internal credit
specialists, based on inputs from external rating agencies, recognized rating methods and the Corporation’s
experience with the customers. The credit risks and credit limits are dynamically reviewed based on fluctuations in
the customer’s financial results and payment behaviour.
These customer credit risk assessments and credit limits are critical inputs in determining the conditions under
which credit or financing will be offered to customers, including obtaining collateral to reduce the Corporation’s
exposure to losses. Specific governance is in place to ensure that financial risks arising from large transactions
are analyzed and approved by the appropriate management level before financing or credit support is offered to
the customer.
Credit risk is monitored on an ongoing basis using different systems and methodologies depending on the
underlying exposure. Various accounting and reporting systems are used to monitor trade receivables, lease
receivables and other direct financings.
Maximum exposure to credit risk – The maximum exposures to credit risk for financial instruments is usually
equivalent to their carrying value, as presented in Note 13 – Financial instruments, except for the financial
instruments in the table below, for which the maximum exposures were as follows, as at:
January 1, 2019
Aircraft loans(1)
26
Investments in financing structures(1)
93
Derivative financial instruments
162
Investments in securities
196
(1) Following the sale of the CRJ business, the Corporation has retained those other financial assets and has a back-to-back agreement with
December 31, 2020
2
—
78
230
December 31, 2019
2
—
128
210
$
$
$
$
$
$
$
$
$
$
$
$
MHI as such there is no credit risk arising from other financial assets as at December 31, 2020. See Note 26 – Other financial liabilities and
Note 30 – Disposal of businesses for more information.
192 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Credit quality – The credit quality, using external and internal credit rating systems, of financial assets that are
neither past due nor impaired is usually investment grade, except for Aviation’s receivables. Aviation’s receivables
are usually not externally or internally quoted, however the credit quality of customers are dynamically reviewed
and is based on the Corporation’s experience with the customers and payment behaviour. The Corporation
usually holds underlying assets or security deposits as collateral or letters of credit for the receivables.
Refer to Note 42 – Commitment and Contingencies for the Corporation’s off-balance sheet credit risk, including
credit risk related to support provided for sale of aircraft.
Liquidity risk
The management of consolidated liquidity requires a constant monitoring of expected cash inflows and outflows,
which is achieved through a detailed forecast of the Corporation’s liquidity position, as well as long-term operating
and strategic plans, to ensure adequacy and efficient use of cash resources. The Corporation uses scenario
analyses to stress-test cash flow projections. Liquidity adequacy is continually monitored which involves the
application of judgment, taking into consideration historical volatility and seasonal needs, stress-test results, the
maturity profile of indebtedness, access to capital markets, the level of customer advances, availability of letter of
credit and similar facilities, working capital requirements, the availability of working capital financing initiatives and
the funding of product development and other financial commitments.
The Corporation engages in certain working capital financing initiatives which impact cash flow from operating
activities such as the negotiation of extended payment terms with certain suppliers (Refer to Note 24 – Trade and
other payables) arrangements for advances from third parties, sale of receivables and the negotiation of extended
payment terms with certain suppliers (Refer to Note 31 – Discontinued operations). These initiatives generally rely
on the ongoing provision of credit by financial institutions to the parties involved in the arrangement.
The Corporation monitors any financing opportunities to optimize its capital structure and maintain appropriate
financial flexibility. The Corporation also routinely reviews its debt profile with a view to managing or extending
maturities and/or negotiating more favourable terms and conditions with respect to its bank facilities. The
Corporation also routinely reviews the terms and conditions of its bank facilities and seeks annual extensions of
the availability periods thereunder. These amendments are subject to prevailing market and other conditions that
are beyond its control and there can be no assurance that the Corporation will be able to successfully negotiate
such amendments on commercially reasonable terms, or at all.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 193
Maturity analysis –The maturity analysis of financial assets and financial liabilities, excluding derivative financial
instruments, was as follows, as at December 31, 2020:
Carrying
amount
Undiscounted cash flows
(before giving effect to the related hedging instruments)
Less
than 1
year
1 to 3
years
3 to 5
years
5 to 10
years
Over 10
years
With no
specific
maturity
Cash and cash equivalents
Trade and other receivables
Other financial assets(1)
Assets
Trade and other payables
Other financial liabilities(1)
Long-term debt
Principal
Interest
Liabilities
Net amount
$ 1,779 $ 1,779 $
$
$
294
838
294
113
2,186
1,611
184
$ 1,611
993
$
$ 10,075
— $
—
139
139
—
334
— $
—
112
112
—
163
— $
—
357
357
—
355
1,901
699
4,395
3,325
1,010
4,669
2,500
616
3,279
2,135
339
2,829
$ (2,209) $ (4,530) $ (3,167) $ (2,472) $
— $
—
273
273
—
311
250
66
627
(354) $
Total
— $ 1,779
294
—
1,029
35
3,102
35
1,611
—
1,347
—
— 10,111
—
2,730
— 15,799
35 $ (12,697)
(1)The carrying amount of other financial assets excludes derivative financial instruments, investments in financing structures, certain aircraft
loans and the back to back agreement that the Corporation has with MHI related to lease subsidies. The carrying amount of other financial
liabilities excludes derivative financial instruments, lease liabilities, lease subsidies and the back-to-back agreement that the corporation has
with MHI related to the regional aircraft securitization program assets (RASPRO) and to certain aircraft loans.
Other financial assets include a back-to-back agreement that the Corporation has with ACLP related to certain
government refundable advances. Other financial liabilities include government refundable advances. Under the
respective agreements, the Corporation is required to pay amounts to governments at the time of the delivery of
aircraft. Due to uncertainty about the number of aircraft to be delivered and the timing of delivery of aircraft, the
amounts shown in the table above may vary.
The maturity analysis of derivative financial instruments, excluding embedded derivatives, was as follows, as at
December 31, 2020:
Nominal
value (USD
equivalent)
Undiscounted cash flows
(1)
Less
than 1
year
1 year
2 to
3 years
3 to
5 years
Over
5 years
Total
Derivative financial assets
Forward foreign exchange contracts
Interest-rate swaps
Derivative financial liabilities
Forward foreign exchange contracts
$
$
$
Net amount
(1) Amounts denominated in foreign currency are translated at the period end exchange rate.
(168) $
$
(9) $ — $
6 $
60 $
1,702 $
300
2,002 $
62 $ — $
7
69 $
6
6 $
— $
2
2 $
— $
2 $
— $ — $
— $ — $
62
15
77
— $ — $
— $ — $
(9)
68
194 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Lease liabilities
The Corporation leases buildings and equipment.
Maturity analysis –The maturity analysis of lease liabilities, after assets held for sale reclassification, was as
follows, as at:
Within 1 year
Between 1 to 5 years
More than 5 years
$
December 31, 2020
56
132
311
499
$
Market risk
Foreign exchange risk
The Corporation is exposed to significant foreign exchange risks in the ordinary course of business through its
international operations, in particular to the Canadian dollar, Pound sterling, Swiss franc, Swedish krona and
Euro. The Corporation employs various strategies, including the use of derivative financial instruments and by
matching asset and liability positions, to mitigate these exposures.
The Corporation’s main exposures to foreign currencies are identified by the segments and covered by the central
treasury function. Foreign currency exposures are mitigated in accordance with the Corporation’s Foreign
Exchange Risk Management Policy (the “FX Policy”). The objective of the FX Policy is to mitigate the impact of
foreign exchange movements on the Corporation’s consolidated financial statements. Under the FX Policy,
potential losses from adverse movements in foreign exchange rates should not exceed Board authorized pre-set
limits. Potential loss is defined as the maximum expected loss that could occur if an unhedged foreign currency
exposure was exposed to an adverse change of foreign exchange rates over a one-quarter period. The FX Policy
also strictly prohibits any speculative foreign exchange transactions that would result in the creation of an
exposure in excess of the maximum potential loss approved by the Board of Directors of the Corporation.
Under the FX Policy, it is the responsibility of the segments’ management to identify all actual and potential foreign
exchange exposures arising from their operations. This information is communicated to the central treasury group,
which has the responsibility to execute the hedge transactions in accordance with the FX Policy.
In order to properly manage their exposures, each segment maintains long-term cash flow forecasts in each
currency. Aviation has adopted a progressive hedging strategy while Transportation hedges all its identified
foreign currency exposures to limit the effect of currency movements on their results. The segments also mitigate
foreign currency risks by maximizing transactions in their functional currency for their operations such as material
procurement, sale contracts and financing activities.
In addition, the central treasury function manages balance sheet exposures to foreign currency movements by
matching asset and liability positions. This program consists mainly in matching the long-term debt in foreign
currency with long-term assets denominated in the same currency.
The Corporation mainly uses forward foreign exchange contracts to manage the Corporation’s exposure from
transactions in foreign currencies and to synthetically modify the currency of exposure of certain balance sheet
items. The Corporation applies hedge accounting for a significant portion of anticipated transactions and firm
commitments denominated in foreign currencies, designated as cash flow hedges. Notably, the Corporation
enters into forward foreign exchange contracts to reduce the risk of variability of future cash flows resulting from
forecasted sales and purchases and firm commitments.
The Corporation’s foreign currency hedging programs are typically unaffected by changes in market conditions, as
related derivative financial instruments are generally held to maturity, consistent with the objective to lock in
currency rates on the hedged item. These programs are reviewed annually and amended as necessary to reflect
current market conditions or practices.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 195
Sensitivity analysis
Foreign exchange risk arises on financial instruments that are denominated in foreign currencies. The foreign
exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure of the
Corporation’s financial instruments recorded in its statement of financial position. The following impact on EBT
from continuing operations for fiscal year 2020 is before giving effect to cash flow hedge relationships.
Gain (loss)
+10 % $
1 $
Variation CAD/USD EUR/USD
Effect on EBT
Other
(1)
(24) $
The following impact on OCI from continuing operations for fiscal year 2020 is for derivatives designated in a cash
flow hedge relationship. For these derivatives, any change in fair value is mostly offset by the re-measurement of
the underlying exposure.
Gain (loss)
Effect on OCI before income taxes
Variation CAD/USD EUR/USD
Other
+10 % $
141 $
(35) $
9
Interest rate risk
The Corporation is exposed to fluctuations in its future cash flows arising from changes in interest rates through
its variable-rate financial assets and liabilities, including fixed-rate long-term debt synthetically converted to
variable interest rates (see Note 28 – Long-term debt). For these items, cash flows could be impacted by a
change in benchmark rates such as Libor, Euribor or Banker’s Acceptance. These exposures are predominantly
managed by a central treasury function as part of an overall risk management policy, including the use of financial
instruments, such as interest-rate swap agreements. Derivative financial instruments used to synthetically convert
interest-rate exposures consist mainly of interest-rate swap agreements.
In addition, the Corporation is exposed to gains and losses arising from changes in interest rates, which includes
marketability risks, through its financial instruments carried at fair value. These financial instruments include
investments in securities, and certain derivative financial instruments.
The Corporation’s interest rate hedging programs are typically unaffected by changes in market conditions, as
related derivative financial instruments are generally held to maturity to ensure proper assets/liabilities
management matching, consistent with the objective to reduce risks arising from interest rates movements. These
programs are reviewed annually and amended as necessary to reflect current market conditions or practices.
Sensitivity analysis
The interest rate risk primarily relates to financial instruments carried at fair value. Assuming a 100-basis point
increase in interest rates impacting the measurement of these financial instruments, excluding derivative financial
instruments in a hedge relationship, as of December 31, 2020, the impact on EBT from continuing operations
would have been a negative adjustment of $17 million as at December 31, 2020 ($112 million as at
December 31, 2019).
196 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
39.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value amounts disclosed in these consolidated financial statements represent the Corporation’s estimate of
the price at which a financial instrument could be exchanged in a market in an arm’s length transaction between
knowledgeable, willing parties who are under no compulsion to act. They are point-in-time estimates that may
change in subsequent reporting periods due to market conditions or other factors. Fair value is determined by
reference to quoted prices in the principal market for that instrument to which the Corporation has immediate
access. However, there is no active market for most of the Corporation’s financial instruments. In the absence of
an active market, the Corporation determines fair value based on internal or external valuation models, such as
stochastic models, option-pricing models and discounted cash flow models. Fair value determined using valuation
models requires the use of assumptions concerning the amount and timing of estimated future cash flows,
discount rates, the creditworthiness of the borrower, the aircraft’s expected future value, default probability,
generic industrial bond spreads and marketability risk. In determining these assumptions, the Corporation uses
primarily external, readily observable market inputs, including factors such as interest rates, credit ratings, credit
spreads, default probabilities, currency rates, and price and rate volatilities, as applicable. Assumptions or inputs
that are not based on observable market data are used when external data are unavailable. These calculations
represent management’s best estimates. Since they are based on estimates, the fair values may not be realized
in an actual sale or immediate settlement of the instruments.
Methods and assumptions
The methods and assumptions used to measure fair value for items recorded at FVTP&L and FVOCI are as
follows:
Aircraft loans, investments in financing structures, receivable from MHI, liabilities related to RASPRO
assets and payable to MHI – The Corporation uses internal valuation models based on stochastic simulations or
discounted cash flow analysis to estimate fair value. Fair value is calculated using market data for interest rates,
published credit ratings when available, yield curves and default probabilities. The Corporation uses market data
to determine the marketability adjustments and also uses internal assumptions to take into account factors that
market participants would consider when pricing these financial assets. The Corporation also uses internal
assumptions to determine the credit risk of customers without published credit rating. In addition, the Corporation
uses aircraft residual value curves reflecting specific factors of the current aircraft market and a balanced market
in the medium and long term. In connection with the sale of the CRJ business, the aircraft loans are included in a
back-to-back agreement with MHI and for the investments in financing structures (RASPRO) the Corporation has
transferred the net beneficial interest through a back-to-back agreement with MHI. The corresponding liabilities
are measured using the same model.
Investments in securities – The Corporation uses discounted cash flow models to estimate the fair value of
unquoted investments in fixed-income securities, using market data such as interest rates.
Long-term contract receivables – The Corporation uses discounted cash flow analysis to estimate the fair value
using market data for interest rates.
Lease subsidies – The Corporation uses internal valuation models based on stochastic simulations or
discounted cash flow analysis to estimate fair value of lease subsidies incurred in connection with the sale of
commercial aircraft. Fair value is calculated using market data for interest rates, published credit ratings when
available, default probabilities from rating agencies and the Corporation’s credit spread. The Corporation also
uses internal assumptions to determine the credit risk of customers without published credit rating. In connection
with the sale of the CRJ business, the lease subsidies are included in a back-to-back agreement with MHI, and
the corresponding asset is measured using the same model.
Government refundable advances – The Corporation uses discounted cash flow analysis to estimate the fair
value using market data for interest rates and credit spreads.
Derivative financial instruments – Fair value of derivative financial instruments generally reflects the estimated
amounts that the Corporation would receive to sell favourable contracts i.e. taking into consideration the
counterparty credit risk, or pays to transfer unfavourable contracts i.e. taking into consideration the Corporation’s
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 197
credit risk, at the reporting dates. The Corporation uses discounted cash flow analysis and market data such as
interest rates, credit spreads and foreign exchange spot rate to estimate the fair value of forward agreements and
interest-rate derivatives.
The Corporation uses option-pricing models and discounted cash flow models to estimate the fair value of
embedded derivatives using applicable market data, when available.
Conversion option – The Corporation uses an internal valuation model to estimate the fair value of the
conversion option embedded in the BT Holdco convertible shares. The fair value of the embedded conversion
option is based on discounted value of the difference between the CDPQ’s share of proceeds from the sale of
Transportation to Alstom, and the carrying value of CDPQ’s non-controlling interest in Transportation. Refer to
Note 31- Discontinued operations for more details regarding the sale of Transportation.
The methods and assumptions used to measure fair value for items recorded at amortized cost are as follows:
Financial instruments whose carrying value approximates fair value – The fair values of cash and cash
equivalents, trade and other receivables, certain aircraft loans, restricted cash and trade and other payables
measured at amortized cost, approximate their carrying value due to the short-term maturities of these
instruments, because they bear variable interest-rate or because the terms and conditions are comparable to
current market terms and conditions for similar items.
Long-term debt – The fair value of long-term debt is estimated using public quotations, when available, or
discounted cash flow analyses, based on the current corresponding borrowing rate for similar types of borrowing
arrangements.
Government refundable advances and vendor non-recurring costs – The Corporation uses discounted cash
flow analysis to estimate the fair value using market data for interest rates and credit spreads.
198 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
Fair value hierarchy
The following table presents financial assets and financial liabilities measured at fair value on a recurring basis
categorized using the fair value hierarchy as follows:
•
•
quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
inputs from observable markets other than quoted prices included in Level 1, including indirectly observable
data (Level 2); and
inputs for the asset or liability that are not based on observable market data (Level 3).
•
Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment.
The fair value of financial assets and liabilities by level of hierarchy was as follows, as at December 31, 2020:
Financial assets
Receivable from ACLP(1)
Investments in securities
Investment in financing structures(2)
Derivative financial instruments(3)
Aircraft loans(4)
Receivable from MHI(5)
Total
Level 1
Level 2
Level 3
$
$
439
266
150
103
30
11
999
$
$
—
35
—
—
—
—
35
$
$
—
231
—
78
—
—
309
$
$
439
—
150
25
30
11
655
Financial liabilities
Government refundable advance(1)
Liabilities related to RASPRO(2)
Derivative financial instruments(3)
Payable to MHI(4)
Lease subsidies(5)
439
149
—
30
11
629
(1) The receivable from related party represents a back-to-back agreement that the Corporation has with ACLP related to certain government
refundable advances.
(2) The liabilities related to RASPRO includes a back-to-back agreement that the Corporation has with MHI related to the transfer of the net
beneficial interest related to the investments in financing structures.
(3) Derivative financial instruments consist of forward foreign exchange contracts, interest-rate swap agreements and embedded derivatives.
(4) This payable to MHI represents a back-to-back agreement that the Corporation has with MHI related to certain aircraft loans.
(5) This receivable represents a back-to-back agreement that the Corporation has with MHI related to lease subsidies.
439
149
42
30
11
671
—
—
42
—
—
42
—
—
—
—
—
—
$
$
$
$
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 199
Changes in the fair value of Level 3 financial instruments, excluding assets and liabilities with a back-to-back
agreement and their corresponding back-to-back assets and liabilities, were as follows, for fiscal years 2020 and
2019:
Balance as at December 31, 2019
Net gains and interest included in net income
Issuances
Sales
Effect of foreign currency exchange rate changes
Balance as at December 31, 2020
Reclassified as liabilities directly associated with assets held for sale(1)
Balance as at December 31, 2020
Prepayment
option
$
$
$
—
25
—
—
—
25
—
25
Trade and
Other
payables
—
$
Conversion
option
$
(325)
—
(10)
10
—
—
—
—
$
$
292
—
—
(9)
(42)
42
—
$
$
(1) Represent liabilities reclassified as held for sale related to the sale of Transportation. Refer to Note 31 - Discontinued operations for more
details.
(2)
120
—
115
—
—
—
—
Balance as at
January 1, 2019
Net gains (losses)
and interest included in net income
Issuances
Settlements
Effect of foreign
currency exchange rate changes
Aircraft
loans
ACLP
non-
voting
units
Investments
in financing
structures
Lease
Subsidies
Conversion
option
Funding
commit-
ments
$
24
$
150
$
173
$
(53)
$
(314) $
(235)
3
—
—
—
(2)
(385)
235
—
—
—
27
—
(3)
—
(4)
—
16
—
—
—
—
(11)
$
197
$
(41)
$
(325) $
Balance as at
December 31, 2019
$
27
$
Reclassified as
assets held for
sale(1)
Balance as at
December 31, 2019
$
(1) Represents assets and liabilities reclassified as held for sale related to the sale of CRJ business.
(2) See Note 8 - Special items and Note 29 - Disposal of investment in associate for more details.
(197)
(27)
—
—
—
—
$
$
41
—
$ —
$
(325) $
Main assumptions developed internally for Level 3 hierarchy
When measuring Level 3 financial instruments at fair value, some assumptions are not derived from an
observable market.
The value of the conversion option is determined by the value of CDPQ’s equity interest in Transportation. See
Note 31 - Discontinued operations.
Fair value hierarchy for items recorded at amortized cost
The following table presents financial assets and financial liabilities measured at amortized cost categorized using
the fair value hierarchy as follows:
•
•
•
quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
inputs from observable markets other than quoted prices included in Level 1, including indirectly observable
data (Level 2); and
inputs for the asset or liability that are not based on observable market data (Level 3).
200 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
The fair value of financial assets and liabilities by level of hierarchy was as follows, as at December 31, 2020:
Financial assets
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Long-term debt
Other financial liabilities
Government refundable advances
Other
Total
Level 1
Level 2
Level 3
$
$
294
140
434
$ (1,611)
(9,812)
(151)
(644)
$ (12,218)
$
$
$
$
—
—
—
—
—
—
—
—
$
$
294
140
434
$ (1,611)
(9,812)
—
—
$ (11,423)
$
$
$
$
—
—
—
—
—
(151)
(644)
(795)
40.
TRANSACTIONS WITH RELATED PARTIES
The Corporation’s related parties are its joint ventures, associates and key management personnel.
Associates
The Corporation buys and sells products and services on arm’s length terms with some of its associates in the
ordinary course of business. The following table presents the transactions from continuing operations with
associates in which the Corporation has an interest, for fiscal years:
Sales of products and services, and other income
(1) Restated to reflect continuing operations only.
2020
60
$
2019 (1)
663
$
The following table presents the Corporation’s outstanding balances from continuing operations with associates,
as at :
Receivables
Receivables from ACLP(1)
Payables
Other financial liabilities
December 31, 2020
—
—
—
—
$
$
$
$
December 31, 2019 (2)
$
$
$
$
199
468
57
32
January 1, 2019 (2)
$
$
$
$
126
385
26
48
(1) See Note 19 - Other financial assets and Note 29 - Disposal of investment in associate.
(2) Restated to reflect continuing operations only.
Joint ventures
There were no transactions or outstanding balances from continuing operations with joint ventures for
fiscal years 2020 and 2019 and as at December 31, 2020, December 31, 2019 and January 1, 2019.
Compensation paid to key management personnel
The annual remuneration and related compensation costs of the executive and non-executive board members
and key Corporate management, defined as the President and Chief Executive Officer of Bombardier Inc., the
Presidents of Aviation and Transportation, and the Senior/Executive Vice Presidents of Bombardier Inc., were as
follows, for fiscal years:
Salaries, bonuses and other short-term benefits
Share-based benefits
Retirement benefits
Termination and other long-term benefits
$
$
2020
12
9
—
13
34
$
$
2019
14
20
1
—
35
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 201
41. UNCONSOLIDATED STRUCTURED ENTITIES
The following table presents the assets and liabilities of unconsolidated structured entities in which the
Corporation had a significant exposure, as at:
Financing structures related to
the sale of commercial aircraft
$
1,484 $
344
$
2,101 $
739
$
3,552 $
1,587
December 31, 2020
December 31, 2019
January 1, 2019
Assets Liabilities
Assets
Liabilities
Assets
Liabilities
The Corporation has provided credit and/or residual value guarantees to certain structured entities created solely
to provide financing related to the sale of commercial aircraft.
Typically, these structured entities are financed by third-party long-term debt and by third-party equity investors.
The aircraft serve as collateral for the structured entities long-term debt. The Corporation retains certain interests
in the form of credit and residual value guarantees, subordinated debt and residual interests. Residual value
guarantees typically cover a percentage of the first loss from a guaranteed value upon the sale of the underlying
aircraft at an agreed upon date. The Corporation also provides administrative services to certain of these
structured entities in return for a market fee.
The Corporation holds investments in financing structure amounting to $150 million as at December 31, 2020
($198 million, as at December 31, 2019 and $173 million as at January 1, 2019). Following the sale of the CRJ
business, the Corporation has retained those investments and has a back-to-back agreement with MHI.
The Corporation’s maximum potential exposure was $0.5 billion, of which $91 million was recorded as provisions
and related liabilities as at December 31, 2020 ($0.8 billion and $108 million, respectively, as at December 31,
2019 and $1.2 billion and $409 million, respectively, as at January 1, 2019). The Corporation’s maximum
exposure under these guarantees is included in Note 42 – Commitments and contingencies. In connection with
the sale of the CRJ business, all of the above are included in a back-to-back agreement with MHI
as at December 31, 2020.
The Corporation concluded that it did not control these structured entities.
202 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
42. COMMITMENTS AND CONTINGENCIES
The Corporation enters into various sale support arrangements, including credit and residual value guarantees
and financing rate commitments, mostly provided in connection with sales of commercial aircraft and related
financing commitments. The Corporation is also subject to other off-balance sheet risks described in the following
table. These off-balance sheet risks are in addition to the commitments and contingencies described elsewhere in
these consolidated financial statements. Some of these off-balance sheet risks are also included in Note 41 –
Unconsolidated structured entities. The maximum potential exposure does not reflect payments expected to be
made by the Corporation.
The table below presents the maximum potential exposure for each major group of exposure, as at:
December 31, 2020
December 31, 2019
January 1, 2019
Aircraft sales
Residual value (a)
Credit (a)
Mutually exclusive exposure(1)
Total credit and residual value exposure
Trade-in commitments (b)
Conditional repurchase obligations (c)
Other(2)
Credit (d)
$
$
$
$
$
72
473
(65)
480
330
40
48
$
$
$
$
$
163
734
(128)
769
998
73
48
$
$
$
$
$
695
1,034
(473)
1,256
1,165
100
48
(1) Some of the residual value guarantees can only be exercised once the credit guarantees have expired without exercise. Therefore, the
guarantees must not be added together to calculate the combined maximum exposure for the Corporation.
(2) The Corporation has also provided other guarantees (see section (f) below).
The Corporation’s maximum exposure in connection with credit and residual value guarantees related to the sale
of aircraft represents the face value of the guarantees before giving effect to the net benefit expected from the
estimated value of the aircraft and other assets available to mitigate the Corporation’s exposure under these
guarantees. Provisions for anticipated losses amounting to $80 million as at December 31, 2020 ($90 million as at
December 31, 2019 and $456 million as at January 1, 2019) have been established to cover the risks from these
guarantees after considering the effect of the estimated resale value of the aircraft, which is based on information
obtained from external appraisals and reflect specific factors of the current aircraft market and a balanced market
in the medium and long-term, and the anticipated proceeds from other assets covering such exposures. When
credit and residual value guarantees become due the respective amounts are re-classified from provision to credit
and residual value guarantees payable within other financial liabilities. Credit and residual value guarantees
payable amounted to $223 million as at December 31, 2020 ($435 million as at December 31, 2019 and
$172 million as at January 1, 2019). In addition, lease subsidies, which would be extinguished in the event of
credit default by certain customers, amounted to $11 million as at December 31, 2020 ($41 million as at
December 31, 2019 and $53 million as at January 1, 2019). The provisions for anticipated losses are expected to
cover the Corporation’s total credit and residual value exposure, after taking into account the anticipated proceeds
from the sale of underlying aircraft and the extinguishment of certain lease subsidies obligations. In connection
with the sale of the CRJ business, all of the above are included in a back-to-back agreement with MHI , except for
$223 million of credit and residual value guarantees payable, as at December 31, 2020. See Note 30 - Disposal of
businesses for more details.
Aircraft sales
a) Credit and residual value guarantees - The Corporation has provided credit guarantees in the form of lease
and loan payment guarantees, as well as services related to the remarketing of aircraft. These guarantees, which
are mainly issued for the benefit of providers of financing to customers, mature in different periods up to 2025.
Substantially all financial support involving potential credit risk lies with regional airline customers. The credit risk
relating to three regional airline customers accounted for 86% of the total maximum credit risk as at
December 31, 2020 (74% as at December 31, 2019 and 71% as at January 1, 2019).
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 203
In addition, the Corporation may provide a guarantee for the residual value of aircraft at an agreed-upon date,
generally at the expiry date of related financing and lease arrangements. The arrangements generally include
operating restrictions such as maximum usage and minimum maintenance requirements. The guarantee provides
for a contractually limited payment to the guaranteed party, which is typically a percentage of the first loss from a
guaranteed value. In most circumstances, a claim under such guarantees may be made only upon resale of the
underlying aircraft to a third party.
The following table summarizes the outstanding residual value guarantees, at the earliest exercisable date, and
the period in which they can be exercised, as at:
Less than 1 year
From 1 to 5 years
From 5 to 10 years
From 10 to 15 years
$
December 31, 2020
16
56
—
—
72
$
$
December 31, 2019
13
142
8
—
163
$
January 1, 2019
97
528
70
—
695
$
$
In connection with the sale of the CRJ business, all of the above are included in a back-to-back agreement with
MHI. See Note 30 - Disposal of businesses for more details.
b) Trade-in commitments - In connection with the signing of firm orders for the sale of new aircraft, the
Corporation enters into specified-price trade-in commitments with certain customers. These commitments give
customers the right to trade-in their pre-owned aircraft as partial payment for the new aircraft purchased.
The Corporation’s trade-in commitments were as follows, as at:
Less than 1 year
From 1 to 3 years
Thereafter
$
December 31, 2020
224
106
—
330
$
$
December 31, 2019
496
475
27
998
$
January 1, 2019
305
622
238
1,165
$
$
c) Conditional repurchase obligations - In connection with the sale of new aircraft, the Corporation enters into
conditional repurchase obligations with certain customers. Under these obligations, the Corporation agrees to
repurchase the initial aircraft at predetermined prices, during predetermined periods or at predetermined dates,
conditional upon mutually acceptable agreement for the sale of a new aircraft. At the time the Corporation enters
into an agreement for the sale of a subsequent aircraft and the customer exercises its right to partially pay for the
subsequent aircraft by trading-in the initial aircraft to the Corporation, a conditional repurchase obligation is
accounted for as a trade-in commitment.
The Corporation’s conditional repurchase obligations, as at the earliest exercise date, were as follows, as at:
Less than 1 year
From 1 to 3 years
Thereafter
Other guarantees
$
December 31, 2020
9
31
—
40
$
$
December 31, 2019
73
—
—
73
$
January 1, 2019
26
74
—
100
$
$
d) Credit and residual value guarantees - In connection with the sale of certain transportation rail equipment,
the Corporation has provided a credit guarantee of lease payments amounting to $48 million as at
December 31, 2020 ($48 million as at December 31, 2019 and $48 million as at January 1, 2019). This guarantee
matures in 2025 and relates to Transportation.
e) Performance guarantees - In certain projects carried out through consortia or other partnership vehicles in
Transportation, partners may be jointly and severally liable to the customer for a default by the other partners. In
204 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
such cases partners would normally provide counter indemnities to each other. These obligations and guarantees
typically extend until final product acceptance by the customer and in some cases to the warranty period.
The Corporation’s maximum net exposure to projects is capped, assuming all counter indemnities are fully
honoured. For projects where the Corporation’s exposure is not capped, such exposure has been determined in
relation to the Corporation’s partners’ share of the total contract value. Under this methodology, the Corporation’s
net exposure is not significant, assuming all counter indemnities are fully honoured. Such joint and several
obligations and guarantees have been rarely called upon in the past.
f) Other - In the normal course of its business, the Corporation has entered into agreements that include
indemnities in favour of third parties, mostly tax indemnities. These agreements generally do not contain specified
limits on the Corporation’s liability and therefore, it is not possible to estimate the Corporation’s maximum liability
under these indemnities.
In connection with the disposal of businesses and the disposal of investment in associate, the Corporation enters
into arrangements that include indemnities and guarantees which are typically limited as to their duration and
maximum potential financial exposure to the Corporation. Under the agreement governing the sale of
Transportation to Alstom, the Corporation is required to provide a €100 million ($123 million) bank guarantee in
favour of Alstom to secure certain indemnities and guarantees obligations of the Corporation.
In connection with the sale of Transportation to Alstom, the Corporation has agreed to an additional compliance-
related indemnity. Under this indemnity, the Corporation will indemnify Alstom or its affiliates for certain known
compliance-related matters as well as for compliance-related violation or alleged violation (of any applicable laws
or regulations, and including for any audits or other proceedings conducted by a governmental authority) arising
within two years following the closing of the sale of Transportation to Alstom and relating to events which occurred
prior to January 29, 2021. To secure this indemnity, the Corporation is required to provide a €250 million
($307 million) bank guarantee in favour of Alstom, the value of such guarantee will be reduced over time upon
certain conditions or milestones being achieved.
Other commitments
The Corporation also has purchase obligations, under various agreements, made in the normal course of
business. The purchase obligations are as follows, as at December 31, 2020:
Within 1 year
Between 1 to 5 years
More than 5 years
Continuing
operations
2,773
745
—
3,518
Discontinued
operations
5,569
3,063
1
8,633
$
$
$
$
$
$
Total
8,342
3,808
1
12,151
The purchase obligations of the Corporation include capital commitments for the purchase of PP&E and
intangible assets amounting to $229 million and $55 million, respectively, as at December 31, 2020 (includes
$197 million and $55 million related to Transportation, respectively).
Legal proceedings
In the normal course of operations, the Corporation is a defendant in certain legal proceedings before various
courts or other tribunals including in relation to product liability and contractual disputes with customers and other
third parties. The Corporation’s approach is to vigorously defend its position in these matters.
While the Corporation cannot predict the final outcome of all legal proceedings pending as at December 31, 2020,
based on information currently available, management believes that the resolution of these legal proceedings will
not have a material adverse effect on its financial position.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 205
Sweden
Since the fourth quarter of 2016, the Swedish police authorities have been conducting an investigation in relation
to allegations concerning a 2013 contract for the supply of signalling equipment and services to Azerbaijan
Railways ADY (the “ADY Contract”). In October 2016, the Corporation launched an internal review into the
allegations which is conducted by external forensic advisors, under the supervision of the General Counsel and
external counsel. Both the investigation and the internal review are on-going. On August 18, 2017, charges were
laid against a then employee of the Swedish subsidiary of the Corporation for aggravated bribery and,
alternatively, influence trafficking. The trial on these charges took place from August 29 to September 20, 2017.
No charges were laid against the subsidiary of the Corporation. In a decision rendered on October 11, 2017, the
then employee was acquitted of all charges. The decision was appealed regarding all charges on October 25,
2017 by the Prosecution Authority. On June 19, 2019, the Prosecution Authority confirmed that the acquittal on
charge of influence trafficking is no longer being appealed; accordingly, this acquittal on this charge stands as a
final judgment. The case is still pending with the Swedish Court of Appeal with a likely scenario that the Swedish
Court of Appeal will set a date for the appeal trial.
The ADY Contract is being audited by the World Bank Group pursuant to its contractual audit rights. The audit is
on-going. The Corporation’s policy is to comply with all applicable laws and it is cooperating to the extent possible
with the investigation and the audit. As reported publicly in the media, on November 15, 2018, the World Bank
Integrity Vice Presidency (“INT”) issued a ‘show cause’ letter to Bombardier, outlining INT’s position regarding
alleged collusion, corruption, fraud and obstruction in the ADY Contract. The Corporation was invited to respond
to these preliminary findings and has done so. As the World Bank’s audit process is governed by strict
confidentiality requirements, the Corporation can only reiterate that it strongly disagrees with the allegations and
preliminary conclusions contained in the letter.
On February 10, 2020, counsel assisting Bombardier with the World Bank Group audit received a letter from the
U.S. Department of Justice (the “DOJ”) requesting the communication of documents and information regarding
the ADY Contract. Bombardier is cooperating with the DOJ’s ongoing requests and is currently providing
documents and information in response to same.
The Corporation’s internal review about the reported allegations is on-going but based on information known to
the Corporation at this time, there is no evidence that suggests a corrupt payment was made or offered to a public
official or that any other criminal activity involving Bombardier took place.
While this matter relates to the Transportation segment, which has been divested as part of the sale to Alstom on
January 29, 2021, the Corporation remains involved in this legal proceeding and remains liable to Alstom, as
acquirer of Transportation, in the event of any damage suffered in connection thereof.
Investigation in Brazil
This investigation relates to the Transportation business formerly owned by Bombardier. While Bombardier was a
party to this legal proceeding during the most recently completed financial year, this is no longer the case as a
result of the sale of the Transportation segment to Alstom, which closed on January 29, 2021.
On March 20, 2014, Bombardier Transportation Brasil Ltda (“BT Brazil”), a subsidiary of the Corporation, received
notice that it was among the 18 companies and over 100 individuals named in administrative proceedings initiated
by governmental authorities in Brazil, including the Administrative Council for Economic Protection (“CADE”), and
the Sao Paulo Public Prosecutor’s office, following previously disclosed investigations carried on by such
governmental authorities with respect to allegations of cartel activity in the public procurement of railway
equipment and the construction and maintenance of railway lines in Sao Paulo and other areas. Since the service
of process in 2014 on BT Brazil, the competition authority has decided to detach the proceedings against 43
individuals whom it claims to have been difficult to serve process and has also issued additional technical notes
dealing with various procedural objections raised by the defendant corporations and individuals. BT Brazil
unsuccessfully contested before the courts both the decision to detach the proceedings against these 43
individuals and decisions by CADE restricting physical access to some of the forensic evidence.
As a result of the administrative proceedings initiated by CADE in 2014, BT Brazil became a party as defendant to
legal proceedings brought by the Sao Paulo State prosecution service against it and other companies for alleged
206 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
‘administrative improbity’ in relation to refurbishment contracts awarded in 2009 by the Sao Paulo metro operator
CMSP and for ‘cartel’ in relation to a five year-maintenance contract with the Sao Paulo urban transit operator
CPTM signed in 2002. In September 2015, the prosecution service of Sao Paulo announced a second public civil
action for ‘cartel’ in relation to the follow-on five year maintenance contract covering the period 2007 to 2012. In
addition, BT Brazil was served notice and joined in December 2014 a civil suit as co-defendant first commenced
by the Sao Paulo state government against Siemens AG in the fall of 2013 and with which the State government
seeks to recover loss for alleged cartel activities.
Companies found to have engaged in unlawful cartel conduct are subject to administrative fines, state actions for
repayment of overcharges and potentially disqualification for a certain period. The Corporation and BT Brazil
cooperated in the investigations relating to the administrative proceedings and defended themselves vigorously.
In December 2018, the Superintendent-General of CADE filed a formal opinion finding BT Brazil had engaged in
anti-competitive behaviour. On February 18, 2019, CADE’s Attorney General issued its opinion, substantially
supporting the General Superintendence’s recommendations. On June 20, 2019, the Brazil Superior Court of
Justice granted an extraordinary recourse brought by CADE to overcome the effects of certain injunctions
instituted by the defendants (including BT Brazil) and the matter was added to the following plenary session of the
CADE Board, a quasi-judicial competition tribunal. On July 8, 2019, the CADE Board issued a bench ruling
supporting the Superintendent-General of CADE’s formal opinion filed in December 2018. This opinion found all
the defendants (including BT Brazil) had engaged in anti-competitive behaviour and recommended the conviction
of all the investigated parties. In the case of BT Brazil, the conviction includes a fine of 22 million Brazilian Real
(approximately $4 million as at December 31, 2020), but no debarment. BT Brazil was not declared ineligible to
participate in future public bids.
On August 26, 2020, BT Brazil’s motion for clarification was finally ruled on and decided by CADE. As concerned
BT Brazil, CADE’s rulings remained the same. The CADE decision clarified that payment of the fine would
become due after 30 days as of publication of the decision if not appealed / challenged in the courts. The August
26, 2020 final decision was officially published on September 2, 2020, triggering the 30-day period for filing a
court action. However, due to a problem in the service of one of the defendants, the deadline for all defendants to
appeal in court was October 9, 2020, and BT Brazil filed its appeal timely. On November 11, 2020 the court
granted the injunction to suspend the enforceability of the fine against BT Brazil.
In parallel with the proceedings described above, the Corporation conducted an internal review to determine
whether any kind of anti-competitive conduct had occurred. This review did not reveal any evidence of
participation in an illicit agreement to allocate markets and influence the outcome of competitive bidding
procedures as alleged by the competition authority.
The Corporation strongly disagrees with the conclusions of the CADE Board and BT Brazil has commenced the
requisite steps to contest its decision before tribunals of competent jurisdiction and continues to vigorously defend
itself against the allegations.
Transnet
While this matter relates to the Transportation segment, which has been divested as part of the sale to Alstom on
January 29, 2021, the Corporation remains involved in this matter and remains liable to Alstom, as acquirer of
Transportation, under certain circumstances.
The Corporation learned through various media reports of the appointment of a Judicial Commission of Inquiry
into Allegations of State Capture, Corruption and Fraud in the Public Sector, including organs of state (the “Zondo
Commission”) for which the terms of reference were published by presidential proclamation on January 25, 2018.
Before and after the creation of the Zondo Commission, the media reported allegations of irregularities with
respect to multiple procurements regarding the supply of 1,064 locomotives by South African train operator
Transnet Freight Rail. On September 7, 2018, Bombardier Transportation South Africa (Pty.) Ltd. (“BTSA”) was
informed that the Special Investigation Unit (“SIU”), a forensic investigation agency under the Department of
Justice in South Africa, had opened an investigation with respect to the acquisition of the 1064 locomotives by
Transnet, in 2014.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 207
On February 4, 2019, BTSA submitted a confidential written statement with supporting documents that sets out its
position on public allegations and requested the opportunity to publicly present evidence to the Zondo
Commission. The Zondo Commission has reviewed the submission and related documents. In December 2019,
BTSA has made a further submission including affidavits. In December 2020, BTSA was informed by the Zondo
Commission that it was granted leave to adduce evidence and to cross-examine witnesses having previously
testified before the Commission. In June 2019, BTSA was requested by SIU to provide information and
explanation about the costs of the relocation to Durban. Although the written statement previously communicated
to the Zondo Commission could not be shared with SIU, BTSA did provide SIU with the information in its
possession regarding the price evolution during tender phase, the relocation as well as explanation about the
costs for same.
The Corporation is conducting an internal review into the allegations by external advisors under the supervision of
counsel. The review is still ongoing but based on information known to the Corporation at this time, there is no
reason to believe that the Corporation has been involved in any wrongdoing with respect to the procurement by
Transnet of 240 TRAXX locomotives from Bombardier Transportation. Contrary to what has been reported by the
media, the contract is still in full force and continues to be executed.
On January 11, 2021, counsel for Bombardier received an additional request from the DOJ for the communication
of documents and information regarding contracts with Transnet and the Passenger Rail Agency of South Africa,
and also about an alleged related sale of a Global 6000. Bombardier is cooperating with the DOJ’s ongoing
requests.
Spain
This matter relates to the Transportation business formerly owned by Bombardier. While this investigation was, as
at December 31, 2020, a legal proceeding to which Bombardier was a party, this is no longer the case as a result
of the sale of the Transportation segment to Alstom, which closed on January 29, 2021.
In December 2017, the Spanish Competition Authority (“CNMC”) conducted an inspection at the offices of
Bombardier European Investments, S.L.U. (“BEI”) in Madrid. According to the Inspection Order, CNMC’s
inspection follows information it learned about possible irregularities in public tenders with the Railway
Infrastructures Administrator (“ADIF”). On January 2, 2018, BEI received an information request from the CNMC
regarding the legal and operational organization of BEI. BEI is cooperating with the authorities to the extent
possible and responded to the information request. There are currently no charges nor allegations that BEI
breached any law.
On August 28, 2018, BEI was informed that the CNMC was opening formal proceedings against eight competing
companies active on the Spanish signalling equipment market and four directors, including BEI and its parent
company, Bombardier Transportation (Global Holding) UK Limited. No Bombardier directors were named. The
inclusion of the parent company is typical of European competition authorities at the early stage of the
proceedings.
The appeal filed by Bombardier to the Audiencia Nacional against the CNMC’s decision that admits ADIF (who is
Bombardier’s customer) as an interested party was rejected on September 4, 2020. The CNMC then decided to
lift the suspension of the investigation.
The Corporation has obtained access to the Statement of Objection in which the CNMC discloses the evidence
they have gathered against the various participants to the alleged cartel in the signalling business. The delay to
respond as extended was expiring on October 13, 2020 and the Corporation filed its response in time exposing
factual and legal arguments to contest the Statement of Objection. Further to the filing of the response the CNMC
will prepare a Proposed Resolution which may include sanctions which can also be responded by the Corporation
to have the case dismissed. The final decision of the CNMC on the Proposed Resolution can be appealed to
Audiencia Nacional.
208 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
The Corporation's policy is to comply with all applicable laws, including antitrust and competition laws. In light of
the early stage of the preliminary investigation, management is unable to predict its duration or outcome, including
whether any operating division of the Corporation could be found liable for any violation of law or the extent of any
fine, if found to be liable.
Indonesia
In May 2020, the Indonesian Corruption Court convicted the former CEO of Garuda Indonesia (Persero) TBK and
his associate of corruption and money laundering in connection with five procurement processes involving
different manufacturers, including the 2011-2012 acquisition and lease of Bombardier CRJ1000 aircraft by Garuda
Indonesia (Persero) TBK (the “Garuda Transactions”). No charges were laid against the Corporation or any of its
directors, officers or employees. Shortly thereafter, the Corporation launched an internal review into the Garuda
Transactions, which is being conducted by external counsel.
The Corporation understands that the U.K. Serious Fraud Office (“SFO”) has commenced a formal investigation
into the same transactions. The Corporation has met with the SFO to discuss the status of the Corporation’s
internal review and its potential assistance with the SFO investigation on a voluntary basis.
Both the SFO investigation and the internal review are on-going.
Class action
On February 15, 2019, the Corporation was served with a Motion for authorization to bring an action pursuant to
Section 225.4 of the Quebec Securities Act and application for authorization to institute a class action before the
Superior Court of Québec in the district of Montréal against Bombardier Inc. and Messrs. Alain Bellemare and
John Di Bert (“Motion”) (formerly the President and Chief Executive Officer and the Senior Vice President and
Chief Financial Officer, respectively, of Bombardier) to claim monetary damages in an unspecified amount in
connection with alleged false and misleading representations about the Corporation’s business, operations,
revenues and free cash flow, including an alleged failure to make timely disclosure of material facts concerning its
guidance for 2018. In the class action component of the Motion, the Plaintiff Denis Gauthier seeks to represent all
persons and entities who have purchased or acquired Bombardier’s securities during the period of August 2, 2018
to November 8, 2018, inclusively and held all or some of these securities until November 8, 2018. Both the action
pursuant to the Quebec Securities Act and the class action require an authorization from the Court before they
can move forward. Until they are authorized, there are no monetary claims pending against the defendants in the
context of these Court proceedings.
Bombardier Inc. and Messrs. Bellemare and Di Bert are contesting this Motion. The Corporation’s preliminary view
at this juncture is that the possibility that these Court proceedings will cause the Corporation to incur material
monetary liability appears to be remote.
43. RECLASSIFICATION
Comparative figures have been reclassified to conform to the presentation adopted in the current period for lease
liabilities, which resulted in a reclassification from other liabilities to other financial liabilities.
BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020 209
INVESTOR INFORMATION
Our Board of Directors
BOARD MEMBERS(1)
Pierre Beaudoin
Éric Martel
Joanne Bissonnette
Charles Bombardier
Martha Finn Brooks
Diane Fontaine
Diane Giard
Chairman of the Board of Directors of Bombardier
President and Chief Executive Officer of Bombardier
Corporate Director
Corporate Director
Corporate Director
Vice President and Portfolio Manager of RBC Dominion Securities Inc.
Corporate Director
Anthony R. Graham
Chairman, President and Chief Executive Officer of Sumarria Inc. (an investment holding
company)
Corporate Director
August W. Henningsen
Douglas (Doug) R. Oberhelman Corporate Director
Vikram Pandit
Antony N. Tyler
BOARD COMMITTEES
Lead Director
Chairman and Chief Executive Officer of The Orogen Group (a company investing in the
financial services industry)
Corporate Director
Board
committees
Board representation(1) Responsibilities
Audit and Risk
Committee
Diane Giard (Chair)
Martha Finn Brooks
Anthony R. Graham
• Help the directors meet their responsibilities with respect to accountability
• Assist in maintaining good communication between the directors and the
independent auditors of Bombardier, Ernst & Young
• Assist in maintaining the independence of Ernst & Young
• Maintain the credibility and objectivity of the financial reports of Bombardier
• Investigate and assess any issue that raises significant concerns with the
Audit Committee
• Review Bombardier’s material financial risks and its monitoring, control and
risk management
• Review adequacy of policies, procedures and controls in place for risk
management
• Review and monitor significant or unusual transactions and/or projects
related to ongoing activities, business opportunities, mergers, acquisitions,
divestitures, significant asset sales or purchases and equity investments
• Monitor matters or activities related to or involving Bombardier’s financial
standing
Corporate
Governance and
Nominating
Committee
Douglas (Doug) R.
Oberhelman (Chair)
Diane Giard
Anthony R. Graham
Vikram Pandit
Antony N. Tyler
• Monitor selection criteria and credentials for Board candidates
• Monitor Board and Committees’ composition and performance
• Monitor Board remuneration
Human
Resources and
Compensation
Committee
Vikram Pandit (Chair)
August W. Henningsen
Douglas (Doug) R.
Oberhelman
Antony N. Tyler
• Oversee succession planning of the President and CEO and other selected
senior positions
• Assess performance of the President and CEO
• Review and approve total executive compensation policy accounting for base
salary, short-term and long-term incentives as well as pension, benefits and
perquisites
(1) As at December 31, 2020. Supplemental information regarding our Board of Directors can be found on our website at bombardier.com.
210 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
STOCK EXCHANGE LISTINGS
FISCAL YEAR 2021 FINANCIAL RESULTS
Class A Shares (Multiple
Voting) and Class B
Subordinate Voting Shares
Preferred Shares, Series 2,
Series 3 and Series 4
Stock listing ticker
First Quarterly Report
Toronto (Canada)
Second Quarterly Report
Third Quarterly Report
Toronto (Canada)
BBD (Toronto)
May 6, 2021
August 5, 2021
October 28, 2021
2021 Annual Financial Report
February 10, 2022
PREFERRED DIVIDEND PAYMENT DATES
Payment subject to approval by the Board of Directors
Series 2
Record date
Payment date
Record date
Payment date
2020-12-31
2021-01-29
2021-02-26
2021-03-31
2021-04-30
2021-05-31
Series 3
2021-01-15
2021-02-15
2021-03-15
2021-04-15
2021-05-15
2021-06-15
2021-06-30
2021-07-30
2021-08-31
2021-09-30
2021-10-29
2021-11-30
Series 4
2021-07-15
2021-08-15
2021-09-15
2021-10-15
2021-11-15
2021-12-15
Record date
Payment date
Record date
Payment date
2021-01-15
2021-04-16
2021-07-16
2021-10-15
2021-01-31
2021-04-30
2021-07-31
2021-10-31
2021-01-15
2021-04-16
2021-07-16
2021-10-15
2021-01-31
2021-04-30
2021-07-31
2021-10-31
Please note that unless stated otherwise, all dividends paid by Bombardier since January 2006 on all of its
common and preferred shares are considered “eligible dividends” as per the Canadian Income Tax Act and any
corresponding provincial or territorial legislation. The same designation applies under the Quebec Taxation Act for
dividends declared after March 23, 2006.
BOMBARDIER INC. / 2020 FINANCIAL REPORT 211
Contact Information
Bombardier Inc.
800 René-Lévesque Blvd. West
Montréal, Québec
Canada H3B 1Y8
Investor relations
Tel.: +1 514 861 9481, extension 13273
Email: investors@bombardier.com
Communications
Tel.: +1 514 861 9481, extension 13390
DUPLICATION
Although Bombardier strives to ensure that registered
shareholders receive only one copy of corporate
documents, duplication is unavoidable if securities are
registered under different names and addresses. If this
is the case, please call Computershare Investor
Services at one of the following numbers:
+1 514 982 7555 or +1 800 564 6253 (toll-free, North
America only) or send an email to
service@computershare.com.
ONLINE INFORMATION
For additional information, we invite you to visit our
websites at:
bombardier.com and ir.bombardier.com
TRANSFER AGENT AND REGISTRAR
Shareholders with inquiries concerning their shares
should contact:
Computershare Investor Services Inc.
100 University Avenue, 8th Floor
Toronto, Ontario
Canada M5J 2Y1
or
1500 Robert-Bourassa Blvd., Suite 700
Montréal, Québec
Canada H3A 3S8
Tel.: +1 514 982 7555 or +1 800 564 6253
(toll-free, North America only)
Fax: +1 416 263 9394 or +1 888 453 0330
(toll-free, North America only)
Email: service@computershare.com
AUDITORS
Ernst & Young LLP
900 de Maisonneuve Blvd. West
Suite 2300
Montréal, Québec
Canada H3A 0A8
ANNUAL MEETING
The annual meeting of shareholders will be held on
Thursday, May 6, 2021, at 10:30 a.m. The annual
meeting will be held virtually via live webcast. The
annual meeting will also be broadcast live on our
website at bombardier.com.
212 BOMBARDIER INC. FINANCIAL REPORT - FISCAL YEAR ENDED DECEMBER 31, 2020
The Global 8000 aircraft is currently in development,
and as such is subject to changes in family strategy,
branding, capacity, performance, design and/or
systems. All specifications and data are approximate,
may change without notice and are subject to certain
operating rules, assumptions and other conditions.
This document does not constitute an offer,
commitment, representation, guarantee or warranty
of any kind.
Bombardier, Challenger, Challenger 300, Challenger
350, Challenger 600, Challenger 604, Challenger
605, Challenger 650, Exceptional by Design, Global,
Global 5000, Global 5500, Global 6000, Global 6500,
Global 7500, Global 8000, Global Express, Global
Vision, Global XRS, La Définition de l’Exceptionnel,
Learjet, Learjet 40, Learjet 45, Learjet 70, Learjet 75
Liberty, Smart Parts, Smart Parts Maintenance Plus,
Smart Parts Plus, Smart Parts Preferred, Smart
Services, Smartfix, Smartfix Plus, Smartlink,
Smartlink Plus, and Vision Flight Deck are
trademarks of Bombardier Inc. or its subsidiaries.
The printed version of this annual report uses paper containing 30% post-consumer fibres,
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consumption in
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