---

UNITED STATES SECURITIES AND EXCHANGE COMMISSION 
WASHINGTON, D.C. 20549

FORM 20-F/A

AMENDED ANNUAL REPORT

Pursuant to Section 13 or 15 (d) of The Securities Exchange
Act of 1934

For the Fiscal Year ended January 31, 2005

Commission file number 333-116582

Bombardier
      Recreational Products Inc.(Bombardier Produits
      Récréatifs Inc.)(Exact name of registrant as
      specified in its charter)Canada(Jurisdiction of company or
      organization)726, St-Joseph, Valcourt,
      Quebec J0E 2L0 Canada(Address of principal executive
      office)


> Securities to be registered pursuant to Section 12 (b) of the Act: None.
>   Securities registered or to be registered pursuant to Section 12 (g) of the
>   Act: None.
>   Securities for which there is a reporting obligation pursuant to Section 15
>   (d) of the Act: None.
>   The number of outstanding shares of each of the issuer's class of capital
>   or common stock as of the close of the period covered by the Annual Report:
>   One (1) Common Share as of January 31, 2005.
>   Indicate by check mark whether the Registrant (1) has filed all reports
>   required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
>   1934 during the preceding 12 months (or for such shorter period that the
>   registrant was required to file such reports, and (2) has been subject to such
>   filing requirement for the past 90 days.
>   Yes: [ ]                                
>   No: [ X ]
>   Indicate by a check mark which financial statement item the Registrant has
>   elected to follow.
>   Item 17: [ X ]                           
>   Item 18: [ ]

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ITEM 5- OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Bombardier Recreational Products
Inc. presents its financial information in Canadian dollars. In this amended
annual report, all references to "U.S.$" refer to U.S. dollars and all
references to "$" refer to Canadian dollars.

RESTATEMENT

Bombardier Recreational Products Inc. amended and restated
its consolidated financial statements and other financial information for the
year ended January 31, 2005 and for each of quarters in the year ended January
31, 2005 with respect to the accounting for certain forward foreign exchange
contracts.

On February 1, 2004, the Company's forward foreign exchange
contracts were designated as hedges of forecasted transactions. For those
contracts that were purchased prior to the beginning of the fiscal year, the
designation of the hedge was made as at February 1, 2004. For forward foreign
exchange contracts that were purchased subsequent to February 1, 2004, the
derivative was designated as a hedge as at the contract inception date. For all
of these derivative instruments the Company had used the critical terms method
to assess hedge effectiveness.

The Company has concluded that the critical terms method to
assess hedge effectiveness did not comply with Canadian and U.S. GAAP for those
derivatives that had a fair value other than zero on the date they were
designated as hedges. Consequently, for those derivatives purchased prior to
February 1, 2004 but designated as hedges on February 1, 2004, management has
concluded that it was inappropriate to apply hedge accounting for these forward
foreign exchange contracts. As a result, the Company has recognized on the
balance sheet these forward foreign exchange contracts at fair value and has
recorded the changes in fair value in income along with the related income tax
effect. Consequently, the consolidated balance sheet as of January 31, 2005, the
consolidated statement of income, the consolidated statement of cash flows and
the consolidated statement of retained earnings and related notes for the year
ended January 31, 2005 have been restated.

The effect of the restatement on the Company's consolidated
balance sheet as at January 31, 2005 are not significant and the restatement has
no effect on the statement of cash flows other than certain items within
Operating activities that have been restated.

The effect of this non-cash restatement, by line item, on the consolidated
statement of income is as follows:

|                                                 | Three-month      |                  |           
|------------------------------------------------ | ---------------- | ---------------- | ----------
|                                                 | period ended     | Year ended      
|                                                 | January 31, 2005 | January 31, 2005
|                                                 | As               |                  | As        
|                                                 | previously       | As               | previously
|                                                 | reported         | restated         | reported  
|Revenues                                         | $ 634.3          | $ 622.4          | $ 2,467.0 
|Cost of sales                                    | 528.9            | 527.3            | 2,044.9   
|Gross profit                                     | 105.4            | 95.1             | 422.1     
|Net gain on
    derivative financial instruments | -                | (5.0)            | -         
|Income (loss)
    from continuing operations     |                  |                  |           
|before income taxes                              | (39.4)           | (44.7)           | 6.7       
|Income tax
    recovery                          | (18.8)           | (20.5)           | (12.6)    
|Income (loss)
    from continuing operations     | (20.6)           | (24.2)           | 19.3      
|Net income (loss)                                | (20.3)           | (23.9)           | 16.0      

---



|            
|------------
|INTRODUCTION

On December 18, 2003 Bombardier Recreational Products Inc. ("BRP"
or the "Company") purchased Bombardier Inc.'s recreational products business for
a total consideration of $806.3 million. The acquisition of the recreational
products business and the related financing transactions are referred to as the
"Transactions." The total cost of the purchase was allocated to the assets
acquired and liabilities assumed on the basis of their estimated fair values as
determined by preliminary independent valuations, using the purchase method of
accounting. During the year ended January 31, 2005, the Company completed its
purchase price allocation and recorded an increase of $6.1 million to goodwill.
Also, originally reported goodwill was restated to account for the tax effects
of the acquired trademarks, which is further discussed in note 3 to the
Consolidated Financial Statements. The effect of the restatement resulted in an
additional goodwill and long-term deferred income tax increase of $38.0 million
with no impact to previously reported shareholder's equity or net income. As a
result, residual goodwill amounts to $135.5 million representing the excess of
the purchase price over the fair value of the identifiable net assets acquired.

The following Management's discussion and analysis ("MD&A"),
dated April 12, 2005 and amended on July 15, 2005 is intended to assist the
stakeholders in better understanding and evaluating material changes in the
financial condition and results of operations of the Company. The MD&A should be
read together with the annual audited consolidated financial statements
("Consolidated Financial Statements ") and the accompanying notes for the year
ended January 31, 2005 and for the 44-day period ended January 31, 2004 ("The
Company") and for the 321-day period ended December 18, 2003 and the year ended
January 31, 2003 ("Predecessor business").

For ease of comparison purposes, financial data for the
44-day period ended January 31, 2004 has been added to financial data for the
321-day period ended December 18, 2003, to arrive at a 12-month combined period
ended January 31, 2004. This period may be referred to herein as the "combined
year ended January 31, 2004" or "combined year 2004." With the exception of the
consolidated balance sheets, comparative financial information for periods prior
to December 18, 2003 is presented in the Consolidated Financial Statements
pursuant to regulatory requirements. In reviewing this comparative financial
information, readers should remember that Predecessor business period results of
operations do not reflect the effects of the acquisition and the application of
purchase accounting.

The Consolidated Financial Statements and the notes thereto,
have been prepared in accordance with Canadian Generally Accepted Accounting
Principles ("GAAP"), which differ in certain material respects from U.S. GAAP.
These differences are described in note 30 to the Consolidated Financial
Statements.

All amounts presented in this MD&A are in Canadian dollars unless otherwise
indicated.

2

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|                       
|-----------------------
|CONSOLIDATED OVERVIEW  
|Description of Business

BRP is a leading designer, manufacturer and distributor of motorised
recreational products worldwide. BRP's business consists of a diversified
portfolio of products. BRP has a number one market share position in the primary
markets of each of its established products: snowmobiles (the Ski-DooTM
and LynxTM brands), personal watercraft (the Sea-DooTM
brand) and sport boats (the Sea-DooTM brand). In 1998, the Company
launched its own product line for all terrain vehicles or ATVs. In 2001, the
Company also entered the market for outboard engines, by acquiring the Johnson
and Evinrude brands from Outboard Marine Corporation. In addition, BRP-Rotax
develops and markets 4-stroke and 2-stroke ROTAXTM engines for
motorcycles, scooters, karts and smalland ultra-light aircraft. Due to
BRP's market leading positions, the Company's products have a large installed
base that generates repeat business from customers and supports a recurring
stream of revenue from related parts, accessories and clothing sales.

BRP's business is comprised of two reportable segments, Power
Sports and Marine Engines. The Power Sports segment includes snowmobiles,
personal watercraft, all-terrain vehicles, sport boats, and small engines and
the Marine Engines segment includes outboard engines. Power Sports is the
largest of the two segments.

Strategy based on three pillars

In order to create value for shareholders, BRP focuses on opportunities and
challenges based on the following three pillars:

- 

During fiscal 2005, the Company began an ongoing analysis of product
complexity which it expects will result in a reduction in the number of SKUs
(stock keeping units). The objective of the ongoing analysis of the Company's
SKUs is to increase both segments' performance measures. The number of SKUs will
be reduced between 7% and 30% depending on the product line. As a result of
having fewer SKUs the Company expects to simplify the manufacturing processes
and lower production and handling costs.

- 

Many of the Company's products are complex to develop and manufacture.
Management, from time to time, undertakes analyses to determine what components
of a given vehicle, or operation in the manufacturing process, it believes is
better completed internally versus by a third party supplier. These analyses and
ultimate decisions will be based on a variety of factors including cost,
quality, and ability to meet market demand. Outsourcing services to others,
including arrangements with suppliers in low-cost countries that can provide the
services more efficiently may be a potential way to reduce costs.

- 

In order to improve its competitiveness, BRP intends to focus its component
manufacturing on core competencies. BRP views its core competencies as product
or component processes that allow for a more competitive design while also
ensuring the integrity and quality of the assembly while maintaining cost
advantages. A significant reduction in the production footprint optimisation is
currently underway. The Company has disposed by sale the following facilities:

- 

The Company also intends to dispose of, by sale, electrical
component equipment located in the Delavan production facility located in
Wisconsin, the Spruce Pine lost foam casting foundry located in North Carolina
and the Stuart testing facility located in Florida.

3

---

During fiscal 2006, the Company will implement a new
continuous assembly line at its main production facility located in Valcourt,
Québec, for its snowmobiles and personal watercraft, further maximising the
benefits of the SKU rationalisation.Consolidated Results of Operations 
For the Three-month Periods 
Three month period ended January 31, 2005 compared with combined three-month
period ended January 31, 2004

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                    | Combined          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------ | ------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Three-month period | three-month period
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | ended January 31,  | ended January 31, 
|(millions of Canadian dollars)                                                                                                                                                                                                                                                                                                                                                                                                                                           | 2005               | 2004[1]           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | [Restated]         |                   
|Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $
    622.4        | $
    726.2       
|Cost of sales                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 527.3              | 640.3             
|Gross profit                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 95.1               | 85.9              
|Operating expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                    |                   
|Selling and
    marketing                                                                                                                                                                                                                                                                                                                                                                                                                                                | 38.2               | 38.0              
|Research and
    development                                                                                                                                                                                                                                                                                                                                                                                                                                             | 28.8               | 25.7              
|General and
    administrative                                                                                                                                                                                                                                                                                                                                                                                                                                           | 35.3               | 26.9              
|Other charges and
    income                                                                                                                                                                                                                                                                                                                                                                                                                                             |                    |                   
|Restructuring                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 26.5               | 0.0               
|Impairment loss                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 12.1               | 0.0               
|Curtailment gain                                                                                                                                                                                                                                                                                                                                                                                                                                                         | (23.7)             | 0.0               
|Total operating expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 117.2              | 90.6              
|Operating loss from continuing
    operations                                                                                                                                                                                                                                                                                                                                                                                                                            | (22.1)             | (4.7)             
|Other Income and
    expense                                                                                                                                                                                                                                                                                                                                                                                                                                             |                    |                   
|Financing costs                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 23.7               | 8.1               
|Accretion in
    carrying value of redeemable preferred shares                                                                                                                                                                                                                                                                                                                                                                                                           | -                  | 0.5               
|Net loss (gain)
    on derivative financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                  | (5.0)              | 4.5               
|Foreign exchange (gain) loss on
    long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                       | 3.9                | (1.3)             
|Loss from continuing operations
    before income taxes                                                                                                                                                                                                                                                                                                                                                                                                                  | (44.7)             | (16.5)            
|Income tax recovery                                                                                                                                                                                                                                                                                                                                                                                                                                                      | (20.5)             | (4.5)             
|Loss from continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                          | (24.2)             | (12.0)            
|Income from discontinued
    operations, net of tax                                                                                                                                                                                                                                                                                                                                                                                                                      | 0.3                | 2.3               
|Net loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ (23.9)           | $ (9.7)           
|[1]
    For ease of comparison purposes, financial data of the Company for the
    44-day period ended January 31, 2004 has been added to financial data of the
    Predecessor for the 48-day period from November 1, 2003 to December 18,
    2003, to arrive at a three-month combined period ended January 31, 2004.
    This period may be referred to herein as the "combined three-month period
    ended January 31, 2004" or "combined fourth quarter of 2004."

Three month period ended January 31, 2005 compared with combined three-month
period ended January 31, 2004

Consolidated revenues for the three-month period ended
January 31, 2005 reached $622.4 million, a decrease of $103.8 million when
compared to revenues of $726.2 million for the combined three-month period ended
January 31, 2004. The decrease is due to lower units sold of approximately $88.0
million and the unfavourable impact of the strengthening of the Canadian dollar
of approximately $36.0 million offset in part by favourable product and pricing
mix of approximately $29.0 million

4

---

Consolidated gross profit reached $95.1 million for the
three-month period ended January 31, 2005 compared to $85.9 million for the
combined three-month period ended January 31, 2004. Favourable product and
pricing mix of approximately $38.0 million was offset by a reduction in units
sold of approximately $31.0 million and unfavourable foreign exchange rates of
approximately $19.0 million. The gross profit for the combined three-month
period ended January 31, 2004 was negatively impacted as a result of the
purchase price allocation resulting in higher carrying values of inventories and
therefore lower gross profit margin for an amount of $22.8 million.
Selling and marketing expense amounted to $38.2 million or
6.1% of consolidated revenues for the three-month period ended January 31, 2005,
which is flat when compared to $38.0 million or 5.2% of consolidated revenues
for the combined three-month period ended January 31, 2004.
Research and development expense ("R&D") totalled $28.8
million for the three-month period ended January 31, 2005 as compared to $25.7
million for the combined fourth quarter of fiscal 2004. R&D expense is
relatively stable as a percentage of consolidated revenues for each of the
fiscal periods due mainly to the Company's continued commitment to investment in
new product research and existing product improvement.
General and administrative expense ("G&A") increased by $8.4
million to $35.3 million or 5.7% of consolidated revenues during the three-month
period ended January 31, 2005 from $26.9 million or 3.7% of revenues in the
combined three-month period ended January 31, 2004. G&A increased as a result of
the establishment of the new management team, compensation expense related to
stock options granted by the parent company to certain members of management of
BRP and professional fees since BRP now operates as a stand-alone entity and
assumes all corporate functions and offset in part by a reduction of expenses
for corporate costs of Bombardier which were allocated to the recreational
products business before the acquisition.
The Company recognised special charges during the three-month
period ended January 31, 2005 which may not be reflective of future operating
results. The Company recorded, during the fourth quarter of fiscal 2005,
restructuring charges of $26.5 million, an impairment loss of $12.1 million for
facilities intended for disposal by sale and a curtailment gain of $23.7 million
related to the suspension of a Canadian defined benefit pension plan and the
introduction of a defined contribution plan.
Financing costs totalled $23.7 million for the three-month
period ended January 31, 2005 compared to $8.1 million for the combined
three-month period ended January 31, 2004. Financing costs result mainly from
the issue of long-term debt in December 2003 in connection with the acquisition
of the recreational products business. Financing costs increase results mainly
from the impact of having a full three-month period of interest expense on the
new debt issued as part of the acquisition versus 44-days for the previous
quarter. During the fourth quarter of fiscal 2005, the Company expensed $12.9
million of deferred financing cost as a result of negotiating a new Term
Facility.Business segment performance for three-month period ended January 31, 2005
compared with combined three-month period ended January 31, 2004BRP operates in two reportable segments, Power Sports and
Marine Engines. During the second quarter, the Company classified its Utility
Vehicles segment as discontinued operations. Management evaluates performance
based on operating income. Operating income does not include allocated corporate
office charges for administrative functions as well as financing costs, other
income and expenses and income taxes.

5

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|                                                                                                          
|----------------------------------------------------------------------------------------------------------
|The
    segmented revenues for the three-month period ended January 31 were as
    follows:               
|                                                                                                          
|(millions of Canadian dollars)                                                                            
|                                                                                                          
|Power Sports                                                                                              
|Marine Engines                                                                                            
|Inter segment revenues                                                                                    
|                                                                                                          
|                                                                                                          
|The
    segmented operating income (loss) for the three-month period ended January
    31 were as follows:
|                                                                                                          
|(millions of Canadian dollars)                                                                            
|                                                                                                          
|Power Sports                                                                                              
|Marine Engines                                                                                            
|                                                                                                          

Power Sports

Power Sports segment revenues reached $518.9 million for the
three-month period ended January 31, 2005 as compared to $612.2 million for the
combined three-month period ended January 31, 2004. The decrease was primarily
caused by a reduction in number of units sold of approximately $84.0 million and
the unfavourable impact of the strengthening of the Canadian dollar for an
amount of approximately $30.0 million partially offset by favourable pricing and
product mix of approximately $29.0 million. Decreased units sold is primarily
due to a management decision to postpone the production and deliveries of
watercrafts from the fourth quarter of fiscal 2005 to the first quarter of our
next fiscal year and by lower sales of engines to motorcycle manufacturers.

Power Sports segment operating income amounted to $38.5
million for the three-month period ended January 31, 2005 as compared to $20.2
million for the combined three-month period ended January 31, 2004. The
unfavourable impact of decreased units sold of approximately $24.0 million and
foreign exchange of approximately $16.0 million was offset by a better pricing
and product mix of approximately $25.0 million and a reduction in operating
expenses. The gross profit for the combined fourth quarter of 2004 was
negatively impacted as a result of the purchase price allocation resulting in
higher carrying values of inventories and therefore lower gross profit margin
for an amount of $22.8 million.

Marine Engines

Marine Engines segment revenues were $117.9 million for the
three-month period ended January 31, 2005 compared to $126.0 million for the
combined three-month period ended January 31, 2004. The decrease in revenues is
due to the unfavourable impact of the strengthening Canadian dollar in relation
to the US dollar of approximately $6.0 million and a reduction in units sold of
approximately $4.0 million.

Marine Engines segment operating loss amounted to $25.0
million for the three-month period ended January 31, 2005 as compared to $15.6
million for the combined three-month period ended January 31, 2004. The
favourable impact of product mix for approximately $13.0 million was more than
offset by the reduction in number of units sold and by higher selling and
marketing expense related to the E-TEC promotion.

6

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|For the Fiscal
    Years Ended                  |                  |                  |                 
|----------------------------------------------- | ---------------- | ---------------- | ----------------
|                                                |                  |                  |                 
|                                                |                  | Combined year    |                 
|                                                | Year ended       | ended            | Year ended      
|(millions of Canadian dollars)                  | January 31, 2005 | January 31, 2004 | January 31, 2003
|                                                |                  |                  |                 
|                                                | [Restated]       |                  |                 
|Revenues                                        | $
    2,451.3    | $
    2,409.1    | $
    2,383.4   
|Gross profit                                    | 411.4            | 423.6            | 555.4           
|Gross profit
    percentage                     | 16.8%            | 17.6%            | 23.3%           
|Restructuring
    charges, impairment loss and  |                  |                  |                 
|curtailment gain                                | 14.9             |                 |                
|Operating income
    from continuing operations | 19.1             | 36.1             | 175.8           
|Income from
    continuing operations           | 31.8             | 10.7             | 113.9           
|Income (loss)
    from discontinued operations, |                  |                  |                 
|net of tax                                      | (3.3)            | 2.0              | 0.9             
|Net income                                      | 28.5             | 12.7             | 114.8           

Year ended January 31, 2005 compared with combined year ended January 31,
2004

When comparing one fiscal year to another fiscal year,
significant fluctuations in the exchange rates between the Canadian dollar,
particularly against the U.S. dollar and the Euro, impact revenues, gross
profit, operating income from continuing operations and therefore earnings of
the Company. As compared with the prior year, management evaluated the
unfavourable effects of foreign currency on revenues, gross profit and operating
income from continuing operations, net of the effect of the Company's hedging
programs, to be approximately as follows:

|(millions of Canadian dollars)                                                 | Year ended January 31, 2005
|------------------------------------------------------------------------------ | ---------------------------
|                                                                               | [Restated]                 
|Effects of
    foreign currency on revenues                                    | $
    (168)                
|Effects of
    foreign currency on gross profit                                | (107)                      
|Effects of foreign currency on
    operating income from continuing operations | (98)                       

Consolidated revenues for fiscal 2005 reached $2,451.3
million, an increase of $42.2 million or 1.8% when compared to revenues of
$2,409.1 million for fiscal 2004. The increase is due primarily to an increased
number of units sold in the Power Sports segment of approximately $134.0 million
and a better product and pricing mix for both the Power Sports and the Marine
Engines segments totalling approximately $76.0 million, partially offset by the
unfavourable impact of the strengthening of the Canadian dollar of approximately
$168.0 million. The increased number of units sold results from higher numbers
of deliveries in snowmobiles, ATVs and personal watercraft partially offset by
lower sales of engines to motorcycle manufacturers. The increase in the number
of deliveries of ATVs is mainly due to the popularity of the Outlander and Max
series and a manufacturing supply agreement with Deere & Company. The increase
in the number of deliveries of personal watercraft results from a Management
decision to better align personal watercraft production with the retail season.
The favourable impact of a production alignment in the latter part of fiscal
2004 was partially offset by the unfavourable impact of an additional adjustment
of production and deliveries in the fourth quarter of fiscal 2005.

Consolidated gross profit reached $411.4 million for the year
ended January 31, 2005 compared to $423.6 million for the combined year ended
January 31, 2004. Gross profit margins for the fiscal year 2005 amounted to
16.8% of consolidated revenues a decrease when compared to the combined year of
fiscal 2004. Consolidated gross profit was primarily influenced by a favourable
product and pricing mix of approximately $63.0 million, an increase in the
number of units sold of approximately $26.0 million, and lower warranty costs of
approximately $15.0 million, partially offset by an unfavourable impact from the
strengthening Canadian dollar of approximately $107.0 million and increased
amortisation of intangibles of approximately $11.0 million.

7

---

Selling and marketing expense amounted to $141.4 million or
5.8% of consolidated revenues for the year ended January 31, 2005, a decrease of
$20.2 million when compared to $161.6 million or 6.7% for the combined year
ended January 31, 2004. The decrease in selling and marketing expense is
primarily due to a general reduction in marketing expense in the Power Sports
segment and the favourable impact of the strengthening of the Canadian dollar of
approximately $6.0 million, partially offset by an increase in marketing expense
in the Marine Engine segment.
Research and development expense ("R&D") totalled $108.1
million for fiscal 2005 as compared to $107.3 million for fiscal 2004. R&D
expense is relatively stable as a percentage of consolidated revenues for each
of the fiscal years due mainly to the Company's continued commitment to
investment in new product research and the improvement of existing products.
General and administrative expense ("G&A") increased by $9.3
million to $127.9 million or 5.2% of consolidated revenues during the year ended
January 31, 2005 from $118.6 million or 4.9% of revenues in the combined year
ended January 31, 2004. Since December 18, 2003, BRP now operates as a
stand-alone entity and assumes all corporate functions, G&A therefore increased
as a result of the establishment of the new management team, the grant of stock
options by the parent company to certain members of Management of BRP which are
recorded as compensation expense by the Company and professional fees incurred,
offset in part by a reduction of expenses for corporate costs of Bombardier
which were allocated to the recreational products business.
The Company recognised charges during the year ended January
31, 2005 which may not be reflective of future operating results. The Company
recorded, during the fourth quarter of fiscal 2005, restructuring charges of
$26.5 million, an impairment loss of $12.1 million for facilities to be disposed
of by sale and a curtailment gain of $23.7 million related to the suspension of
a Canadian defined benefit pension plan and the introduction of a defined
contribution plan.
The restructuring charges related to an additional reduction
of its workforce in order to make the recreational products business more
competitive in the current economic environment where the Canadian dollar is
strengthening compared to the U.S. dollar. The restructuring cost includes a
special early retirement benefit of $20.0 million and severance, outplacement
services and professional costs of $6.5 million. The early retirement benefit
was recognised as a result of offering a voluntary early retirement incentive
and bridging to early retirement its more senior employees affected. The cash
severance and outplacement services paid amounted to $3.2 million. In accordance
with the Company's termination practices, employees receive indemnities that
include a cash severance, and other benefits such as relocation of employees and
outplacement services. A non-cash impairment charge of $12.1 million was
recorded after assessing the carrying value of the Delavan and Spruce Pine
plants of the Marine Engines segment both of which Management intends to dispose
of by sale.
Once completed, approximately 660 jobs will be eliminated, of
which 146 as a result of severance and 199through voluntary early
retirement and 315 which are on recall list. Total workforce was reduced by 997
jobs during the year when considering the restructuring related to the
acquisition.

In January 2005, the Company amended a Canadian defined
benefit pension plan to provide for its suspension and thereby eliminated, for
most of the Canadian employees, the right to earn defined benefit pension
benefits for their future service after the June 1, 2005 effective date of the
pension plan suspension. A curtailment gain of $23.7 million was recognised in
the fourth quarter as a result of the amendment of the defined benefit pension
plan which, with the support of the affected employees, froze the existing
defined benefit pension plan and introduced a new defined contribution plan.

Financing costs totalled $60.4 million for the year ended
January 31, 2005 compared to $13.5 million for the combined year ended January
31, 2004. Financing costs result mainly from the issuance of long-term debt in
December 2003 in connection with the acquisition of the recreational products
business. Financing costs increase results primarily from the impact of having a
full year's interest expense on the debt issued as part of the acquisition.
Financing costs is mainly comprised of $16.1 million of interest charges
relating to BRP's U.S. $280 million Term Facilities and $21.8 million interest
relating to the senior subordinated notes and amortisation of the deferred
financing costs amounting to $6.5 million for the year ended January 31, 2005.
During the fourth quarter, the

8

---

Company expensed $12.9 million of deferred financing cost as
a result of repaying the Term Facilities. The effective interest rate on the
U.S. and Canadian term loans, as of January 31, 2005 was 4.97%. Interest expense
on the senior subordinated notes is at a fixed rate and will be approximately
U.S.$16.8 million for fiscal 2006.
On October 29, 2004, the Company redeemed all of the issued
and outstanding Class A preferred shares held by its parent company for a total
cash consideration of $52.6 million. The outstanding Class A preferred shares
had a carrying value of $46.2 million and were redeemable at $50.0 million plus
the accrued dividend of $2.6 million. A loss of $6.4 million on early redemption
of the preferred shares was recorded as an expense during fiscal year 2005.
Foreign exchange gain on long-term debt amounted to $46.7 million for the
year ended January 31, 2005 compared to $1.3 million for the combined year ended
January 31, 2004.
The following table presents the realised and unrealised foreign exchange
gain on long-term debt for the years ended:

|                                           |                  | Combined        
|------------------------------------------ | ---------------- | ----------------
|                                           | Year ended       | year ended      
|(millions of Canadian dollars)             | January 31, 2005 | January 31, 2004
|U.S. $280 million Term Facilities          |                  |                 
|Realised                                   | $ 18.5           | $              
|Unrealised                                 | 10.5             | 0.7             
|U.S.$200 million senior subordinated notes |                  |                 
|Unrealised                                 | 17.7             | 0.6             
|                                           | $ 46.7           | $ 1.3           

The net losses on derivative financial instruments relate to losses of
forward foreign exchange contracts that are not eligible to hedge accounting as
previously explained.

The income tax recovery was $7.0 million for the year ended
January 31, 2005, a variation of $15.2 million when compared to an income tax
expense of $8.2

Income from continuing operations was $31.8 million for fiscal year 2005
compared to $10.7 million for the combined year ended January 31, 2004. The
increase in income from continuing operations resulted from the above.

On August 30, 2004 the Company completed the sale of the Utility Vehicles
segment for net proceeds of $40.3 million. The carrying value of the Utility
Vehicles segment's net assets approximates fair value, as the net assets were
recorded at their estimated fair values as part of the acquisition on December
18, 2003. The net book value of the assets disposed, excluding goodwill of $12.9
million, was $27.4 million. Management believes that the disposal of the Utility
Vehicles segment will not have a significant impact on the results of operations
and financial position of the Company. BRP did not retain any financial interest
in the disposed segment.

Loss from the discontinued operations represents the results
of operations of the Utility Vehicles segment up to the disposal date. Loss from
discontinued operations of the Utility Vehicles segment, for the year ended
January 31, 2005, amounted to $3.3 million compared to income of $2.0 million
for the combined year ended January 31, 2004.

As a result of the above, net income for the year ended January 31, 2005
amounted to $28.5 million, an increase of $15.8 million compared to previous
combined fiscal year.

9

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Combined year ended January 31, 2004 compared with year ended January 31,
2003Consolidated revenues reached $2,409.1 million for the combined year 2004,
approximately the same level as in the preceding fiscal year. Revenue increases
in the Power Sports segment were offset by revenue declines in the Marine
Engines segment. The revenue increase in the Power Sports segment was a result
of higher revenue per unit offset by lower unit shipments. The revenue decline
in the Marine Engines segment was caused primarily by lower exchange rates used
to translate results into Canadian dollars.
Consolidated gross profit reached $423.6 million or 17.6% of
consolidated revenues for the combined year ended January 31, 2004 as compared
to $555.4 million or 23.3% for the year ended January 31, 2003. The decrease in
consolidated gross profit is primarily due to a favourable impact in the prior
year caused by changes in estimates and in accounting policies. The changes in
estimates established in connection with the acquisition of assets of the
outboard engine business of Outboard Marine Corporation in fiscal 2002 resulted
in the reversal of acquisition-related accruals. The change in accounting policy
represents the impact of adopting a new sales promotion and incentive accounting
policy as of February 1, 2002, based on the Emerging Issues Task Force ("EITF"),
of the United States Financial Accounting Standards Board ("FASB"), EITF Issue
No. 01-09 "Accounting for Consideration Given to a Vendor by a Customer." The
remainder of the decrease in consolidated gross profit is primarily due to an
unfavourable impact in the current year resulting from the fair valuation of
assets and liabilities acquired, and, to a lesser extent, the planned
postponement of personal watercraft production to better align shipments with
retail sales, and higher warranty costs mainly related to a recall of personal
watercraft fuel tanks.
Operating expenses were $387.5 million or 16.1% of
consolidated revenues for the combined year ended January 31, 2004 as compared
to $379.6 million or 15.9% for the year ended January 31, 2003. Selling and
marketing expense remained stable as a percentage of consolidated revenues in
both periods. Research and development expense increased slightly from 4.3% of
consolidated revenues for the year ended January 31, 2003 to 4.4% for the
combined year ended January 31, 2004 based mainly on investment in new product
research. General and administrative expense increased slightly from 4.8% to
4.9% based primarily on additional functions required as a standalone company in
the successor period.
Increased financing costs resulted mainly from interest
expense as well as the accretion in the carrying value of the redeemable
preferred shares resulted from the new debt raised and redeemable preferred
shares issued as part of the Transactions.
The net losses on derivative financial instruments relate to
losses on foreign exchange contracts on the Canadian dollar equivalent of the
U.S. dollar debt issued December 18, 2003, offset by gains on the fair value of
the acquired foreign exchange contracts.
Income from continuing operations before income taxes
amounted to $18.9 million or 0.8% of consolidated revenues for the combined year
ended January 31, 2004, as compared to $163.2 million or 6.8% for the year ended
January 31, 2003.
Income tax expense amounted to $8.2 million for the combined
year ended January 31, 2004, as compared to $49.3 million for the year ended
January 31, 2003. The tax rate is impacted by tax-exempt items applied against a
lower income before income taxes offset by the favourable impact attributable to
a different mix of accounting profits and losses between tax jurisdictions.
Income from the discontinued operations, net of tax of the
Utility Vehicles segment, for the combined year ended January 31, 2004, amounted
to $2.0 million compared to income of $0.9 million for the year ended January
31, 2003.
Net income amounted to $12.7 million for the combined year ended January 31,
2004, as compared to $114.8 million in the year ended January 31, 2003.

10

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Risks
Effect of Foreign Exchange Rate FluctuationsThe Company is subject to currency fluctuations from the translation of
revenues and expenses and of assets and liabilities of the self-sustaining
foreign operations using a functional currency other than the Canadian dollar,
mainly the U.S. dollar and the Euro, and from transactions in foreign
currencies, mainly the U.S. dollar and the Euro. Management believes that
exchange rate movements, particularly of the U.S. dollar to the Canadian dollar
and the Euro to the Canadian dollar could have a significant impact on the
Company's Consolidated Financial Statements.
The year-end exchange rates used to translate assets and liabilities were as
follows:
January 31, 2005
    January 31, 2004U.S. dollar
    1.2380 $CA/$US
    1.3264 $CA/$USEuro
    1.6157 $CA/Euro
    1.6520 $CA/EuroWhen comparing the January 31, 2005 exchange rates to the
January 31, 2004 exchange rates, the Canadian dollar strengthened in relation to
the U.S. dollar by approximately 6.7%. The Canadian dollar also strengthened in
relation to the Euro by approximately 2.2%.
The average exchange rates used to translate revenues and expenses, excluding
any effect of the Company's hedging program, were as follows:
Year ended
    Combined year ended
    Year endedJanuary 31, 2005
    January 31, 2004
    January 31, 2003U.S. dollar
    1.2962 $CA/$US
    1.3812 $CA/$US
    1.5655 $CA/$USEuro
    1.6147 $CA/Euro
    1.5811 $CA/Euro
    1.5018 $CA/EuroWhen comparing the average exchange rates for the year ended January 31, 2005
to the average exchange rates for the combined year ended January 31, 2004, the
Canadian dollar strengthened in relation to the U.S. dollar by approximately
6.2% whereas the Canadian dollar weakened in relation to the Euro by
approximately 2.2%. When comparing the average exchange rates for the combined
year ended January 31, 2004 to the average exchange rates for the year ended
January 31, 2003, the Canadian dollar strengthened in relation to the U.S.
dollar by 11.8% whereas the Canadian dollar weakened in relation to the Euro by
approximately by 5.3%.
The Company's primary exposures are to U.S. dollar denominated sales in
excess of its purchases, Euro denominated purchases in excess of its sales and
foreign exchange movements on the U.S. dollar denominated debt.
In addition to the impact of movements in exchange rates on translation into
Canadian dollars of the Company's foreign currency transactions, described
above, the Company's results can also be influenced by the impact of movements
in exchange rates on foreign integrated operations. A portion of the Company's
sales and operating expenses are derived from foreign integrated operations
denominated in currencies other than the Canadian dollar. Sales made outside
Canada are denominated in foreign currencies, and these currencies could become
less valuable prior to conversion into Canadian dollars as a result of exchange
rate fluctuations. Unfavourable currency fluctuations could result in lower
revenues for the Company, when expressed in Canadian dollars.
However, foreign currency transactions occurring in a given fiscal year may
not have been fully impacted by the movements in exchange rates of that same
fiscal year as a result of the Company's hedging programs. The Company's current
practice is to use derivative financial instruments to manage foreign currency
exchange rate risks for the short term exposure while for the long term the
Company aims to have a natural hedge position by balancing its inflows and
outflows by currencies.
As at December 18, 2003, in connection with the acquisition,
the outstanding forward foreign exchange contracts were recognised on the
balance sheet at fair value of $50.8 million. This had an unfavourable impact on
gross profit of $25.2 million for the year ended January 31, 2005 and an
unfavourable impact of $25.6 million for the combined year ended January 31,
2004.
11
Inflation and Price FluctuationsThe Company does not believe that inflation has a significant
impact on its results of operations. While raw materials included as part of
cost of sales is subject to inflationary pressures and price fluctuations, the
Company has generally been able over time to mitigate the effects of inflation
and price fluctuations through sales price increases or price reductions from
suppliers.
Interest Rates
The credit agreements allow the Company to borrow up to $250 million under
revolving credit facilities (the "Revolving Facilities") and U.S.$280 million
(U.S.$50 million as at February 9, 2005) under Term Facilities bearing a
floating rate of interest based on LIBOR or "prime" rates plus applicable
margin. At January 31, 2005, the effective interest rate on Revolving Facilities
and Term Facilities borrowings was 5.05% and 4.97%, respectively. During January
2005, the Company voluntarily repaid, without penalty, U.S.$158.3 million
(approximately $193.0 million) of its Term Facilities and shortly thereafter, on
February 9, 2005, the Company voluntarily fully repaid, without penalty, the
remaining outstanding balance of U.S.$118.9 million (approximately $147.0
million) of the Term Facilities and entered into a new Term Facility of U.S.$50
million (approximately $62.0 million), under an amended and restated Credit
Agreement, which will mature January 31, 2011. Concurrent with the voluntary
repayment on February 9, 2005, the Company settled the U.S.$70 million interest
rate swap agreements it had in order to manage exposures to interest rate
fluctuations.
The U.S.$200 million (approximately $248.0 million) senior subordinated notes
bear a fixed rate of 83/8%, with interest payable semi-annually in June and December.
Seasonality
The Company has historically realised higher sales of snowmobiles in the
summer and fall and higher sales of personal watercraft in the winter and
spring. Seasonal trends in the other businesses are not material.
12
BUSINESS SEGMENT PERFORMANCEBRP operates in two reportable segments, Power Sports and
Marine Engines. During the second quarter, the Company classified its Utility
Vehicles segment as discontinued operations. Management evaluates performance
based on operating income. Operating income does not include allocated corporate
office charges for administrative functions as well as financing costs, other
income and expenses and income taxes.
When comparing one fiscal year to another, significant
fluctuations in the exchange rates between the Canadian dollar, particularly
against the U.S. dollar and the Euro, impact segmented revenues, and segmented
operating income. Management evaluated the unfavourable effects of foreign
currency fluctuations, net of the effect of the Company's hedging programs,
approximately as follows:
Year ended(millions of Canadian dollars)
    January 31, 2005[Restated]Effects of
    foreign currency on segmented revenuesPower Sports
    $
    (152)Marine Engines
    (16)$ (168)Effects of foreign currency on
    segmented operating incomePower Sports
    $
    (100)Marine Engines
    2$ (98)The
    segmented revenues for the years ended January 31 were as follows:CombinedYear ended
    year ended
    Year ended(millions of Canadian dollars)
    January 31, 2005
    January 31, 2004
    January 31, 2003[Restated]Power Sports
    $
    1,935.6
    $
    1,888,5
    $
    1,834.0Marine Engines
    561.1
    559.8
    579.9Inter segment revenues
    (45.4)
    (39.2)
    (30.5)Total consolidated revenues
    $ 2,451.3
    $ 2,409.1
    $ 2,383.4The
    segmented operating income (loss) for the years ended January 31 were as
    follows:CombinedYear ended
    year ended
    Year ended(millions of Canadian dollars)
    January 31, 2005
    January 31, 2004
    January 31, 2003[Restated]Power Sports
    $
    101.7
    $
    84.2
    $
    186.9Marine Engines
    (17.8)
    (14.6)
    17.8Total
    $ 83.9
    $ 69.6
    $ 204.7Power Sports
Year ended January 31, 2005 compared with combined year ended January 31,
2004
Power Sports segment revenues reached $1,935.6 million for
the year ended January 31, 2005 as compared to $1,888.5 million for the combined
year ended January 31, 2004. The increase was caused by a higher number of units
sold of approximately $134.0 million and by favourable pricing and product mix
of approximately $62.0 million partially offset by the unfavourable impact of
the strengthening of the Canadian dollar for an amount of approximately $152.0
million. The increased number of units sold results from a higher number of
deliveries in snowmobiles, ATVs and personal watercraft, partially offset by
lower sales of engines to motorcycle manufacturers. The increase in the number
of deliveries of ATVs is mainly due to the popularity of the Outlander and Max
series
13
and a manufacturing supply agreement with Deere & Company.
The increase in the number of deliveries of personal watercraft results from a
Management decision to better align personal watercraft production with the
retail season. The favourable impact of the personal watercraft production
alignment in the latter part of fiscal 2004 was partially offset by the
unfavourable impact of an additional adjustment of production and deliveries in
the fourth quarter of fiscal 2005.
The Power Sports segment operating income amounted to $101.7
million for the year ended January 31, 2005 as compared to $84.2 million for the
combined year ended January 31, 2004. The favourable impact of increased units
sold and better pricing and product mix totalling approximately $76.0 million
and a reduction in operating expenses were slightly offset by the unfavourable
impact of foreign exchange of approximately $100.0 million.
Power Sports segment includes the following product lines:
Snowmobiles
The International Snowmobile Manufacturer's Association ("ISMA")
estimates that the size of the snowmobile market in North America was
approximately U.S.$1.1 billion in model year 2004 (model year 2004 refers to the
period from April 1 to March 31, 2004). The Company leads this market in terms
of retail units sold for model year 2004, according to ISMA. The Company also
leads the European market in terms of retail units sold for the same model year.
Management attributes the Company's strong position in these markets to its
product performance and innovation and to the strength and breadth of its
distribution network. In model year 2003, the Company released the REV platform,
which changes the rider's position on the sled, improving manoeuvrability and
comfort. The Company believes that widespread market acceptance of the design
helped BRP to increase its North American market share.
Management believes snowmobile sales are affected by quantity and timing of
snowfall. The quantity of snowfall impacts the usage of the snowmobiles and the
repurchase of new sleds whereas the timing of snowfall can affect the timing of
sales within a given season. Management believes that the North American
snowmobile market will record another year of single digit decline, during model
year 2005, which should be offset slightly by the growth in the European market.
Despite the negative trend in the North American market, Management expects to
increase its market share and consolidate its North American market position
with products such as the Ski-Doo Mach Z, the MX Z, Renegade 1000cc and the
Freestyle. Likewise the Company's strong line-up in Europe should also allow it
to maintain its leadership position in that market.
Personal Watercraft
The North American personal watercraft market has registered
a slight decline for the season 2004. The year was marked by the decision of one
of the Company's competitors to exit the market. The Company believes that the
personal watercraft business remains solid overall due to proprietary research
that indicates the popularity of the sport, particularly among young adults. In
addition, the Company believes annual sales should stabilize over the coming
years as the average age of the installed base increases and new cleaner and
quieter technologies are available. The National Marine Manufacturer Association
estimates the U.S. retail market was approximately U.S.$700.0 million for
calendar year 2003. The Company has led this market for several years and has
increased its share of retail units sold in North America.
Management believes that the gains in market share have been, in part, due to
product performance, design and innovation as well as a broad dealer network.
With the most complete product lines of the industry, the Company expects to
benefit in the long run from the reduction in the number of competitors and
maintain its leadership position in the North American and International
markets.
ATVs
Once again, the worldwide retail market grew when compared to
the previous year. North American market growth rate was in the low single
digits, whereas the European market experienced a more robust annual growth
percentage, nearing 30%. The Motorcycle Industry Council estimates the U.S.
retail market was approximately U.S.$4.4 billion in calendar year 2004. During
the 2004 model year, the Company's market share was essentially stable.
14
Management believes that, similar to other consumer product categories that
have experienced rapid growth, the North American ATV market will stabilize and
subsequently contract over the next few years. Management expects the market
contraction in North America to be partially offset by the growth in the
European and international markets where the Company competes.
Sport boats
Sport boats occupy a specific niche in the market,
representing motorized boats that utilize jet-power rather than conventional
propeller propulsion. The U.S. sport boat retail market was estimated by the
National Marine Manufacturers Association, or NMMA, to be approximately
U.S.$115.0 million in 2003. The Company leads the sport boat market in North
America in 2004. Management expects to maintain its leadership position on the
North America market.
Engines
BRP also manufactures small engines for a broad array of
vehicles and equipment under the Rotax brand name. These engines are used in the
Company's Ski-Doo and Lynx snowmobiles, Sea-Doo personal watercraft, ATVs, and
sport boats as well as in other manufacturers' motorcycles, karts and small and
ultra-light aircraft.
Parts and Accessories
Parts and accessories sales are driven mainly by the installed based of
products sold in current and past seasons and are recurring in nature. As a
result of the Company's more than 40-year presence in the industry and its
history of market leading positions, BRP has a large installed base that
generates repeat business from customers and supports a recurring stream of
revenue from the sale of related parts, accessories and clothing.
Combined year ended January 31, 2004 compared with year ended January 31,
2003
Power Sports segment revenues reached $1,888.5 million for
the combined year 2004 as compared to $1,834.0 million for the year ended
January 31, 2003. The increase was caused by higher revenue per unit offset by
lower unit shipments. The higher revenue per unit resulted primarily from higher
prices and favourable unit mix towards higher priced units in snowmobiles and
ATVs. The lower unit shipments resulted primarily from lower personal watercraft
units as a result of the planned one-time shift of production from the second
half of the combined year 2004 to the first half of the fiscal year 2005 to
better align shipments with retail sales, offset primarily by higher ATV units
as a result of the launch of a more complete product line-up and strategic
distribution arrangement with Deere & Company.
Power Sports segment operating profit amounted to $84.2
million for the combined year 2004 as compared to $186.9 million for the year
ended January 31, 2003. The decrease results primarily from the favourable
impact in the prior period of adopting EITF Issue No. 01-09 and the unfavourable
impact in the current period of increasing inventory value to distributor prices
in purchase accounting, higher warranty costs related mainly to a recall of
personal watercraft fuel tanks and the postponement of personal watercraft
deliveries. Having adopted EITF No. 01-09, the Company recognises sales
promotion and incentives at the later of revenue recognition or the announcement
of the sales and incentive program. The increase in value of inventory to
distributor prices at the time of the Transactions and the subsequent sale of a
portion of that inventory at a lower margin resulted in an unfavourable impact
in the current period.
Marine Engines
Year ended January 31, 2005 compared with combined year ended January 31,
2004
Marine Engines segment revenues remained relatively flat at
$561.1 million for the year ended January 31, 2005 compared to $559.8 million
for the combined year ended January 31, 2004. The favourable impacts of better
product mix of approximately $14.0 million were offset by the unfavourable
impact of the strengthening Canadian dollar in relation to the US dollar of
approximately $16.0 million. Increased deliveries in the international market
was offset by a reduction in deliveries in the North American market mainly due
to the impact of import duties on Japanese manufactured engines sold in the
United States.
Marine Engines segment operating loss amounted to $17.8million for the year ended January 31, 2005 as compared to $14.6
million for the combined year ended January 31, 2004. The favourable impact of
product mix of
15
approximately $13.0 million was offset by higher selling and marketing
expense related to the Company's E-TEC technologies in marine engines.

The U.S. Department of Commerce ("DOC") issued a preliminary
determination of anti-dumping on August 6, 2004 and had ordered a 22.52% cash
deposit or an import bond to be posted for each "Japanese made" outboard engine
sold in the United States. On December 28, 2004, the DOC rendered its final
ruling on dumping and imposed a final anti-dumping duty of 18.98%. However on
February 2, 2005, the International Trade Commission (ITC), after having
conducted a hearing on the injury to the U.S. outboard engine industry resulting
from the Japanese dumping, ruled that the U.S. outboard engine industry had not
been materially injured and was not threatened with material injury.
Consequently, the anti-dumping duty bonds will be released and deposits will be
reimbursed to importers and "Japanese made" outboard engines sold in the United
States will not be subject to any anti-dumping duties.

The NMMA estimated the U.S. outboard engine retail market to
be approximately U.S.$2.6 billion in 2003. As observed over the past years, the
industry continues to experience a shift toward 2-stroke direct injected and
4-stroke engines, away from traditional 2-stroke carbureted engines. While
emissions standards initially prompted the shift toward 2-stroke direct injected
and 4-stroke engines, Management believes that these technologies continue to
gain momentum due to actual and perceived advantages over carburated technology.
BRP, under the Evinrude brand, has the most extensive line-up of 2-stroke direct
injected engines.

The Company's worldwide unit sales and market shares are
expected to decline slightly over the next fiscal year as a result of the
Company's plan to focus heavily behind its E-TEC engines. The emphasis on the
E-TEC engines will result in the elimination of certain carbureted 2-stroke and
4-stroke engines. However, the Company believes, supported by proprietary
research, that it should be able to recapture sales with its E-TEC engines.
Management also believes that market shares were negatively affected as a result
of the Company's reduced offering of the 4-stroke engines due to the
anti-dumping case against "Japanese made" outboard engines sold in the United
States.

Combined year ended January 31, 2004 compared with year ended January 31,
2003

Marine Engines segment revenues declined to $559.8 million
for the combined year ended January 31, 2004 from $579.9 million in the year
ended January 31, 2003 primarily due to lower revenue per unit mainly as a
result of lower exchange rates used to translate results into Canadian dollars,
offset primarily by higher unit shipments due to introducing the E-TEC product
line.

Marine Engines segment operating loss amounted to $14.6
million for the combined year ended January 31, 2004 as compared to a segment
operating profit of $17.8 million in the year ended January 31, 2003. This
decrease results mainly from the favourable impact of changes in estimates
established in connection with the acquisition of assets of the outboard engine
business of Outboard Marine Corporation that resulted in the reversal of
acquisition related accruals. Management determined that reserves established at
the time of the acquisition of assets against accounts receivable, inventory,
and warranty, were no longer necessary given its collection of receivables,
turnover of inventories, and warranty experience.

16

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LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION

The Company's principal sources of liquidity are cash generated from
operations and revolving facilities. A summary of the cash flow and additional
information for the years ended January 31, is presented below:

|                                                             | Year ended       | Combined year ended
|------------------------------------------------------------ | ---------------- | -------------------
|(millions of Canadian dollars)                               | January 31, 2005 | January 31, 2004   
|Cash flow from operating
    activities before net change in |                  |                    
|non-cash working capital items related to
    operations     | $
    111.4      | $
    108.7        
|Net change in
    non-cash working capital items related to  |                  |                    
|operations                                                   | 81.8             | (103.2)            
|Cash flows from
    operating activities                     | 193.2            | 5.5                
|Additional information                                       |                  |                    
|Additions to property, plant and equipment                   | 70.1             | 94.2               
|Repayment of long-term debt                                  | 196.5            | 2.1                
|Cash paid for interest                                       | 36.7             | 5.8                
|Cash paid for income taxes                                   | 15.7             | 7.0                

Cash paid for the acquisition of the recreational products
business was $757.2 million. This amount includes $713.3 million, net of cash
acquired of $196.7 million, paid on the date of acquisition plus the settlement
of acquisition related accruals of $43.9 million during the 44-day period ended
January 31, 2004. Acquisition related accruals outstanding as of January 31,
2005 totalled $7.4 million mainly representing restructuring related accruals.
The Company also issued redeemable preferred shares with a fair value of $42.7
million as a non-cash consideration for the acquisition. The acquisition was
partly financed through the issuance of capital stock for an amount of $304.5
million and the issuance of long-term debt of $591.9 million net of issuance
costs of $46.1 million.

The Company's primary sources of funds are provided by cash
balances, cash from operating activities, and borrowings under the $250 million
Revolving Facilities. The primary uses of funds are capital investments and
working capital. Based on the current level of operations, Management believes
that cash on hand, cash flows from operations and available borrowings under the
Revolving Facilities portion of the senior secured Amended and Restated Credit
Agreement will enable the Company to meet its working capital, capital
expenditure, debt service and other funding requirements for at least the next
twelve months.

The seasonality of production and shipments causes working capital
requirements to fluctuate during the year. Typically, working capital needs grow
through the spring and summer and decline through the autumn and winter with a
peak in mid-summer. Management believes that cash and availability under the
senior secured Amended and Restated Credit Agreement provides sufficient
liquidity for its operations. Cash as at January 31, 2005 totalled $150.3
million, the Revolving Facilities availability stood at $198.8 million since the
Company had borrowings of $12.3 million and issued letters of credit of $38.9
million.

Financial Position

Receivables amounted to $112.7 million as at January 31,
2005, compared to $148.7 million as at January 31, 2004. This $36.0 million
decrease results from the collection from Bombardier of amounts related to the
acquisition and by the last two days of revenues of fiscal 2004 that had not
been floorplanned until the early part of fiscal 2005 and which were presented
as accounts receivable.

Inventories amounted to $302.1 million as at January 31,
2005, compared to $331.3 million as at January 31, 2004. This $29.2 million
decrease is mainly due to lower marine engine inventories, the impact of the
strengthening Canadian dollar when converting from U.S. dollars and due to
inventory which was increased in value, as at January 31, 2004, to distributor
selling prices for $9.3 million.

Other current assets amounted to $90.2 million as at January
31, 2005, compared to $97.1 million as at January 31, 2004. This $6.9 million
decrease is mainly due to a reduction in derivative financial assets of $16.7
million and prepaid expenses of $5.3 million offset in part by an increase in
income taxes receivable of $17.5 million.

17

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Property, plant and equipment amounted to $425.8 million as
at January 31, 2005, compared to $490.3 million as at January 31, 2004. This
$64.5 million decrease is a result of depreciation of $104.4 million, an
impairment charge of $12.1 million for facilities intended for disposal by sale
and the negative impact of exchange rate of approximately $13.5 million,
partially offset by the additions of $70.1 million.

Goodwill amounted to $119.9 million as at January 31, 2005,
compared to $117.6 million as at January 31, 2004. This $2.3 million increase is
mainly due to an adjustment resulting from the finalisation of the purchase
price allocation of $6.1 million, and the effect of exchange rate fluctuations
of $3.4 million. As discussed in note 3 of the Consolidated Financial
Statements, the originally reported amounts of goodwill and long-term deferred
income tax have been restated by $38.0 million to appropriately reflect the tax
effects of the acquired trademarks, which are not deductible for tax purposes
and are accounted for as indefinite life intangible assets for accounting
purposes.

Other intangible assets amounted to $229.2 million as at January 31, 2005,
compared to $241.8 million as at January 31, 2004. This $12.6 million decrease
is mainly due to
amortisation expense.

Other long-term assets amounted to $43.1 million as at
January 31, 2005, compared to $64.5 million as at January 31, 2004. This $21.4
million decrease is mainly due to the $12.9 million write-off of the deferred
financing charges during the fourth quarter of fiscal 2005 attributable to the
U.S. $280 million Term Facilities which the Company had partially settled prior
to January 31, 2005 and completely repaid shortly thereafter on February 9, 2005
and to amortisation expense of $6.5 million recorded during the year.

Accounts payable and accrued liabilities amounted to $594.8
million as at January 31, 2005, compared to $640.5 million as at January 31,
2004. This $45.7 million decrease is mainly due to payments made as part of the
restructuring provision of $16.1 million, a reduction in accounts payable and
accrued liabilities of $13.5 million, a decrease in sales promotions and
incentive programs of $11.0 million mainly in the Marine Engines segment and a
reduction in the warranty provision of $6.5 million offset in part by higher
compensation accruals.

In connection with the acquisition, Management approved and
initiated a plan to restructure the recreational products business. The
restructuring activities undertaken in connection with the acquisition are on
schedule and according to plan. During the fourth quarter of fiscal 2005, the
Company finalised its plan and reduced its original estimate by $0.8 million.
The remaining $3.3 million of severance and relocation costs and the $4.0
million for the lease cancellation cost (mainly office space) are expected to be
completed during fiscal 2006. Approximately 337 jobs were terminated as part of
the restructuring of the recreational products business.

As previously mentioned, also on November 9, 2004, BRP
announced the restructuring of its operations, including a reduction of its
workforce and recorded a restructuring charge of $6.5 million. The additional
restructuring activities undertaken are on schedule and according to plan. The
majority of the remaining $3.3 million of severance cost is expected to be paid
during fiscal 2006.

On October 29, 2004, the Company redeemed all of the issued
and outstanding Class A preferred shares held by its parent company for a total
cash consideration of $52.6 million. The outstanding Class A preferred shares
had a carrying value of $46.2 million and were redeemable at $50.0 million plus
the accrued dividend of $2.6 million. In accordance with Canadian GAAP, the
preferred shares with mandatory redemption features at the option of the holders
had been classified with long-term liabilities. The carrying value of the
preferred shares was accreted to its redemption value through charges to income
over the period up to their expected redemption date, based on the effective
yield method.

18

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As at January 31, 2005, the debt structure consisted of the following:

|                                                |               | Effective interest |            
|----------------------------------------------- | ------------- | ------------------ | -----------
|                                                |               | rate as at         | Amount     
|                                                | Maturity date | January 31, 2005   | outstanding
|Classified as current
    liabilities:          |               |                    |            
|$250million Revolving
    Facilities            | 2008          | 5.05%              | $12.3      
|U.S. $280 million
    Term Facilities           | 2010          | 4.97%              | 147.2      
|Classified as
    long-term liabilities:        |               |                    |            
|U.S. $200 million
    Senior subordinated notes | 2013          | 8
    3/8%         | 247.6      
|Other                                           | 2008          | 2.00%              | 1.9        

During the fourth quarter of fiscal 2005, the Company
voluntarily repaid, without penalty, U.S.$158.3 million (approximately $193.0
million) on the Term Facilities and shortly thereafter, on February 9, 2005,
fully repaid the remaining outstanding balance of U.S.$118.9 million ($147.2
million) on the Term Facilities. The U.S. $280 million Term Facilities has been
replaced by a new Term Facility of U.S. $50 million (approximately $62.0
million), under an amended and restated Senior Secured Credit Agreement, which
will mature January 31, 2011.

The $250 million Revolving Facilities and U.S. $50 million
(approximately $62.0 million) new Term Facility bear a floating rate of interest
generally based on LIBOR or "prime" rates plus applicable margin. As at January
31, 2005, the effective interest rate on the Revolving Facilities borrowings was
5.05%. The Company had interest rate swap agreements in order to manage
exposures to interest rate fluctuations. As at February 9, 2005, the Company
settled for $1.7 million its favourable U.S. $70.0 million notional interest
rate swap agreements.

As at January 31, 2005, the Company had share capital of
$364.4 million. During the year ended January 31, 2005, share capital increased
by an aggregate amount of $59.9 million as a result of additional capital
contributions received by its parent company following the issue of 7,641,550
Class B common shares of J.A.B. and the redemption of all of the issued and
outstanding class A preferred shares held by J.A.B.

The cumulative translation adjustment account amounted to a
debit of $13.7 million as at January 31, 2005 compared to a credit of $2.0
million as at January 31, 2004. This variation is mainly due to the
strengthening of the Canadian dollar compared to the U.S. dollar and the Euro.
Assets and liabilities mainly from the U.S. dollar denominated self-sustaining
foreign subsidiaries translated at the exchange rate at balance sheet date
resulted in an exchange loss, which is accumulated in the cumulative translation
adjustment account.

Statement of Cash Flows

Net cash provided by operating activities, before net change
in working capital items, totalled $111.4 million for the year ended January 31,
2005 an improvement over the net cash provided by operating activities before
net change in working capital items of $108.7 million for the combined year
ended January 31, 2004. This results mainly from improved margin and operating
expenses.

Net cash use by investing activities totalled $46.6 million
for the year ended January 31, 2005 of which $40.3 million was provided from the
disposal of the Utility Vehicles segment and $70.1 million was used for capital
expenditures and $21.5 million was used to pay costs related to the acquisition
of the recreational product business from Bombardier. Net cash used in investing
activities totalled $990.7 million for the combined year ended January 31, 2004
mainly relating to the acquisition of the recreational product business from
Bombardier. Capital expenditures amounted to $94.2 million the combined year
ended January 31, 2004. Management expects to use approximately $92.0 million
for capital expenditures during fiscal year 2006, primarily in connection with
the continuation of new product development and providing for maintenance of
capacity, infrastructure and equipment at the manufacturing facilities.

19

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Net cash used in financing activities totalled $181.0 million
for the year ended January 31, 2005 mainly attributable to the repayment of the
long-term debts. Net cash provided by financing activities totalled $1,143.5
million for the combined year ended January 31, 2004 which results from the
financing of the acquisition through the issuance of long-term debt and share
capital of $638.0 million and of $304.5 million, respectively.

Cash paid for income taxes for the years ended January 31,
2005 and 2004 amounted to $15.7 million and $7.0 million. The increase is
partially due to the timing of tax payments related to the tax filings of the
2004 fiscal year for the U.S. legal entities. In addition, interim tax payments
during the fiscal year 2004 have been substantially higher than in fiscal 2003,
as a result of changes in the tax structure pursuant to the acquisition.

Capital Resources

As of January 31, 2005, the debt structure consisted of
U.S.$200 million (approximately $248.0million) aggregate principal amount of senior subordinated notes and
Senior Secured Credit Facilities, consisting of a (i) U.S.$118.9 million
(approximately $147.0 million) Term Facilities with a maturity of seven years,
and (ii) $250 million Revolving Facilities with a maturity of five years. At
January 31, 2005, the Revolving Facilities stood at U.S.$10 million (excluding
approximately $38.9 million of outstanding letters of credit).

Under the senior secured Amended and Restated Credit
Agreement, the Company can borrow up to $250 million ("available borrowings")
under Revolving Facilities, which terminates on December 18, 2008. Pursuant to
the Revolving Facilities, the Company may borrow up to $200.0 million of the
available borrowings, which borrowings may be denominated, in Canadian dollars,
in U.S. dollars or in Euros, and one of the Company's wholly owned subsidiaries
may borrow up to $50.0 million of the available borrowings, which borrowings
will be denominated in U.S dollars. Available borrowings can also be drawn in
the form of letters of credit by the Company for an amount of $100.0 million in
Canadian dollars, U.S dollars or Euros and by one of the Company's wholly owned
subsidiaries for an additional U.S.$20.0 million (approximately $25.0 million).

The Senior Secured Credit Agreement was amended and restated
on February 9, 2005 to provide for a new Term Facility of U.S. $50 million
(approximately $62.0 million), which will mature January 31, 2011. The Company
may also, at any time or from time to time, request one or more additional
tranches of US dollar denominated term loans of an aggregate amount not to
exceed US$100 million.

The new Term Facility bears interest equal to either the U.S.
prime rate, or LIBOR plus applicable margin, has semiannual principal repayments
of U.S. $0.25 million (approximately $0.3 million) beginning June 30, 2005 and
final principal repayments of U.S. $47.3 million (approximately $58.0 million)
on January 31, 2011.

OFF-BALANCE SHEET ARRANGEMENTS

Off-Balance Sheet Obligations

The Company has agreements with various finance companies to
provide financing to its dealers to facilitate their purchase of the Company's
products. These agreements improve the Company's liquidity by financing dealer
purchases of products without requiring substantial use of its working capital.
A significant percentage of the Company's sales of snowmobiles, personal
watercraft, ATVs, sport boats, and outboard engines to dealers in North America
are financed under such arrangements. In the event of a dealer default, the
Company may be required to repurchase, from the finance companies, new and
unused products at the total unpaid principal balance of the dealer to the
finance companies. No material losses have been incurred under these agreements.
However, an adverse change in market conditions or other factors could cause
this situation to change and thereby require the Company to perform under this
obligation and to purchase the finance companies' repossessed units. The
purchase price with respect to these repurchases is generally the unpaid balance
on the original invoice. The Company capped its Bombardier Capital Ltd. and
Bombardier Capital Inc. repurchase payments on an annual basis at an amount
equal to the greater of U.S.$25.0 million or 10% of the average amount of
financing outstanding under such floorplanning agreements.

20

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The total amount of floorplan financing provided to dealers
in North America, Australia and New Zealand during the year ended January 31,
2005, the combined year ended January 31, 2004 and the year ended January 31,
2003 was $1.4 billion, $1.4 billion and $1.5 billion, respectively. The amount
outstanding as of January 31, 2005, 2004 and 2003 was $719.6, $753.7 million and
$950.1 million, respectively. The Company's portion of financing charges under
the free floorplanning programs described above for the year ended January 31,
2005, and the years ended January 31, 2004 and 2003 was $30.6 million, $28.9
million and $25.6 million, respectively.

Also as part of the working capital management, the Company
sells receivables to related and third parties. The total amount of receivables
factoring worldwide during the year ended January 31, 2005, the combined year
ended January 31, 2004 and the year ended January 31, 2003, was $796.0, $803.6
million and $647.5 million, respectively. The amount outstanding as of January
31, 2005, 2004 and 2003 was $186.5, $213.1 million and $193.5 million,
respectively. Related financing charges for the year ended January 31, 2005, and
the years ended January 31, 2004 and 2003 were $6.8, $3.9 million and $7.6
million, respectively.

CONTRACTUAL OBLIGATIONS

The following is a summary of the contractual cash obligations as of January
31, 2005:

|                                                         |                                                                                                                  | Payments Due By Period
|-------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | ----------------------
|                                                         |                                                                                                                  |                       
|                                                         |                                                                                                                  | Less than             
|(millions of Canadian dollars)                           | 1 year                                                                                                           | 1-2 years             
|U.S.$118.9 million Term
    Facilities (including        |                                                                                                                  |                       
|                                                         | mandatory
    interest payments)
    (1)                                                                         | $
    147.3           
|U.S.$50 million Term Facilities (including mandatory     |                                                                                                                  |                       
|                                                         | interest
    payments) (2)                                                                                       | 3.8                   
|U.S.$200 million Senior subordinated notes (including    |                                                                                                                  |                       
|                                                         | mandatory
    interest payments)                                                                                 | 20.7                  
|Other
    existing debt                                  |                                                                                                                 |                      
|Purchase commitments                                     | 7.6                                                                                                              | 2.5                   
|Operating leases including
    residual value guarantees | 8.6                                                                                                              | 3.8                   
|Total contractual cash
    obligations                   | $ 188.0                                                                                                          | $ 30.8                
|(1)                                                      | Assumes the applicable interest rate of 4.97% as of January 31, 2005 and
    repayment on February 9, 2005      
|(2)                                                      | Assumes the applicable interest rate of 5.25% as of January 31, 2005 and
    final repayment on January 31, 2011

Upon completion of the business acquisition, the Company and
J.A.B. entered into a management agreement with affiliates of the Sponsors to
provide management services. Pursuant to such agreement, affiliates of the
Sponsors receive an aggregate annual management fee of U.S.$2.25 million.

HEDGING ACTIVITIES AND FOREIGN EXCHANGE RATES

BRP's foreign exchange exposures are managed through a
central treasury service. Derivative financial instruments are concluded with
investment grade financial institutions. The derivative financial instruments
consist mainly of forward foreign exchange contracts and interest rate swap
agreements used to manage currency and interest rate risks.

BRP uses derivative financial instruments to manage currency
exposure arising from forecasted foreign currency cash flows, mainly the U.S.
dollar, and the Euro. In accordance with generally accepted accounting
principles in Canada, the fair value of forward foreign exchange contracts used
to hedge off-balance sheet forecasted foreign currency cash flows and the
offsetting changes in the fair values of the hedged forecasted foreign currency
cash flow transactions are not recognised in the Consolidated Financial
Statements, when they are eligible to hedge accounting. Otherwise, derivative
financial instruments that are not eligible to hedge accounting are recognized
on the balance sheet at fair value with changes in fair value recognised to
income of the period.

21

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The Company purchases financial derivatives, primarily
forward contracts, to reduce foreign exchange volatility. Currently, the
objective is to hedge at a minimum 80% of all of its forecasted foreign currency
cash flows exposures over the next rolling twelve months and 50% of all of its
forecasted foreign currency cash flows exposures over the following rolling
twelve months (months 13 to 24). Management typically reviews the foreign
exchange exposure monthly. The Company is exposed to credit loss in the event of
non-performance by the other party to the derivative financial instruments. The
Company limits this exposure by entering into agreements directly with a number
of major financial institutions that meet its credit standards and that are
expected to satisfy fully their obligations under the contracts.

Derivative contracts outstanding as of January 31, 2005 have
maturity dates between 1 and 24 months. Notional amounts of foreign exchange
contracts outstanding as of January 31, 2005 to manage foreign exchange exposure
on U.S. dollar sales were $649.9 million and to manage foreign exchange exposure
on Euro denominated purchases were $274.4 million. Because these contracts are
for foreign currency denominated transactions, any change in the fair value of
the contracts should be offset by changes in the value of the underlying
transaction.

The Company also uses derivative financial instruments to manage the impact
of fluctuating interest rates, arising on long-term debt. BRP's interest rate
swap agreements convert a portion of its long-term debt from variable to fixed
interest rates. The Company decided not to cover the currency exposure on its
long-term debt. As not all of the variability of the hedged item's functional
currency equivalent cash flows are eliminated by the effect of the hedge, the
interest rate swaps do not qualify for hedge accounting.

Outstanding foreign exchange contracts, by maturity date, are as follows :

|                               | Sell     | Buy      |                  |                  |          |            
|------------------------------ | -------- | -------- | ---------------- | ---------------- | -------- | -----------
|(millions of Canadian dollars) | currency | currency | January 31, 2005 | January 31, 2004
|                               |          |          |                  | Canadian         |          | Canadian   
|                               |          |          | Weighted         | equivalent       | Weighted | equivalent 
|                               |          |          | average          | notional         | average  | notional   
|Sell contracts:                |          |          | rate             | amount           | rate     | amount     
|Less than 1 year               | USD      | CAD      | 0.7495           | $
    449.8      | 0.7108   | $
    588.0
|Between 1 and 2 years          | USD      | CAD      | 0.7865           | 200.1            | 0.7525   | 257.4      
|Less than 1 year               | USD      | JPY      |                 |                 | 0.0095   | 2.4        
|Less than 1 year               | AUD      | USD      |                 |                 | 1.4580   | 42.2       
|                               |          |          |                  |                  |          |            
|                               |          |          |                  |                  |          |            
|Buy contracts:                 |          |          |                  |                  |          |            
|Less than 1 year               | CAD      | Euro     | 0.6042           | 183.9            | 0.6120   | 241.8      
|Between 1 and 2 years          | CAD      | Euro     | 0.6114           | 90.5             | 0.6123   | 107.8      

Gains and losses resulting from the change in the fair value
of the forward foreign exchange contracts are recorded in the same category as
the forecasted foreign currency denominated transactions, when they are eligible
to hedge accounting. For example, if the hedged item is a forecasted foreign
currency sale, gains and losses will be included in revenues, and if the hedged
item is a forecasted foreign currency purchase, gains and losses will be
included in cost of sales. Whereas, when derivative financial instruments are
not eligible to hedge accounting, gains and losses are recognised immediately to
income.

PENSION AND OTHER BENEFIT PLANS

The Company sponsors several domestic and foreign funded and
unfunded defined benefit pension plans covering a majority of its employees in
Canada, the United States, Austria and Belgium. The Company provides a defined
contribution plan for its employees in the United States. The Company also
provides post-retirement benefits plans. These benefits plans essentially
consist of post-retirement health care coverage and life insurance benefits in
Canada.

22

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The significant actuarial assumptions adopted to determine the benefit cost
and the projected benefit obligation were as follows (weighted-average
assumptions as at the measurement date, December 31 preceding the fiscal year
end):

|                                                           | Year ended January 31, 2005
|---------------------------------------------------------- | ---------------------------
|                                                           | Pension                    
|                                                           | Domestic                   
|Benefit cost actuarial
    assumptions (1)                 |                            
|Discount rate                                              | 6.00%                      
|Rate of
    compensation increase                          | 4.09%                      
|Expected
    long-term rate of return on plan assets       | 6.81%                      
|Projected
    benefit obligation actuarial assumptions (2) |                            
|Discount rate                                              | 6.00%                      
|Rate of compensation increase                              | 4.07%                      
|(1) Determined as of
    beginning of period               |                            
|(2)
    Determined as of end of period                     |                            

The determination of the above assumptions was made by
Management after a periodic review of factors, such as long-term investment
returns expectations prepared by consultants or economists, historical
investment returns, long-term inflation expectations and bond yields and
recommendations from actuaries. The Company uses the market value of assets for
purposes of measuring the pension cost. The Company also reflects the cost of
future life expectancy improvements.

Based on the current economic environment and tendency toward
increasing the long bond yields, Management does not expect these assumptions to
change in such a way so that it would result in higher re-measured projected
benefit obligations.

As at January 31, 2005, the reconciliation of the funded status of the
pension plans to the amounts recorded on the consolidated balance sheets under
employee future benefits obligations was as follows:

|                                          | January 31, 2005
|----------------------------------------- | ----------------
|                                          | Pension         
|                                          | Domestic        
|Fair value of plan assets                 | $ 112.4         
|Projected benefit obligation              | (144.7)         
|Funded status                             | (32.3)          
|Unamortised net actuarial loss
    (gain) | (1.5)           
|Net recognised amount                     | $ (33.8)        

The unfunded foreign plans are mainly located in Austria where regulations do
not require pre-funding.

The Company will amortise any net actuarial gains and losses
over 10% of the greater of the pension obligation and the fair value of plan
assets, as well as the cost of any future plan improvements over the estimated
average remaining service life of the plan members.

It is estimated that a decrease of 50 basis points in the
discount rate assumption would increase the projected benefit obligation for the
pension plans by approximately $21.8 million and for other benefits by $1.9
million. The decrease would also increase the pension and other benefit cost by
$1.3 million.

It is further estimated that a decrease of 50 basis points in the current
long term expected returns on assets would increase the pension cost by
approximately $0.5 million.

In accordance with the minimum funding obligations required under the current
regulations, the Company expects to contribute $10.3 million to all plans for
the year ended January 31, 2006.

23

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The Company froze the existing Canadian defined benefit pension plan with the
support of the affected employees. Following the curtailment of that pension
plan, employees are no longer able to earn benefits by providing future service
but actuarial and investment risks are not eliminated, since current retirees
are still covered by the defined benefit pension plan, and employees still on
the payroll as at the June 1, 2005 termination date will not lose the benefits
they have accumulated until that date. Also the Company agreed to the creation
of a replacement pension plan, which would be a defined contribution plan,
subject to finalisation of regulatory approval.

Participation in the new Canadian defined contribution plan will be optional
for current but mandatory for the new employees with a minimum contribution rate
of 4% of their salaries. The Company will match employee contributions up to a
maximum of 6%. As a transition, the Company will make additional contributions,
for the current employees, up to 5% of their salaries based on age and years of
services accumulated as at June 1, 2005, the reform date.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with
GAAP requires the use of estimates, which may involve a higher degree of
judgement and complexity in their application, and the use of assumptions, all
of which may affect the reported amounts of assets and liabilities, related
amounts of revenues and expenses and disclosure of contingent assets and
liabilities. Estimates are influenced by factors such as historical experience,
current market conditions, changes in the business environment and various other
assumptions that are believed to be reasonable and consistent with industry
practice. Actual results may differ from these estimates under different
assumptions or conditions.

Management discussed the application of these critical accounting estimates
with the Audit Committee of the Company.

Management believes the following are the critical accounting
estimates used in the preparation of the Company's Consolidated Financial
Statements. This discussion addresses only critical accounting estimates that
Management considers important based on the degree of uncertainty and the
likelihood of a material impact if different estimates were used. There are
other areas which require the use of estimates about uncertain matters.

Inventory valuation

Raw materials and work in process, finished products and
parts and accessories are valued at the lower of cost (average cost or first-in,
first-out) and replacement cost (raw materials) or net realisable value. The
Company makes ongoing estimates relating to the net realisable value of
inventories, based upon Management's assumptions about future demand and market
conditions. If the Company estimates that the net realisable value of its
inventory is less than the cost of the inventory recorded in its books, the
Company records a reserve equal to the difference between the cost of the
inventory and the estimated net realisable value. This reserve is recorded as a
charge to cost of sales. If changes in market conditions result in reductions in
the estimated realisable value of its inventory below its previous estimate, the
Company would increase its reserve in the period in which the Company made such
a determination and record an expense to cost of sales.

Sales promotions and incentive programs

Sales promotion and incentive programs include dealer and
distributor rebates, volume discounts and retail financing programs. The Company
generally provides for estimated sales promotion and incentive expenses at the
later of revenue recognition or the announcement of sales promotion and
incentive programs. Sales promotion and incentive expenses are estimated based
on current programs, historical rates for each product line, inventory levels at
the dealer network and future forecasted sales of the dealer network.

Product warranties

The estimated warranty is accrued for each product at the
time of sale. Estimates are principally based on assumptions regarding lifetime
warranty costs of each product line and each model year of that product line,
where little or no claims experience may exist. In addition, the number and
magnitude of additional service actions expected to be approved, and policies
related to additional service actions, are taken into consideration. Additional
service action costs may occur due to certain factors such as weather and its
impact on product usage and product

24

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recalls. Due to the uncertainty and potential volatility of these estimated
factors, changes in Management's assumptions could materially affect net income.

Management estimates of warranty are re-evaluated on a
quarterly basis. Experience has shown that initial data for any given model year
can be volatile; therefore, the Company's process relies upon long-term
historical averages until sufficient data are available. As actual experience
becomes available, it is used to modify the historical averages to ensure that
the forecast is within the range of likely outcomes. Resulting balances are then
compared with present spending rates to ensure that the accruals are adequate to
meet expected future obligations.

Litigation

The Company incurs expenses on claims as a result of legal
actions against it. The Company maintains insurance for a portion of this
exposure and records a liability for its non-insured obligations. The Company
estimates its liability obligations based on historical trends and a review of
product performance. Any liability recorded is established for reported and
unreported claims of injuries or damages that occurred prior to the date of the
financial statements.

RECENT ACCOUNTING AND REPORTING DEVELOPMENTS

Canadian GAAP 
Financial Instruments  Recognition and Measurement, Hedge, Comprehensive
Income, Equity

In January 2005, the CICA released a new financial standards relating to
recognition and measurement of financial instruments, hedging relationships, and
presentation of equity and comprehensive income.

Section 3855, "Financial Instruments  Recognition and
Measurement" establishes standards for recognising and measuring financial
assets, financial liabilities and non-financial derivatives. It also specifies
how financial instrument gains and losses are to be presented.

Section 3865, "Hedge" establishes standards for when and how
hedge accounting may be applied. Hedge accounting is optional. It replaces and
expands on Accounting Guideline AcG-13 "Hedging Relationships," and the hedging
guidance in Section 1650 "Foreign Currency Translation" by specifying how hedge
accounting is applied and what disclosure is necessary when it is applied.

Section 1530, "Comprehensive Income" establishes standards for reporting and
display of comprehensive income. It introduces a new requirement to temporarily
present certain gains and losses outside net income.

Section 3251 "Equity" establishes standards for the
presentation of equity and changes in equity during the reporting period. The
requirements of this Section are in addition to those in Section 1530,
"Comprehensive Income," Section 3240, "Share Capital," and Section 3260,
"Reserves."

The adoption may eliminate certain reconciling items between Canadian and US
GAAP. The mandatory effective date for the above new Sections for the Company
will be February 1, 2007.

Determining Whether an Arrangement Contains a Lease

On December 9, 2004, the Emerging Issues Committee ("EIC")
issued EIC-150, Determining Whether an Arrangement Contains a Lease which
addresses the situation when an entity enters into an arrangement comprising a
transaction or a series of related transactions that does not take the legal
form of a lease but conveys a right to use a tangible asset (e.g., an item of
property, plant or equipment) in return for a payment or series of payments.
This Abstract provides guidance for determining whether such arrangements are,
or contain, leases that are within the scope of CICA 3065. The Company should
apply the recommendations of EIC-150 to arrangements agreed to, committed to if
earlier, or modified after January 31, 2005.

25

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US GAAP

BRP also prepares a reconciliation highlighting the
significant differences between its financial statements as prepared in
accordance with Canadian GAAP as compared to financial statements prepared under
U.S. GAAP (see note 29 to the audited consolidated financial statements).

Inventory Costs

On November 24, 2004, the FASB issued Statement No. 151 "Inventory Costs" ("FAS
151") to clarify the accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage). This Statement requires
that those items be recognised as current-period charges regardless of whether
they meet the "so abnormal" criterion outlined in ARB 43. FAS 151 also
introduces the concept of "normal capacity" and requires the allocation of fixed
production overheads to inventory based on the normal capacity of the production
facilities. Unallocated overheads must be recognised as an expense in the period
in which they are incurred. This Statement is effective for inventory costs
incurred during fiscal years beginning after June 15, 2005. Earlier application
is permitted for costs incurred during fiscal years beginning after the date of
the issuance of this Statement. The Company does not expect the adoption of FAS
151 to have an impact on the financial position, cash flows, and results of
operations of the Company.

SUBSEQUENT EVENT

Repayment of Long-term debt

On February 9, 2005, the Company voluntarily fully repaid,
without penalty, the U.S. $280 million Term Facilities, for an amount
outstanding of $147.2 million, under the Senior Secured Credit Agreement. The
U.S. $280 million Term Facilities has been replaced by a new term loan facility
of U.S. $50 million, under a senior secured Amended and Restated Credit
Agreement, which will mature January 31, 2011.

26

---



|FINANCIAL INFORMATION                                                               
|------------------------------------------------------------------------------------
|BOMBARDIER RECREATIONAL
    PRODUCTS INC.                                           
|Interim Consolidated Balance
    Sheets                                             
|(millions of Canadian dollars)                                                      
|(Unaudited)                                                                         
|                                                                                    
|                                                                                    
|                                                                                    
|ASSETS                                                                              
|Current assets                                                                      
|Cash and cash
    equivalents                                                       
|Receivables                                                                         
|Inventories                                                                         
|Deferred income
    taxes                                                           
|Other assets                                                                        
|Assets held for sale                                                                
|Total current assets                                                                
|Property, plant
    and equipment                                                   
|Goodwill                                                                            
|Trademarks                                                                          
|Other intangible
    assets                                                         
|Deferred income
    taxes                                                           
|Other assets                                                                        
|Asset held for sale                                                                 
|                                                                                    
|LIABILITIES AND SHAREHOLDER'S EQUITY                                                
|Current Liabilities                                                                 
|Bank loans                                                                          
|Accounts payable
    and accrued liabilities                                        
|Current portion
    of long-term debt                                               
|Deferred income
    taxes                                                           
|Liabilities related to assets
    held for sale                                     
|Total current liabilities                                                           
|Long-term debt                                                                      
|Deferred income
    taxes                                                           
|Employee future
    benefits obligations                                            
|Redeemable
    preferred shares                                                     
|Other long-term
    liabilities                                                     
|Liabilities related to assets
    held for sale                                     
|Total liabilities                                                                   
|                                                                                    
|Shareholder's equity                                                                
|Capital stock                                                                       
|Contributed
    surplus                                                             
|Retained earnings
    (deficit)                                                     
|Cumulative
    translation adjustment                                               
|                                                                                    
|Total liabilities and Shareholder's equity                                          
|(1)
    See notes 2 to the Consolidated Financial Statements as at January 31, 2005.
|27                                                                                  

---



|BOMBARDIER RECREATIONAL PRODUCTS INC.                                              
|-----------------------------------------------------------------------------------
|Interim Consolidated Statements of Operations                                      
|(millions of Canadian dollars)                                                     
|(Unaudited)                                                                        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Revenues                                                                           
|Cost of sales                                                                      
|Gross profit                                                                       
|Operating expenses                                                                 
|Selling and
    marketing                                                          
|Research and
    development                                                       
|General and
    administrative                                                     
|Other charges
    (income)                                                         
|Restructuring charges                                                              
|Impairment loss on property, plant and equipment                                   
|Curtailment gain on pension plan                                                   
|Total operating expenses                                                           
|Operating income (loss) from
    continuing operations                             
|Other (income)
    and expenses                                                    
|Financing costs                                                                    
|Accretion in carrying value and loss on early
    redemption                       
|of preferred shares                                                                
|Net loss (gain) on derivative financial
    instruments                            
|Foreign exchange (gain) loss on long-term debt                                     
|Income (loss) from continuing
    operations before income                         
|taxes                                                                              
|Income tax expense (recovery)                                                      
|Income (loss) from continuing
    operations                                       
|Income (loss) from discontinued
    operations, net of tax                         
|Net Income (loss)                                                                  
|(1)
    See note 2 to the Consolidated Financial Statements as at January 31, 2005.



28

---



|BOMBARDIER RECREATIONAL PRODUCTS INC.                                              
|-----------------------------------------------------------------------------------
|Interim Consolidated Statements of Operations                                      
|(Unaudited)                                                                        
|(millions of Canadian dollars)                                                     
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Revenues                                                                           
|Cost of sales                                                                      
|Gross profit                                                                       
|Operating expenses                                                                 
|Selling and
    marketing                                                          
|Research and
    development                                                       
|General and
    administrative                                                     
|Other charges
    (income)                                                         
|Restructuring charges                                                              
|Impairment loss on property, plant and equipment                                   
|Curtailment gain on pension plan                                                   
|Total operating expenses                                                           
|Operating income (loss) from
    continuing operations                             
|Other (income)
    and expenses                                                    
|Financing costs                                                                    
|Accretion in carrying value and loss on early                                      
|redemption of preferred
    shares                                                 
|Net loss (gain) on derivative financial
    instruments                            
|Foreign exchange (gain) loss on long-term debt                                     
|Income (loss) from continuing
    operations before income                         
|taxes                                                                              
|Income tax expense (recovery)                                                      
|Income (loss) from continuing
    operations                                       
|Loss from discontinued operations,
    net of tax                                  
|Net Income (loss)                                                                  
|(1)
    See note 2 to the Consolidated Financial Statements as at January 31, 2005.



29

---



|BOMBARDIER RECREATIONAL PRODUCTS INC.                                            |                |                |                |               
|-------------------------------------------------------------------------------- | -------------- | -------------- | -------------- | --------------
|Interim
    Consolidated Statements of Cash Flows                                |                |                |                |               
|(millions of
    Canadian dollars)                                               |                |                |                |               
|(Unaudited)                                                                      |                |                |                |               
|                                                                                 |                |                | Three-month    | Three-month   
|                                                                                 | Three-month    | Three-month    | period ended   | period ended  
|                                                                                 | period ended   | period ended   | October 31,    | January 31,   
|                                                                                 | April 30, 2004 | July 31, 2004  | 2004           | 2005          
|OPERATING ACTIVITIES                                                             | [Restated] (1) | [Restated] (1) | [Restated] (1) | [Restated] (1)
|Income (loss)
    from continuing operation                                      | $
    (47.0)   | $
    30.6     | $
    72.4     | $
    (24.2)  
|Non-cash items:                                                                  |                |                |                |               
|Depreciation and amortisation                                                    | 30.1           | 30.1           | 32.3           | 27.6          
|Amortisation of deferred financing costs                                         | 1.6            | 1.6            | 1.5            | 14.7          
|Employee stock compensation                                                      | 0.7            | 0.6            | 0.6            | 0.4           
|Deferred income taxes                                                            | (20.0)         | (2.2)          | 18.7           | (10.8)        
|Loss on disposal of property, plant and equipment                                |               | 0.4            | 0.6            |              
|Gain on disposal of assets held for sale                                         |               |               | (0.3)          |              
|Accretion in carrying value and loss on early
    redemption of preferred shares | 1.0            | 1.0            | 7.4            |              
|Unrealised loss (gain) on derivative financial
    instruments                   | 18.1           | (15.3)         | (27.0)         | 4.5           
|Other charges and income                                                         |               |               |               | 8.4           
|Foreign exchange loss (gain) on long-term debt                                   | 21.2           | (19.9)         | (51.9)         | 3.9           
|Net changes in non-cash working
    capital balances related to operations       | (29.4)         | 53.4           | (27.1)         | 84.9          
|Cash flows from operating activities                                             | (23.7)         | 80.3           | 27.2           | 109.4         
|INVESTING ACTIVITIES                                                             |                |                |                |               
|Additions to
    property, plant and equipment                                   | (8.5)          | (11.3)         | (15.8)         | (34.5)        
|Proceeds on
    disposal of property, plant and equipment                        |               | 0.1            | 1.2            |              
|Proceeds on
    disposal of assets held for sale                                 |               |               | 1.4            | 2.0           
|Net proceeds
    related to the Utility Vehicles segment                         |               |               | 41.1           | (0.8)         
|Business acquisition                                                             | (6.4)          | (7.5)          | (3.6)          | (4.0)         
|Cash flows from investing activities                                             | (14.9)         | (18.7)         | 24.3           | (37.3)        
|FINANCING ACTIVITIES                                                             |                |                |                |               
|Increase in bank
    loans                                                       |               |               |               | 12.3          
|Redemption of
    preferred share                                                |               |               | (52.6)         |              
|Increase in
    capital stock                                                    | 6.5            |               | 53.1           | 0.3           
|Other liabilities                                                                | (2.7)          |               |               | 2.7           
|Repayment of
    long-term debt                                                  |               | (2.7)          |               | (193.8)       
|Debt issuance
    cost                                                           |               |               |               | (1.4)         
|Other                                                                            |               |               |               | (2.7)         
|Cash flows from financing activities                                             | 3.8            | (2.7)          | 0.5            | (182.6)       
|Effect of exchange rate changes
    on cash and cash equivalent                  | (3.2)          | (1.9)          | (4.7)          | 9.7           
|Cash flow from continuing
    operations                                         | (38.0)         | 57.0           | 47.3           | (100.8)       
|Cash flow from discontinued
    operations                                       | (5.7)          | (3.9)          | (2.0)          | 0.2           
|Net increase (decrease) in cash
    and cash equivalents                         | (43.7)         | 53.1           | 45.3           | (100.6)       
|Cash and cash equivalent at beginning of period                                  | 196.2          | 152.5          | 205.6          | 250.9         
|Cash and cash equivalent at end of period                                        | $ 152.5        | $ 205.6        | $ 250.9        | $ 150.3       
|(1) Only certain
    items within operating activities have been restated.       |                |                |                |               
|30                                                                              

---



|BOMBARDIER RECREATIONAL PRODUCTS INC.                                           
|--------------------------------------------------------------------------------
|Interim Consolidated Statements of Cash Flows                                   
|(millions of Canadian dollars)                                                  
|(Unaudited)                                                                     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|OPERATING
    ACTIVITIES:                                                       
|Income (loss) from
    continuing operation                                     
|Non-cash items:                                                                 
|Depreciation and amortisation                                                   
|Amortisation of deferred financing costs                                        
|Employee stock compensation                                                     
|Deferred income taxes                                                           
|Loss on disposal of property, plant and equipment                               
|Gain on disposal of held for sale                                               
|Accretion in carrying value and loss on early
    redemption of preferred shares
|Unrealised loss (gain) on derivative financial
    instruments                  
|Other charges and income                                                        
|Foreign exchange loss (gain) on long-term debt                                  
|Net changes in non-cash working
    capital balances related to operations      
|Cash flows from operating
    activities                                        
|INVESTING ACTIVITIES                                                            
|Additions to
    property, plant and equipment                                  
|Proceeds on
    disposal of property, plant and equipment                       
|Proceeds on
    disposal of assets held for sale                                
|Net proceeds
    related to the Utility Vehicles segment                        
|Business acquisition                                                            
|Cash flows from investing
    activities                                        
|FINANCING ACTIVITIES                                                            
|Increase in bank
    loans                                                      
|Redemption of
    preferred share                                               
|Increase in capital
    stock                                                   
|Other liabilities                                                               
|Repayment of
    long-term debt                                                 
|Debt issuance cost                                                              
|Other                                                                           
|Cash flows from financing
    activities                                        
|Effect of exchange rate changes on
    cash and cash equivalent                 
|Cash flow from continuing
    operations                                        
|Cash flow from discontinued
    operations                                      
|Net increase (decrease) in cash and
    cash equivalents                        
|Cash and cash equivalent at
    beginning of period                             
|Cash and cash equivalent at end
    of period                                   
|(1)
    Only certain items within operating activities have been restated.      
|31                                                                              

---

Forward-looking statements

This MD&A includes forward-looking statements regarding,
among other things, the Company's plans, strategies and prospects, both business
and financial. All statements contained in this document other than historical
information are forward-looking statements. Forward-looking statements include,
but are not limited to, statements that represent the Company's beliefs
concerning future operations, strategies, financial results or other
developments, and contain words and phrases such as "may," "expects," "should,"
or similar expressions. Because these forward-looking statements are based on
estimates and assumptions that are subject to significant business, economic and
competitive uncertainties, many of which are beyond the Company's control or are
subject to change, actual results could be materially different. Although the
Company believes that its plans, intentions and expectations reflected in or
suggested by these forward-looking statements are reasonable, the Company cannot
assure you that it will achieve or realize these plans, intentions or
expectations. Forward-looking statements are inherently subject to risks,
uncertainties and assumptions. Important factors that could cause actual results
to differ materially from the forward-looking statements include, but are not
limited the following: the Company's high degree of leverage and significant
debt service obligations; restrictions under the Company's senior secured credit
agreement and the indenture governing the Company's senior subordinated notes;
changes in interest rates; changes in foreign currency valuations and economic
conditions in the countries where the Company does business; the Company's
ability to introduce new, or improve existing, products; the Company's failure
to protect its trademarks, patents and other intellectual property rights;
changes in the price of raw materials; interruptions in deliveries of raw
materials or finished goods; the Company's ability to effectively compete and
changes in competition or other trends in the industries in which it competes;
current and future litigation; and acceptance by the Company's customers of new
products it develops or acquires.

Consequently, such forward-looking statements should be
regarded solely as the Company's current plans, estimates and beliefs. The
Company does not intend, and does not undertake, any obligation to update any
forward-looking statements to reflect future events or circumstances after the
date of such statements.

32

---

ITEM 17- FINANCIAL STATEMENTS



Restated Consolidated Financial Statements



---

REPORT OF INDEPENDENT AUDITOR

To the Directors of Bombardier Recreational
Products Inc.

We have audited the consolidated balance sheets of Bombardier
Recreational Products Inc. [the "Company"] as at January 31, 2005 and 2004, the
related consolidated statements of income, deficit and cash flows for the year
ended January 31, 2005 and for the 44-day period ended January 31, 2004 and the
statements of income, changes in Bombardier Inc.'s net investment and cash flows
of Bombardier Recreational Products (a reportable segment of Bombardier Inc.)
[the "Predecessor" to the Company] for the 321-day period ended December 18,
2003 and for the year ended January 31, 2003. These financial statements are the
responsibility of the Company's Management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States) and Canadian
generally accepted auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. We were not engaged to perform an audit of
the Company's internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by Management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in
all material respects, the financial position of the Company as at January 31,
2005 and 2004 and the related results of its operations and its cash flows for
the year ended January 31, 2005 and for the 44-day period ended January 31, 2004
and the results of operations and cash flows of Bombardier Recreational Products
(a reportable segment of Bombardier Inc.) for the 321-day period ended December
18, 2003 and for the year ended January 31, 2003, in conformity with Canadian
generally accepted accounting principles.

Our previous report dated April 19, 2005 has been withdrawn
and as discussed in note 2 to the consolidated financial statements, the
consolidated financial statements as at January 31, 2005, and for the year then
ended, have been restated.

|                                                     |                          
|---------------------------------------------------- | -------------------------
|Montréal, Canada,                                    | Chartered
    Accountants
|April 19, 2005.                                      |                          
|[except for note
    2 which is as of July 15, 2005] |                          

F-2

---



|Bombardier Recreational Products Inc.                                                          
|-----------------------------------------------------------------------------------------------
|                                                                                               
|CONSOLIDATED
    BALANCE SHEETS                                                                
|                                                                                               
|[millions of
    Canadian dollars]                                                             
|                                                                                               
|                                                                                               
|                                                                                               
|ASSETS                                                                                         
|Current assets                                                                                 
|Cash and cash
    equivalents                                                                  
|Receivables                                                                                    
|Inventories                                                                                    
|Deferred income
    taxes                                                                      
|Other assets                                                                                   
|Assets held for sale                                                                           
|Total current assets                                                                           
|Property, plant and
    equipment                                                              
|Goodwill                                                                                       
|Trademarks                                                                                     
|Other intangible
    assets                                                                    
|Deferred income
    taxes                                                                      
|Other assets                                                                                   
|Assets held for sale                                                                           
|                                                                                               
|LIABILITIES AND SHAREHOLDER'S EQUITY                                                           
|Current
    Liabilities                                                                        
|Bank loans                                                                                     
|Accounts payable
    and accrued liabilities                                                   
|Current portion of
    long-term debt                                                          
|Deferred income
    taxes                                                                      
|Liabilities related to assets held
    for sale                                                
|Total current liabilities                                                                      
|Long-term debt                                                                                 
|Deferred income
    taxes                                                                      
|Employee future
    benefits obligations                                                       
|Redeemable
    preferred shares                                                                
|Other long-term
    liabilities                                                                
|Liabilities related to assets held
    for sale                                                
|Total liabilities                                                                              
|Commitments and
    contingencies                                                              
|                                                                                               
|Shareholder's
    equity                                                                       
|Capital stock                                                                                  
|Contributed surplus                                                                            
|Retained earnings
    (deficit)                                                                
|Cumulative
    translation adjustment                                                          
|                                                                                               
|                                                                                               
|                                                                                               
|The
    accompanying notes are an integral part of these Consolidated Financial
    Statements.

F-3

---



|Bombardier
    Recreational Products Inc.
|-----------------------------------------
|                                         

|CONSOLIDATED STATEMENTS OF INCOME                                                              
|-----------------------------------------------------------------------------------------------
|                                                                                               
|[millions of
    Canadian dollars]                                                             
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Revenues                                                                                       
|Cost of sales                                                                                  
|Gross profit                                                                                   
|Operating expenses                                                                             
|Selling and
    marketing                                                                      
|Research and
    development                                                                   
|General and
    administrative                                                                 
|Other charges and
    (income)                                                                 
|Restructuring                                                                                  
|Impairment loss                                                                                
|Curtailment gain                                                                               
|Total operating expenses                                                                       
|Operating income (loss) from                                                                   
|continuing operations                                                                          
|Other (income)
    and expenses                                                                
|Financing costs                                                                                
|Accretion in
    carrying value and loss                                                       
|on early redemption of preferred                                                               
|shares                                                                                         
|Net loss (gain) on
    derivative financial                                                    
|instruments                                                                                    
|Foreign exchange
    gain on long-term                                                         
|debt                                                                                           
|Income (loss) from continuing                                                                  
|operations before income taxes                                                                 
|Income tax expense (recovery)                                                                  
|Income (loss) from continuing                                                                  
|operations                                                                                     
|Income (loss)
    from discontinued                                                            
|operations, net of tax                                                                         
|Net income (loss)                                                                              
|                                                                                               
|The
    accompanying notes are an integral part of these Consolidated Financial
    Statements.

F-4

---



|Bombardier
    Recreational Products Inc.                                        |       |               |                      |            |            
|-------------------------------------------------------------------------------- | ----- | ------------- | -------------------- | ---------- | -----------
|                                                                                 |       |               |                      |            |            
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                            |       |               |                     
|                                                                                 |       |               |                      |            |            
|[millions of
    Canadian dollars]                                               |       |               |                      |            |            
|                                                                                 |       | The Company   | Predecessor Business
|                                                                                 |       |               | 44-day               | 321-day    | Year       
|                                                                                 |       | Year          | period               | period     | ended      
|                                                                                 |       | ended         | ended                | ended      | January    
|                                                                                 |       | January       | January 3            | December   | 31,        
|                                                                                 | Notes | 31, 2005      | 1, 2004              | 18, 2003   | 2003       
|                                                                                 |       | (Restated     |                      |            |            
|OPERATING
    ACTIVITIES                                                         |       | -
    Note 2) |                      |            |            
|                                                                                 |       |               |                      |            |            
|Income (loss) from
    continuing operations                                     |       | $
    31.8    | $
    (17.1)         | $
    27.8 | $
    113.9
|                                                                                 |       |               |                      |            |            
|Non-cash items:                                                                  |       |               |                      |            |            
|                                                                                 |       |               |                      |            |            
|Depreciation and amortisation                                                    |       | 120.1         | 14.1                 | 90.7       | 96.3       
|Amortisation of deferred financing costs                                         | 24    | 19.4          | 0.8                  |           |           
|                                                                                 |       |               |                      |            |            
|Employee stock compensation                                                      | 21    | 2.3           |                     |           |           
|                                                                                 |       |               |                      |            |            
|Deferred income taxes                                                            | 25    | (14.3)        | (8.6)                | 0.1        | 41.8       
|                                                                                 |       |               |                      |            |            
|Loss (gain) on disposal of
    property, plant and equipment                     |       | 1.0           |                     | 1.0        | (4.7)      
|                                                                                 |       |               |                      |            |            
|Gain on disposal of assets held
    for sale                                     |       | (0.3)         |                     | (2.4)      |           
|                                                                                 |       |               |                      |            |            
|Employee future benefits                                                         | 17    |              | 1.7                  |           |           
|                                                                                 |       |               |                      |            |            
|Accretion in carrying value and
    loss on early redemption of preferred shares | 18    | 9.4           | 0.5                  |           |           
|                                                                                 |       |               |                      |            |            
|Unrealised gains on derivative
    financial instruments                         |       | (19.7)        | (1.9)                | (4.1)      |           
|                                                                                 |       |               |                      |            |            
|Other charges and income                                                         |       | 8.4           |                     |           |           
|                                                                                 |       |               |                      |            |            
|Deferred foreign exchange gain on
    forward foreign exchange contracts         |       |              |                     | 7.4        |           
|                                                                                 |       |               |                      |            |            
|Foreign exchange gain on long-term
    debt                                      |       | (46.7)        | (1.3)                |           |           
|                                                                                 |       |               |                      |            |            
|Net changes in non-cash working capital balances related to
    operations       | 26    | 81.8          | 94.6                 | (197.8)    | (51.4)     
|                                                                                 |       |               |                      |            |            
|Cash flows from operating
    activities                                         |       | 193.2         | 82.8                 | (77.3)     | 195.9      
|INVESTING ACTIVITIES                                                             |       |               |                      |            |            
|Additions to
    property, plant and equipment                                   |       | (70.1)        | (21.0)               | (73.2)     | (97.3)     
|Proceeds on
    disposal of property, plant and equipment                        |       | 1.3           |                     | 1.4        | 12.6       
|Proceeds on
    disposal of assets for sale                                      |       | 3.4           |                     | 4.1        |           
|Proceeds from the disposal of the Utility
    Vehicles segment,                  |       |               |                      |            |            
|net of transactioncosts of $ 1.6million                                          |       | 40.3          |                     |           |           
|Business
    acquisition, net of cash acquired                                   | 3     | (21.5)        | (757.2)`             |           |           
|Other                                                                            |       |              |                     | (4.6)      | (11.3)     
|                                                                                 |       |               |                      |            |            
|Cash flows from investing
    activities                                         |       | (46.6)        | (778.2)              | (72.3)     | (96.0)     
|FINANCING ACTIVITIES                                                             |       |               |                      |            |            
|Increase in bank
    loans                                                       |       | 12.3          |                     |           |           
|Redemption of
    preferred shares                                               | 18    | (52.6)        |                     |           |           
|Net variation in
    advances (to) from related parties                          |       |              |                     | (118.0)    | 16.0       
|Net contribution
    from (to) Bombardier Inc.                                   |       |              |                     | 367.8      | (140.7)    
|F-5                                                                             

---



|                                                                                            |    |         |         |         |        
|------------------------------------------------------------------------------------------- | -- | ------- | ------- | ------- | -------
|Increase in capital stock                                                                   | 20 | 59.9    | 304.5   |        |       
|Issuance of long-term debt                                                                  |    |        | 638.0   | 2.0     |       
|Repayment of long-term debt                                                                 |    | (196.5) | (0.5)   | (1.6)   | (3.3)  
|Debt issuance costs                                                                         |    | (1.4)   | (46.1)  |        |       
|Other                                                                                       |    | (2.7)   |        | (2.6)   | 9.8    
|                                                                                            |    |         |         |         |        
|Cash flows from financing activities                                                        |    | (181.0) | 895.9   | 247.6   | (118.2)
|Effect of exchange rate changes on cash and cash equivalents                                |    | (0.1)   | (1.1)   | 19.6    | 11.0   
|Cash flows from continuing operations                                                       |    | (34.5)  | 199.4   | 117.6   | (7.3)  
|Cash flows from discontinued operations                                                     | 6  | (11.4)  | (3.2)   | (6.1)   | 19.0   
|Net increase (decrease) in cash and cash equivalents                                        |    | (45.9)  | 196.2   | 111.5   | 11.7   
|Cash and cash equivalents at beginning of the period                                        |    | 196.2   |        | 28.7    | 17.0   
|Cash and cash equivalents at end of the period                                              |    | $ 150.3 | $ 196.2 | $ 140.2 | $ 28.7 
|Supplemental information                                                                    |    |         |         |         |        
|Cash paid for:                                                                              |    |         |         |         |        
|Interest                                                                                    |    | $ 36.7  | $ 2.6   | $ 3.2   | $ 4.9  
|Income taxes                                                                                |    | 15.7    | 1.6     | 5.4     | 4.6    
|The accompanying notes are an
    integral part of these Consolidated Financial Statements.



F-6

---



|Bombardier Recreational Products Inc.                                                       |                        |                           |              |                 
|------------------------------------------------------------------------------------------- | ---------------------- | ------------------------- | ------------ | ----------------
|                                                                                            |                        |                           |              |                 
|CONSOLIDATED STATEMENTS OF
    RETAINED EARNINGS AND STATEMENTS OF CHANGES IN              
|BOMBARDIER INC.'S NET INVESTMENT                                                            |                        |                           |             
|                                                                                            |                        |                           |              |                 
|[millions of Canadian dollars]                                                              |                        |                           |              |                 
|                                                                                            | The Company's Retained | Predecessor Business' Net
|                                                                                            | Earnings               | Investment               
|                                                                                            |                        | 44-day                    | 321-day      |                 
|                                                                                            | Year ended             | period ended              | period ended |                 
|                                                                                            | January 31,            | January 31,               | December 18, | Year ended      
|                                                                                            | 2005                   | 2004                      | 2003         | January 31, 2003
|                                                                                            | (Restated -            |                           |              |                 
|                                                                                            | Note 2)                |                           |              |                 
|Balance at beginning of the period                                                          | $ (17.5)               | $                        | $ 170.2      | $ 178.1         
|Net
    income (loss)                                                                       | 28.5                   | (17.5)                    | 30.2         | 114.8           
|Net
    change in currency translation adjustment                                           |                       |                          | 9.6          | 18.0            
|Net
    distribution from (to) Bombardier Inc.                                              |                       |                          | 367.8        | (140.7)         
|Balance at end of the period                                                                | $ 11.0                 | $ (17.5)                  | $ 577.8      | $ 170.2         
|                                                                                            |                        |                           |              |                 
|The accompanying notes are an
    integral part of these Consolidated Financial Statements. |                       



F-7

---

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS

Bombardier Recreational Products Inc. ("BRP"), incorporated
under the laws of Canada, is a wholly owned subsidiary of J. A. Bombardier Inc.
("J.A.B."). J.A.B. is owned by Bain Capital Luxembourg Investments S.ar.L (50%),
La Caisse de Dépôt et Placement du Québec (15%) and Beaudier Inc., 4260937
Canada Inc., 4260911 Canada Inc. and 4260929 Canada Inc. (shares were previously
held by Jadier International Inc., Gestion J.I.C.A. Inc. and Fonds Achbée Inc.,
respectively) collectively ("Beaudier group") (35%) (collectively, the
"Sponsors").

BRP and its subsidiaries, collectively (the "Company"),
through its Power Sports and Marine Engines segments, designs, develops,
manufactures and sells snowmobiles, watercraft, all-terrain vehicles, sport
boats, outboard engines, recreational and small aircraft engines (the
"recreational products business"). The Company's products are sold mainly
through an international network of independent dealers, distributors and
original equipment manufacturers. The Company manufactures its products
primarily in North America and in certain European countries.

As further described in note 3, on December 18, 2003, the
Company acquired the recreational products business from Bombardier Inc. Prior
to December 18, 2003, the recreational products business consisted primarily of
a division within the Bombardier Inc. group of companies ("Bombardier").

Certain comparative figures have been reclassified to conform to the
presentation adopted in the current year.

2.

On February 1, 2004, the Company's forward foreign exchange
contracts were designated as hedges of forecasted transactions. For those
contracts that were purchased prior to the beginning of the fiscal year, the
designation of the hedge was made as at February 1, 2004. For forward foreign
exchange contracts that were purchased subsequent to February 1, 2004, the
derivative was designated as a hedge as at the contract inception date. For all
of these derivative instruments the Company had used the critical terms method
to assess hedge effectiveness.

The Company has concluded that the critical terms method to
assess hedge effectiveness did not comply with Canadian and U.S. GAAP for those
derivatives that had a fair value other than zero on the date they were
designated as hedges. Consequently, for those derivatives purchased prior to
February 1, 2004 but designated as hedges on February 1, 2004, management has
concluded that it was inappropriate to apply hedge accounting for these forward
foreign exchange contracts. As a result, the Company has recognized on the
balance sheet these forward foreign exchange contracts at fair value and has
recorded the changes in fair value in income along with the related income tax
effect. Consequently, the consolidated balance sheet as of January 31, 2005, the
consolidated statement of income, the consolidated statement of cash flows and
the consolidated statement of retained earnings and related notes for the year
ended January 31, 2005 have been restated.

The effect of the restatement, by line item, is as follows:

Consolidated balance sheet

|                                               |               | January 31, 2005
|---------------------------------------------- | ------------- | ----------------
|                                               | As previously |                 
|                                               | reported      | As restated     
|Current Assets                                 |               |                 
|Deferred income
    taxes                      | $
    62.4    | $
    56.8      
|Other current
    assets                       | 74.5          | 90.2            
|Total Assets                                   | 1,546.8       | 1,556.9         
|Current
    Liabilities                        |               |                 
|Accounts payable
    and accrued liabilities   | 597.2         | 594.8           
|Shareholder's
    equity                       |               |                 
|Retained earnings
    (deficit)                | (1.5)         | 11.0            
|Total liabilities and
    shareholder's equity | 1,546.8       | 1,556.9         

F-8

---



|Consolidated
    statement of income                      |                  |          
|--------------------------------------------------------- | ---------------- | ---------
|                                                          | Year ended      
|                                                          | January 31, 2005
|                                                          | As previously    | As       
|                                                          | reported         | restated 
|Revenues                                                  | $ 2,467.0        | $ 2,451.3
|Cost of sales                                             | 2,044.9          | 2,039.9  
|Gross profit                                              | 422.1            | 411.4    
|Net gain on
    derivative financial instruments          |                 | (28.8)   
|Income from
    continuing operations before income taxes | 6.7              | 24.8     
|Income tax
    recovery                                   | (12.6)           | (7.0)    
|Income from
    continuing operations                     | 19.3             | 31.8     
|Net income                                                | $ 16.0           | $ 28.5   

|                                                     |                  |            
|---------------------------------------------------- | ---------------- | -----------
|Consolidated
    statement of cash flows             |                  |            
|                                                     | Year ended      
|                                                     | January 31, 2005
|                                                     | As previously    |            
|                                                     | reported         | As restated
|OPERATING ACTIVITIES                                 |                  |            
|Income from
    continuing operations                | $
    19.3       | $
    31.8 
|Non-cash items:                                      |                  |            
|Deferred income taxes                                | (19.9)           | (14.3)     
|Unrealised gains on derivative financial instruments | (1.6)            | (19.7)     
|Cash flows from operating
    activities             | 193.3            | 193.2      

The comparative figures initially presented in the
Consolidated Financial Statements as at January 31, 2005 had previously been
restated in connection with the tax effects of the acquired trademarks
identified in the purchase price allocation (see note 3) and the discontinued
operations (see note 6).

3.

Acquisition of the recreational products business

Pursuant to a purchase agreement dated December 2, 2003, the
Company purchased Bombardier's recreational products business for a total
consideration of $806.3 million. The net assets acquired are subject to a
purchase price adjustment based on indemnification amounts related to income
taxes due to Bombardier, which are included in other long-term liabilities. The
total cost of the purchase was preliminarily allocated to the assets acquired
and liabilities assumed on the basis of their estimated fair values, as
determined by independent valuations, using the purchase method of accounting.
During the year ended January 31, 2005, the Company completed its purchase price
allocation and an adjustment was made to increase previously recorded goodwill
by $6.1 million.

The following table summarises the initial estimated
aggregate fair values of the assets acquired and liabilities assumed at the
acquisition date and the adjustments to the purchase price allocation, as well
as total amounts given as consideration for the acquisition:

F-9

---



|                                               | Purchase Price Allocation
|---------------------------------------------- | -------------------------
|                                               | Initial
    [1]          
|Assets acquired and liabilities
    assumed    |                          
|Current assets                                 | $
    740.4              
|Property, plant
    and equipment[2]           | 503.3                    
|Other long-term
    assets                     | 21.9                     
|Long-term
    deferred income tax assets       | 2.4                      
|Intangibles
    assets :                       |                          
|Trademarks                                     | 151.1                    
|Dealer network                                 | 46.3                     
|Patents                                        | 32.1                     
|License agreement                              | 13.8                     
|Current
    liabilities[3]                     | (635.9)                  
|Long-term
    deferred income tax liabilities  | (45.1)                   
|Employee future
    benefits obligations       | (120.0)                  
|Other long-term liabilities                    | (33.4)                   
|Net assets acquired                            | 676.9                    
|Goodwill                                       | 129.4                    
|Purchase price                                 | $ 806.3                  
|                                               |                          
|Consideration
    given                        |                          
|Cash, net of cash
    acquired of $196.7[4]    | $
    713.3              
|50,000 Redeemable Class A
    Preferred Shares | 42.7                     
|                                               | 756.0                    
|Transaction costs[5]                           | 50.3                     
|Total consideration                            | $ 806.3                  

> [1]

[2]Includes $14.5 million
  of assets held for sale, which consists primarily of land and buildings.

[3]Includes $24.8 million
  of costs associated with restructuring activities related to the acquisition.

[4]Includes an amount of
  $49.0 million of cash received from Bombardier related to the working capital
  purchase price adjustment, in accordance with the terms of the purchase
  agreement.

[5]Transaction costs are
  principally comprised of sponsors fees and professional fees.

In connection with the acquisition, the Company and
Bombardier entered into a trademark license agreement, at no cost to the
Company, expiring on December 31, 2008, with automatic consecutive five year
renewal terms, conditional upon the Beaudier Group's continued direct or
indirect participation in the Company, under which the Company licenses from
Bombardier certain trademarks owned by Bombardier.

The goodwill recorded as a result of the acquisition is not
deductible for tax purposes. As at January 31, 2005, out of the trademarks and
other intangible assets of $229.2 million ($243.3 million at acquisition date)
recorded on the balance sheet, $41.0 million ($74.0 million at acquisition date)
is deductible for tax purposes.

4.

Basis of presentation

The accompanying Consolidated Financial Statements as at
January 31, 2005 and January 31, 2004 and for the year ended January 31, 2005,
for the 44-day period ended January 31, 2004, for the 321-day period ended
December 18, 2003 and for the year ended January 31, 2003 have been prepared in
accordance with Canadian generally accepted

F-10

---

accounting principles ("Canadian GAAP"). These accounting principles conform,
in all material respects, with accounting principles generally accepted in the
United States ("US GAAP"), except as described in note 30.
All inter-company transactions and balances have been eliminated upon
consolidation.
The Consolidated Financial Statements as at January 31, 2005
and January 31, 2004 and for the year ended January 31, 2005 and for the 44-day
period ended January 31, 2004 include the accounts of BRP and its subsidiaries,
which are controlled through voting equity interests. The Company currently
operates in 12 countries, with major operating units in Canada, the United
States and Europe. The most important manufacturing subsidiaries of the Company
included in the Consolidated Financial Statements are as follows:BRP US Inc., located in
  the United States;

The combined financial statements for the 321-day period
ended December 18, 2003 and for the year ended January 31, 2003 present the
results of operations and cash flows of Bombardier's recreational products
business on a carve out basis from Bombardier (the "predecessor business"), and
are not necessarily indicative of the results of operations and cash flows that
might have occurred had the recreational products business been financed as a
stand alone business at that time since they include allocations for certain
costs such as corporate office charges, interest expense, employee future
benefits and income taxes. As a result of adjustments to the carrying value of
assets and liabilities pursuant to the acquisition by the Company of the
predecessor business, the results of operations and cash flows subsequent to the
acquisition may not be comparable to those of the predecessor business.

The principal accounting policies of the Company are summarised as follows:

Use of estimates

The preparation of consolidated financial statements in
accordance with Canadian GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, related
amounts of revenues and expenses and disclosure of contingent assets and
liabilities. Significant areas requiring the use of management estimates relate
to the determination of fair value of assets acquired and liabilities assumed in
the acquisition of the recreational products business, determination of pension
and other employee benefits, net realisable value of inventory, promotion and
incentive program accruals, provision for product warranty, provision for
litigation, the useful life of assets subject to amortisation and evaluation of
net recoverable amounts, fair value of goodwill and intangibles, and provisions
for income taxes. Actual results could differ from these estimates, and such
differences could be material.

Translation of foreign currencies

Foreign operations are classified as self-sustaining or integrated.

a)

All assets and liabilities are translated at exchange rates
in effect at year-end. Revenues and expenses are translated at the average
exchange rates for the period. The Company's translation gains and losses are
deferred and shown separately in shareholder's equity. The predecessor business
resulting net gains or losses are part of "Net change in currency translation
adjustment" included in Bombardier Inc.'s net investment.

b)

Accounts in foreign currencies, including integrated foreign
investees, are translated using the temporal method. Under this method, monetary
balance sheet items are translated at the exchange rates in effect at year-end
and non-monetary items are translated at historical exchange rates. Revenues and
expenses (other than depreciation and amortisation, which are translated at the
same exchange rates as the related assets) are translated at the exchange rates
in effect on the transaction dates or at the average exchange rates of the
period. Translation gains or losses are included in the consolidated statement
of income.

F-11

---

Cash and cash equivalentsCash and cash equivalents consist of cash and highly liquid investments, with
maturities of three months or less from the date of acquisition. The investments
are with investment grade financial institutions only.Sales of receivablesIn the normal course of its operations, the Company sells
receivables, on an ongoing basis, to third parties and related parties in
securitisation transactions to fund its operations. A bankruptcy-remote special
purpose securitisation entity is used to legally isolate the receivable
transferred. These transactions are accounted for as sales when the Company is
deemed to have surrendered control over the receivables transferred and
consideration other than beneficial interest in the transferred receivables is
retained. When the transfer is considered a sale, the Company de-recognises all
assets sold, recognises at fair value, the assets received and includes the gain
or loss on the sale under financing costs. Such gain or loss partly depends on
the previous carrying amount of the receivables transferred, broken down between
the assets sold and the rights retained based on their fair value at the time of
the transfer. Retained interests are subsequently accounted for as investments
in debt securities and are included within other current assets on the
consolidated balance sheets.
The Company also transfers receivables, under receivable
factoring agreements, whereby it receives the face value of the receivable less
some negotiated discount. Such transfers are also accounted for as sales when
the Company is deemed to have surrendered control.
Losses on sales of receivables are recognised when incurred in the statement
of income and are classified with financing costs.Inventory valuationRaw materials and work in process, finished products and
parts and accessories are valued at the lower of cost (average cost or first-in,
first-out) and replacement cost (raw materials) or net realisable value. The
cost of work in process and finished products includes the cost of raw
materials, direct labour and related manufacturing overhead.Income taxesThe Company's income taxes are provided for using the
liability method. Under this method, deferred income tax assets and liabilities
are determined based on all significant differences between the carrying amounts
and tax bases of assets and liabilities using substantively enacted tax rates
and laws expected to be in effect when the differences reverse.
For purposes of preparing the financial statements of the
predecessor business, Management has calculated income taxes as if all of its
predecessor business operations had been separate tax paying legal entities,
each filing a separate tax return in its local tax jurisdiction and giving
effect to any tax sharing agreements with Bombardier.Property, plant and equipmentProperty, plant and equipment are recorded at cost and are depreciated on a
straight line basis over the following estimated useful lives:

|Equipment | 3 to 10 years 
|--------- | --------------
|Tooling   | 3 to 5 years  
|Buildings | 10 to 40 years

Depreciation of assets under construction begins when they are ready for
their intended use.

Fully depreciated long-lived assets are retained in the cost
and accumulated depreciation accounts until such assets are removed from
service. In the case of disposals, assets and related accumulated depreciation
amounts are removed from the accounts, and the net amounts, less proceeds from
disposals, are included in income.

F-12

---

Goodwill and other intangible assetsGoodwill represents the excess of the purchase price of
businesses acquired over the fair value of the net assets acquired. Goodwill is
tested for impairment annually on the basis of its fair value, or more
frequently if events or circumstances indicate that the asset might be impaired.
The impairment test consists of a comparison of the fair value of the Company's
reporting units with their carrying amount. The fair value of the reporting
units is determined according to an estimate of future discounted cash flows.
When the carrying amount of a reporting unit is greater than its fair value, the
Company compares the fair value of the goodwill related to the reporting units
with its carrying amount. Any impairment in the carrying amount of goodwill is
charged to income.
Trademarks and the license agreement have an indefinite life
and are not amortised to earnings but are assessed for impairment on an annual
basis, or more frequently if events or circumstances indicate that the asset
might be impaired when comparing carrying value to fair value, using discounted
expected future net cash flows to determine fair value.
Patents and dealer networks, acquired as part of the business
acquisition, are amortised on a straight-line basis over a period of 3 and 25
years respectively. Any potential impairment is calculated in the same manner as
that disclosed under impairment of long-lived assets.Impairment of long-lived assetsThe Company periodically evaluates the carrying value of
long-lived assets to be held and used, including property, plant and equipment
and intangibles subject to amortisation, when events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
recoverability test is performed using undiscounted future net cash flows that
are directly associated with the asset's use and eventual disposition. The
amount of the impairment, if any, is measured as the difference between the
carrying value and the fair value of the impaired assets and presented as an
additional current period depreciation and amortisation charge. Assets held for
sale are valued at the lower of cost and fair value.Restricted investmentsRestricted investments are recorded at cost and consist of securities with
various maturities greater than three months. Reductions in value, other than
temporary, are recorded as a charge in the period in which they occur.Deferred financing costsDeferred financing costs are amortised on the effective yield
basis over the duration of the related loans and are presented with financing
cost on the consolidated statement of income. The unamortised portion is
presented in other long-term assets.Employee future benefitsThe Company sponsors several domestic and foreign funded and
unfunded defined benefit pension plans covering a majority of its employees. The
Company also provides post-retirement benefits plans. These benefits plans
essentially consist of post-retirement health care coverage and life insurance
benefits in Canada.
The cost of pension and other benefits earned by employees
under the Company's defined benefit plans is actuarially determined using the
projected benefit method and Management's best estimate of expected plan
investment performance, salary escalation, retirement ages of employees and
health care costs. Plan obligations are determined based on expected future
benefit payments discounted using current market interest rates and plan assets
are presented at fair value. The net actuarial gains and losses over 10% of the
greater of the benefit obligation and the fair value of plan assets are
amortised to income over the estimated average remaining service life of
participants of approximately 19 years. The Company uses a measurement date of
December 31.
For purposes of preparing predecessor business financial
statements a portion of the costs of Bombardier's common plans was allocated to
the recreational business based on a pro-rata share of the plan obligations as
at December 31, 2002, except for the amounts related to prior plan improvements
specific to the predecessor business employees, which were allocated entirely to
the predecessor business.

F-13

---

Redeemable preferred sharesThe estimated fair value of the Company's obligation to
redeem the Class A Preferred Shares ("Redeemable Preferred Shares") was recorded
as a liability on the date of issue since the mandatory redemption, upon
occurrence of certain future events, was determined to be likely to occur.Derivative financial instrumentsThe Company uses forward foreign exchange contracts to mitigate foreign
currency risks and exposures of forecasted foreign currency cash flows.
The Company does not use derivative financial instruments for
trading or speculative purposes. Forecasted foreign currency cash flows can only
be hedged when significant characteristics and the expected terms of the
forecasted foreign currency cash flows are identified and it is probable that
these cash flows will occur. There is no recognition in the Consolidated
Financial Statements of unrealised gains or losses on foreign exchange contracts
designated as hedges of forecasted foreign currency cash flows until the
anticipated transactions occur.
Gains or losses related to the derivative financial instruments designated as
hedges are recorded in the same category as the hedged item.
Gains and losses associated with derivative financial
instruments designated as hedges, which have been settled prior to maturity, are
deferred on the consolidated balance sheet and recognised to income in the
period in which the underlying hedged transaction is recognised to income, if
the underlying transaction is still probable of occurring. Otherwise, these
gains and losses are recognised immediately to income. In the event that a
hedged item is settled prior to the termination of the corresponding derivative
financial instrument or is no longer probable of occurring, any gain or loss on
such derivative financial instrument is recognised to income immediately.
Derivative financial instruments that give rise to a
financial asset or financial liability, and are not designated as hedges, are
recognised on the consolidated balance sheet at fair value as derivative
financial assets or as derivative financial liabilities with changes in fair
value recognised in current income as gains or losses on derivative financial
instruments.Stock based compensationThe Company records compensation expense for grants of stock
options issued by J.A.B. to directors, officers and employees of the Company
using the fair value method over the vesting period of the option, with a
corresponding amount recorded as contributed surplus.Revenue recognitionRevenue is derived primarily from the sale of products. Revenues are
recognised when title passes upon delivery of products to dealers, distributors
or customers and collection is reasonably assured.Sales promotions and incentive programsSales promotion and incentive programs include dealer and
distributor rebates, volume discounts and retail financing programs. The Company
generally provides for estimated sales promotion and incentive expenses at the
later of revenue recognition or the announcement of sales promotion and
incentive programs. Cash sales promotions and incentive programs are recorded as
a reduction of revenues. Sales incentive programs that involve a free product or
service delivered to the consumer are recorded as a component of cost of sales.
Sales promotion and incentive expenses are estimated based on current programs
and historical rates of the recreational products operations for each product
line.Dealer holdback programsSale proceeds are subject to a dealer holdback program. The
Company provides dealer incentive programs whereby at the time of shipment, the
Company invoices an amount to the dealer that is reimbursable upon ultimate sale
of the product. Holdback payments are generally made to dealers twice each year
subject to product registration. The Company presents these amounts as a
liability on the consolidated balance sheet.

F-14

---

Shipping and handlingThe Company records revenues from freight as a part of revenue and shipping
and handling costs as a component of cost of sales at the time the product is
shipped.Product warrantiesThe Company provides limited product warranties covering
periods from six months to three years for primarily all product lines. However,
in certain geographical markets, the Company provides longer warranties as
determined by local regulations and market conditions. In addition, the Company
provides certain extended product warranties. The Company's offers product
warranties to its customers, which allow them to repair or replace defective
products at the expense of the Company during such limited warranty period. The
warranty provision is established at the time of sale based on Management's best
estimate, using historical rates and trends. Adjustments to the warranty
provision are made from time to time as actual claims materialise.Advertising costsThe Company expenses advertising costs as incurred. The
Company's total advertising expense amounted to $53.4 million and $6.2 million
for the year ended January 31, 2005 and for the 44-day period ended January 31,
2004. The predecessor business total advertising expense amounted to $69.6
million and $82.6 million, for the 321-day period ended December 18, 2003 and
for the year ended January 31, 2003, respectively.Research and development costs and tax creditsResearch and development costs are charged to income when
incurred, except for significant development costs on certain projects, which
are capitalised when specific criteria are met and their recovery is reasonably
assured. The related tax credits are deducted from research and development
expense and are deducted from the related assets for items of a capital nature.5. CHANGE IN ACCOUNTING PRINCIPLES

Employee future benefits

In January 2004, the CICA amended Section 3461, "Employee
Future Benefits" (Section 3461R), to require additional disclosures about the
assets, cash flows and net periodic benefit cost of defined benefit pension
plans and other post-retirement benefit plans. The new annual disclosures are
effective for years ending on or after June 30, 2004, and new interim
disclosures are effective for periods ending on or after that date. During the
year, the Company adopted Section 3461R and the additional disclosures for
pension plans and other post-retirement benefit plans are presented in Note 17.

Variable interest entities

In June 2003, the CICA issued Accounting Guideline No. 15,
"Consolidation of Variable Interest Entities" ("

6.

As a result of the Company's decision on July 23, 2004 to
sell its Utility Vehicles segment, the results of operations, cash flows and
financial position of the Utility Vehicles segment have been segregated in the
accompanying Consolidated Financial Statements and are reported as discontinued
operations.

The Company sold the Utility Vehicles segment on August 30,
2004. The carrying value of the Utility Vehicles segment net assets approximates
fair value, as the net assets were recorded at their estimated fair values as
part of the acquisition on December 18, 2003. The net book value of the assets
disposed, excluding goodwill of $12.9 million, was $27.4 million. The Company
received net proceeds of $40.3 million on the disposal and recorded a
curtailment gain of $3.5 million (see note 17) in discontinued operations. As a
result, there was no gain or loss recorded in the disposal.

F-15

---

The results of discontinued operations presented in the accompanying
consolidated statements of income, were as follows:

|                                                             | The Company | Predecessor Business
|------------------------------------------------------------ | ----------- | --------------------
|                                                             |             | 44-day              
|                                                             | Year ended  | period ended        
|                                                             | January 31, | January 31,         
|                                                             | 2005[1]     | 2004                
|Revenues                                                     | $ 22.6      | $ 11.5              
|Cost of sales                                                | 21.0        | 10.8                
|Gross profit                                                 | 1.6         | 0.7                 
|Operating expenses                                           |             |                     
|Selling and marketing                                        | 2.5         | 0.4                 
|Research and development                                     | 1.6         | 0.4                 
|General and administrative                                   | 2.5         | 0.5                 
|Total operating expenses                                     | 6.6         | 1.3                 
|Operating income (loss)                                      | (5.0)       | (0.6)               
|Financing costs                                              |            |                    
|Income (loss) before income taxes                            | (5.0)       | (0.6)               
|Income tax expense (recovery)                                | (1.7)       | (0.2)               
|Income (loss) from discontinued operations                   | $ (3.3)     | $ (0.4)             
|[1]Reflects results
    of operations up to August 30, 2004.

The cash flows from discontinued operations presented in the accompanying
consolidated statements of cash flows, were as follows:

|                                            | The Company | Predecessor Business
|------------------------------------------- | ----------- | --------------------
|                                            |             | 44-day              
|                                            | Year ended  | period ended        
|                                            | January 31, | January 31,         
|                                            | 2005        | 2004                
|Operating activities                        | $ (11.0)    | $ (3.2)             
|Investing
    activities                    | (0.4)       |                    
|Effect of
    exchange rate changes         |             |                     
|on cash and cash equivalents                |            |                    
|Cash flows from discontinued
    operations | $ (11.4)    | $ (3.2)             

F-16

---

The assets held for sale and the related liabilities pertaining to the
Utility Vehicles segment were as follows:

|                                         | January 31, 2004
|---------------------------------------- | ----------------
|ASSETS                                   |                 
|Current assets                           |                 
|Receivables                              | $ 4.7           
|Inventories                              | 20.5            
|Deferred income taxes                    | 1.6             
|Other assets                             | 0.7             
|Total current assets                     | 27.5            
|Property, plant and equipment            | 7.6             
|Goodwill                                 | 12.9            
|Deferred income taxes                    | 0.1             
|Total assets                             | $ 48.1          
|LIABILITIES                              |                 
|Current Liabilities                      |                 
|Accounts payable and accrued liabilities | $ 11.8          
|Income taxes payable                     | 0.5             
|Total current liabilities                | 12.3            
|Employee future benefits obligations     | 3.3             
|Total liabilities                        | $ 15.6          

Assets held for sale also include three facilities in the
United States amounting to $13.4 million as at January 31, 2005 (four facilities
amounting to $14.5 million as at January 31, 2004, two of which were sold during
the year ended January 31, 2005).

7.

The Company is party to various related party transactions
carried out in the normal course of business. In addition to other related party
transactions disclosed elsewhere in the Consolidated Financial Statements,
related party transactions are described below. All transactions are measured at
their exchange amount.

a)

Upon completion of the business acquisition, the Company and
J.A.B. entered into a management agreement with affiliates of the Sponsors to
provide management services. Pursuant to such agreement, affiliates of the
Sponsors receive an aggregate annual management fee of U.S.$2.25 million. An
amount of $2.9 million and $0.4 million was incurred and paid during the year
ended January 31, 2005 and the 44-day period ended January 31, 2004,
respectively, related to this agreement.

Fees and expenses of $24.5 million were incurred in connection with the
business acquisition and the related financing of which $6.4 million were
transaction costs and $18.1 million were deferred financing costs.

Under the revolving credit facility that is part of its
credit agreement dated December 18, 2003 (amended and restated on February 9,
2005), the Caisse de Dépôt et Placement du Québec has committed to lend to the
Company an amount of up to $41.0 million (including letters of credit) and has
lent to the Company an amount of approximately $9.0 million under the revolving
credit facility as at January 31, 2005.

Pursuant to the new term facility under the amended and
restated credit agreement dated February 9, 2005, the Caisse de Dépôt et
Placement du Québec has lent to the Company an amount of U.S.$6.5 million
(approximately $8.0 million).

F-17

---

b)
Floorplan financing

Bombardier Capital Ltd. and Bombardier Capital Inc.
(collectively "BC"), wholly owned subsidiaries of Bombardier, which has
significant shareholders in common with the Company, have entered into a
floorplan inventory financing agreement for retailers of the Company's products.

The current maximum outstanding floorplan financing permitted
under the inventory financing agreement is U.S.$750.0 million (approximately
$929.0 million) subject to increase as necessary or by agreement. The agreement
is for a renewable period of five years ending December 18, 2008. Under the
agreement, BC acts as the exclusive provider of floorplan financing for the
Company's products in North America excluding outboard engine products.

In addition, the Company has a separate agreement with BC
providing for the Company to repurchase floorplan inventory repossessed from
defaulting dealers, which is capped at an amount equal to the greater of
U.S.$25.0 million (approximately $31.0 million) and 10% of the 12-month average
amount of financing outstanding under the floorplan agreement. Any loss on the
resale of repurchased new and used products is the responsibility of the
Company. No material losses have been incurred under this agreement during the
periods presented. The total amount of floorplan financing provided by BC for
the year ended January 31, 2005 and for the 44-day period ended January 31, 2004
was respectively, $1.4 billion and $174.6 million. Outstanding floorplan
financing between the Company's dealers, including amounts outstanding prior to
the transaction, and BC as at January 31, 2005 and 2004 was respectively, $705.3
million and $734.1 million.

Furthermore, as a sales incentive, the Company generally
provides a free floorplanning period to the dealers during which the Company
pays interest to BC for a limited period of time. The Company's portion of the
financing charges under the floorplan agreement for the year ended January 31,
2005 and for the 44-day period ended January 31, 2004 was respectively, $28.5
million and $3.5 million, which is classified as a reduction in revenues.

c)

BRP and certain of its subsidiaries (collectively "the
transferors"), entered into a receivable transfer arrangement ("the
arrangement") with Bombardier Capital Inc. ("BCI") for a maximum of U.S.$115.0
million (approximately $142.0 million), which expires in June 2005. Under this
arrangement, BCI funds receivables subject to certain eligibility criteria.
Pursuant to the arrangement, receivables are first transferred without recourse
to BRP Receivables Funding, LLC ("BRFL"), a special purpose entity, controlled
and consolidated by the Company but legally separate and distinct from it.
Receivables transferred to BRFL are owned by it and not owned by the transferors
of such receivables.

Pursuant to the arrangement, the transferors transfer
receivables subject to certain criteria to BRFL for the purpose of legally
isolating them from the Company and its creditors. Following the transfer of
each receivable to BRFL, this latter will transfer and assign to BCI, with
recourse, an undivided interest in all of its right, title and interest in the
transferred receivables in exchange for consideration comprising cash equal to
85% of the amount of eligible receivables, an undivided 15% ownership interest
in eligible receivables and an undivided 100% ownership interest in ineligible
receivables transferred. Carrying values of receivables transferred approximate
their fair values due to their short-term nature. In accordance with the
arrangement, the transferors will assume certain servicing obligations as well
as administration of collection with respect to all receivables transferred.

The balance outstanding of all receivables held by the BRFL
amounted to $21.6 million and $18.3 million as at January 31, 2005 and 2004,
respectively. As at January 31, 2005 and 2004, an amount of $38.0 million and
$40.5 million respectively, representing BRFL's retained interest in receivables
transferred to BCI pursuant to the arrangement, was accounted for as investments
on the Company's balance sheet and included with other current assets, net of
provision for loss of $0.5

Certain of the Company's subsidiaries, not party to the
arrangement, transfer receivables directly to BC. The receivables not party to
the arrangement and sold are subject to the repurchase of new and unused
products at the total unpaid principal balance due, in the event of dealer
default, subject to a cap. The amount outstanding subject to

F-18

---

repurchase as at January 31, 2005 and 2004 was $10.4 million and $9.4
million, including amounts prior to the acquisition of the recreational product
business.
Total receivable transfers to BC during the year ended
January 31, 2005 and the 44-day period ended January 31, 2004 were respectively,
$510.8 million and $196.4 million, of which $125.1 million and $124.5 million
were outstanding at January 31, 2005 and 2004. The loss incurred by the Company
in connection with all transfers of receivables for the year ended January 31,
2005 and for the 44-day period ended January 31, 2004 amounted to respectively,
$2.4 million and $0.7 million and was classified with financing costs.d)
Other

The Company is also renting equipment from BC. Rental expense
with BC of $2.7 million and $0.7 million for the year ended January 31, 2005 and
for the 44-day period ended January 31, 2004 is included in cost of sales on the
consolidated statement of income. The predecessor business rental expense for
the 321-day period ended December 18, 2003 and for fiscal year 2003 were $2.5
million and $4.1 million, respectively.

e)

|                                                 | 321-day period ended | Year ended      
|------------------------------------------------ | -------------------- | ----------------
|                                                 | December 18, 2003    | January 31, 2003
|                                                 |                      |                 
|Allocation of
    corporate office charges       | $
    12.6           | $
    11.2      
|Allocation of employee future
    benefits costs | 21.1                 | 16.3            
|                                                 | $ 33.7               | $ 27.5          

The predecessor business corporate office charges are
included in general and administrative expenses. The predecessor business
employee future benefits costs are allocated to the same line items as the
respective salary expense.

f)

|                                             | 321-day period ended | Year ended      
|-------------------------------------------- | -------------------- | ----------------
|                                             | December 18, 2003    | January 31, 2003
|Insurance charges                            | $ 6.8                | $ 6.3           
|Fees in connection with floorplan financing  | 23.2                 | 25.7            
|Loss in connection with sales of receivables | 2.0                  | 4.6             
|Other                                        | 0.9                  | 0.9             
|                                             | $ 32.9               | $ 37.5          

Bombardier negotiated and entered into insurance contracts
with insurers with respect to various risks. It then charged BRP for its portion
of these costs. These amounts are mainly included in general and administrative
expenses.

Bombardier Capital (BC) provided floorplan financing in
connection with the sale of predecessor business recreational products. The
predecessor business paid financing charges as a sales incentive for a
pre-determined period on behalf of some of its customers to BC. These sales
incentives include interest and other costs and are presented as a reduction of
revenues. In the event of dealer default, BC may require the predecessor
business to repurchase new and unused products at the total unpaid principal
balance due to BC

The total amount of receivables sold was $354.4 million for
the 321-day period ended December 18, 2003 and $497.4 million for the year ended
January 31, 2003. A portion of the receivables sold is subject to the repurchase
of new and unused products at the total unpaid principal balance due to BC, in
the event of dealer default. Losses incurred in connection with sales of
receivables are included in financing cost.

F-19

---

8. RECEIVABLES

The Company's receivables were as follows:

|                                | January 31, | January 31,
|------------------------------- | ----------- | -----------
|                                | 2005        | 2004       
|Trade receivables               |             |            
|Canadian dollars                | $
    9.7   | $
    14.2 
|U.S. dollars                    | 22.9        | 33.5       
|Euros                           | 20.5        | 31.2       
|Brazilian real                  | 7.3         | 5.7        
|Swedish krona                   | 6.5         | 0.8        
|Other currencies                | 9.7         | 14.7       
|                                | 76.6        | 100.1      
|Allowance for doubtful accounts | (3.2)       | (3.8)      
|                                | 73.4        | 96.3       
|Sales tax                       | 24.5        | 24.4       
|Bombardier                      | 6.7         | 19.4       
|Other                           | 8.1         | 8.6        
|                                | $ 112.7     | $ 148.7    

The dollar denomination of trade receivables was attributed based on the
invoicing currency.

Sales of receivables

In addition to the related party transactions disclosed
previously, the Company also sells receivables to third parties. The fair value
of the receivables sold approximates their carrying value at the time of sale.
The total amount of receivables sold to third parties for the year ended January
31, 2005 was $285.1 million ($51.7 million; $201.0 million and $150.0 million
for the 44-day period ended January 31, 2004; for the 321-day period ended
December 18, 2003 and for the year ended January 31, 2003, respectively). A
portion of the amount of receivables sold is subject to the repurchase of new
and unused products, in the event of dealer default, at the total unpaid
principal balance due. The amount outstanding subject to repurchase as at
January 31, 2005 and 2004, including amounts outstanding prior to the
transaction, respectively totalled $55.6 million and $48.2 million.

Allowance for doubtful accounts

Changes in allowance for doubtful accounts were as follows:

|                               | The Company | Predecessor Business
|------------------------------ | ----------- | --------------------
|                               |             | 44-day              
|                               | Year ended  | period ended        
|                               | January 31, | January 31,         
|                               | 2005        | 2004                
|Balance at beginning of the    |             |                     
|period                         | $
    3.8   | $3.5                
|Bad debt expense               | 0.8         | 0.4                 
|Uncollectible
    accounts     |             |                     
|written-off, net of recovery   |            | (0.1)               
|Change in
    estimate         | (1.4)       |                    
|Effect of foreign
    currency |             |                     
|exchange rate changes          |            |                    
|Balance at end of the period   | $ 3.2       | $
    3.8           

F-20

---

9. INVENTORIES

The Company's inventories were as follows:

|                                  | January 31, | January 31,
|--------------------------------- | ----------- | -----------
|                                  | 2005        | 2004       
|Raw materials and work in process | $ 135.6     | $ 120.8    
|Finished products                 | 84.3        | 122.5      
|Parts and accessories             | 82.2        | 88.0       
|                                  | $ 302.1     | $ 331.3    

As at January 31, 2004, inventories, mainly parts and
accessories, included fair value increments of $9.3 million recorded as part of
the acquisition, all of which was expensed in cost of sales during the first
part of the year ended January 31, 2005.

10.

Other assets were as follows:

|                                           | January 31,      | January 31,
|------------------------------------------ | ---------------- | -----------
|                                           | 2005             | 2004       
|                                           | (Restated - Note |            
|Current                                    | 2)               |            
|Investment in retained interests [Note 7c] | $ 38.0           | $ 40.5     
|Derivative financial assets                | 18.9             | 35.6       
|Prepaid expenses                           | 13.3             | 18.6       
|Income taxes receivable                    | 19.9             | 2.4        
|Other                                      | 0.1              |           
|                                           | $ 90.2           | $ 97.1     
|Long-term                                  |                  |            
|Deferred financing costs                   | $ 24.8           | $ 42.9     
|Deferred development costs                 | 5.8              | 9.0        
|Restricted investments                     | 12.5             | 12.6       
|                                           | $ 43.1           | $ 64.5     

The Company's amortisation of development costs for the year
ended January 31, 2005 and the 44-day period ended January 31, 2004 were $3.1
million, and $0.3 million respectively. The predecessor business amortisation of
development costs for the 321-day period ended December 18, 2003 and for the
year ended January 31, 2003 was $2.5 million and $2.7 million, respectively.

The restricted investments can only be used for severance
payments and pension costs associated with BRP-Rotax GmbH & Co. KG pension
plans, and are not available for general corporate use and are, therefore,
classified as restricted long-term assets, which are designated as held to
maturity.

11.

|          | January 31, 2005 | January 31, 2004
|--------- | ---------------- | ----------------
|          | Cost             | Accumulated     
|          |                  | depreciation    
|Equipment | $ 186.4          | $ 51.7          
|Tooling   | 143.2            | 55.1            
|Buildings | 172.5            | 10.5            
|Land      | 41.0             |                
|          | $ 543.1          | $ 117.3         

F-21

---

Included in the above are assets under construction amounting to $19.0
million as at January 31, 2005 and $6.7 million as at January 31, 2004.
Depreciation of property, plant and equipment was as follows:

|                   | The Company | Predecessor Business
|------------------ | ----------- | --------------------
|                   |             | 44-day              
|                   | Year ended  | period ended        
|                   | January 31, | January 31,         
|                   | 2005        | 2004                
|Cost of sales      | $ 95.2      | $ 9.7               
|Operating expenses | 9.2         | 2.6                 
|                   | $ 104.4     | $ 12.3              

12.

The change in the carrying amount is due to foreign exchange rate
fluctuations and an adjustment resulting from the finalisation of the purchase
price allocation.

13.

|                                     |              | January 31, 2005
|------------------------------------ | ------------ | ----------------
|                                     | Amortisation |                 
|                                     | period (in   |                 
|                                     | years)       | Cost            
|Intangible assets subject to         |              |                 
|amortisation                         |              |                 
|Patents                              | 3            | $
    32.1      
|Dealer network                       | 25           | 46.3            
|                                     |              | 78.4            
|Intangible
    assets not subject to |              |                 
|amortisation                         |              |                 
|License agreement                    | N/A          | 13.8            
|                                     |              | $ 92.2          
|                                     |              |                 
|                                     |              | January 31, 2004
|                                     | Amortisation |                 
|                                     | period (in   |                 
|                                     | years)       | Cost            
|Intangible assets subject to         |              |                 
|amortisation                         |              |                 
|Patents                              | 3            | $
    32.1      
|Dealer network                       | 25           | 46.3            
|                                     |              | 78.4            
|Intangible
    assets not subject to |              |                 
|amortisation                         |              |                 
|License agreement                    | N/A          | 13.8            
|                                     |              | $ 92.2          

F-22

---

Amortisation of patents and dealer network was $12.6 million
for the year ended January 31, 2005 and $1.5 million for the 44-day period ended
January 31, 2004. The predecessor business amortisation of patent rights for the
321-day period ended December 18, 2003 and for the year ended January 31, 2003
was $2.7 million and $3.1 million, respectively.
The estimated aggregate amortisation expenses for each of the next five
successive fiscal years:

|2006 | $ 12.6
|---- | ------
|2007 | 12.3  
|2008 | 1.9   
|2009 | 1.9   
|2010 | 1.9   

14.

|                          | January 31, | January 31,
|------------------------- | ----------- | -----------
|                          | 2005        | 2004       
|Revolving credit facility | $ 12.3      | $         

The outstanding borrowings were denominated in U.S. dollars
as at January 31, 2005. The Company also had issued letters of credit for an
amount of $38.9 million ($54.5 million as at January 31, 2004), under the
revolving credit facility.

Under the credit agreement (the "credit agreement") dated
December 18, 2003 (amended and restated on February 9, 2005), the Company can
borrow up to $250.0 million ("available borrowings") under a revolving credit
facility (the "revolving facility"). Available borrowings may be denominated
either in Canadian dollars, in U.S. dollars or in Euros, at various interest
rates plus applicable margin. Weighted-average interest rate on the revolving
facility was 5.05% for the year ended January 31, 2005. The revolving facility
can be used for general corporate purposes and to fund working capital
requirements.

The revolving facility is secured by all of the assets of the
Company, certain of its subsidiaries and of J.A.B. and contains restrictions
including the obligation to maintain certain financial ratios. The revolving
facility requires that the Company comply on a quarterly basis with certain
financial covenants, such as a maximum total leverage ratio test and a minimum
interest coverage ratio test. In addition, the revolving facility restricts or
limits the Company's ability to make capital expenditures and incur additional
indebtedness.

15.

|                                        | January 31, 2005    | January 31, 2004
|--------------------------------------- | ------------------- | ----------------
|                                        | (Restated - Note 2) |                 
|Accounts payable                        | $ 241.0             | $ 264.9         
|Accrued liabilities                     | 90.6                | 79.9            
|Wages and related liabilities           | 73.3                | 58.1            
|Warranty provision                      | 71.2                | 77.7            
|Sales promotions and incentive programs | 45.9                | 56.9            
|Dealer holdback programs                | 33.0                | 30.6            
|Due to BCI                              | 16.7                | 22.6            
|Restructuring provision                 | 10.6                | 24.6            
|Income taxes payable                    | 8.5                 | 8.5             
|Acquisition costs                       | 0.1                 | 6.4             
|Derivative financial liabilities        | 1.0                 | 7.2             
|Other                                   | 2.9                 | 3.1             
|                                        | $ 594.8             | $ 640.5         

F-23

---

The change in the accrued warranty provision was as follows:
The Company
    Predecessor Business44-day
    321-dayYear ended
    period ended
    period ended
    Year endedJanuary 31,
    January 31,
    December 18
    January 31,2005
    2004
    , 2003
    2003Balance at beginning of the
    period
    $ 77.7
    $ 77.4
    $ 71.5
    $ 103.6Expensed during
    the period
    48.5
    4.9
    34.6
    39.6Change in
    estimate
    (12.6)
    0.3
    15.2
    (31.3)Claims paid
    during the period
    (40.3)
    (5.1)
    (39.6)
    (44.6)Effect of foreign currency
    exchange rate changes
    (2.1)
    0.2
    (4.3)
    4.2Balance at end of the period
    $ 71.2
    $ 77.7
    $ 77.4
    $ 71.5a)
Restructuring provisions related to
business acquisition

Costs associated with certain restructuring activities
related to the business acquisition are recorded as a liability assumed as of
the consummation date of the business acquisition and are included in the cost
of the acquired business.

In connection with the acquisition, management approved and
initiated a plan to restructure the recreational products business, and recorded
a related accrual of $24.8 million. The acquisition liabilities include
incremental costs to terminate approximately 337 employees located in Canada,
the U.S. and Austria, and costs to shut down manufacturing facilities, primarily
in the Marine Engines segment located in the U.S. and to relocate the Company's
head office. During the year, the Company completed its assessment of
restructuring activities related to the business acquisition. Revision of prior
accruals of $0.8 million resulted primarily from the finalisation and approval
of the restructuring plans related to the business acquisition and was recorded
as an adjustment to goodwill.

The restructuring costs related to the business acquisition recorded were as
follows:

|                                                                  |                 | Facilities |           
|----------------------------------------------------------------- | --------------- | ---------- | ----------
|                                                                  | Severance and   | shutdown   |           
|                                                                  | relocation cost | costs      | Total     
|Restructuring
    accrual in connection with business acquisition | $
    17.8      | $
    7.0  | $
    24.8
|Cash payments                                                     | (0.2)           |           | (0.2)     
|Balance as at January 31, 2004                                    | $ 17.6          | $ 7.0      | $ 24.6    
|Revision of prior
    accruals                                    |                | (0.8)      | (0.8)     
|Restructuring
    charges                                         |                 |            |           
|Cash payments                                                     | (14.0)          | (2.1)      | (16.1)    
|Effect
    of foreign currency exchange rate changes              | (0.3)           | (0.1)      | (0.4)     
|Balance as at January 31, 2005                                    | $3.3            | $4.0       | $7.3      

The facilities shutdown charge consisted of cash payments of
approximately $2.1 million which consisted of the net lease charges related to
leased facilities (mainly office space) that were no longer required pursuant to
the acquisition. The Company expects to pay the majority of the remaining
balance of the facility shutdown costs by the end of fiscal 2006.

b)

In November 2004, the Company announced the restructuring of certain of its
operations, including a reduction of its workforce. Approximately 660 jobs were
eliminated. Employees received indemnities that include a cash

F-24

---



severance, early retirement pension benefits, and other benefits such as
relocation of employees and career transition services. Departures began during
the last quarter of the year ended January 31, 2005.

The restructuring costs relating to the November 2004
announcement were charged to income during the year ended January 31, 2005 and
consisted of $6.5 million of severance and a $20.0 million charge for special
termination benefits. The special termination benefits were mainly as a result
of offering a voluntary early retirement incentive and bridging to early
retirement, which increased the Company's employee future benefit obligation.
Severance payment during the year ended January 31, 2005 amounted to $3.2
million resulting in an outstanding restructuring provision of $3.3 million as
at January 31, 2005. The Company expects to pay the majority of the remaining
balance of severance costs by the end of fiscal 2006.

Additionally, a non-cash impairment charge of $12.1 million
was recorded after assessing the fair value of two Marine Engines segment
facilities located in the United States, both of which management intends to
dispose of by sale.

16.

The Company's long-term debt, average effective rates and maturities were as
follows:

|                                                                                     |          | Effective   | Effective   |             |            
|------------------------------------------------------------------------------------ | -------- | ----------- | ----------- | ----------- | -----------
|                                                                                     |          | interest    | interest    |             |            
|                                                                                     |          | rate as at  | rate as at  |             |            
|                                                                                     | Maturity | January 31, | January 31, | January 31, | January 31,
|                                                                                     | date     | 2005 [1]    | 2004 [1]    | 2005        | 2004       
|Term Facilities                                                                      |          |             |             |             |            
|(U.S. $280 million)                                                                  | 2010     | 4.97%       | 6.0%        | $
    147.2 | $
    371.4
|Senior
    subordinated notes                                                        |          |             |             |             |            
|(U.S. $200 million)                                                                  | 2013     | 8
    3/8%  | 8
    3/8%  | 247.6       | 265.3      
|                                                                                     |          |             | 2.00%       |             |            
|Other                                                                                | 2008     | 2.00%       | to 5.6%     | 1.9         | 3.3        
|                                                                                     |          |             |             | 396.7       | 640.0      
|Current portion                                                                      |          |             |             | (147.2)     | (5.0)      
|Long-term portion                                                                    |          |             |             | $ 249.5     | $ 635.0    
|[1]Interest rates are before giving effect to the interest rate swap
    agreements. |         

Senior Secured Credit Facilities:

The credit agreement (the "credit agreement") dated December 18, 2003
(amended and restated on February 9, 2005) with a syndicate of banks consists of
the revolving facility and the following term loans:

> i.   U.S. $84 million (approximately $104.0 million), secured
>   U.S. term loan maturing December 18, 2010 
>   ii.  U.S. $196 million (approximately $243.0 million), secured Canadian
>   term loan maturing December 18, 2010

During January 2005, the Company voluntarily repaid, without
penalty, U.S. $158.3 million (approximately $193.0 million) on the Term
Facilities. Shortly thereafter, on February 9, 2005, the Company voluntarily
repaid, without penalty, the remaining and outstanding balance of the Term
Facilities. The U.S.$280 million facility has been replaced by a new term loan
facility of U.S. $50 million (approximately $62.0 million), under the amended
and restated Senior Secured Credit Facilities, which will mature January 31,
2011. The Company may also, at any time or from time to time, request one or
more additional tranches of US dollar denominated term loans of an aggregate
amount not to exceed US$100 million (approximately $124.0 million).

The new term facility bears interest equal to either the U.S.
prime rate, or LIBOR plus applicable margin, semiannual principal repayments of
U.S. $0.25 million (approximately $0.3 million) beginning June 30, 2005 and a
final principal repayments of U.S. $47.3 million (approximately $58.0 million)
on January 31, 2011.

F-25

---



The new term facility is secured by all of the assets of BRP,
certain of its subsidiaries and of J.A.B. The credit agreement contains
restrictions including the obligation to maintain certain financial ratios. The
credit agreement requires that the Company comply on a quarterly basis with
certain financial covenants, such as a maximum total leverage ratio test, and a
minimum interest coverage ratio test. In addition, the credit agreement facility
restricts or limits the Company's ability to make capital expenditures and incur
additional indebtedness.

Senior Subordinated Notes

On December 18, 2003 the Company issued U.S.$200 million
(approximately $248.0 million) of unsecured senior subordinated notes (the
"notes"), maturing on December 15, 2013. Interest on the notes accrues at a rate
of 8% per annum and
is payable semi-annually beginning June 15, 2004. The notes rank junior, in
right of payment, to all of the Company's existing and future senior
indebtedness, including indebtedness under the credit agreement, pari passu, in
right of payment, with all existing and future senior subordinated indebtedness
and senior, in right of payment, to all existing or future subordinated
indebtedness.

Before December 15, 2006, the Company may redeem, on one or
more occasions, 35% of the aggregate principal amount of the notes at a
redemption price of 108.375% of the principal amount, conditional on the
occurrence of an equity offering and that at least 65% of the aggregate
principal amount of the notes remains outstanding, and otherwise subject to the
terms and conditions of the indenture governing the notes.

After December 15, 2006 and before December 15, 2008, the
Company may redeem the notes, as a whole, but not in part, upon the occurrence
of a change of control (as defined in the indenture governing the notes) at a
redemption price equal to 100% of the principal amount thereof plus an
applicable premium as of, and accrued and unpaid interest and additional
interest thereon, if any, to the date of redemption, and otherwise subject to
the terms of the indenture governing the notes.

On or after December 15, 2008, subject to certain terms, the
Company may redeem, in whole or in part, at the redemption prices set forth
below (expressed as a percentage of the principal amount of the notes plus
accrued and unpaid interest and additional interest thereon, if any, to the
applicable redemption date), if redeemed during the 12-month period beginning on
December 15 of the years as follows:

|                    | Redemption Price
|------------------- | ----------------
|                    |                 
|2008                | 104.188%        
|2009                | 102.792%        
|2010                | 101.396%        
|2011 and thereafter | 100.000%        

The repayment requirements, after giving effect to the new term loan facility
obtained February 9, 2005, for the next five years ended January 31 and
thereafter, are as follows:

|2006       | $ 0.6  
|---------- | -------
|2007       | 0.6    
|2008       | 2.5    
|2009       | 0.6    
|2010       | 0.6    
|Thereafter | 306.5  
|           | $ 311.4

F-26

---

17.
EMPLOYEE FUTURE BENEFITS

The Company maintains non-contributory defined benefits plans that provide
for pensions and other post-retirement benefits, and also makes contributions to
defined contribution retirement plans.

Defined benefit plans

Before the acquisition, Bombardier was sponsoring several
registered and non-registered defined benefit pension plans and other
post-retirement and post-employment benefits plans for its employees. Certain
BRP employees were part of Bombardier plans covering employees of multiple
segments ("common plans").

a)

Effective December 18, 2003, the Company put in place defined
benefit pension and other post-retirement benefit plans for its Canadian
employees providing benefits that are substantially the same as those provided
by Bombardier prior to the acquisition.

Since Canadian employees were part of Bombardier common
plans, as part of the acquisition, an agreement was reached with Bombardier with
respect to the transfer of a proportionate share of assets to fund the
liabilities assumed by the Company under its new plans. The liabilities assumed
by the Company relate only to the active Canadian employees (not the retirees)
as of December 18, 2003 and cover past services with Bombardier for eligibility
and determination of benefits. As part of the acquisition, Bombardier agreed to
make a special one time contribution to these new plans in order to ensure that
the contribution of Bombardier provided sufficient funds over the active
Canadian employees' remaining working careers for the new plans to be in
position to pay pension benefits as they become due.

As at January 31, 2005, Bombardier's transfer of the plan
assets and its one-time contribution to the new plans are still pending, subject
to regulatory approval. The Company's proportionate share of pension assets is
still invested in the Bombardier Trust funds and is credited with interest equal
to the Bombardier Trust rate of return net of plan expenses from December 18,
2003 up to the actual transfer date. The Company's required contributions
payable from December 18, 2003 are held separately for each plan under a custody
contract with Royal Trust.

As part of the sale of the Utility Vehicles segment, the
Company terminated, effective August 30, 2004, the pension membership of all
employees transferred to the buyer and offered to each transferred employee
either to receive a deferred pension or the commuted value of the amounts due to
them under the Company's pension plan. Furthermore, the buyer also assumed past
service liabilities with respect to post-retirement benefits for the transferred
employees. A curtailment gain of $2.8 million for the Canadian pension plan and
of $0.7 million for the other post-retirement plans were recognised.

Pursuant to the November 2004 restructuring announcement, a
charge for special early termination benefit of $20.0 million (for the pension
and other post-retirement plans), which includes a curtailment loss of $5.2
million, was recognised as a result of offering a voluntary early retirement
incentive and bridging to early retirement.

During January, 2005, the Company suspended a Canadian
defined benefit pension plan covering the majority of the Canadian employees and
introduced a defined contribution pension plan with an effective date of June 1,
2005. The Canadian plan suspension freezes the plan participants' benefits
accrued prior to June 1, 2005 which will remain payable by the plan. The new
defined contribution pension plan has been communicated to employees prior to
January 31, 2005. The Company recognised a curtailment gain of $23.7 million
resulting from the removal of future salary projections for Canadian employees
who participate in the career pay formula in the calculation of the benefit
obligation of a Canadian defined benefit pension plan and is subject to
finalisation of regulatory approval.

b)

Prior to the acquisition, employees in the United States were
part of Bombardier common plans. As part of the acquisition, an agreement was
reached with Bombardier. The purpose of this agreement was to ensure that the
Company did not assume liabilities for the active and retired employees as of
December 18, 2003 in connection with the defined benefit plan, with the
exception of the non-registered supplementary executive retirement plan for its
executive employees, for which the Company assumed the liabilities.

F-27

---



Effective December 18, 2003, the Company put in place a non-registered
supplementary executive retirement plan for its executive employees in the
United States.

c)

Since BRP acquired the shares of the subsidiaries of Bombardier's
recreational products business, ownership of both pension and other
post-retirement benefits plans has been transferred to the Company.

Defined Benefit Pension Plans

The significant actuarial assumptions adopted to determine the benefit cost
and the projected benefit obligation were as follows (weighted-average
assumptions as at the measurement date, December 31 preceding the fiscal year
end):

|                                                       |             |                      |              |            |          |                  |                  |      
|------------------------------------------------------ | ----------- | -------------------- | ------------ | ---------- | -------- | ---------------- | ---------------- | -----
|                                                       | The Company | Predecessor Business
|                                                       |             |                      |              | 44-day     |          | 321-day          |                  |      
|                                                       | Year ended  | period ended         | period ended |            |         
|                                                       | January 31, | January 31,          | December 18, | Year ended
|                                                       |             | 2005                 |              | 2004       |          | 2003             | January 31, 2003
|                                                       | Domestic    | Foreign              | Domestic     | Foreign    | Domestic | Foreign Domestic | Foreign         
|Benefit cost actuarial
    assumptions (1)            
|Discount rate                                          | 6.00%       | 5.01%                | 6.00%        | 5.01%      | 6.50%    | 5.47%            | 6.50%            | 5.87%
|Rate of
    compensation increase                      | 4.09%       | 3.51%                | 4.10%        | 3.51%      | 4.25%    | 3.58%            | 4.25%            | 3.89%
|Expected
    long-term rate of return                  | 6.81%       | 6.00%                | 6.81%        | 6.00%      | 7.17%    | 7.55%            | 7.75%            | 8.21%
|on plan assets                                         |             |                      |              |            |          |                  |                  |      
|Projected benefit obligation actuarial assumptions (2) |             |                      |              |            |          |                 
|Discount rate                                          | 6.00%       | 5.01%                | 6.00%        | 5.01%      | 6.00%    | 5.37%            | 6.50%            | 5.47%
|Rate of compensation increase                          | 4.07%       | 3.51%                | 4.09%        | 3.51%      | 4.00%    | 3.85%            | 4.25%            | 3.58%

(1) Determined as of beginning of period 
(2) Determined as of end of period

The expected return on plan assets is determined by considering the long-term
historical returns, future estimates of long-term investment returns and assets
allocation.

The following tables provide a reconciliation of the changes in the pension
plans' projected benefit obligation and fair value of assets as at the
measurement date, December 31 preceding the fiscal year end.

|                                                      | January 31, 2005 | January 31, 2004
|----------------------------------------------------- | ---------------- | ----------------
|                                                      | Domestic         | Foreign         
|Projected benefit obligation                          |                  |                 
|Obligation at
    beginning of the period             | $ 133.5          | $ 71.6          
|Current service
    cost                              | 10.6             | 2.9             
|Interest cost                                         | 8.3              | 3.5             
|Actuarial loss
    (gain)                             | 1.1              | 1.2             
|Benefits paid                                         | (1.3)            | (4.5)           
|Curtailment gains                                     | (26.5)           |                
|Special
    termination benefits                      | 19.0             |                
|Effect of foreign currency
    exchange rate changes  |                 | (0.7)           
|Projected benefit obligation at
    end of the period | $ 144.7          | $ 74.0          

F-28

---



|                                          | January 31, 2005 | January 31, 2004
|----------------------------------------- | ---------------- | ----------------
|                                          | Domestic         | Foreign         
|Plan assets
    [1]                       |                  |                 
|Fair value at
    beginning of the period | $
    97.1       | $
    0.2       
|Adjustment [2]                            | (3.1)            |                
|                                          | 94.0             | 0.2             
|Actual return on
    plan assets          | 8.2              |                
|Employer
    contributions                | 11.5             | 5.1             
|Benefits paid                             | (1.3)            | (4.5)           
|Fair value at end of the period           | $ 112.4          | $ 0.8           

[1]

The allocation of the projected benefit obligation and plan assets by major
countries was as follows:

|                             | January 31, 2005 | January 31, 2004
|---------------------------- | ---------------- | ----------------
|Projected benefit obligation |                  |                 
|Canada                       | $
    144.7      | $
    133.5     
|United States                | 1.1              | 1.0             
|Austria                      | 72.4             | 70.3            
|Belgium                      | 0.5              | 0.3             
|                             | $ 218.7          | $ 205.1         
|Plan assets                  |                  |                 
|Canada                       | $
    112.4      | $
    97.1      
|Belgium                      | 0.8              | 0.2             
|                             | $ 113.2          | $ 97.3          

The reconciliation of the funded status of the pension plans to the amounts
recorded on the consolidated balance sheets under employee future benefits
obligations was as follows:

|                                                                                                             | January 31, 2005 | January 31, 2004
|------------------------------------------------------------------------------------------------------------ | ---------------- | ----------------
|                                                                                                             | Domestic         | Foreign         
|Fair value of plan assets                                                                                    | $ 112.4          | $ 0.8           
|Projected benefit obligation                                                                                 | (144.7)          | (74.0)          
|Funded status                                                                                                | (32.3)           | (73.2)          
|Unamortised net actuarial loss
    (gain)                                                                    | (1.5)            | 0.8             
|Net recognised amount                                                                                        | $ (33.8)         | $ (72.4)        
|[1]Includes $2.8 million related to the disposal of the Utility
    Vehicles segment as disclosed in note 6.

All of the pension plans had projected benefit obligations in excess of plan
assets.

Pension plans with accumulated benefit obligations in excess of plan assets
were as follows:

Accumulated benefit obligations in excess of plan assets

|                               | January 31, 2005 | January 31, 2004
|------------------------------ | ---------------- | ----------------
|                               | Domestic         | Foreign         
|Accumulated benefit obligation | $ (126.1)        | $ (51.1)        
|Fair value of plan assets      | 99.6             |                
|                               | $ (26.5)         | $ (51.1)        

F-29

---



COMPONENTS OF THE NET BENEFIT PLAN COST WERE AS FOLLOWS:

|                                  | The Company | Predecessor Business
|--------------------------------- | ----------- | --------------------
|                                  |             |                     
|                                  | Year ended  | period ended        
|                                  | January 31, | January 31,         
|                                  |             | 2005                
|                                  | Domestic    | Foreign Domestic    
|Net benefit plan cost (1)         |             |                     
|Current service
    cost          | $
    10.6  | $
    2.9           
|Interest cost                     | 8.3         | 3.5                 
|Actual return on
    plan assets  | (8.2)       |                    
|Actuarial loss                    | 1.1         | 1.2                 
|Curtailment gain                  | (23.7)      |                    
|Special termination benefits      | 19.0        |                    
|Benefit cost before adjustments   |             |                     
|to recognised the long-term       |             |                     
|nature of the plans               | 7.1         | 7.6                 
|Difference
    between actual and |             |                     
|expected return on plan assets    | 1.6         |                    
|Difference
    between actual and |             |                     
|actuarial gain and the amount     |             |                     
|recognised                        | (1.1)       | (1.2)               
|Amortisation of
    past service  |             |                     
|costs                             |            |                    
|Benefit cost recognised           | $ 7.6       | $ 6.4               

> (1) For the year ended January 31,
>   2005, benefit cost recognised includes $0.5 million for the Canadian plans
>   ($0.1 million for the 44-day period ended January 31, 2004; $1.0 million for
>   the 321-day period ended, December 18, 2003 and $1.6 million for the year
>   ended January 31, 2003) relating to the Utility Vehicles segment. These
>   amounts are included in income from discontinued operations in the
>   consolidated statements of income.

The most recent actuarial valuation for funding purposes of
the Company's pension plans was prepared with an effective date of December 18,
2003, and the next valuation will be completed during the second quarter of
fiscal year ended January 31, 2006 with and effective date of December 31, 2004.

Since the transfer from Bombardier of the plan assets is
still pending as at January 31, 2005, the Company's contributions have
temporarily been invested in indexed balance funds. The target allocation has
not been finalised and until the plan assets are transferred the Company will be
credited with Bombardier's actual return on plan assets.

In accordance with the minimum funding obligations required under the current
regulations, the Company expects to contribute $10.3 million to all defined
benefit plans for the year ended January 31, 2006.

Based on current estimates, the future benefit payments under the Company's
defined benefit pension plans over the next ten years are expected to be as
follows:

|             | Domestic  | Foreign   | Total    
|------------ | --------- | --------- | ---------
|2006         | $
    3.0 | $
    2.5 | $
    5.5
|2007         | 4.7       | 2.5       | 7.2      
|2008         | 6.4       | 2.6       | 9.0      
|2009         | 7.6       | 2.7       | 10.3     
|2010         | 8.4       | 2.9       | 11.3     
|2011 to 2015 | 48.3      | 15.3      | 63.6     

F-30

---



Defined Contribution Pension Plans

The Company contributions under defined contribution pension
plans totalled $2.3 million for the year ended January 31, 2005 and $0.1 million
for the 44-day period ended January 31, 2004. Predecessor business contributions
under defined contribution plans totalled $2.0 million and $2.7 million for the
321-day period ended December 18, 2003 and for the year ended January 31, 2003,
respectively.

Other post-retirement benefit plans

The significant actuarial assumptions adopted to determine the benefit cost
and the projected benefit obligation were as follow (weighted-average
assumptions as at the measurement date, December 31 preceding the fiscal year
end):

|                                                           | The Company | Predecessor Business
|---------------------------------------------------------- | ----------- | --------------------
|                                                           |             | 44-day              
|                                                           | Year ended  | period ended        
|                                                           | January 31, | January 31,         
|                                                           | 2005        | 2004                
|                                                           | Domestic    | Domestic            
|Benefit cost actuarial
    assumptions (1)                 |             |                     
|Discount rate                                              | 6.00%       | 6.00%               
|Rate of compensation                                       |             |                     
|increase                                                   | 4.09%       | 4.10%               
|Projected benefit obligation
    actuarial assumptions (2) |             |                     
|Discount rate                                              | 6.00%       | 6.00%               
|Rate of compensation                                       |             |                     
|increase                                                   | 4.07%       | 4.09%               

(1) Determined as of beginning of the period 
(2) Determined as of end of the period

The following tables provide a reconciliation of the changes in the benefit
plans' projected benefit obligation as at the measurement date, December 31
preceding the fiscal year end.

|                                                      | January 31, | January 31,
|----------------------------------------------------- | ----------- | -----------
|                                                      | 2005        | 2004       
|                                                      | Domestic    | Domestic   
|Projected benefit obligation                          |             |            
|Obligation at
    beginning of the period             | $
    12.5  | $ 12.5     
|Current service cost                                  | 0.9         | 0.1        
|Interest cost                                         | 0.8         | 0.1        
|Plan amendments                                       | 1.4         |           
|Actuarial loss (gain)                                 | 0.3         | (0.2)      
|Benefits paid                                         | (0.1)       |           
|Curtailment gain                                      | (0.7)       |           
|Special termination benefit                           | 1.0         |           
|Projected benefit obligation at end of
    the period | $ 16.1      | $ 12.5     

The Company's post-retirement benefits plans are all unfunded.

The reconciliation of the funded status of the other post-retirement benefit
plans to the amounts recorded under accrued benefit liability on the
consolidated balance sheets was as follows as at January 31:

F-31

---



|                                                                                                             | January 31, | January 31, 
|------------------------------------------------------------------------------------------------------------ | ----------- | ------------
|                                                                                                             | 2005        | 2004        
|                                                                                                             | Domestic    | Domestic    
|Deficit                                                                                                      | $ (16.1)    | $ (12.5)    
|Unamortised net actuarial loss (gain)                                                                        | 0.1         | (0.2)       
|Net recognised amount                                                                                        | $ (16.0)    | $ (12.7) [1]
|[1]Includes $0.7 million related to the disposal of the Utility Vehicles
    segment as disclosed in note 6.

Components of the net benefit plan cost were as follows:

|                                | The Company | Predecessor Business
|------------------------------- | ----------- | --------------------
|                                |             | 44-day              
|                                | Year ended  | period ended        
|                                | January 31, | January 31,         
|                                | 2005        | 2004                
|                                | Domestic    | Domestic            
|Net benefit plan cost           |             |                     
|Current service cost            | $ 0.9       | $ 0.1               
|Interest cost                   | 0.8         | 0.1                 
|Actuarial loss                  | 0.3         | (0.2)               
|Plan amendments                 | 1.4         |                    
|Special termination benefits    | 1.0         |                    
|Benefit cost before adjustments |             |                     
|to recognised the long-term     |             |                     
|nature of the plans             | 4.4         |                    
|Difference between actual and   |             |                     
|actuarial gain and the amount   |             |                     
|recognised                      | (0.3)       | 0.2                 
|Benefit cost recognised         | $ 4.1       | $ 0.2               

Health care costs

The health care cost trend rate, which is a weighted-average
annual rate of increase in the per capita cost of covered health and dental-care
benefits, was assumed to start at 12.25% in fiscal year 2005 and is expected to
gradually decline by 0.75% per year to be at 5.5% in fiscal year 2013 and
remaining at that level thereafter. Other benefit costs were assumed to increase
at the same rate as price inflation.

A one-percentage-point change in assumed health care cost trend rates would
have the following effects:

|                                             | One percentage
|-------------------------------------------- | --------------
|                                             | point         
|                                             | Increase      
|                                             |               
|Effect on total of service and interest cost | $ 0.2         
|Effect on post-retirement benefit obligation | 1.3           

F-32

---

18.
REDEEMABLE PREFERRED SHARES

On October 29, 2004, the Company redeemed all of the issued
and outstanding Class A preferred shares held by its parent company for a total
cash consideration of $52.6 million. The outstanding Class A preferred shares
had a carrying value of $46.2 million. The carrying value of the redeemable
preferred shares was accreted to its redemption value through charges to
operations over the period up to their estimated redemption date based on the
effective yield method. The accretion in the carrying value of the preferred
share was $3.0 million for the year ended January 31, 2005. The preferred shares
were redeemable at $50.0 million plus the accrued dividend of $2.6 million.

On December 18, 2003, as part of the consideration given for
the purchase of Bombardier's recreational products business, the Company issued
50,000 Class A Preferred Shares at $1,000 per share. Redemption of the Class A
Preferred Shares is mandatory upon occurrence of certain future events that the
Company considers likely to occur and as a result, the shares were initially
recorded at their fair value of $42.7 as a long-term liability on the Company's
consolidated balance sheet.

19.

|                                                              | January 31, | January 31,
|------------------------------------------------------------- | ----------- | -----------
|                                                              | 2005        | 2004       
|                                                              |             |            
|Due to Bombardier Inc.
    in connection with indemnification | $
    23.0  | $ 22.7     
|related
    to income taxes                                   |             |            
|Other                                                         | 5.5         | 8.2        
|                                                              | $ 28.5      | $ 30.9     

20.

The authorised capital stock of the Company is as follows:

Classified as liabilities

Unlimited number of Class A Preferred Shares, cumulative
dividend per share of 6% per annum calculated on the redemption price of $1,000
per share plus any unpaid dividends for prior years, redeemable at the option of
the Company or mandatory redemption on a direct or indirect change of control of
the Company to a party other than the sponsors, sale of all or substantially all
of the assets of the Company, or on a direct of indirect change of control of
J.A.B. to a party other than the Sponsors, at a price of $1,000 plus accrued
dividends

Classified as equity

Unlimited number of Common Shares

Unlimited number of Class B Preferred Shares, rights and
privileges to be determined by the board of directors of the Company prior to
the issuance of any Class B Preferred Shares, provided that all Class B
Preferred Shares will in all instances rank junior as to liquidation rights,
dividend rights and redemption rights to the Class A Preferred Shares for so
long as any Class A Preferred Shares are outstanding

|Issued and outstanding | January 31, 2005 | January 31, 2004
|---------------------- | ---------------- | ----------------
|1                      | Common Share     | $ 364.4         

On December 18, 2003, the Company issued 1 common share to its parent company
for a total cash consideration of $304.5 million.

F-33

---

During the year ended January 31, 2005, the stated capital was increased as a
result of the following:$7.4 million
  received from J.A.B. following the issue of 7,641,550 Class B common shares of
  J.A.B. for an amount equal to their fair value; and

$52.6 million
  received from J.A.B. following the redemption of all of the issued and
  outstanding class A preferred shares held by J.A.B.

21. MANAGEMENT SHARE SUBSCRIPTION AGREEMENT AND STOCK OPTION PLAN

During the year ended January 31, 2005, the board of
directors of J.A.B. approved a management share subscription agreement and a
stock option plan for directors, officers and certain employees of the Company.

Under the management share subscription agreement, the
subscribers purchased 7,641,550 Class B common shares (the "subscription
shares") of J.A.B. for an amount equal to their fair value. The net proceeds of
$7.4 million were then transferred by J.A.B. to the Company, and were accounted
for by the Company as an increase in shareholder's equity. The terms of the
management share subscription agreement provide J.A.B. with the right to
repurchase all or a portion of the subscription shares (a "call option"), and
provide the subscribers with a right to sell to J.A.B. all or a portion of their
subscription shares (a "put option"), under certain circumstances. The call and
put options expire on the occurrence of an Initial Public Offering ("IPO") by
the Company or upon a change in control.

During the year ended January 31, 2005, the board of
directors of J.A.B. approved a grant of 21 424 650 options. The options are
exercisable into Class B common shares of J.A.B. at an exercise price equal to
the fair market value of the Class B shares on the date of grant, and are
exercisable for a period of up to 10 years. One-third of the options granted
vest in equal annual instalments on each of the five anniversary dates of the
date of grant. The remaining two-thirds become eligible to vest in equal annual
instalments on each of the five anniversary dates of the date of grant, and
shall only vest upon certain performance measures being achieved upon either an
IPO or a change in control.

|                                |            | Weighted      
|------------------------------- | ---------- | --------------
|                                | Number of  | Average       
|                                | options    | Exercise Price
|Options granted during the year | 21,424,650 | 1.00          
|Options cancelled               | 1,350,000  | 1.00          
|Option outstanding              | 20,074,650 | 1.00          

The Company records compensation expense using the fair value
method, for these grants of stock options by J.A.B. that are expected to vest,
over the expected vesting period of the option with a corresponding amount
recorded as contributed surplus.

The estimated fair value of the granted options, which
assumes that all performance measures will likely be achieved, is approximately
$10.7 million of which $2.3 million has been recorded as compensation expense in
general and administrative expenses during the year ended January 31, 2005. Fair
value is estimated at the grant date based on a Black-Scholes option-pricing
model using the following weighted average assumptions:

|Risk-free interest rate | 3.98%   
|----------------------- | --------
|Expected life           | 10 years
|Expected volatility     | 35%     
|Dividend yield          | 0%      

F-34

---

22.
CUMULATIVE TRANSLATION ADJUSTMENT

Unrealised currency translation adjustments, in the currency
translation adjustment, resulted primarily from the weakening of the U.S. dollar
against the Canadian dollar and the strengthening of the Canadian dollar against
the Euro for the year ended January 31, 2005 and from the strengthening of the
Euro against the Canadian dollar for the 44-day period ended January 31, 2004.

23.

|                                     | The Company    | Predecessor Business
|------------------------------------ | -------------- | --------------------
|                                     |                | 44-day period       
|                                     | Year
    ended | ended               
|                                     | January 31,    | January 31,         
|                                     | 2005           | 2004                
|Research and development             |                |                     
|expense                              | $
    119.3    | $ 14.3              
|Tax credits and other
    government |                |                     
|assistance                           | (11.2)         | (1.4)               
|                                     | $ 108.1        | $ 12.9              

24.

|                                  | The Company | Predecessor Business
|--------------------------------- | ----------- | --------------------
|                                  |             | 44-day              
|                                  | Year ended  | period ended        
|                                  | January 31, | January 31,         
|                                  | 2005        | 2004                
|Interest on long-term debt        | $ 38.8      | $ 5.4               
|Receivable factoring losses       | 6.8         | 0.6                 
|Interest on advances from related |             |                     
|parties                           |            |                    
|Amortisation of deferred          |             |                     
|financing costs                   | 19.4        | 0.8                 
|Interest income                   | (4.1)       |                    
|Change in fair value of interest  |             |                     
|rate swaps                        | (1.6)       |                    
|Other                             | 1.1         | 0.2                 
|                                  | $ 60.4      | $ 7.0               

Deferred financing costs of $12.9 million relating to the
U.S.$280 million Term Facilities were expensed during the year as a result of
the repayment of the Term Facilities of which the Company repaid U.S.$158.3
million (approximately $193.0million) during January 2005 and fully repaid the remaining outstanding
balance of U.S.$118.9 million (approximately $147.0million) shortly thereafter on February 9, 2005.

F-35

---

25.
INCOME TAX

The reconciliation of income taxes computed at the Canadian statutory rates
to income tax expense was as follows:

|                            | The Company         | Predecessor business
|--------------------------- | ------------------- | --------------------
|                            |                     |                     
|                            |                     |                     
|                            | Year ended          | January 31,         
|                            | January 31, 2005    |                     
|                            | (Restated - Note 2) |                     
|Income taxes
    calculated |                     |                     
|at
    statutory rates      | $ 7.7               | 31.0%               
|Increase (decrease)         |                     |                     
|resulting
    from:         |                     |                     
|Income
    tax rate         |                     |                     
|differential of             |                     |                     
|foreign subsidiaries        | (12.6)              |                     
|Effect of
    income tax    |                     |                     
|rate changes                | 0.6                 |                     
|Tax
    benefits from       |                     |                     
|losses and                  |                     |                     
|temporary                   |                     |                     
|differences not             |                     |                     
|recognised                  | 0.3                 |                     
|Recognition of              |                     |                     
|previously                  |                     |                     
|unrecorded tax              |                     |                     
|benefit                     | (0.2)               |                     
|Tax-exempt items            | (3.8)               |                     
|Large corporation tax       | 1.1                 |                     
|Manufacturing and           |                     |                     
|processing credit           |                    |                     
|Other                       | (0.1)               |                     
|Income tax expense          |                     |                     
|(recovery)                  | $ (7.0)             |                     

F-36

---

Details of income tax recovery are as follows:

|                           | The Company | Predecessor Business
|-------------------------- | ----------- | --------------------
|                           |             | 44-day              
|                           | Year ended  | period ended        
|                           | January 31, | January 31,         
|                           | 2005        | 2004                
|                           | (Restated - |                     
|                           | Note 2)     |                     
|Current income tax expense |             |                     
|Domestic                   | $ (0.5)     | $ 1.6               
|Foreign                    | 7.8         | 1.3                 
|                           | 7.3         | 2.9                 
|Deferred income tax        |             |                     
|recovery                   |             |                     
|Temporary differences      | (14.7)      | (8.6)               
|Effect of income tax rate  |             |                     
|changes                    | 0.6         | 0.1                 
|Recognition of previously  |             |                     
|unrecorded tax benefits    | (0.2)       | (0.1)               
|                           | (14.3)      | (8.6)               
|Income tax expense         |             |                     
|(recovery)                 | $ (7.0)     | $ (5.7)             

Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred income tax asset (liability)
were as follows:

|                                             | January 31, | January 31,
|-------------------------------------------- | ----------- | -----------
|                                             | 2005        | 2004       
|                                             | (Restated - |            
|                                             | Note 2)     |            
|Accounts payable and
    accrued liabilities | $
    53.0  | $ 67.6     
|Loss carry-forwards                          | 30.7        | 14.7       
|Employee future
    benefits obligations     | 22.5        | 21.7       
|Inventories                                  | 10.3        | 7.9        
|Property, plant and
    equipment            | (43.1)      | (41.8)     
|Other current assets                         | (8.0)       | (11.2)     
|Other long-term assets                       | 13.8        | 11.9       
|Other intangible
    assets                  | (43.1)      | (45.7)     
|Long term debt                               | (4.5)       |           
|Other                                        | 1.8         | 4.1        
|                                             | 33.4        | 29.2       
|Valuation allowance                          | (1.6)       | (1.5)      
|Net amount                                   | $ 31.8      | $ 27.7     

Losses carried forward and other temporary differences, which
are available to reduce future taxable income for which no related income tax
benefits have been recognised, amounted to respectively, $4.5 million and $4.5
million as at January 31, 2005 and 2004 and have no specified expiry dates.

F-37

---

Deferred income taxes have not been provided for the
undistributed earnings of foreign subsidiaries based upon Management's
determination that such earning will be indefinitely reinvested. As at January
31, 2005 and 2004, the cumulative undistributed earnings of these foreign
subsidiaries were approximately $44.8 million and $28.9 million, respectively.
If such earnings were not considered indefinitely reinvested, deferred foreign
income taxes would have been provided, after consideration of estimated foreign
tax credits for an amount of $1.0 million as at January 31, 2005 and an amount
of $0.3 million as at January 31, 2004.26.
NET CHANGES IN NON-CASH WORKING CAPITAL
BALANCES RELATED TO OPERATIONS

The net changes in non-cash working capital balances related to operations
were as follows:

|                                 | The Company | Predecessor Business
|-------------------------------- | ----------- | --------------------
|                                 |             | 44-day              
|                                 | Year ended  | period ended        
|                                 | January 31, | January 31,         
|                                 | 2005        | 2004                
|Receivables                      | $ 35.8      | $ (22.8)            
|Receivables from related parties |            |                    
|Inventories                      | 21.1        | 83.0                
|Other current assets             | (12.5)      |                    
|Accounts payable and accrued     |             |                     
|liabilities                      | 3.3         | 11.6                
|Employee future benefits         | 5.8         | (0.1)               
|Derivative financial instruments | 28.6        | 25.6                
|Other                            | (0.3)       | (2.7)               
|                                 | $ 81.8      | $ 94.6              

Non-cash transactions

Issuance of redeemable preferred shares in conjunction with the business
acquisition at a fair value of $42.7 million.

Transfers of receivables in exchange of investment in
retained interests of transferred receivables of $38.0million and $40.5 million for the year ended January 31, 2005 and for the
44-day period ended January 31, 2004, respectively. The predecessor business
transfers of receivables in exchange of investment in retained interests of
transferred receivables of $24.4 million for the year ended January 31, 2003.

27.

Foreign exchange risks

The Company uses derivative financial instruments to manage foreign currency
risks and exposures. The Company does not trade in derivatives for speculative
purposes.

Foreign exchange contracts

The Company's forward foreign exchange contracts were
designated as hedges of forecast transactions for accounting purposes effective
February 1, 2004 for contracts entered into during the year. As a result, there
is no recognition in the Consolidated Financial Statements of unrealised gains
or losses arising during the year on such contracts. For the forward foreign
exchange contracts purchased prior to February 1, 2004, which had a fair value
other than zero on the date they were designated as hedges, these derivatives
were recognised on the consolidated balance sheet at fair value as at January
31, 2005. In the 44-day period ended January 31, 2004, the Company's forward
foreign exchange contracts were not designated as hedges for accounting
purposes. Accordingly such contracts were recognised in the consolidated
financial statements at fair value on January 31, 2004.

F-38

---

The following tables set out the significant notional amounts outstanding
under foreign exchange contracts, the average contractual exchange rates and the
settlement periods of these contracts.

|                          | January 31, 2005
|------------------------- | ----------------
|                          |                 
|                          |                 
|                          | Sell            
|                          | currency        
|Sell contracts            |                 
|Less than
    1 year      | USD             
|Between 1
    and 2 years | USD             
|Buy contracts             |                 
|Less than
    1 year      | CAD             
|Between 1 and 2 years     | CAD             
|                          |                 
|                          | January 31, 2004
|                          |                 
|                          |                 
|                          | Sell            
|                          | currency        
|Sell contracts            |                 
|Less than
    1 year      | USD             
|Between 1
    and 2 years | USD             
|Less than
    1 year      | USD             
|Less than
    1 year      | AUD             
|Buy contracts             |                 
|Less than
    1 year      | CAD             
|Between 1 and 2 years     | CAD             

Interest rate swap

In order to manage its exposure to interest rate risk, the
Company entered into interest rate swap agreements in order to fix the interest
rate on a portion of its term loans for a notional amount of U.S. $70.0 million.
The interest rate swap agreements involve the exchange of a floating LIBOR rate
for a fixed rate of 2.525%. Including the applicable margin on the U.S. term
loans of 2.75%, the effective interest rate on U.S. $70.0 million of the term
loan is 5.275%. The interest rate swaps were settled on February 9, 2005.

The interest rate swaps did not qualify for hedge accounting, as not all of
the variability of the hedged item's functional currency equivalent cash flows
is eliminated by the effect of the hedge.

Changes in fair value of the interest rate swap agreements were included in
financing costs.

Fair value of financial instruments

The estimated fair value of certain financial instruments has
been determined using available market information or other valuation
methodologies that require considerable judgement in interpreting market data
and developing estimates. The use of different assumptions and/or estimation
methodologies may have a material effect on the estimated fair values.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that the Company could realise in a current market exchange.

Cash and cash equivalents, receivables, investment in retained interest, bank
loans, accounts payable and accrued liabilities

The carrying amounts reported, on the consolidated balance sheets,
approximate the fair values of these items due to their short-term nature.

F-39

---

Restricted investments

The carrying amount of restricted investments approximates
their fair value, which are estimated using public quotations, when available,
or discounted cash flow analyses, using interest rates applicable for assets
with similar terms.
Long-term debt and redeemable preferred shares

The fair values of long-term debt and redeemable preferred
shares are determined using public quotations or discounted cash flow analyses,
based on current corresponding borrowing rates for similar types of borrowing
arrangements.
Derivative financial instruments

The fair values generally reflect the estimated amounts that
the Company would receive upon the settlement of favourable contracts or be
required to pay to terminate unfavourable contracts at the reporting dates.
Investment dealers' quotes from the Company's bankers are available for
substantially all of the Corporation's forward foreign exchange contracts and
interest-rate swap agreements.
The fair value of financial instruments for which the carrying amount
reported is different from the fair value was as follows as at January 31:

|                                   | January 31, 2005 | January 31, 2004   
|---------------------------------- | ---------------- | -------------------
|                                   | Carrying         |                    
|                                   | Value            | Fair Value         
|                                   |                  | (Restated - Note 2)
|Senior subordinated notes          | $ 247.6          | $ 264.9            
|Redeemable preferred shares        |                 |                   
|Forward foreign exchange contracts |                  |                    
|Favourable                         | 1.6              | 25.5               
|Unfavourable                       | (3.4)            | (9.1)              

Credit risk

In addition to the credit risk described elsewhere in these
Consolidated Financial Statements, the Company is subject to risk related to
derivative financial instruments, whereby counterparty failure would result in
economic losses on favourable contracts. However, the counterparties to these
derivative financial instruments are all investment grade financial
institutions, which the Company anticipates will satisfy their obligations under
the contracts.

The Company considers that its credit risk associated with
its receivables did not represent a significant concentration of credit risk at
January 31, 2005 and 2004, due to the large number of customers and their
dispersion across many geographic areas.

28.

In addition to the commitments and contingencies described elsewhere in these
Consolidated Financial Statements, the Company is subject to the following (all
amounts presented are undiscounted):

a)

The Company leases buildings and equipment under operating
leases. The Company's rent expense under all lease agreements, was $11.4 million
and $1.8 million for the year ended January 31, 2005 and for the 44-day period
ended January 31, 2004, respectively. The predecessor business rent expense
under all lease agreements, including intercompany transactions, was $16.5
million and $18.2 million for the 321-day period ended December 18, 2003 and for
the year ended January 31, 2003, respectively. The related minimum lease
payments and residual value guarantees (including $3.1 million to related
parties) for the next five years are as follows:

F-40

---



|     | Buildings and | Residual value |       
|---- | ------------- | -------------- | ------
|     | equipment     | guarantees     | Total 
|2006 | $ 7.1         | $ 1.5          | $ 8.6 
|2007 | 3.4           | 0.4            | 3.8   
|2008 | 1.7           | 0.3            | 2.0   
|2009 | 1.1           |               | 1.1   
|2010 | 0.5           |               | 0.5   
|     | $ 13.8        | $ 2.2          | $ 16.0

b)

Under its dealer financing agreements with BC and certain
third party financing companies, the Company may be required to repurchase new
and unused products at a price equivalent to the dealer's total unpaid principal
balance owed to the financing company, subject to pre-set limits, in the event
of dealer default. Any loss on the resale of the repurchased products is the
responsibility of the Company. The Company or the predecessor business have not
incurred material losses under these agreements. Outstanding floorplan financing
between the Company's dealers and the respective financing companies as at
January 31, 2005 was $719.6 million ($753.7 million, including amounts
outstanding prior to the transaction, as at January 31, 2004).

c)

The Company sells certain of its receivables. A portion of
the receivables sold is subject to the repurchase of new and unused products at
a price equivalent to the total unpaid principal balance owed to the financing
company, in the event of dealer default. Any loss on the resale of the
repurchased products is the responsibility of the Company. The Company or the
predecessor business have not incurred material losses under these agreements.
The outstanding amount, subject to repurchase, as at January 31, 2005 was $66.0
million ($57.6 million, including outstanding amounts prior to the transaction
as at January 31, 2004).

d)

In the normal course of its business, the Company entered
into a purchase agreement with a Japanese marine engines manufacturer whereby it
must buy a certain number of units of marine engines with an annual minimum
purchase requirement for each year through August 31, 2006. Using the purchase
price paid during the period ended January 31, 2005, the minimum purchase
commitment would be $7.6 and $2.5 million for the years ending January 31, 2006
and 2007, respectively.

e)

The Company is subject to product liability claims in the
normal course of business. With respect to product liability claims, which arose
prior to the business acquisition, Bombardier has agreed to indemnify the
Company for certain amounts. On any product liability claim relating to injuries
or damages occurring prior to December 18, 2003, Bombardier shares equally with
the Company the first $250,000 per claim in case expenses (fees, settlements and
judgements) and indemnifies the Company for any expenses in excess of $125,000
on such claims.

The Company has a patent infringement case outstanding that
is on appeal following summary judgement in the Company's favour, as well as one
action for alleged infringement of a trademark. The Company also has various
other cases outstanding mainly for commercial disputes with terminated dealers
and minor disputes with customers.

The Company intends to vigorously defend its position in
these matters. Management believes the Company has recorded adequate provisions
to cover potential losses and amounts not recoverable under insurance coverage,
if any, in relation to these legal actions. While the final outcome with respect
to actions outstanding or pending as at January 31, 2005 cannot be predicted
with certainty, it is management's opinion that their resolution will not have
material adverse effects on the Company's financial position, results of
operations, or cash flows.

f)

The U.S. Department of Commerce ("DOC") issued a preliminary
determination of anti-dumping on August 6, 2004 and had ordered a 22.52% cash
deposit or an import bond to be posted for each "Japanese made" outboard engine
sold in the United States. On December 28, 2004, the DOC rendered its final
ruling on dumping and imposed a final anti-dumping duty of 18.98%. However on
February 2, 2005, the International Trade Commission (ITC), after

F-41

---

having conducted a hearing on the injury to the U.S. outboard
engine industry resulting from the Japanese dumping, ruled that the U.S.
outboard engine industry had not been materially injured or was not threatened
with material injury. Consequently, the anti-dumping duty bonds will be released
and deposits will be reimbursed to importers and "Japanese made" outboard engine
sold in the United States will not be subject to any anti-dumping duties.29.
SEGMENT DISCLOSURE

Subsequent to the decision to sell its Utility Vehicles
segment, the Company now operates in the two reportable segments described
below. Each reportable segment offers different products and services and
requires different technology and marketing strategies.

The Power Sports segment designs, develops, manufactures and
sells snowmobiles, watercraft, all-terrain vehicles, sport boats and Rotax
engines. Power Sports products are sold mainly through an international network
of independent dealers and distributors. The manufacturing plants are located
primarily in Canada, the United States, Austria and Finland.

The Marine Engines segment designs, develops, manufactures
and sells outboard engines available across three technologies: 2-stroke
carburated, 2-stroke direct injection and 4-stroke technology. Marine Engine
products are sold directly to boat builders or through an international network
of independent dealers and distributors. The Marine Engine manufacturing plants
are located primarily in the United States and Mexico.

The Company's accounting policies for its segments are the
same as those described in the Summary of Significant Accounting Policies.
Management evaluates performance based on operating profit. Operating profit
does not include allocated corporate office charges for administrative functions
as well as financing cost, other income and expense and income taxes. Whereas
for the predecessor business, the cost of employee future benefits allocated to
each reportable segment is based on a percentage of payroll, which approximates
the current service cost component. Predecessor business Management evaluates
performance based on operating profit. Predecessor business operating profit
does not include allocated corporate office charges for administrative functions
as well as interest and income taxes. Intersegment services are accounted for at
the exchange amount which management believes reflects current market prices as
if the services were provided to third parties.

F-42

---



|                                              |              |              | The Company   |              |            
|--------------------------------------------- | ------------ | ------------ | ------------- | ------------ | -----------
|                                              | Consolidated | Power Sports | Marine Engine
|                                              |              | 44-day       |               | 44-day       |            
|                                              | Year ended   | period ended | Year ended    | period ended | Year ended 
|                                              | January 31,  | January 31,  | January 31,   | January 31,  | January 31,
|                                              | 2005         | 2004         | 2005          | 2004         | 2005       
|                                              | (Restated -  |              | (Restated -   |              |            
|                                              | Note 2)      |              | Note 2)       |              |            
|External revenues                             | $ 2,451.3    | $ 333.5      | $ 1,912.0     | $ 273.7      | $ 539.3    
|Intersegment revenues                         |             |             | 23.6          | 3.7          | 21.8       
|Segment revenues                              | 2,451.3      | 333.5        | 1,935.6       | 277.4        | 561.1      
|Cost of sales and operating expenses          | 2,249.4      | 328.3        | 1,737.6       | 273.7        | 557.2      
|Depreciation and amortisation                 | 118.0        | 13.9         | 96.3          | 10.8         | 21.7       
|                                              | 2,367.4      | 342.2        | 1,833.9       | 284.5        | 578.9      
|Segment operating income (loss) from          |              |              |               |              |            
|continuing operations                         | 83.9         | (8.7)        | $ 101.7       | $ (7.1)      | $ (17.8)   
|Corporate and other                           | 48.0         | 3.2          |               |              |            
|Restructuring, impairment and other charges   |              |              |               |              |            
|and (income)                                  | 14.9         |              |               |              |            
|Depreciation dealer network                   | 1.9          | 0.2          |               |              |            
|Operating income from continuing              |              |              |               |              |            
|operations                                    | 19.1         | (12.1)       |               |              |            
|Other (income) and expenses                   |              |              |               |              |            
|Financing costs                               | 60.4         | 7.0          |               |              |            
|Accretion in carrying value and loss on early |              |              |               |              |            
|redemption of preferred shares                | 9.4          | 0.5          |               |              |            
|Net loss (gain) on derivative financial       |              |              |               |              |            
|instruments                                   | (28.8)       | 4.5          |               |              |            
|Foreign exchange gain on long-term debt       | (46.7)       | (1.3)        |               |              |            
|Income from continuing operations before      |              |              |               |              |            
|income taxes                                  | $ 24.8       | $ (22.8)     |               |              |            

F-43

---

The Company's net segment assets exclude cash and cash equivalents deferred
income taxes, goodwill, dealer network and license agreement and are net of
accounts payable and accrued liabilities.

|                                         | The Company     
|---------------------------------------- | ----------------
|                                         | January 31, 2005
|                                         |                 
|                                         | Consolidated    
|                                         | (Restated - Note
|                                         | 2)              
|Net segment assets                       | $ 524.7         
|Net corporate office and other           | 47.5            
|Goodwill                                 | 119.9           
|Dealer network                           | 44.2            
|License agreement                        | 13.8            
|Accounts payable and accrued liabilities | 586.3           
|Deferred income taxes                    | 70.2            
|Cash and cash equivalents                | 150.3           
|Assets held for sale of Utility Vehicles |                 
|Segment                                  |                
|Total assets                             | $1,556.9        

F-44

---



|                                                      | Predecessor Business
|----------------------------------------------------- | --------------------
|                                                      | Consolidated        
|                                                      | 321-day             
|                                                      | period ended        
|                                                      | December 18,        
|                                                      | 2003                
|External revenues                                     | $ 2,075.6           
|Intersegment revenues                                 |                    
|Segment revenues                                      | 2,075.6             
|Cost of sales and operating expenses                  | 1,906.6             
|Depreciation and amortisation                         | 90.7                
|                                                      | 1,997.3             
|Segment operating income (loss) from continuing       |                     
|operations                                            | 78.3                
|Corporate and other                                   | 30.1                
|Depreciation dealer network                           |                    
|Operating income from continuing operations           | 48.2                
|Financing costs                                       | 6.5                 
|Income from continuing operations before income taxes | $ 41.7              

|                    |                                               
|------------------- | ----------------------------------------------
|                    | Additions to property, plant and
    equipment
|                    | The Company                                   
|                    | Year ended                                    
|                    |                                               
|                    | January 31,                                   
|                    | 2005                                          
|Power Sports        | $ 48.4                                        
|Marine Engine       | 17.0                                          
|Corporate and other | 4.7                                           
|                    | $ 70.1                                        

F-45

---



|Geographic
    information:                              |                |                      |              |                   |                         |            
|-------------------------------------------------------- | -------------- | -------------------- | ------------ | ----------------- | ----------------------- | -----------
|                                                         |                |                      |              |                   | Property, plant and    
|                                                         |                |                      |              |                   | equipment, goodwill and
|                                                         |                | Revenues 1           |              | intangible assets
|                                                         | The Company    | Predecessor Business |              |                  
|                                                         |                | 44-day               | 321-day      |                   |                         |            
|                                                         | Year
    ended | period ended         | period ended | Year
    ended    |                         |            
|                                                         | January 31,    | January 31,          | December 18, | January 31,       | January 31,             | January 31,
|                                                         | 2005           | 2004                 | 2003         | 2003              | 2005                    | 2004       
|                                                         | (Restated -    |                      |              |                   |                         |            
|                                                         | Note 2)        |                      |              |                   |                         |            
|Canada                                                   | $
    379.8    | $ 45.3               | $ 362.5      | $ 402.7           | $
    462.2             | $ 487.8    
|United States                                            | 1,376.6        | 177.1                | 1,183.7      | 1,389.5           | 173.5                   | 207.1      
|Australia                                                | 79.9           | 11.7                 | 44.4         | 48.6              | 0.3                     | 0.3        
|Finland                                                  | 45.4           | 3.8                  | 35.6         | 33.0              | 8.7                     | 7.7        
|Austria                                                  | 16.6           | 1.0                  | 13.7         | 17.6              | 121.3                   | 137.9      
|Scandinavia                                              | 88.0           | 14.7                 | 68.3         | 80.2              | 0.2                     | 0.1        
|Russia                                                   | 46.8           | 3.3                  | 22.0         | 7.4               |                        |           
|Other - Americas                                         | 51.8           | 7.9                  | 42.8         | 47.7              | 6.2                     | 6.2        
|Other
    - Europe                                       | 229.2          | 51.9                 | 205.1        | 264.4             |                        |           
|Other                                                    | 137.2          | 16.8                 | 97.5         | 92.3              | 2.5                     | 2.6        
|                                                         | $ 2,451.3      | $ 333.5              | $ 2 075.6    | $ 2, 383.4        | $ 774.9                 | $ 849.7    
|1The attribution of revenues was based on the invoicing. |                |                      |              |                  

F-46

---

30.
DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP

The Consolidated Financial Statements have been prepared in
accordance with Canadian GAAP, which differs in certain respects from U.S. GAAP.
The following tables present a summary of the material adjustments and
additional disclosures to the Company's financial statements that would be
required in order to conform with U.S. GAAP and the related rules and
regulations adopted by the United States Securities and Exchange Commission
("SEC").

Changes in Accounting Policies

Pensions and other post-retirement benefits

In December 2003, Financial Accounting Standards Board issued
FAS No. 132 (revised 2003), "Employers' Disclosures about Pensions and Other
Post-retirement Benefits." This Statement revises employers' disclosures about
pension plans and other post-retirement benefit plans. It does not change the
measurement or recognition of those plans required by FASB Statements No. 87, 88
and 106. This revised Statement requires additional disclosures to those in the
original Statement 132 about the assets, obligations, cash flows, and net
periodic benefit cost of defined benefit pension plans and other defined benefit
post-retirement plans. The required information should be provided separately
for pension plans and for other post-retirement benefit plans. During the year
ended January 31, 2005, the Company adopted the additional disclosure
requirements.

|                                                                  | The Company      | Predecessor Business
|----------------------------------------------------------------- | ---------------- | --------------------
|                                                                  |                  | 44-day              
|                                                                  | Year ended       |                     
|                                                                  |                  | period ended        
|                                                                  | January 31, 2005 | January 31, 2004    
|                                                                  | (Restated -      |                     
|                                                                  | Note 2)          |                     
|Net income under Canadian                                         |                  |                     
|GAAP                                                              | $ 28.5           | $ (17.5)            
|Development costs (c)                                             | 3.1              | (9.0)               
|                                                                  |                  |                     
|Accretion in carrying value and loss on early                     |                  |                     
|redemption of preferred shares
    (d)                            | 9.4              | 0.5                 
|Employee future benefits (a)                                      |                 |                    
|Foreign exchange contracts (b)                                    |                 |                    
|Software costs (e)                                                |                 |                    
|                                                                  |                  |                     
|Total adjustments before the following:                           | 12.5             | (8.5)               
|Income tax expense (recovery) (f)                                 | 1.0              | (2.3)               
|Total adjustments                                                 | 11.5             | (6.2)               
|Net income under U.S.GAAP                                         | 40.0             | (23.7)              
|                                                                  |                  |                     
|Minimum pension liability adjustment, net of
    income tax of    |                  |                     
|$6.1 million and $6.1 million
    for                             |                  |                     
|the respective the 321-day
    period                             |                  |                     
|ended December 18 2003 and year                                   |                  |                     
|ended January 31, 2003(a)                                         |                 |                    
|                                                                  |                  |                     
|Change in cumulative translation adjustment                       | (15.6)           | (2.0)               
|                                                                  |                  |                     
|Unrealised gains (losses) on derivative
    financial instruments |                  |                     
|arising during the period, net
    of                             |                  |                     
|income tax of $5.6 million for
    the                            |                  |                     
|year ended January 31, 2005 (b)                                   | 12.6             |                    
|Comprehensive income under                                        |                  |                     
|U.S. GAAP                                                         | $ 37.0           | $ (25.7)            

F-47

---

Reconciliation of Consolidated Balance Sheet Captions

|                                    | As at January 31, 2005 | As at January 31, 2004
|----------------------------------- | ---------------------- | ----------------------
|                                    |                        |                       
|                                    | Canadian GAAP          | Adjustments           
|                                    | (Restated - Note 2)    |                       
|Current deferred
    income         |                        |                       
|taxes
    assets                    | $
    56.8             | $
    (5.6)           
|Other current assets
    (b)        | 90.2                   | 23.9                  
|Long-term deferred
    income       |                        |                       
|taxes
    assets (f)                | 13.4                   | 1.3                   
|Other long-term assets
    (c)      | 43.1                   | (5.8)                 
|Accounts payable and                |                        |                       
|accrued
    liabilities (b)         | 594.8                  | 5.7                   
|Current deferred
    income         |                        |                       
|taxes
    liabilities               | 0.4                    |                      
|Retained earning
    (deficit)      | 11.0                   | (4.6)                 
|Cumulative translation              |                        |                       
|adjustment                          | (13.7)                 | 13.7                  
|Accumulated other                   |                        |                       
|comprehensive income:               |                        |                       
|Cumulative translation              |                        |                       
|adjustment                          |                       | (13.6)                
|Unrealised gains on                 |                        |                       
|derivative                          |                        |                       
|Financial instruments
    (b)       |                       | 12.6                  
|Redeemable preferred
    shares (d) |                       |                      
|Mezzanine preferred
    shares (d)  |                       |                      
|Total assets                        | 1,556.9                | 13.8                  

Reconciliation of consolidated cash flow captions

|                         | The Company                           
|------------------------ | --------------------------------------
|                         | Year ended January 31, 2005           
|                         | Canadian                              
|                         | GAAP                                  
|Cash flows from:         |                                       
|operating activities (c) | $ 193.2                               
|investing activities (c) | (46.6)                                
|                         |                                       
|                         | Predecessor business                  
|                         | 321-day period ended December 18, 2003
|                         | Canadian                              
|                         | GAAP                                  
|Cash flows from:         |                                       
|operating activities (c) | $ (77.3)                              
|investing activities (c) | (72.3)                                

F-48

---

a)
Employee future benefits The Company

As part of the acquisition, Bombardier Inc. agreed to
transfer a proportionate share of assets to fund the liabilities assumed by the
Company under its new plans. As a result there were no unfunded accumulated
benefit obligations as of October 31, 2004 and therefore no differences between
Canadian GAAP and U.S. GAAP.

Predecessor Business

Under Canadian GAAP, effective February 1, 2000, the
predecessor business adopted the new method of accounting for employee future
benefits. In reporting the impact of the adoption of this method, the
transitional obligation was accounted for as a charge to Bombardier Inc.'s net
investment. Under U.S. GAAP, the transitional pension obligation that arose on
February 1, 1989, upon the adoption of Financial Accounting Standards Board
Statement No. 87 is being amortised over 16 years.

Under U.S. GAAP, an additional minimum pension liability is
recorded for any excess of the unfunded accumulated benefit obligation over the
recorded employee future benefits liability. An offsetting intangible asset is
recorded equal to unrecognised prior service costs and transitional obligation,
with any difference recorded in accumulated other comprehensive income.

b)

Under U.S. GAAP, unrealised gain/loss on derivative financial
instruments designated as hedges are recorded in comprehensive income. When the
gain/loss on these derivative financial instruments are realised, the realised
gain/loss is recorded as part of net income and any unrealised gain/loss
previously recorded as part of comprehensive income is reversed.

Under Canadian and U.S. GAAP, gains and losses on derivative financial
instruments that are not eligible to hedge accounting are recognized immediately
to income of the period.

Predecessor Business

Under Canadian GAAP, foreign exchange contracts entered into,
by the predecessor, to hedge foreign currency exposure met the criteria for
hedge accounting. Under U.S. GAAP, hedging activities and practices did not meet
the documentation criteria necessary to apply hedge accounting under FAS 133 or
firm commitment criteria under SFAS 52. Accordingly, changes in the fair value
of forward exchange contracts are recorded in income under U.S. GAAP.

c)

Under Canadian GAAP, certain development costs are deferred and amortised if
they meet certain criteria. Under U.S. GAAP, these costs are expensed as
incurred.

Upon acquisition of the recreational products business, as
described in note 3 development costs were recorded on the balance sheet at
their fair market value. Under U.S. GAAP, the acquired development costs were
recorded at their fair market value on the balance sheet as of the acquisition
date and were expensed immediately following the acquisition. The Company's
appraisal valued in-process research at an immaterial amount, and therefore the
acquisition of the recreational products business did not require the write-off
of any in-process research.

d)

Under Canadian GAAP preferred shares which are mandatorily
redeemable by the Company upon the occurrence of certain future events that
management considers to be likely are recorded as liabilities and are accreted
to the redemption value at the estimated redemption date. Accretion of carrying
value and unpaid dividends are included in net loss.

Under U.S. GAAP, the redeemable preferred shares are recorded at fair value
outside of equity and the accretion of the carrying value and unpaid dividends
are recorded as a capital transaction.

F-49

---

e)
Software costs

Under Canadian GAAP, costs incurred to enhance the service
potential of computer software that extends its useful life may be capitalised.
Under U.S. GAAP, costs that extend the useful life absent any additional
functionality are expensed.

f)

The income taxes adjustment reflects the income tax effect on the adjustments
between Canadian GAAP and U.S. GAAP.

g)

U.S. GAAP establishes standards for reporting and display of
comprehensive income (loss) and its components. Comprehensive income is defined
as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources. It
includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners. Under U.S. GAAP, all
components of comprehensive income must be reported in the financial statements
in the period in which they are recognised. A total amount for comprehensive
income shall be displayed in the financial statements where the components of
other comprehensive income are reported.

31.

(All capitalised terms used but not defined in this note have
the meanings set forth in the Credit Facility Agreement entered into by the
Company, on December 18, 2003, as amended on February 9, 2005, unless the
context requires otherwise).

The Company entered into a Senior Secured Credit Facility,
and issued senior subordinated notes. Certain of the Company's wholly-owned
subsidiaries («Guarantor Subsidiaries») fully and unconditionally guarantee the
senior secured credit facility and the senior subordinated notes (the Guaranteed
Debt») on a joint and several basis. The Guaranteed Debt is not guaranteed by
Austrian Subsidiaries which produce RotaxTM engines, the Finland
Subsidiaries which produce LynxTM and certain models of Ski-DooTM
snowmobiles, all other non-domestic subsidiaries and certain immaterial domestic
subsidiaries which are either intended to be used for foreign tax planning
purposes or are prohibited by law from guaranteeing the Guaranteed Debt
(collectively the "Non-Guarantor Subsidiaries").

As at January 31, 2005, the main guarantor subsidiaries
included BRP U.S. Inc., BRP (Barbados) Inc., BRP Mexico S.A. de C.V., BRP
Australia Pty Ltd., and BRP Japan Ltd. and the non-guarantor subsidiaries
included BRP Finland OY, BRP Sweden AB, BRP Norway A.S., BRP-Rotax Management
GmbH, BRP-Rotax GmbH & Co KG, BRP Receivables Funding LLC, BRP Europe NV,
Bombardier Recreational Products Brazil Ltda and BRP Asia Ltd.

On March 12, 2004, BRP Mexico S.A. de C.V., and BRP Japan Ltd., both of which
were Non-Guarantor Subsidiaries as at January 31, 2004, guaranteed the senior
subordinated notes through supplemental indentures.

The following condensed consolidating financial information
sets forth, on an unconsolidated basis, the balance sheets as at January 31,
2005 and 2004 and the statements of income and cash flows for the year ended
January 31, 2005 and for the 44-day period ended January 31, 2004, for
Bombardier Recreational Products Inc. (the "Parent Company"), and on a combined
basis for the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. The
condensed consolidating financial information reflects the investments of the
Parent Company in the Guarantor Subsidiaries and Non-Guarantor Subsidiaries
using the equity method. The Parent Company's fair value increments, including
applicable intangible assets, arising from the business acquisition have been
pushed down to the applicable subsidiary columns.

Prior to the acquisition, the issuance of the Guaranteed Debt
on December 18, 2003, the parent company of the Predecessor Business, the
Guaranteed Subsidiaries of the Predecessor Business and the Non-Guarantor
Subsidiaries of the predecessor business did not legally exist, as all
operations of the Company were within Bombardier. For purposes of presenting the
following condensed consolidating financial information, amounts were allocated
to the parent company, the Guaranteed Subsidiaries and the Non-Guarantor
Subsidiaries assuming that they did exist for

F-50

---

the periods presented and assuming that the operations of the Predecessor
Business were allocated to these subsidiaries under the same assumptions as
those allocations actually applied by our Successor Company.
The following condensed consolidating financial information
for the 321-day period ended December 18, 2003 and for the year ended January
31, 2003, show the statements of income and cash flows for the parent company
and on a combined basis for the Guarantor Subsidiaries and the Non-Guarantor
Subsidiaries. The condensed consolidating financial information reflects the
investments of the parent company in the Guarantor Subsidiaries and
Non-Guarantor Subsidiaries using the equity method.
Condensed Consolidating Balance Sheet as at January 31, 2005

|                                             |             | Guarantor    | Non-Guarantor |              |             
|-------------------------------------------- | ----------- | ------------ | ------------- | ------------ | ------------
|                                             | Parent      | Subsidiaries | Subsidiaries  | Eliminations | Consolidated
|ASSETS                                       | (Restated - |              |               |              | (Restated - 
|                                             | Note 2)     |              |               |              | Note 2)     
|Current Assets                               |             |              |               |              |             
|Cash and cash
    equivalents                | $
    88.8  | $
    22.9   | $
    38.6    | $           | $
    150.3 
|Receivables                                  | 33.7        | 19.7         | 59.3          |             | 112.7       
|Inventories                                  | 135.0       | 98.7         | 84.7          | (16.3)       | 302.1       
|Deferred income taxes                        | 9.8         | 37.4         | 3.3           | 6.3          | 56.8        
|Intercompany accounts                        | 167.2       | 252.7        | 398.3         | (818.2)      |            
|Other assets                                 | 36.2        | 9.9          | 44.1          |             | 90.2        
|Assets held for sale                         |            | 3.4          |              |             | 3.4         
|Total current assets                         | 470.7       | 444.7        | 628.3         | (828.2)      | 715.5       
|Property, plant and
    equipment            | 146.7       | 146.3        | 132.8         |             | 425.8       
|Goodwill                                     |            |             |              | 119.9        | 119.9       
|Trademarks                                   | 151.1       |             |              |             | 151.1       
|Other intangible
    assets                  | 45.0        | 57.6         |              | (24.5)       | 78.1        
|Deferred income taxes                        |            | 2.2          | 2.0           | 9.2          | 13.4        
|Investments in
    affiliates                | 364.5       | 22.5         |              | (387.0)      |            
|Other assets                                 | 22.9        | 2.3          | 17.9          |             | 43.1        
|Assets held for sale                         |            | 10.0         |              | -            | 10.0        
|                                             | $ 1,200.9   | $ 685.6      | $ 781.0       | $ (1,110.6)  | $ 1,556.9   
|LIABILITIES AND                              |             |              |               |              |             
|SHAREHOLDER'S EQUITY                         |             |              |               |              |             
|Current Liabilities                          |             |              |               |              |             
|Bank loans                                   | $
    12.3  | $           | $            | $           | $
    12.3  
|Accounts payable and
    accrued liabilities | 234.3       | 183.9        | 176.6         |             | 594.8       
|Current portion of
    long-term debt        | 103.0       | 44.2         |              |             | 147.2       
|Deferred income taxes                        |            | 0.2          | 0.1           | 0.1          | 0.4         
|Intercompany accounts                        | 128.7       | 125.1        | 437.0         | (690.8)      |            
|Total current liabilities                    | 478.3       | 353.4        | 613.7         | (690.7)      | 754.7       
|Long-term debt                               | 247.6       | 1.9          |              |             | 249.5       
|Deferred income taxes                        | 28.5        | 5.1          | 4.4           |             | 38.0        
|Employee future
    benefits obligations     | 49.9        | 1.1          | 71.2          |             | 122.2       
|Other long-term liabilities                  | 18.9        | 4.1          | 5.5           |             | 28.5        
|Total liabilities                            | 823.2       | 365.6        | 694.8         | (690.7)      | 1,192.9     
|Shareholder's
    equity                     |             |              |               |              |             
|Capital stock                                | 364.4       | 339.0        | 59.7          | (398.7)      | 364.4       
|Contributed surplus                          | 2.3         |             |              |             | 2.3         
|Retained earnings
    (deficit)              | 11.0        | (6.5)        | 27.5          | (21.0)       | 11.0        
|Cumulative translation
    adjustment        |            | (12.5)       | (1.0)         | (0.2)        | (13.7)      
|                                             | 377.7       | 320.0        | 86.2          | (419.9)      | 364.0       
|                                             | $ 1,200.9   | $ 685.6      | $ 781.0       | $ (1,110.6)  | $ 1,556.9   

F-51

---

Condensed Consolidating Balance Sheet as at January 31, 2004

|                                             |           | Guarantor    | Non-Guarantor |              |             
|-------------------------------------------- | --------- | ------------ | ------------- | ------------ | ------------
|                                             | Parent    | Subsidiaries | Subsidiaries  | Eliminations | Consolidated
|ASSETS                                       |           |              |               |              |             
|Current Assets                               |           |              |               |              |             
|Cash and cash
    equivalents                | $ 56.9    | $ 44.8       | $ 94.5        | $           | $ 196.2     
|Receivables                                  | 54.3      | 37.3         | 57.5          | (0.4)        | 148.7       
|Inventories                                  | 137.3     | 109.6        | 89.9          | (5.5)        | 331.3       
|Deferred income taxes                        | 16.7      | 46.9         | 2.2           | 2.3          | 68.1        
|Intercompany accounts                        | 314.8     | 302.6        | 98.7          | (716.1)      |            
|Other assets                                 | 49.5      | 4.8          | 45.0          | (2.2)        | 97.1        
|Assets held for sale                         | 21.2      | 7.2          |              | (0.9)        | 27.5        
|Total current assets                         | 650.7     | 553.2        | 387.8         | (722.8)      | 868.9       
|Property, plant and
    equipment            | 162.9     | 174.0        | 153.4         |             | 490.3       
|Goodwill                                     |          |             |              | 117.6        | 117.6       
|Trademarks                                   | 151.1     |             |              |             | 151.1       
|Other intangible
    assets                  | 56.0      | 34.7         |              |             | 90.7        
|Deferred income taxes                        | (0.1)     | 0.6          | 2.4           |             | 2.9         
|Investments in
    affiliates                | 343.7     | 22.5         |              | (366.2)      |            
|Other assets                                 | 35.6      | 8.1          | 20.8          |             | 64.5        
|Assets held for sale                         | 20.6      | 14.5         |              |             | 35.1        
|                                             | $ 1,420.5 | $ 807.6      | $ 564.4       | $ (971.4)    | $ 1,821.1   
|LIABILITIES AND                              |           |              |               |              |             
|SHAREHOLDER'S                                |           |              |               |              |             
|EQUITY                                       |           |              |               |              |             
|Current Liabilities                          |           |              |               |              |             
|Accounts payable and
    accrued liabilities | $ 256.1   | $ 199.4      | $ 188.3       | $ (3.3)      | $ 640.5     
|Current portion of
    long-term debt        | 2.6       | 1.1          | 1.3           |             | 5.0         
|Deferred income taxes                        |          |             | 0.3           |             | 0.3         
|Intercompany accounts                        | 206.1     | 120.4        | 229.1         | (555.6)      |            
|Liabilities related to
    assets held       |           |              |               |              |             
|for sale                                     | 8.9       | 2.8          |               | 0.6          | 12.3        
|Total current liabilities                    | 473.7     | 323.7        | 419.0         | (558.3)      | 658.1       
|Long-term debt                               | 522.7     | 112.3        |              |             | 635.0       
|Deferred income taxes                        | 25.5      | 17.3         | 0.2           |             | 43.0        
|Employee future
    benefits                 |           |              |               |              |             
|obligations                                  | 46.9      | 1.0          | 70.7          |             | 118.6       
|Other long-term
    liabilities              | 18.2      | 7.2          | 5.5           |             | 30.9        
|Redeemable preferred
    shares              | 43.2      |             |              |             | 43.2        
|Liabilities related to
    assets held       |           |              |               |              |             
|for sale                                     | 3.3       |             |              |             | 3.3         
|Total liabilities                            | 1,133.5   | 461.5        | 495.4         | (558.3)      | 1,532.1     
|Shareholder's
    equity                     |           |              |               |              |             
|Capital stock                                | 304.5     | 345.8        | 66.4          | (412.2)      | 304.5       
|Retained earnings
    (deficit)              | (17.5)    | (1.7)        | 2.3           | (0.6)        | (17.5)      
|Cumulative translation adjustment            |          | 2.0          | 0.3           | (0.3)        | 2.0         
|                                             | $ 1,420.5 | $ 807.6      | $ 564.4       | $ (971.4)    | $ 1,821.1   

F-52

---

The Company's Condensed Consolidating Statements of Income

|                                 | For the year
    ended January 31, 2005
|-------------------------------- | ---------------------------------------
|                                 |                                        
|                                 | Parent                                 
|                                 | (Restated                              
|                                 | - Note 2)                              
|Revenues                         | $ 1,474.7                              
|Cost of sales                    | 1,335.6                                
|Gross profit                     | 139.1                                  
|Operating expenses               |                                        
|Selling and marketing            | 30.0                                   
|Research and development         | 41.5                                   
|General and administrative       | 32.2                                   
|Other charges and (income)       |                                        
|Restructuring charges            | 23.8                                   
|Impairment loss on property,     |                                        
|plant and
    equipment          |                                       
|Curtailment gain on pension      |                                        
|plan                             | (23.7)                                 
|Total operating expenses         | 103.8                                  
|Operating income (loss) from     |                                        
|continuing operations            | 35.3                                   
|Other (income) and expense       |                                        
|Financing costs                  | 48.0                                   
|Accretion in carrying value and  |                                        
|loss on early redemption of      |                                        
|preferred shares                 | 9.4                                    
|Net gain on derivative financial |                                        
|instruments                      | (28.8)                                 
|Foreign exchange gain on long    |                                        
|term debt                        | (38.4)                                 
|Share in earnings of equity      |                                        
|accounted investees              | 20.3                                   
|Income (loss) from continuing    |                                        
|operations before income         |                                        
|taxes                            | 24.8                                   
|Income tax expense (recovery)    | (7.0)                                  
|Income (loss) from continuing    |                                        
|operations                       | 31.8                                   
|Income (loss) from               |                                        
|discontinued operations,         |                                        
|net of income tax                | (3.3)                                  
|Net income (loss)                | $ 28.5                                 

F-53

---



|                                     | For the 44-day period January 31,
    2004
|------------------------------------ | ------------------------------------------
|                                     |                                           
|                                     | Parent                                    
|Revenues                             | $ 204.2                                   
|Cost of sales                        | 204.6                                     
|Gross profit                         | (0.4)                                     
|Operating expenses                   |                                           
|Selling and marketing                | 6.3                                       
|Research and
    development         | 8.3                                       
|General and administrative           | 3.4                                       
|Total operating expenses             | 18.0                                      
|Operating profit (loss)              | (18.4)                                    
|Other (income) and
    expense       |                                           
|Financing costs                      | 5.2                                       
|Accretion in carrying
    value of   |                                           
|redeemable preferred shares          | 0.5                                       
|Net loss on derivative
    financial |                                           
|instruments                          | 3.3                                       
|Foreign exchange loss
    (gain) on  |                                           
|long-term
    debt                   | (1.1)                                     
|Share in earnings of
    equity      |                                           
|accounted investees                  | (3.0)                                     
|Income (loss) from continuing        |                                           
|operation before income              |                                           
|taxes                                | (23.3)                                    
|Income tax expense (recovery)        | (5.6)                                     
|Income (loss) from continuing        |                                           
|operations                           | (17.7)                                    
|Income (loss) from                   |                                           
|discontinued operations, net         |                                           
|of income tax                        | 0.2                                       
|Net income (loss)                    | $ (17.5)                                  

F-54

---

The Predecessor Business Condensed Consolidating Statements of Income

|                              | For the 321-day period ended
    December 18, 2003
|----------------------------- | --------------------------------------------------
|                              |                                                   
|                              | Parent                                            
|Revenues                      | $ 1,243.8                                         
|Cost of sales                 | 1,069.9                                           
|Gross profit                  | 173.9                                             
|Operating expenses            |                                                   
|Selling and marketing         | 39.0                                              
|Research and
    development  | 41.4                                              
|General and administrative    | 54.8                                              
|Total operating expenses      | 135.2                                             
|Operating profit (loss)       | 38.7                                              
|Financing costs               | (0.5)                                             
|Income (loss) from continuing |                                                   
|operation before income       |                                                   
|taxes                         | 39.2                                              
|Income tax expense (recovery) | 12.1                                              
|Income (loss) from continuing |                                                   
|operations                    | 27.1                                              
|Income (loss) from            |                                                   
|discontinued operations, net  |                                                   
|of income tax                 | 1.5                                               
|Net income (loss)             | $ 28.6                                            
|                              |                                                   
|                              |                                                   
|                              | For the year ended January 31, 2003               
|                              |                                                   
|                              | Parent                                            
|                              |                                                   
|Revenues                      | $
    1,351.5                                     
|Cost of sales                 | 1,093.5                                           
|Gross profit                  | 258.0                                             
|Operating expenses            |                                                   
|Selling and marketing         | 37.2                                              
|Research and
    development  | 69.4                                              
|General and administrative    | 60.5                                              
|Total operating expenses      | 167.1                                             
|Operating profit
    (loss)   | 90.9                                              
|Financing costs               | 0.1                                               
|Income from
    continuing    |                                                   
|operation before income       |                                                   
|taxes                         | 90.8                                              
|Income tax expense (recovery) | 29.1                                              
|Income from continuing        |                                                   
|operations                    | 61.7                                              
|Income (loss) from            |                                                   
|discontinued operations, net  |                                                   
|of income tax                 | (1.4)                                             
|Net income                    | $ 60.3                                            

F-55

---

The Company's Condensed Consolidating Statements of Cash Flow

|                                                          | For the year ended January 31, 2005
|--------------------------------------------------------- | -----------------------------------
|                                                          |                                    
|                                                          |                                    
|                                                          | Parent                             
|                                                          | (Restated                          
|OPERATING ACTIVITIES                                      | -Note 2)                           
|Income from continuing operations                         | $ 31.8                             
|Non-cash items:                                           |                                    
|Depreciation and amortisation                             | 56.8                               
|Amortisation of deferred
    financing costs              | 13.6                               
|Employee stock compensation                               | 2.3                                
|Deferred income taxes                                     | 8.2                                
|Loss on disposal of property,
    plant and equipment     | 0.4                                
|Gain on disposal of asset held
    for sale               |                                   
|Unrealised gains on derivative
    financial instruments  | (19.2)                             
|Accretion in carrying value and
    loss on early         |                                    
|redemption
    preferred shares                           | 9.4                                
|Other charge and income                                   | (3.7)                              
|Foreign exchange (gain) loss on
    long-term debt        | (38.4)                             
|Share in earnings of equity accounted
    investees       | 5.8                                
|Net changes in non-cash working capital
    balances      |                                    
|related to operations                                     | 71.9                               
|                                                          |                                    
|Cash flows from operating activities                      | 138.9                              
|INVESTING ACTIVITIES                                      |                                    
|Additions to property, plant and equipment                | (29.5)                             
|Proceeds on disposal of property, plant and
    equipment | 0.2                                
|Proceeds on disposal of assets for sale                   |                                   
|Proceeds from the disposal of the Utility
    Vehicles    |                                    
|segment, net of transaction
    costs of $ 1.6 million    | 40.3                               
|Investment in affiliates                                  | 13.6                               
|Business acquisition, net of cash acquired                | (0.5)                              
|Acquisition of patents                                    |                                   
|                                                          |                                    
|Cash flows from investing activities                      | 24.1                               
|FINANCING ACTIVITIES                                      |                                    
|Increase in bank loans                                    | 12.3                               
|Increase of capital stock                                 | 59.9                               
|Redemption of preferred shares                            | (52.6)                             
|Redemption of common shares                               |                                   
|Repayment of long-term debt                               | (136.3)                            
|Dividend paid                                             |                                   
|Debt issuance costs                                       | (1.4)                              
|Other                                                     | (2.7)                              
|Intercompany accounts                                     | 2.8                                
|                                                          |                                    
|Cash flows from financing activities                      | (118.0)                            
|Effect of exchange rate changes on cash and cash          |                                    
|equivalents                                               |                                   
|Cash flows from continuing operations                     | 45.0                               
|Cash flows from discontinued operations                   | (13.1)                             
|                                                          |                                    
|Net increase (decrease) in cash and cash
    equivalents  | 31.9                               
|                                                          |                                    
|Cash and cash equivalents at beginning of the period      | 56.9                               
|                                                          |                                    
|Cash and cash equivalents at end of the
    period        | $ 88.8                             
|Supplemental information                                  |                                    
|Cash paid for:                                            |                                    
|Interest                                                  | $32.2                              
|Income taxes                                              | 3.8                                

F-56

---

The Company's Condensed Consolidating Statements of Cash Flows

|                                  | For the 44-day period ended January 31, 2004
|--------------------------------- | --------------------------------------------
|                                  | Parent                                      
|                                  |                                             
|OPERATING ACTIVITIES              |                                             
|Income from continuing operations | $ (17.7)                                    
|Non-cash items:                   |                                             
|Depreciation and amortisation     | 6.1                                         
|Amortisation of deferred          |                                             
|financing
    costs               | 0.7                                         
|Employee stock compensation       | 1.4                                         
|Deferred income taxes             | (8.9)                                       
|Change in fair value of           |                                             
|derivative
    financial          |                                             
|instruments                       | (3.2)                                       
|Accretion in carrying value of    |                                             
|redeemable
    preferred shares   | 0.5                                         
|Net changes in non-cash working   |                                             
|capital balances related to       |                                             
|operations                        | 86.6                                        
|Cash flows from operating         |                                             
|activities                        | 65.5                                        
|INVESTING ACTIVITIES              |                                             
|Additions to property, plant and  |                                             
|equipment                         | (11.6)                                      
|Investments in affiliates         | (320.5)                                     
|Business acquisition              | (592.6)                                     
|Cash flows from investing         |                                             
|activities                        | (924.7)                                     
|FINANCING ACTIVITIES              |                                             
|Increase of share capital         | 304.5                                       
|Insurance of long-term debt       | 526.4                                       
|Debt issuance costs               | (38.0)                                      
|Repayment of long-term debt       |                                            
|Intercompany account              | 128.6                                       
|Cash flows from financing         |                                             
|activities                        | 921.5                                       
|Effect of exchange rate changes   |                                             
|on cash                           |                                             
|                                  | (1.4)                                       
|Cash flows from continuing        |                                             
|operations                        | 60.9                                        
|Cash flows from discontinued      |                                             
|operations                        | (4.0)                                       
|Net increase (decrease) in cash   |                                             
|and cash equivalent               | 56.9                                        
|Cash and cash equivalent at       |                                             
|beginning of period               |                                             
|                                  |                                            
|Cash and cash equivalent at end   | $ 56.9                                      
|of period                         |                                             
|Supplemental information          |                                             
|Cash paid for:                    |                                             
|Interest                          | $ 1.7                                       
|Income taxes                      |                                            

F-57

---

The Company's Condensed Consolidating Statements of Cash Flows

|                                            | For the 321-day period ended December 18, 2003
|------------------------------------------- | ----------------------------------------------
|                                            |                                               
|                                            | Parent                                        
|OPERATING ACTIVITIES                        | $ 27.1                                        
|Income from continuing operations           | 37.6                                          
|Non-cash items:                             |                                               
|Depreciation and amortisation               |                                               
|Amortisation of deferred
    financing      |                                               
|costs                                       |                                               
|Employee stock compensation                 |                                               
|Deferred income taxes                       | 5.3                                           
|Loss on disposal of property,
    plant     |                                               
|and equipment                               | 0.8                                           
|Change in fair value of
    derivative      |                                               
|financial
    instruments                   | (4.1)                                         
|Deferred foreign exchange loss
    on       |                                               
|forward
    contracts.                      | 7.4                                           
|Loss (gain) on disposal of
    assets       |                                               
|for sale                                    |                                              
|Foreign exchange (gain) loss on             |                                               
|long-term debt                              |                                               
|Share in earnings of equity accounted       |                                               
|investees                                   |                                               
|Net changes in non-cash working             |                                               
|capital balances related to                 |                                               
|operations                                  | (158.3)                                       
|Cash flows from operating                   |                                               
|activities                                  | (84.2)                                        
|INVESTING ACTIVITIES                        |                                               
|Additions to property, plant and            |                                               
|equipment                                   | (36.7)                                        
|Proceeds on disposal of property,           |                                               
|plant and equipment                         | 0.2                                           
|Proceeds on disposal of assets for sale     |                                              
|Other long-term assets                      | (2.4)                                         
|Cash flows from investing                   |                                               
|activities                                  | (38.9)                                        
|FINANCING ACTIVITIES                        |                                               
|Increase of long-term debt                  |                                              
|Net variation in advance to related parties |                                              
|Net contribution by Bombardier Inc.         | 191.9                                         
|Repayment of long-term debt                 |                                              
|Other liabilities                           | (3.0)                                         
|Cash flows from financing activities        | 188.9                                         
|Effect of exchange rate changes on          |                                               
|cash                                        | 0.3                                           
|Cash flows from continuing                  |                                               
|operations                                  | 66.1                                          
|Cash flows from discontinued                |                                               
|operations                                  | (4.1)                                         
|Net increase (decrease) in cash and         |                                               
|cash equivalent                             | 62.0                                          
|Cash and cash equivalent at                 |                                               
|beginning of period                         | (0.4)                                         
|Cash and cash equivalent at end of          |                                               
|period                                      | $ 61.6                                        
|Supplemental information                    |                                               
|Cash paid for:                              |                                               
|Interest                                    | $ (0.5)                                       
|Income taxes                                |                                              

F-58

---

The Company's Condensed Consolidating Statements of Cash Flows

|                                            | For the year ended January 31, 2003
|------------------------------------------- | -----------------------------------
|                                            |                                    
|                                            | Parent                             
|OPERATING ACTIVITIES                        |                                    
|Income from continuing
    operations       | $ 61.7                             
|Non-cash items:                             |                                    
|Depreciation and amortisation               | 36.7                               
|Amortisation of deferred financing          |                                    
|costs                                       |                                    
|Employee
    stock compensation             |                                    
|Deferred
    income taxes                   | 13.1                               
|Loss on
    disposal of property, plant     |                                    
|and equipment                               | 0.1                                
|Net changes in
    non-cash working         |                                    
|capital balances related
    to operations  | 43.0                               
|                                            |                                    
|Cash flows from operating
    activities    | 154.6                              
|INVESTING
    ACTIVITIES                    |                                    
|Additions to property,
    plant and        |                                    
|equipment                                   | (33.0)                             
|Proceeds on disposal
    of property, plant |                                    
|and
    equipment                           | 1.7                                
|Other long-term assets                      | (12.5)                             
|                                            |                                    
|Cash flows from investing
    activities    | (43.8)                             
|FINANCING ACTIVITIES                        |                                    
|Net variation in
    advances (to) from     |                                    
|related parties                             |                                   
|Net contribution by
    Bombardier Inc.     | (125.1)                            
|Repayment of long-term
    debt             |                                   
|Other liabilities                           | 8.9                                
|                                            |                                    
|Cash flows from financing
    activities    | (116.2)                            
|                                            |                                    
|Effect of exchange
    rate changes on      |                                    
|cash                                        |                                   
|Cash flows from continuing operations       | (5.4)                              
|Cash flows from
    discontinued            |                                    
|operations                                  | 9.3                                
|Net increase (decrease) in cash and         |                                    
|cash
    equivalent                         | 3.9                                
|Cash and cash
    equivalent at             |                                    
|beginning of period                         | (4.3)                              
|Cash and cash equivalent at end of          |                                    
|period                                      | $ (0.4)                            
|Supplemental information                    |                                    
|Cash paid for:                              |                                    
|Interest                                    | $ 0.1                              
|Income taxes                                |                                   

F-59

---

Summary of Differences Between Canadian and U.S. GAAP

As disclosed in note 30, the Consolidated Financial
Statements have been prepared in accordance with Canadian GAAP. As well, the
supplemental condensed consolidating financial information has been prepared in
accordance with Canadian GAAP, which differs in certain respects from U.S. GAAP
and related rules and regulations by the SEC. Such differences are summarised
below.
Reconciliation of Condensed Balance Sheet Captions as at January 31, 2005

|                            | Parent              | Guarantor Subsidiaries | Non-Guarantor Subsidiaries
|--------------------------- | ------------------- | ---------------------- | --------------------------
|                            | Canadian            | Adjust-                | U.S.                      
|                            | GAAP                | ments                  | GAAP                      
|                            | (Restated - Note 2) |                        |                           
|Current deferred            |                     |                        |                           
|income
    taxes assets     | $ 9.8               | $
    (5.6)            | $ 4.2                     
|Other current assets (b)    | 36.2                | 23.9                   | 60.1                      
|Long-term deferred          |                     |                        |                           
|income
    tax assets       |                    |                       |                          
|Other long-term             |                     |                        |                           
|assets                      | 22.9                | (0.3)                  | 22.6                      
|Accounts
    payable and    |                     |                        |                           
|accrued
    liabilities (b) | 234.3               | 5.7                    | 240.0                     
|Retained earnings           |                     |                        |                           
|(deficit)                   | 11.0                | (0.3)                  | 10.7                      
|Cumulative                  |                     |                        |                           
|translation                 |                     |                        |                           
|adjustment                  |                    |                       |                          
|Accumulated other           |                     |                        |                           
|comprehensive               |                     |                        |                           
|income:                     |                     |                        |                           
|Unrealised gains on         |                     |                        |                           
|derivative financial        |                     |                        |                           
|instruments                 |                    | 12.6                   | 12.6                      
|Cumulative                  |                     |                        |                           
|translation                 |                     |                        |                           
|adjustment                  |                    |                       |                          
|Total assets                | 1,200.9             | 18.0                   | 1,218.9                   

F-60

---

Reconciliation of Condensed Balance Sheet Captions as at January 31, 2004

|                                |        | Parent   | Non-Guarantor Subsidiaries
|------------------------------- | ------ | -------- | --------------------------
|                                | Note   | Canadian | Adjust-                   
|                                |        | GAAP     | ments                     
|Long-term deferred income tax   |        |          |                           
|assets                          |        | $ (0.1)  | $ 0.1                     
|Other long-term assets          |        | 35.6     | (0.8)                     
|Retained earnings
    (deficit) |        | (17.5)   | (0.7)                     
|Cumulative translation          |        |          |                           
|adjustment                      |        |         |                          
|Accumulated other               |        |          |                           
|comprehensive income:           |        |          |                           
|Cumulative translation          |        |          |                           
|adjustment                      |        |         |                          
|Redeemable preferred
    shares | 23 (c) | 43.2     | (43.2)                    
|Mezzanine preferred
    shares  | 23 (c) |         | 43.2                      
|Total assets                    |        | 1,420.5  | (0.7)                     

Reconciliation of the Company's Condensed Statements of Income and Other
Comprehensive Income

|                                          | For the year ended January 31, 2005
|----------------------------------------- | -----------------------------------
|                                          |                                    
|                                          | Parent                             
|                                          | (Restated -                        
|                                          | Note 2)                            
|Net income (loss)
    under Canadian      |                                    
|GAAP                                      | $
    28.5                         
|Development costs                         | 0.5                                
|Accretion
    in carrying value and       |                                    
|loss on early redemption of               |                                    
|preferred shares                          | 9.4                                
|Total adjustments before
    the          |                                    
|following:                                | 9.9                                
|Income tax expense
    (recovery)         | 0.1                                
|Total adjustments                         | 9.8                                
|Net income (loss) under U.S. GAAP         | 38.3                               
|Change in cumulative
    translation      |                                    
|adjustment                                |                                   
|Unrealised gains on
    derivative        |                                    
|financial
    instrument arising during   |                                    
|the
    period net of income tax of $ 5.6 |                                    
|million (b):                              | 12.6                               
|Comprehensive income (loss) under         |                                    
|U.S. GAAP                                 | $ 50.9                             

F-61

---



|                                     | For the 44-day period ended January
    31, 2004
|------------------------------------ | ------------------------------------------------
|                                     |                                                 
|                                     | Parent                                          
|                                     |                                                 
|Net income (loss)
    under          |                                                 
|Canadian GAAP                        | $ (17.5)                                        
|Development costs                    | (0.8)                                           
|Accretion
    in carrying value of   | 0.5                                             
|redeemable preferred                 |                                                 
|shares                               |                                                 
|Total adjustments before
    the     | (0.3)                                           
|following:                           |                                                 
|Income
    tax expense               | (0.1)                                           
|(recovery)                           |                                                 
|Total adjustments                    | (0.2)                                           
|Net income (loss) under U.S.         | (17.7)                                          
|GAAP                                 |                                                 
|Change in cumulative
    translation |                                                
|adjustment                           |                                                 
|Comprehensive income (loss)          |                                                 
|under U.S. GAAP                      | $ (17.7)                                        

Reconciliation of the Predecessor Business Condensed Statements of Income and
Other Comprehensive Income

|                                  | For the 321-day period ended December 18, 2003
|--------------------------------- | ----------------------------------------------
|                                  |                                               
|                                  | Parent                                        
|                                  |                                               
|Net income (loss) under           |                                               
|Canadian GAAP                     | $ 28.6                                        
|Development costs                 | 0.5                                           
|Employee future benefits (a)      | (0.6)                                         
|Foreign exchange contract
    (b) | 12.5                                          
|Software costs                    | 1.2                                           
|Total adjustments before          |                                               
|the following:                    | 13.6                                          
|Income tax expense                | 4.2                                           
|Total adjustments                 | 9.4                                           
|Net income (loss) under U.S.      |                                               
|GAAP                              | 38.0                                          
|Minimum pension liability         |                                               
|adjustment, net of tax of         |                                               
|$6.1 million                      | (17.6)                                        
|Change in cumulative              |                                               
|translation adjustment            |                                              
|Comprehensive income              |                                               
|(loss) under U.S. GAAP            | $ 20.4                                        

F-62

---



|                             | For the year ended January 31, 2003
|---------------------------- | -----------------------------------
|                             |                                    
|                             | Parent                             
|                             |                                    
|Net income (loss) under      |                                    
|Canadian GAAP                | $ 60.3                             
|Development costs            | 0.3                                
|Employee future benefits (a) | (0.9)                              
|Foreign exchange             |                                    
|contracts (b)                | 31.6                               
|Software costs               | 1.4                                
|Total adjustments before     |                                    
|the following:               | 32.4                               
|Income tax expense           | 10.6                               
|Total adjustments            | 21.8                               
|Net income (loss) under U.S. |                                    
|GAAP                         | 82.1                               
|Change in cumulative         |                                    
|translation adjustment       |                                   
|Minimum pension liability    |                                    
|adjustment, net of tax of    |                                    
|$6.1 million                 | (9.2)                              
|Comprehensive income         |                                    
|(loss) under U.S. GAAP       | $ 72.9                             

Reconciliation of Condensed Statements of Cash Flows

The Company

|               |                    |                  | For the 44-day     |                        |               |               |         
|-------------- | ------------------ | ---------------- | ------------------ | ---------------------- | ------------- | ------------- | --------
|               | For the year ended | period ended     | For the year ended | For the 44-day period 
|               | January 31, 2005   | January 31, 2004 | January 31, 2005   | ended January 31, 2004
|               |                    |                  |                    |                        | Non-Guarantor | Non-Guarantor
|               | Parent             | Parent           | Subsidiaries       | Subsidiaries          
|               | Canadian           | U.S.             | Canadian           | U.S.                   | Canadian      | U.S.          | Canadian
|               | GAAP               | GAAP             | GAAP               | GAAP                   | GAAP          | GAAP          | GAAP    
|Cash flows     |                    |                  |                    |                        |               |               |         
|from operating |                    |                  |                    |                        |               |               |         
|activities     | $
    138.9        | $
    138.9      | $ 65.5             | $ 64.6                 | $
    38.2    | $
    38.2    | $ (14.8)
|Cash flows     |                    |                  |                    |                        |               |               |         
|from investing |                    |                  |                    |                        |               |               |         
|activities     | $ 24.1             | $ 24.1           | $ (924.7)          | $ (923.8)              | $ (30.1)      | $ (30.1)      | $ (33.8)

F-63

---

Predecessor business

|               | For the 321-day   |                    |                   | For the 321-day    |               |              
|-------------- | ----------------- | ------------------ | ----------------- | ------------------ | ------------- | -------------
|               | period ended      | For the year ended | period ended      | For the year ended
|               | December 18, 2003 | January 31, 2003   | December 18, 2003 | January 31, 2003  
|               |                   |                    |                   |                    | Non-Guarantor | Non-Guarantor
|               | Parent            | Parent             | Subsidiaries      | Subsidiaries      
|               | Canadian          | U.S.               | Canadian          | U.S.               | Canadian      | U.S.         
|               | GAAP              | GAAP               | GAAP              | GAAP               | GAAP          | GAAP         
|Cash flows     |                   |                    |                   |                    |               |              
|from operating |                   |                    |                   |                    |               |              
|activities     | $ (84.2)          | $ (84.2)           | $ 154.6           | $ 154.1            | $ 89.4        | $ 84.7       
|Cash flows     |                   |                    |                   |                    |               |              
|from investing |                   |                    |                   |                    |               |              
|activities     | $ (38.9)          | $ (38.9)           | $ (43.8)          | $ (43.3)           | $ (28.3)      | $ (23.6)     

32.

Repayment of long-term debt

On February 9, 2005, the Company voluntarily fully repaid,
without penalty, the U.S. $280 million term loan facility under the Term
Facilities. The U.S. $280 million Term Facilities has been replaced by a new
term loan facility of U.S. $50 million, under an amended and restated Senior
Secured Credit Facilities, which will mature January 31, 2011.

F-64

---

SIGNATURES
The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F/A and that it has duly caused and authorised the undersigned
to sign this amended annual report on its behalf.

BOMBARDIER RECREATIONAL
      PRODUCTS INC.By: / s / JOSÉ BOISJOLIName: José BoisjoliTitle: President and Chief
      Executive Officer


Date: August 31, 2005

---

ITEM 19- EXHIBITS

The following documents are filed as exhibits for the Amended Annual Report
on Form 20-F/A:

|Exhibit No. | Description                                                                                
|----------- | -------------------------------------------------------------------------------------------
|            |                                                                                            
|12.1        | Certification of Chief
    Executive Officer Pursuant to 18 U.S.C. Section 1350            
|            |                                                                                            
|12.2        | Certification of Chief
    Financial Officer Pursuant to 18 U.S.C. Section 1350            
|            |                                                                                            
|13.1        | Certification of Chief
    Executive Officer Pursuant Section 906 of the Sarbanes-Oxley Act
|            |                                                                                            
|13.2        | Certification of Chief
    Financial Officer Pursuant Section 906 of the Sarbanes-Oxley Act

---

Exhibit 12.1
CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, José Boisjoli, certify that:
I have reviewed this amended annual report on Form 20-F/A of Bombardier
  Recreational Products Inc.;
  Based on my knowledge, this report does not contain any untrue statement
  of a material fact or omit to state a material fact necessary to make the
  statements made, in light of the circumstances under which such statements
  were made, not misleading with respect to the period covered by this report;
  Based on my knowledge, the financial statements, and other financial
  information included in this report, fairly present in all material respects
  the financial condition, results of operations and cash flows of the
  registrant as of, and for, the periods presented in this report;
  The registrant's other certifying officer and I are responsible for
  establishing and maintaining disclosure controls and procedures (as defined in
  Exchange Act Rules 13a-15(e) and 15d-15(e)) [omitted pursuant to Transition
  Period provisions at Section III of Release 34-47986 of the Securities and
  Exchange Commission entitled "Management's Reports on Internal Control over
  Financial Reporting and Certification of Disclosure in Exchange Act Periodic
  Reports"] for the registrant and have:a) designed such disclosure controls and procedures, or caused such
  disclosure controls and procedures to be designed under our supervision, to
  ensure that material information relating to the registrant, including its
  consolidated subsidiaries, is made known to us by others within those
  entities, particularly during the period in which this report is being
  prepared;
  b) [omitted pursuant to Transition Period provisions at Section III of
  Release 34-47986 of the Securities and Exchange Commission entitled
  "Management's Reports on Internal Control over Financial Reporting and
  Certification of Disclosure in Exchange Act Periodic Reports"];
  c) evaluated the effectiveness of the registrant's
  disclosure controls and procedures and presented in this report our
  conclusions about the effectiveness of the disclosure controls and procedures
  as of the end of the period covered by this report based on such evaluation;
  and
  d) disclosed in this report any change in the registrant's internal control
  over financial reporting that occurred during the registrant's most recent
  fiscal quarter (the registrant's fourth fiscal quarter in the case of an
  amended annual report) that has materially affected, or is reasonably likely
  to materially affect, the registrant's internal control over financial
  reporting; and
The registrant's other certifying officer and I have disclosed,
  based on our most recent evaluation of internal control over financial
  reporting, to the registrant's auditors and the audit committee of the
  registrant's board of directors (or persons performing the equivalent
  functions):a) all significant deficiencies and material weaknesses in the design or
  operation of internal control over financial reporting which are reasonably
  likely to adversely affect the registrant's ability to record, process,
  summarise and report financial information; and
  b) any fraud, whether or not material, that involves management or other
  employees who have a significant role in the registrant's internal control
  over financial reporting.
By: /s/ JOSÉ BOISJOLIJosé Boisjoli President and Chief Executive Officer
Date: August 31, 2005

---

Exhibit 12.2
CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Louis Morin, certify that:
I have reviewed this amended annual report on Form 20-F/A of Bombardier
  Recreational Products Inc;
  Based on my knowledge, this report does not contain any untrue statement
  of a material fact or omit to state a material fact necessary to make the
  statements made, in light of the circumstances under which such statements
  were made, not misleading with respect to the period covered by this report;
  Based on my knowledge, the financial statements, and other financial
  information included in this report, fairly present in all material respects
  the financial condition, results of operations and cash flows of the
  registrant as of, and for, the periods presented in this report;
  The registrant's other certifying officer and I are responsible for
  establishing and maintaining disclosure controls and procedures (as defined in
  Exchange Act Rules 13a-15(e) and 15d-15(e)) [omitted pursuant to Transition
  Period provisions at Section III of Release 34-47986 of the Securities and
  Exchange Commission entitled "Management's Reports on Internal Control over
  Financial Reporting and Certification of Disclosure in Exchange Act Periodic
  Reports"] for the registrant and have:a) designed such disclosure controls and procedures, or caused such
  disclosure controls and procedures to be designed under our supervision, to
  ensure that material information relating to the registrant, including its
  consolidated subsidiaries, is made known to us by others within those
  entities, particularly during the period in which this report is being
  prepared;
  b) [omitted pursuant to Transition Period provisions at Section III of
  Release 34-47986 of the Securities and Exchange Commission entitled
  "Management's Reports on Internal Control over Financial Reporting and
  Certification of Disclosure in Exchange Act Periodic Reports"];
  c) evaluated the effectiveness of the registrant's
  disclosure controls and procedures and presented in this report our
  conclusions about the effectiveness of the disclosure controls and procedures
  as of the end of the period covered by this report based on such evaluation;
  and
  d) disclosed in this report any change in the registrant's internal control
  over financial reporting that occurred during the registrant's most recent
  fiscal quarter (the registrant's fourth fiscal quarter in the case of an
  amended annual report) that has materially affected, or is reasonably likely
  to materially affect, the registrant's internal control over financial
  reporting; and
The registrant's other certifying officer and I have disclosed, based on
  our most recent evaluation of internal control over financial reporting, to
  the registrant's auditors and the audit committee of the registrant's board of
  directors (or persons performing the equivalent functions):a) all significant deficiencies and material weaknesses in the design or
  operation of internal control over financial reporting which are reasonably
  likely to adversely affect the registrant's ability to record, process,
  summarise and report financial information; and
  b) any fraud, whether or not material, that involves management or other
  employees who have a significant role in the registrant's internal control
  over financial reporting.
By: /s/ LOUIS MORINLouis Morin Chief Financial Officer
Date:August 31, 2005

---

Exhibit 13.1
CERTIFICATIONS PURSUANT TO THE SARBANES-OXLEY ACT 18 U.S.C. SECTION 1350 
AS ADOPTED PURSUANT TO SECTION 906 
OF THE SARBANES-OXLEY ACT OF 2002
I, José Boisjoli, President and Chief Executive Officer of Bombardier
Recreational Products Inc. (the "Company") do hereby certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to my knowledge:
This Amended Annual Report on Form 20-F/A of the Company for the fiscal
  year ended January 31, 2005, as filed with the Securities and Exchange
  Commission (the "report"), fully complies with the requirements of Section
  13(a) or 15(d) of the Securities Exchange Act of 1934; and
  The information contained in the report fairly presents, in all material
  respects, the financial condition and results of operations of the Company./s/ JOSÉ BOISJOLIJosé Boisjoli President and Chief Executive Officer
Date: August 31, 2005

---

Exhibit 13.2
CERTIFICATIONS PURSUANT TO THE SARBANES-OXLEY ACT 18 U.S.C. SECTION 1350 
AS ADOPTED PURSUANT TO SECTION 906 
OF THE SARBANES-OXLEY ACT OF 2002
I, Louis Morin, Chief Financial Officer of Bombardier
Recreational Products Inc. (the "Company") do hereby certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to my knowledge:
This Amended Annual Report on Form 20-F/A of the Company for the fiscal
  year ended January 31, 2005, as filed with the Securities and Exchange
  Commission (the "report"), fully complies with the requirements of Section
  13(a) or 15(d) of the Securities Exchange Act of 1934; and
  The information contained in the report fairly presents, in all material
  respects, the financial condition and results of operations of the Company./s/ LOUIS MORINLouis Morin Chief Financial Officer
Date: August 31, 2005

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