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

FORM 20-F

ANNUAL REPORT

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

For the Fiscal Year ended January 31, 2005



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 Street,
      Valcourt, Quebec, Canada J0E 2L0(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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|TABLE OF
    CONTENTS                                                                        
|---------------------------------------------------------------------------------------------
|                                                                                             
|                                                                                             
|INTRODUCTION                                                                                 
|ITEM 1 - IDENTITY OF DIRECTORS, SENIOR
    MANAGEMENT AND ADVISERS                           
|ITEM 2 - OFFER STATISTICS AND EXPECTED
    TIMETABLE                                         
|ITEM 3- KEY INFORMATION                                                                      
|ITEM 4- INFORMATION ON THE COMPANY                                                           
|ITEM 5- OPERATING AND FINANCIAL REVIEW AND
    PROSPECTS                                     
|ITEM 6- DIRECTORS, SENIOR MANAGEMENT AND
    EMPLOYEES                                       
|ITEM 7- MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS                                
|ITEM 8- FINANCIAL INFORMATION                                                                
|ITEM 9- THE OFFER AND LISTING                                                                
|ITEM 10- ADDITIONAL INFORMATION                                                              
|ITEM 11- QUANTITATIVE AND QUALITATIVE
    DISCLOSURES ABOUT MARKET RISK                      
|ITEM 12- DESCRIPTION OF SECURITIES OTHER THAN
    EQUITY SECURITIES                          
|ITEM 13- DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUINCIES                                 
|ITEM 14- MATERIAL MODIFICATIONS TO THE RIGHTS
    OF SECURITY HOLDERS AND USE
    OF PROCEEDS
|ITEM 15- CONTROLS AND PROCEDURES                                                             
|ITEM 16- [RESERVED]                                                                          
|ITEM 16A- AUDIT COMMITTEE FINANCIAL EXPERT                                                   
|ITEM 16B- CODE OF ETHICS                                                                     
|ITEM 16C- PRINCIPAL ACCOUNTANT FEES AND
    SERVICES                                         
|ITEM 16D- EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES                     
|ITEM 16E- PURCHASES OF EQUITY SECURITIES BY
    THE ISSUER AND AFFILIATEDPURCHASERS          
|ITEM 17- FINANCIAL STATEMENTS                                                                
|ITEM 18- FINANCIAL STATEMENTS                                                                
|ITEM 19- EXHIBITS                                                                            

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Explanatory NotesBombardier
Recreational Products Inc. is not currently subject to the periodic reporting
requirements of Section 13 or Section 15(d) of the Securities Exchange Act of
1934 and is not required by any rules or regulations of the Securities and
Exchange Commission (the "SEC") to file this Annual Report on Form 20-F ("Annual
Report"). Notwithstanding the foregoing, Bombardier Recreational Products Inc.
is required to file certain periodic reports with the SEC (to the extent such
reports are accepted by the SEC) pursuant to the terms of the indenture
governing its outstanding 8 3/8% Senior Subordinated Notes due 2013. This Annual
Report is being filed solely pursuant to the terms of such indenture.
Bombardier Recreational Products
Inc. presents its financial information in Canadian dollars. In this annual
report, all references to "U.S.$" refer to U.S. dollars and all references to
"$" refer to Canadian dollars.INTRODUCTIONBombardier
Recreational Products Inc. (the "Company" or "BRP") is a leading designer,
manufacturer and distributor of motorised recreational products worldwide. Its
business consists of a diversified portfolio of products. BRP has a leading
market share position in each of its established products: snowmobiles (the Ski-Doo
brand in North America and the Ski-Doo and Lynx brands in Europe), personal
watercraft (the Sea-Doo brand), and sport boats (the Sea-Doo brand). In 1998,
the Company launched its own product line for all terrain vehicles, or ATVs. In
2001, BRP 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 Rotax engines for motorcycles,
scooters, karts and small and ultra-light aircraft. BRP's products have a large
base of customers who currently use its products. This installed base provides a
recurring stream of revenue from related parts, accessories and clothing sales.
The Company's products are distributed worldwide through approximately 1,600
power sports dealers and 1,800 marine dealers and through approximately 55 power
sports distributors and 70 marine distributors.
On December 18,
2003, BRP purchased Bombardier Inc.'s recreational products business for a total
consideration of $806.3 million (the "Transactions"). During the year ended January 31,
2005, the Company completed its purchase price allocation and as a result,
residual goodwill amounted to $135.5 million representing the excess of the
purchase price over the fair value of the identifiable net assets acquired.
BRP, incorporated
under the laws of Canada, is a wholly owned subsidiary of J. A. Bombardier (J.A.B.)
Inc. ("J.A.B." or the "Company's parent"). The Company's parent is primarily
owned by Bain Capital Luxembourg Investments S.ar.L, the Caisse de Dépôt et
Placement du Québec and the Beaudier Group (comprised of Beaudier Inc., 4260937
Canada Inc., 4260911 Canada Inc. and 4260929 Canada Inc.). Bain Capital
Luxembourg Investments S.ar.L, the Caisse de Dépôt et Placement du Québec and
the Beaudier Group are collectively referred to as the Sponsors (the
"Sponsors").- 3 -ITEM 1 - IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERSNot applicable.ITEM 2 - OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.ITEM 3- KEY INFORMATION
A. Selected Financial Data(millions of Canadian dollars,
    except ratios)Predecessor Business
    
    
    
    Successor
    
    
    Successor321-day
    44-dayperiod
    period
    CombinedYear ended
    ended
    ended
    year ended
    Year EndedJanuary 31,
    January
    January
    December
    January 31,
    January
    January 31,2001
    31, 2002
    31, 2003
    18, 2003
    2004
    31, 2004
    2005(Restated,
    (Restated,
    (Restated,
    (Restated,
    (Restated,Canadian GAAP
    see (h))
    see (h))
    see (h))
    see (h))
    see (h))Statement of Income Data:Revenues(a)
    1,558.7
    1,928.2
    2,383.4
    2,075.6
    333.5
    2,409.1
    2,467.0Cost of sales
    1,190.9
    1,486.7
    1,828.0
    1,678.1
    307.4
    1,985.5
    2,044.9Gross profit
    367.8
    441.5
    555.4
    397.5
    26.1
    423.6
    422.1Operating expensesSelling and marketing
    91.0
    130.2
    161.1
    143.4
    18.2
    161.6
    141.4Research anddevelopment
    70.4
    97.3
    103.2
    94.4
    12.9
    107.3
    108.1General andadministrative
    97.2
    122.5
    115.3
    111.5
    7.1
    118.6
    127.9Other charges and(income)Restructuring
    
    
    
    
    
    
    26.5Impairment loss
    
    
    
    
    
    
    12.1Curtailment gain
    
    
    
    
    
    
    (23.7)Total operating expenses
    258.6
    350.0
    379.6
    349.3
    38.2
    387.5
    392.3Operating profit (loss)from continuingoperations
    109.2
    91.5
    175.8
    48.2
    (12.1)
    36.1
    29.8Financing costs
    0.3
    4.3
    12.6
    6.5
    7.0
    13.5
    60.4Accretion in carryingvalue and loss on
    earlyredemption of
    preferredshares
    
    
    
    
    0.5
    0.5
    9.4Net loss on derivativefinancial
    instruments
    
    
    
    
    4.5
    4.5
    Foreign exchange loss onlong-term debt
    
    
    
    
    (1.3)
    (1.3)
    (46.7)Income (loss) fromcontinuing
    operationsbefore income
    taxes
    108.9
    87.2
    163.2
    41.7
    (22.8)
    18.9
    6.7Income tax expense(recovery)
    34.1
    22.1
    49.3
    13.9
    (5.7)
    8.2
    (12.6)Income (loss) fromcontinuing operations
    74.8
    65.1
    113.9
    27.8
    (17.1)
    10.7
    19.3Income (loss) from
    (0.3)
    1.5
    0.9
    2.4
    (0.4)
    2.0
    (3.3)



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|discontinued operations, |         |         |         |         |          |         |        
|------------------------ | ------- | ------- | ------- | ------- | -------- | ------- | -------
|net of tax               |         |         |         |         |          |         |        
|Net income (loss)        | $ 74.5  | $ 66.6  | $ 114.8 | $ 30.2  | $ (17.5) | $ 12.7  | $ 16.0 
|                         |         |         |         |         |          |         |        
|                         |         |         |         |         |          |         |        
|Other Operating Data:    |         |         |         |         |          |         |        
|EBITDA (b)               | $ 170.3 | $ 160.1 | $ 272.1 | $ 138.9 | $ (1.2)  | $ 137.7 | $ 196.6
|Depreciation and         |         |         |         |         |          |         |        
|amortisation             | 61.1    | 68.6    | 96.3    | 90.7    | 14.1     | 104.8   | 120.1  
|Additions to property,   |         |         |         |         |          |         |        
|plant and equipment      | 61.5    | 194.3   | 97.3    | 73.2    | 21.0     | 94.2    | 70.1   
|Cash flows provided by   |         |         |         |         |          |         |        
|(used in):               |         |         |         |         |          |         |        
|Operating activities     | 168.0   | 185.6   | 195.9   | (77.3)  | 82.8     |        | 193.2  
|Investing activities     | (70.8)  | (359.0) | (96.0)  | (72.3)  | (778.2)  |        | (46.6) 
|Financing
    activities | (108.4) | 192.7   | (118.2) | 247.6   | 895.9    |        | (181.0)





- 5 -

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|(millions of Canadian dollars,
    except ratios) |                      |             |            |             |             |         
|------------------------------------------------- | -------------------- | ----------- | ---------- | ----------- | ----------- | --------
|                                                  | Predecessor Business |             | Successor  |             | Successor  
|                                                  |                      |             |            | 321-day     | 44-day      |         
|                                                  |                      |             |            | period      | period      | Combined
|                                                  | Year ended           | ended       | ended      | year ended  | Year Ended 
|                                                  |                      |             |            |             |             |         
|                                                  | January 31,          | January     | January    | December    | January 31, |         
|                                                  | 2001                 | 31, 2002    | 31, 2003   | 18, 2003    | 2004        |         
|                                                  | (Restated,           | (Restated,  | (Restated, | (Restated,  | (Restated,  | January 
|                                                  | see (h) and          | see (h) and | see (h)    | see (h) and | see (h) and | 31, 2004
|                                                  | (i))                 | (i))        | and (i))   | (i))        | (i))        |         
|Balance Sheet Data (at end of period):            |                      |             |            |             |             |         
|Cash                                              | $ 11.1               | $ 17.0      | $ 28.7     | $ 140.2     | $ 196.2     | $ 196.2 
|Working capital (c)                               | (49.5)               | (282.4)     | (280.8)    | 171.8       | 210.8       | 210.8   
|Total assets (d)                                  | 693.4                | 1,127.7     | 1,134.9    | 1,328.5     | 1,821.1     | 1,821.1 
|Total long-term debt(e)                           | 9.0                  | 5.9         | 3.5        | 3.9         | 640.0       | 640.0   
|Redeemable preferred                              |                      |             |            |             |             |         
|shares                                            |                     |            |           |            | 43.2        | 43.2    
|Capital stock                                     |                     |            |           |            | 304.5       | 304.5   
|Total net equity                                  | 142.3                | 178.1       | 170.2      | 577.8       | 289.0       | 289.0   
|                                                  |                      |             |            |             |             |         
|U.S. GAAP                                         |                      |             |            |             |             |         
|Statement of Income Data:                         |                      |             |            |             |             |         
|Net income (loss)                                 |                      | $ 53.4      | $ 132.8    | $ 37.8      | $ (23.7)    | $ 14.1  
|Other Operating Data:                             |                      |             |            |             |             |         
|EBITDA (b) (f)                                    |                      | 138.5       | 295.7      | 147.3       | (10.0)      | 137.3   
|Balance Sheet Data (at end of                     |                      |             |            |             |             |         
|period):                                          |                      |             |            |             |             |         
|Total assets                                      |                      | 1,129.0     | 1,152.0    | 1,357.0     | 1,814.4     | 1,814.4 
|Total long-term debt (e)                          |                      | 13.7        | 12.5       | 12.5        | 640.0       | 640.0   
|Total net equity (g)                              |                      | 136.4       | 130.5      | 531.2       | 325.5       | 325.5   

1. Effective February 1, 2002, the predecessor business
  prospectively adopted the requirements of EITF Issue 01-09 when accounting for
  sales promotions and incentive programs. Under the new method, estimated sales
  promotion and incentive expenses are generally provided for at the later of
  revenue recognition or the announcement of sales promotion and incentive
  programs. Prior to the year ended January 31, 2003, these sales promotions and
  incentive programs were provided for at the time that management determined
  that the sales promotions and incentives were necessary, which was generally
  before the announcement to customers.
2. EBITDA represents income (loss) from continuing operations
  plus income tax expense (recovery), interest expense (income), including
  amortisation of deferred financing costs, accretion in carrying value of
  redeemable preferred shares (which is considered interest expense under
  Canadian GAAP) and depreciation and amortisation. The Company presents EBITDA
  because it believes it provides useful information about its ability to
  service and incur debt. EBITDA is not an alternative to net income nor does it
  represent cash flow from operations as defined by either Canadian GAAP or U.S.
  GAAP, collectively, GAAP, and the Company does not suggest that readers
  consider it as an indicator of operating performance or an alternative to
  operating cash flow or net income (as measured by GAAP) or as a measure of
  liquidity. See "Management's Discussion and Analysis of Financial Condition
  and Results of Operations." Furthermore, since EBITDA is not defined by GAAP,
  it may not be calculated on the same basis as other similarly titled measures
  of other companies. The following table represents a reconciliation from
  income (loss) from continuing operations (a GAAP measure) to EBITDA:

|(millions of Canadian dollars,
    except ratios) |                      |          |          |           |          |          
|------------------------------------------------- | -------------------- | -------- | -------- | --------- | -------- | ---------
|                                                  | Predecessor Business |          |          | Successor |          | Successor
|                                                  |                      |          |          | 321-day   | 44-day   | Combined 
|                                                  |                      |          |          | period    | period   | year     
|                                                  | Year ended           | ended    | ended    | ended     | Ended   
|                                                  | January              | January  | January  | December  | January  | January  
|                                                  | 31, 2001             | 31, 2002 | 31, 2003 | 18, 2003  | 31, 2004 | 31, 2004 
|EBITDA                                            |                      |          |          |           |          |          
|Income (loss) from                                |                      |          |          |           |          |          
|continuing operations                             | $ 74.8               | $ 65.1   | $ 113.9  | $ 27.8    | $ (17.1) | $ 10.7   
|Financing cost                                    | 0.3                  | 4.3      | 12.6     | 6.5       | 7.0      | 13.5     
|Accretion in carrying                             |                      |          |          |           |          |          
|value and loss on
    early                       |                      |          |          |           |          |          
|redemption of
    preferred                       |                      |          |          |           |          |          
|shares                                            |                     |         |         |          | 0.5      | 0.5      
|Income tax expense                                | 34.1                 | 22.1     | 49.3     | 13.9      | (5.7)    | 8.2      

- 6 -

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|(recovery)       |         |         |         |         |         |         |        
|---------------- | ------- | ------- | ------- | ------- | ------- | ------- | -------
|Depreciation and |         |         |         |         |         |         |        
|amortisation     | 61.1    | 68.6    | 96.3    | 90.7    | 14.1    | 104.8   | 120.1  
|EBITDA           | $ 170.3 | $ 160.1 | $ 272.1 | $ 138.9 | $ (1.2) | $ 137.7 | $ 196.6

1. Represents total current assets less total current liabilities.
2. Total assets as of January 31, 2001 does not include the acquisition of
  assets of the outboard engine business of Outboard Marine Corporation, which
  was consummated on March 9, 2001.
3. In January 2005, the Company voluntarily repaid, without penalty,
  U.S.$158.3 million (approximately $193.0 million) of the Term Facilities and
  shortly thereafter, on February 9, 2005, fully repaid the remaining
  outstanding balance of U.S.$118.9 million (approximately $147.0 million) of
  the Term Facilities. The U.S.$280 million Term Facilities has been replaced
  with a new Term Facility of U.S.$50.0 million (approximately $62.0 million),
  which will mature December 18, 2010, under the amended and restated Senior
  Secured Credit Facilities.
4. The following is a reconciliation of EBITDA from Canadian GAAP to U.S.
  GAAP:

|(millions of Canadian dollars,
    except ratios) |                      |             |              |             |            
|------------------------------------------------- | -------------------- | ----------- | ------------ | ----------- | -----------
|                                                  | Predecessor Business | Successor   |              | Successor   |            
|                                                  |                      |             | 321-day      | 44-day      |            
|                                                  |                      |             | period       | period      | Combined   
|                                                  | Year ended           | ended       | ended        | year ended  | Year Ended 
|                                                  | January 31,          | January 31, | December 18, | January 31, | January 31,
|                                                  | 2002                 | 2003        | 2003         | 2004        | 2004       
|EBITDA (Canadian GAAP)                            | $ 160.1              | $ 272.1     | $ 138.9      | $ (1.2)     | $ 137.7    
|Adjustments: (i)                                  |                      |             |              |             |            
|Development costs capitalised                     | (9.5)                | (8.6)       | (4.7)        | (9.3)       | (14.0)     
|Accretion in carrying value and                   |                      |             |              |             |            
|loss on early
    redemption of                   |                      |             |              |             |            
|preferred
    share                               |                     |            |             | 0.5         | 0.5        
|Pension expense                                   | (0.5)                | (0.9)       | (0.4)        |            | (0.4)      
|Software cost capitalised                         | 1.5                  | 1.4         | 1.2          |            | 1.2        
|Unrealised gains (losses) on                      |                      |             |              |             |            
|foreign exchange contracts                        | (13.1)               | 31.7        | 12.3         |            | 12.3       
|EBITDA (US GAAP)(ii)                              | $ 138.5              | $ 295.7     | $ 147.3      | $ (10.0)    | $ 137.3    

> (i) See Note Differences Between
>     Canadian and US GAAP to the audited consolidated financial statements of the
>     Company included elsewhere in this annual report.
>     (ii) EBITDA includes $8.2 million,
>     $13.2 million, $10.0 million, $1.2 million, $11.2 million and $8.6 million
>     of research and development tax credits for the fiscal years ended January
>     31, 2002 and 2003, the 321-day period ended December 18, 2003, the 44-day
>     period ended January 31, 2004, the combined year ended January 31, 2004 and
>     the year ended January 31, 2005, respectively, which the Company includes as
>     a reduction in its research and development expenses, as opposed to a
>     reduction in its income tax expense.

1. Total net equity under U.S. GAAP includes other accumulated
  comprehensive income (loss) of $(12.3) million, $(10.3) million, $(15.2)
  million, $2.0 million and $22.7 million as of January 31, 2002 and 2003,
  December 18, 2003, January 31, 2004 and January 31, 2005.
2. See Note Discontinued Operations and Assets Held for Sale to
  the audited consolidated financial statements of the Company included
  elsewhere in this annual report.
3. See Note Business Acquisition to the audited consolidated
  financial statements of the Company included elsewhere in this annual report.

- 7 -

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B. Capitalisation and indebtednessNot applicable.
C. Reasons for the offer and use of proceeds

Not applicable.
D. Risk factors
BRP has a significant amount of debt, which it might not be able to service
and which contain covenants that limit its activities.

As of January 31,
2005, the Company and its subsidiaries had $147.2 million (U.S.$118.9 million)
of senior secured debt outstanding (which was fully repaid on February 9, 2005)
and $247.6 million (U.S.$200 million) of senior subordinated debt outstanding.
In addition, subject to restrictions in the indenture governing its 8 3/8%
Senior Subordinated Notes and the Company's senior secured Amended and Restated
Credit Agreement, BRP may incur additional debt. This level of debt could have
significant consequences including:BRP must use a substantial portion of its cash flow from
  operations to pay interest and principal on the notes, loans under its senior
  secured Amended and Restated Credit Agreement and other indebtedness, which
  reduces the funds available for other purposes such as potential acquisitions
  and capital expenditures;
  BRP's ability to obtain additional financing
  for working capital, capital expenditures, acquisitions or general corporate
  purposes may be impaired;
  the Company is subject to fluctuations in
  interest rates and foreign exchange rates, because its senior secured Amended
  and Restated Credit Agreement and other financing arrangements have variable
  rates of interest and are denominated in foreign currency;
  the Company has a higher level of
  indebtedness than some of its competitors, which may put it at a competitive
  disadvantage and reduce its flexibility in planning for, or responding to,
  changing conditions in its industry, including increased competition; and
  the Company is more vulnerable to general
  economic downturns and adverse developments in its business.

BRP expects to
have sufficient liquidities to pay its expenses and to pay the principal and
interest on the notes, its senior secured Amended and Restated Credit Agreement
and other debt from cash flow from its operations. BRP's ability to meet its
expenses depends on its future performance, which will be affected by financial,
business, economic and other factors. The Company will not be able to control
many of these factors, such as economic conditions in the markets where it
operates and pressure from competitors. The Company cannot be certain that its
cash flow will be sufficient to allow it to pay principal and interest on its
debt and meet its other obligations. If BRP does not have enough liquidity, it
may be required to refinance all or part of its existing debt, sell assets or
borrow more money. BRP cannot guarantee that it will be able to do so on terms
acceptable to it, if at all. In addition, the terms of existing or future debt
agreements, may restrict it from pursuing any of these alternatives.- 8 -

---

The indenture relating to the notes and BRP's senior secured
Amended and Restated Credit Agreement impose significant operating and financial
restrictions on the Company, which may prevent BRP from capitalising on business
opportunities and taking some corporate actions.

The indenture
relating to the notes and BRP's senior secured Amended and Restated Credit
Agreement contain, and future debt instruments to which it may become subject
may contain, debt covenants that limit its ability to engage in activities that
could otherwise benefit BRP, including restrictions on its ability to:

- incur, assume or permit to exist additional indebtedness or
  contingent obligations;
- incur liens and engage in sale and leaseback transactions;
- make capital expenditures;
- make loans and investments;
- declare dividends, make payments or redeem or repurchase
  capital stock;
- engage in mergers, acquisitions and other business
  combinations;
- prepay, redeem or purchase certain indebtedness;
- amend or otherwise alter the terms of its indebtedness;
- sell assets;
- transact with affiliates; and
- alter the business that it conducts.

BRP's senior
secured Amended and Restated Credit Agreement also includes financial covenants,
including requirements that it maintain a maximum total leverage ratio and a
minimum interest coverage ratio. BRP's ability to comply with these covenants is
dependent on its future performance, which will be subject to many factors, some
of which are beyond its control, including prevailing economic and weather
conditions. A failure to comply with these covenants could result in a default
under BRP's senior secured Amended and Restated Credit Agreement, which could
permit the lenders to accelerate such debt. If any of its debt is accelerated,
BRP may not have sufficient funds available to repay such debt, in which case,
its lenders could proceed against any collateral securing that debt. BRP cannot
assure that these covenants will not adversely affect its ability to finance its
future operations or capital expenditure needs to pursue available business
opportunities.

BRP operates in a highly competitive industry, which may adversely affect its
results of operations or its ability to expand its businesses.

The industry in
which BRP operates is highly competitive and BRP has a number of significant
competitors in each of its markets. Some of its competitors are more diversified
and have financial and marketing resources which are substantially greater than
BRP's. To continue to remain competitive, the Company will need to develop new,
and improve its existing, products. The mature nature of its markets means that
actions by its competitors to reduce their costs, lower their prices or
introduce innovative products could hurt its sales or profits. BRP may not be
able to maintain its competitive position within its markets.

- 9 -

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If BRP is unable to develop new products or improve upon its existing
products on a timely basis, its future profitability could be negatively
affected.

The Company
believes that its future success depends, in part, on its ability to develop on
a timely basis new technologically advanced products or improve upon its
existing products in innovative ways that meet or exceed appropriate industry
standards. Maintaining its market position will require the Company to continue
to invest in research and development and sales and marketing. Industry
standards, customer expectations or other products may emerge that could render
one or more of its products less desirable. The Company may not have sufficient
resources to make necessary investments or it may be unable to make the
technological advances necessary to develop new products or improve its existing
products to maintain its market position.

If BRP is unable to protect its intellectual property rights or further
develop its existing technologies, brands and marks, its competitive position
may be harmed.

BRP relies on a
combination of patent, trademark and trade secret laws to protect certain
aspects of its business. BRP has registered trademarks, copyrights and patents
and trademark and patent applications pending in the United States, Canada and
abroad. However, the Company has selectively pursued patent and trademark
protection in Europe, Canada, and the United States, and in some instances it
has not perfected important patent and trademark rights in these and other
countries. BRP may not be able to obtain broad enough patent protection over its
engine and other technologies to adequately protect its competitive advantage.
The failure to obtain worldwide patent protection may result in other companies
copying and marketing products based upon BRP's protected technologies outside
its protected markets. This could impede BRP's growth in existing markets and
into new markets, and result in a greater supply of similar products that could
erode its pricing power.

BRP's brands and
branded products include Ski-Doo and Lynx snowmobiles, Sea-Doo personal
watercraft and sport boats, Johnson and Evinrude outboard engines, Bombardier
ATVs and Rotax engines. BRP believes that these trademarks are of great value
and that the loss of any one or all of its trademark rights could lower sales
and increase its costs. In addition, BRP has a trademark license agreement
whereby it has the right, subject to certain conditions, to continue to use
certain marks of Bombardier Inc. which were not otherwise assigned to BRP in
connection with the Transactions. The license allows the Company to use
"Bombardier" in BRP's corporate name as long as the Beaudier Group maintains at
least a 10% ownership interest in its parent. If BRP has not been able to create
a comparable independent brand for its products prior to a termination of the
license, if any, it may see a decline in sales and revenues.

BRP may be required to enforce its intellectual property or
to defend its intellectual property from infringement claims and it may incur
substantial costs as a result of litigation or other proceedings relating to
patent or trademark rights.

BRP's success
depends in part on its ability to protect its trademarks, trade secrets and
patents from unauthorised use by others. If substantial unauthorised use of its
intellectual property rights occurs, BRP may incur significant costs in
prosecuting actions for infringement of its rights, as well as the loss of
efforts by engineers and managers who must devote attention to these matters.
The Company also cannot be sure that the patents it has obtained, or other
protections such as confidentiality and trade secrets, will be adequate to
prevent imitation of its products and technology by others. If the Company were
unable to protect its technology through the enforcement of intellectual
property rights, its ability to compete based on technological advantages may be
harmed. If the Company fails to prevent substantial unauthorised use of its
trade secrets, it risks the loss of intellectual property rights and its
competitive advantage.

Additionally, BRP is currently a
defendant in a patent lawsuit relating to its snowmobiles and personal
watercraft and others may bring similar suits. If BRP is unsuccessful in its
defence of any of

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these actions, there could be material adverse consequences
including payment of monetary damages, licensing of patents on unfavourable
terms, and removal of desirable features from its products. Others may also
claim BRP is infringing upon their patents. If so, BRP might also face
significant liabilities, incur costs and see its ability to use certain
technologies limited. Even if BRP is able to defeat such a claim, the allegation
that it is infringing another's intellectual property rights could harm its
reputation and cause it to incur significant costs. Also, third parties have
challenged, and may in the future try to challenge, BRP trademark rights and
branding practices. BRP may be required to institute or defend litigation to
enforce its trademark rights, which, regardless of the outcome, could result in
substantial costs and diversion of resources and could negatively affect its
competitive position, sales, profitability and reputation. If BRP loses the use
of a product name, its efforts spent building that brand will be lost and it
will have to rebuild a brand for that product, which it may or may not be able
to do.
Patented technologies developed by BRP's competitors and others may impair
BRP's competitive position.
It is possible
that BRP's competitors will develop and patent equivalent or superior engine
technologies and other products that compete with BRP's. They may assert these
patents against BRP and it may be required to license these patents on
unfavourable terms or cease using the technology covered by these patents,
either of which would harm its competitive position and may materially adversely
affect its business.
Actions of BRP's dealers and distributors could harm its sales.
BRP is dependent
on a dealer and distribution network to sell and service its products. BRP sells
a majority of its products through non-exclusive dealer and distribution
agreements. Many of the dealers through which BRP sells its products also carry
competing product offerings and most dealers who sell its products exclusively
are not contractually obligated to continue to do so and may choose to sell
competing products at any time, which may lower BRP's sales. In addition, BRP
relies on its dealers to service and repair its products. There can be no
assurance that BRP's dealers will provide high quality repair services to its
customers. If BRP's dealers fail to provide quality repair work to its
customers, its brand and reputation may be damaged and sales of its products may
be adversely affected.
If BRP's dealer
base were to consolidate, competition for the business of fewer dealers would
intensify. If BRP does not provide product offerings and pricing that meet the
needs of its dealers, or if BRP loses a substantial amount of its dealer base,
its profitability could decrease.
Also, particularly
with respect to marine engines, BRP depends on relationships with boatbuilders
who equip their boats with BRP marine outboard engines. If BRP's boatbuilder
customers were to begin using BRP's competitors for their engine needs or if any
of these customers were acquired by BRP's competitors, BRP's marine engine sales
to boatbuilders would be adversely affected.
BRP floorplan financing and factoring financing arrangements subject the
Company to risks associated with dealer defaults and insufficient liquidity.
BRP is party to
written agreements with financing companies that provide financing for purchases
of many of its products by dealers that meet the credit and other requirements
of such financing companies. When a dealer purchases a product, using dealer
financing (also known as floorplan financing arrangements), BRP receives payment
from the financing company soon after shipment to the dealer. If BRP is not able
to maintain this sort of dealer financing on acceptable terms, BRP's dealers
will have to pay cash or obtain independent financing to purchase the Company's
products and consequently, may buy fewer products from BRP. These financing
agreements require the repurchase from the financing company of any new and
unused product if dealers default on their obligations. As a result, if one or
more of BRP's dealers default and the Company is required to repurchase
inventory repossessed by the financing companies, any funds used for this
purpose will not be available to operate the Company's business. Repurchases
would likely be required at times when the market for BRP products is depressed

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or not in season, which would limit its ability to resell the units and could
have a material adverse effect on its financial position. The majority of such
repurchase obligations are subject to a cap.
Additionally,
certain of BRP's supplemental floorplan and factoring financing under which BRP
sells receivables to third parties are terminable by the other party on short
notice. In the event a finance company terminates its arrangements with BRP, the
Company may not have an adequate amount of time to find replacement financing on
comparable terms or at all. In the absence of these arrangements, BRP would have
to self-finance the sales of its products, the result of which would be an
increase in the Company's working capital needs. BRP may not be in a financial
position to provide self-financing, and, if it did, it could have a negative
impact on its short-term liquidity.
BRP relies on third parties to supply materials, components and, in some
instances, its products, and their failure to do so could adversely affect BRP's
sales and increase its costs.
Some important
components of BRP products are available from only one or two sources and in
some instances BRP has entered into relationships whereby a third-party
manufacturer supplies the Company with the finished product BRP sells. If these
suppliers ceased doing business with BRP or decreased their supply to the
Company, it may be unable to timely replace them, if at all. This could
interrupt BRP's production, hurt its sales or increase its costs.
BRP is subject to
the risk of possible delays in deliveries or delivery failures on its supplier
contracts. Suppliers' failure to supply BRP on commercially reasonable terms
would materially harm its operations. Adequate sources of alternative reliable
outside suppliers may not be identified and engaged at advantageous terms or on
any terms at all, which could adversely affect BRP's products or sales.
BRP may not be able to execute its growth strategy.
Part of BRP's
strategy is to continue to gain market share by leveraging the strength of its
brands in existing markets, expanding its development expertise into new
markets, and growing internationally. Many factors, such as innovation, economic
conditions, consumer demand and BRP's competitors' ability to achieve similar
goals, will impact whether or not it is able to execute its growth strategy.
Additionally, many of the markets in which BRP currently operates have either
remained flat or declined over time. If BRP is not able to gain additional
market share, expand into new markets and/or increase its presence
internationally, its operating results may be materially harmed.
BRP's annual and quarterly financial results are subject to significant
fluctuations depending on various factors, many of which are beyond its control.
BRP's sales and operating results
can vary significantly from quarter to quarter and year to year depending on
various factors, many of which are beyond its control. These factors include:
variations in the timing and volume of BRP sales;
  seasonality of its products;
  discretionary spending habits;
  sales promotions by BRP and its competitors;
  changes in competitive and economic conditions generally;
  changes in interest rates;
  changes in the cost or availability of BRP raw materials or labour; and

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foreign currency exposure.As a result, BRP's
results of operations may decline quickly and significantly in response to
changes in order patterns or rapid decreases in demand for its products. BRP
anticipates that fluctuations in operating results will continue in the future.
Unfavourable weather conditions could hurt BRP's sales and increase its
inventory levels.
As a manufacturer
of outdoor motorised equipment, BRP's sales, inventory levels and resulting
profitability are affected by weather conditions. For example, lack or timing of
snowfall in any year in any particular region of the United States, Canada or
Europe may adversely affect retail sales of snowmobiles in that region. In
addition, sales of personal watercraft may be affected by increased rain during
the summer. Further, sales of parts and accessories for BRP products are also
influenced by weather conditions.
Product liability, warranty and recall claims may materially affect BRP's
financial condition and damage its reputation.
BRP is engaged in
a business which exposes it to claims for product liability and warranty claims
in the event its products actually or allegedly fail to perform as expected or
the use of its products results, or is alleged to result, in property damage,
personal injury or death. BRP has approximately 140 pending litigations, 70% of
which are in the United States and about half of which consist of product
liability cases. With respect to product liability claims which arise as a
result of personal injury or property damage that occurred prior to the
consummation of the Transactions, currently approximately 93% of the pending
product liability cases, Bombardier Inc. agreed to indemnify BRP for certain
amounts. Claims may arise in the future in excess of BRP's indemnities and
insurance coverage. In the future, BRP may not be able to adequately insure its
product liability risk or the cost of doing so may be prohibitive. Adverse
determination of material product liability claims made against BRP could have a
material adverse effect on its financial condition and harm the Company's
reputation.
In addition, if
any of the Company's products are, or are alleged to be, defective, BRP may be
required to participate in a recall of that product if the defect or alleged
defect relates to safety. BRP has been the subject of numerous lawsuits for
product liability claims related to fuel tanks for certain of its personal
watercraft which were the subject of a recall and to the steering design of
personal watercraft and anticipate future suits of this nature. These and other
claims BRP faces could be costly to the Company and require substantial
management attention.
BRP has less control over the quality and timeliness of products manufactured
by others.
BRP has entered
into and intends to enter into manufacturing agreements with third parties to
produce some of its products, which it markets under its brand names. BRP has
entered into agreements with a Taiwanese manufacturer to produce entry-level
ATVs and related components under BRP's brand. BRP has also entered into an
agreement with a Japanese manufacturer to supply a substantial portion of its
Johnson 4-stroke engines. BRP will have less control over the quality and
timeliness of production of these products. Similarly, in return for royalties,
BRP licenses some of its trademarks to third parties that manufacture and sell
their products under the Sea-Doo or Ski-Doo name, for example. As all of these
products will carry BRP's name or trademarks, any manufacturing defects would be
associated with BRP and may harm its reputation and sales.
A downturn in general economic or business conditions, either domestically or
internationally, could adversely affect the Company's business.
Many of BRP's products, including
snowmobiles, ATVs, sport boats and personal watercraft, are considered to be
discretionary purchases by its customers and, as a result, sales of these
products tend

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to decline during periods of economic uncertainty.
Accordingly, any significant decline in general economic conditions, including
uncertainty regarding future economic prospects, could have a material adverse
effect on the Company's business, financial condition and results of operations. BRP's business is also subject to changes in consumer preferences. There can be
no assurance that interest in BRP's products will continue to grow, or that it
will be able to sustain current levels of production and sales, or to increase
such levels. Any significant decline in the size of the market of any of its
products as a result of downturn in general economic conditions could have a
material adverse effect on its business, financial condition and results of
operations.
Compliance with existing and changing environmental and safety laws and
regulations could increase the Company's costs or restrict its business.
The Company is
subject to extensive environmental and safety laws and regulations concerning,
among other things, emissions and discharges to waters, air and land, the
handling and disposal of hazardous and non-hazardous materials and wastes, and
employee health and safety. Environmental risks and liabilities are inherent in
many of the Company's manufacturing operations and products. Future
environmental liabilities may occur or environmental damages may result in
future liabilities due to prior or present practices. From time to time, BRP has
incurred and continues to incur costs and obligations related to environmental
compliance matters. Failure to comply with such laws and regulations could
result in costs for corrective action, penalties or the imposition of additional
liabilities or restrictions. Potential liabilities resulting from past or
present practices cannot be estimated at this time and may be significant.
Further, BRP has from time to time acquired other businesses or entities and it
may be subject to claims based on successor liability with respect to the prior
activities of entities or businesses it acquired. BRP is aware that there is or
may be soil or groundwater contamination at certain of its facilities resulting
from current or former operations. These matters are in various stages of
investigation and may result in material costs.
Additionally,
changes in environmental or other laws could require extensive changes in BRP's
operations or to its products. BRP cannot anticipate what the costs of
compliance with these changes might be. New engine emission regulations are
being phased in through the year 2010 by the U.S. federal government, the State
of California, the Canadian government and the European Union and products sold
in the European Union are subject to the noise reduction directive applicable to
outdoor equipment that became effective January 1, 2002.
BRP cannot be
certain, however, that identification of presently unidentified environmental
conditions, more vigorous enforcement by regulatory agencies, enactment of more
stringent laws and regulations or other unanticipated events will not arise in
the future and give rise to additional material environmental liabilities which
could have a material adverse effect on its business, financial condition or
results of operations.
Access to riding areas for motorised recreational vehicles may become more
controlled.

Certain groups
have made efforts in Canada and elsewhere to have legislation passed that would
restrict access by motorised recreational vehicles to public lakes, parks and
other areas. A reduction in the number of areas in which BRP's products can be
used may result in a reduction in BRP's sales and could have a material adverse
effect on its business, financial condition or results of operations.
BRP may not always be able to terminate its relationships
with particular dealers and distributors, which could limit its ability to
improve its dealer and distributor network and could increase its costs.
BRP is subject to
regulations and other restrictions on its ability to terminate its dealer and
distribution relationships, which prescribe the means by which it can terminate
dealer and distributor relationships and impose penalties for failure to comply.
There is currently litigation pending against BRP

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pursuant to the regulations with respect to certain dealers
with whom it has terminated its relationship. Even if BRP prevails on these
matters, it may spend a considerable amount of time and money to do so. These
restrictions may also prevent or deter BRP from terminating dealer and
distributor relationships that are unprofitable or otherwise undesirable to
maintain.
BRP's international operations subject it to additional risks, which risks
and costs may differ in each country in which the Company does business, and may
cause its profitability to decline.

BRP conducts its business in many countries. BRP's financial condition and
results of operations may be adversely affected if the markets in which it
competes are affected by changes in political, economic or other factors. These
factors, over which the Company has no control, may include:

- recessionary trends in international markets;
- changing labour conditions and difficulties in staffing and managing its
  foreign operations;
- increases in the taxes the Company pays and other changes in applicable
  tax laws;
- legal and regulatory changes and the burdens and costs of its compliance
  with a variety of laws, including trade restrictions and tariffs;
- difficulties in obtaining and enforcing intellectual property rights;
- changes in inflation rates;
- changes in exchange rates and the imposition of restrictions on currency
  conversion or the transfer of funds; and
- political and economic instability.

Fluctuations in the value of the Canadian dollar in relation to other
currencies may lead to lower revenues and earnings.

Exchange rate
fluctuations could have an adverse effect on BRP's results of operations. The
majority of the Company's revenue and debt is in U.S. dollars while the majority
of its cost of sales and operating expenses is in Canadian dollars and Euros. A
portion of BRP's sales and operating expenses are in currencies of other
countries, including Australia, Finland and Norway. Sales made outside Canada
are denominated in the currency of the country in which the sale is made, and
this currency could become less valuable when converted into Canadian dollars as
a result of exchange rate fluctuations. Unfavourable currency fluctuations could
lead to increased prices to customers outside Canada, or could result in lower
revenues for BRP, on a Canadian dollar basis, from such customers. For the
twelve-month period from February 1, 2004 to January 31, 2005, the U.S. dollar
weakened against the Canadian dollar by 6.7% from 1.3264$CA/$US to
1.2380$CA/$US. For the same period, the Euro weakened against the Canadian
dollar by 2.2% from 1.6520$CA/Euro to 1.6157$CA/Euro.

For the purposes of financial reporting, any change in the value of the Canadian
dollar against the U.S. dollar during a given financial reporting period would
result in a foreign currency loss or gain on the translation of any U.S. cash
and cash equivalents or U.S. dollar denominated debt into Canadian currency
under GAAP. Consequently, the Company's reported earnings or equity under GAAP
could fluctuate materially as a result of foreign exchange translation gains or
losses.

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Loss of key personnel or BRP's inability to attract and retain qualified
personnel could hurt its business and inhibit its ability to operate and grow
successfully.

BRP's success will
continue to depend to a significant extent on its leadership team and other key
management personnel as well as its ability to attract and retain qualified
personnel to staff its manufacturing, research and development, design,
marketing, distribution and international operations. The loss of these
employees or BRP's inability to recruit and retain qualified personnel could
have a material adverse effect on its operating results.

Since BRP does not sell its products under long-term purchase commitments and
may not correctly estimate demand, production delays or poor marketing judgement
could diminish sales.

BRP's ability to
predict future demand for its products and to timely develop new products to
meet that demand will influence its performance. BRP plans annual production
levels and long-term product development and introductions based on anticipated
demand. For the majority of sales, BRP does not have long-term purchase
commitments or non-revocable orders. The Company relies on its market assessment
and regular communication with its dealers and other customers to anticipate the
future volumes of purchase orders. Changes in product demand or delays in
product delivery by BRP could impair its ability to achieve sales goals or
maintain profitability.

Employment related matters such as unionisation and pension plan obligations
may affect BRP's profitability.

BRP's employees in
Austria and Finland are members of each country's national union. While the
Company has positive labour relations in these and its other locations, it has
little control over the labour laws, national collective bargaining agreements
or union activities in these areas and could face difficulties in the future.
The Company and certain of its employees at the Valcourt Facility in Canada are
parties to a stability agreement concerning the terms of their employment. The
stability agreement provides that certain employees classified as "permanent
employees" may not be laid off except under specified circumstances.
Additionally, these employees are entitled to receive a portion of their salary
even if they are not working due to supply shortages or problems related to the
Company's business development. As a result of the stability agreement, BRP's
profit margins could be reduced in the event that it produces and sells fewer
products but is required to continue to pay its employees. BRP may have to
negotiate similar agreements in other locations to avoid significant labour
disruptions.

The Company
maintains non-contributory defined benefit plans that provide for pensions and
post-retirement benefits to its employees in Canada. With the support of the
affected employees, BRP will establish a defined contribution plan as of June 1,
2005 to replace an existing defined benefit plan, for future service only. In
the United States, the Company provides for a defined contribution plan to its
employees and a supplemental defined benefit pension plan for its senior
management. A defined benefit pension plan is also offered to the Company's
employees in Austria, Belgium and Norway. In the event BRP were to experience
shortfalls in its pension plans, due to economic conditions or otherwise, BRP
would be obligated in Canada and may be obligated in other jurisdictions to fund
these shortfalls. These obligations would divert sums which could be used to
increase revenues or be contributed to marketing, research and development or
other areas of its business.

The predecessor historical financial information may not be representative of
BRP's results as a separate company.

The historical
financial information of BRP's predecessor included in this annual report may
not reflect what the results of operations, financial position and cash flows
would have been, had BRP been a separate, stand-alone entity during the periods
presented, or what its results of operations, financial position and cash flows
will be in the future. Accordingly, BRP's historical results of operations of
the predecessor may not be indicative of its future operating or financial
performance.

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ITEM 4- INFORMATION ON THE COMPANY

A. History and development of the Company

BRP's History

BRP's legal name
is Bombardier Recreational Products Inc. BRP was incorporated under the laws of
Canada on November 3, 2003 and is a wholly owned subsidiary of J.A.B. Prior to
December 18, 2003, BRP's business was operated as the recreational products
division of Bombardier Inc. The recreational products division of Bombardier
Inc. was the founding business on which that company expanded into a world
leader in transportation products. In 1937, Joseph Armand Bombardier developed a
vehicle with steerable skis in front of a set of tracks that could travel across
snow. Bombardier Inc. was founded in 1942 to manufacture this tracked vehicle
and later produced what became the modern snowmobile. The first Ski-Doo
snowmobile was launched in 1959. Thereafter, the recreational products division
was expanded to other recreational motorised products, including the Sea-Doo
personal watercraft in 1968, Sea-Doo sport boat in 1994, and ATV in 1998.
Bombardier Inc. also made key acquisitions that complemented its recreational
product business, including the acquisition in 1970 of the Austrian company that
manufactured Rotax engines, the acquisition of the Lynx brand snowmobile in 1988
and the acquisition of the Johnson and Evinrude outboard engine brands and
related assets in 2001.

On December 18, 2003, BRP
purchased Bombardier Inc.'s recreational products business for a total
consideration of $806.3 million.

On July 23, 2004,
the Company's board of directors approved the sale of its utility vehicles
segment. The transaction was completed on August 30, 2004 and the utility
vehicles segment was sold for net proceeds of $40.3 million. The sale of the
utility vehicles segment did not have a significant impact on the results of
operations or financial position of the Company. For the combined year ended
January 31, 2004, revenues from the utility vehicles segment represented 3.3% of BRP's combined revenues and segment operating profit represented 4.6% of its
combined segment operating profit.

B. Business overview

General

BRP is a leading designer, manufacturer and distributor of
motorised recreational products worldwide. Its business consists of a
diversified portfolio of products. BRP has a leading market share position in
each of its established products: snowmobiles (the Ski-Doo brand in North
America and the Lynx brand in Europe), personal watercraft (the Sea-Doo brand),
and sport boats (the Sea-Doo brand). In 1998, the Company launched its own
product line for all terrain vehicles, or ATVs. In 2001, BRP also entered the
market for outboard engines by acquiring the Johnson and Evinrude brands from
Outboard Marine Corporation. BRP's products have a large base of customers who
currently use its products. This installed base supports a recurring stream of
revenue from related parts, accessories and clothing sales. The Company's
products are distributed worldwide through approximately 1,600 power sports
dealers and 1,800 marine dealers and through approximately 55 power sports
distributors and 70 marine distributors.

BRP's Businesses

Power Sports Segment

The Company's power sports segment
includes its snowmobile, personal watercraft, ATV, sport boat and engine
businesses, including any related parts, accessories and clothing operations.
During the

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year ended January 31, 2005, the Company's power sports segment generated
revenues of approximately $1,951.3 million.
Snowmobiles. 
The Company's founder introduced the first modern day snowmobile in 1959. BRP
currently produces a full line of products marketed under the Ski-Doo brand name
in North America and Europe and the Lynx brand name in Europe. The International
Snowmobile Manufacturer's Association estimates that the size of the snowmobile
market in North America was approximately U.S.$1.1 billion in model year 2004. BRP leads this market as well as the European market for the number of retail
units sold in model year 2005. The Company attributes its success in these
markets to its product performance and innovation and its broad distribution
network. BRP's products have been recognised with industry-related and other
awards for many years. In model year 2003, BRP released the REV platform, which
changed the rider's position on the sled, improving manoeuvrability and comfort.
Widespread market acceptance of the design helped BRP to continually increase
its North American market share from model year 2002 to model year 2005. The
Company's distribution network consists of approximately 840 dealers in North
America.
The Company
believes the timing of snowmobile sales is affected by trends in snowfall. From
1994 up to 1998, snowfall was above 20-year average levels in the U.S. and
industry unit sales increased by approximately 9% per year during that period.
The Company believes that the above average snowfall contributed to an
acceleration of sales in these years that would have otherwise been made after
1998. Because of this trend and several subsequent years of below average
snowfall, industry unit sales experienced a compounded annual decrease of
approximately 5% from model year 1999 to model year 2004. Despite these negative
trends, BRP was able to increase its sales of retail units from model year 2002
to model year 2004. Due to BRP's more than 45-year presence in the industry and
its market leadership, the Company has a large installed base of snowmobiles.
Through the sale of related parts, accessories and clothing, this installed base
generates a recurring stream of revenues.
Personal
Watercraft. BRP introduced the first sit-down personal watercraft in 1968. BRP
currently produces a full line of personal watercraft marketed under the Sea-Doo
brand name. The National Marine Manufacturer Association, or NMMA, estimates the
U.S. retail market was approximately U.S.$716.5 million for calendar year 2003.
BRP has led this market for several years and has increased its share of retail
units sold in North America from model year 1992 to model year 2004. BRP's gains
in market share have been, in part, due to its product performance and
innovation as well as its broad dealer network. The Company's products have been
recognised with industry-related and other awards for many years. In model year
2004, BRP introduced an "inter-cooled supercharged" version of its 4-TEC engine
in the Sea-Doo RXP, which at 215hp is the industry's most powerful personal
watercraft. BRP believes its customers are attracted to personal watercraft with
4-TEC engines due to their performance, lower emissions and sound levels. BRP's
distribution network consists of approximately 900 dealers in North America.
During the
mid-1990s, personal watercraft use gained popularity. The large number of new
users created problems with safety and pollution. This resulted in more
regulatory scrutiny, with several bans and restrictions proposed against the use
of personal watercraft. Due in part to this increased regulatory activity, new
unit sales across the industry declined approximately 14% annually from model
year 1995 to model year 2001 in the United States. Personal watercraft have
significantly improved noise control and emissions standards, and the market has
since started to stabilise. The active regulatory environment has also eased
with several favourable rulings at important water destinations in the United
States. The Company expects the market to be relatively stable going forward.
Despite the declining industry volumes in the past five years, BRP has continued
to gain market share. As a result of its history of market leadership, BRP has a
large installed base of personal watercraft that generates a recurring stream of
revenues from the sale of related parts, accessories and clothing.
All-terrain
Vehicles. The first 3-wheel ATV product was introduced in North America in
1971, and the modern 4-wheel ATV was introduced during the late 1980s. Since
that time, the North American market has expanded each year. The Motorcycle
Industry Council estimates the U.S. retail market was

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approximately U.S.$4.4 billion in 2004. BRP believes that,
similar to other consumer product categories that have experienced rapid growth,
the ATV market will contract and then stabilise over the next few years. BRP
began producing a limited line of ATVs in 1998 to leverage its manufacturing
facilities, technology and dealer network. Since that time, BRP has expanded its
ATV product lines to cover most market segments. The Company's products have
been recognised with industry awards. The Company's distribution network
consists of approximately 1,200 dealers in North America. In addition, the
Company has a supply agreement with Deere & Company to manufacture John
Deere-branded ATVs, which are sold through Deere & Company's dealer network in
North America.
Sport Boats.
BRP entered the recreational boating industry in 1994 as an extension of its
already successful personal watercraft business. The model year 2005 line-up is
composed of eight platforms and ten different models of sport boats marketed
under the Sea-Doo brand name, which address sport performance and all-purpose
recreational needs of consumers in the sport boat segment of the recreational
boating industry. Sport boats represent a specific niche in the market,
representing motorised boats that utilise jet power rather than conventional
propeller propulsion. Relative to conventional boats, sport boats provide
superior acceleration, handling, increased safety for swimmers and marine
wildlife and better accessibility to shallow waters. The U.S. sport boat retail
market was estimated by the NMMA to be approximately U.S.$115.3 million in 2003.
According to Statistical Surveys, Incorporated, BRP leads the sport boat market
in North America. The Company's distribution network consists of approximately
300 dealers in North America.
Engines. The
Company manufactures engines for a broad array of vehicles and equipment under
the Rotax brand name. These engines are used in its Ski-Doo and Lynx
snowmobiles, its Sea-Doo personal watercraft and sport boats. The Company
believes it is the world's leading supplier of engines for light and ultra-light
aircraft. In some cases, the Company has established long-term relationships
with certain manufacturers to purchase its engines, including BMW and Aprilia
(now owned by Piaggio) for motorcycle engines.
Marine Engines Segment
The NMMA estimated
the U.S. outboard engine retail market to be approximately U.S.$2.55 billion in
2003 and it further observed that over the past several years, the industry
continued to experience a shift toward 2-stroke direct injected (DI) and
4-stroke engines, away from traditional 2-stroke carbureted engines. According
to the NMMA, DI and 4-strokes further strengthened their dominance in 2004,
capturing a 65.3% share of US wholesale shipments, up from 60.2% in 2003 and
53.7% in 2002. While emissions standards initially prompted this shift, these
technologies continue to gain momentum due to actual and perceived advantages
over carbureted technology. These include, but are not limited to, emissions,
fuel efficiency and noise. BRP, under the Evinrude brand, has the most extensive
line-up of 2-stroke DI engines.
As a result of the
Outboard Marine Corporation asset acquisition and the subsequent improvement BRP
has instituted, BRP's share of the North American wholesale market has grown
from 2001 to 2004. Due to the long history of the Johnson and Evinrude brands,
BRP has a large installed base of outboard engines in the United States. In
addition, BRP's Evinrude E-TEC technology has won several industry-related and
other awards including as a product that enhances boating safety, due to the low
carbon monoxide emission levels. During the year ended January 31, 2005, the
Company's marine engines segment generated revenues of approximately $561.1
million.
Related Parts and Accessories
BRP provides
parts, accessories and clothing related to its power sports and marine engine
products. Revenues from the sale of parts, accessories and clothing related to
each segment are included in the results of operations for that segment. The
parts BRP sells include consumables (e.g., oil), wearable components (e.g.,
spark plugs and transmission belts) and replacement parts (e.g., pistons and

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windshields), while the accessories it sells include products
that enhance or modify vehicle functionality (e.g., second passenger seats,
coloured covers and racks). Parts and accessories sales are driven mainly by the
installed base of vehicles sold in current and past seasons and are recurring in
nature. Of the parts and accessories sold by the Company, many are components,
gauges and other parts which are not provided by another vendor. BRP also sells
clothing, mainly in connection with its snowmobile and personal watercraft
products, which reflects its brands and is designed with colours and logos to
match its products.
BRP's Products
Power Sports
Snowmobiles.
BRP produces a broad line of snowmobiles, consisting of 14 models, marketed
under the Ski-Doo brand name in North America and Europe and the Lynx brand name
in Europe. This broad product offering allows the Company to successfully
compete in all segments of the snowmobile market. BRP's snowmobiles offer a wide
range of standard and optional features that enhance their operation, riding
comfort and performance. BRP also introduces new models every year and its
leadership in innovation, technology, style and performance has been recognised
through numerous industry honours and awards.
The REV platform
continues to gain market share. This new design positions the snowmobile driver
12 inches forward, creating a smoother ride and improving manoeuvrability. The
REV has enjoyed considerable success on the racing circuit, winning many races
during the 2005 racing season, including the SnoCross event of the 2005 X-Games
and the HillCross event. For model year 2006, BRP has introduced a lighter
platform based on the popular REV. This lighter snowmobile is expected to
attract new customers to the sport.
The Company's 2006
Ski-Doo models carry suggested retail prices ranging from U.S.$3,999 -
U.S.$11,949 (excluding the Mini Z model which retails for U.S.$2,149) for the
U.S. market. The Company's Lynx models carry suggested retail prices which are
slightly higher. BRP also generates revenue from the sale of parts, accessories
and clothing related to its snowmobile products. The Company's clothing reflects
the Ski-Doo brand for enthusiast riders who value having clothing with colours
and designs to match their sleds.
Personal
Watercraft. The Company introduced the first sit-down personal watercraft in
1968, and relaunched its personal watercraft in 1988. The Company introduced the
first three-seat personal watercraft in 1990 and the first high-performance
product in 1991. BRP currently produces a full line of personal watercraft,
consisting of 11 models, marketed under the Sea-Doo brand name. BRP also
generates revenue from the sale of parts, accessories and clothing related to
these products, which sales are driven mainly by the existing fleet of personal
watercraft sold in current and past seasons and are recurring in nature. BRP's
personal watercraft products have been recognised with many industry honours and
awards.
In model year
2005, BRP introduced its popular 4-stroke 4-TEC engine into a new 3-seater
personal watercraft, the RXT. For the 2004 season, BRP introduced the Sea-Doo
RXP "inter-cooled supercharged" engine, which at 215hp is the industry's most
powerful personal watercraft. The Company believes that new buyers are attracted
by the high horsepower performance and environmental characteristics of the RXP.
In 2004 BRP also introduced a new kind of personal watercraft, the Sea-Doo 3D,
the world's first personal watercraft to offer multiple riding experiences. The
Sea-Doo 3D has already won several awards due to its innovative design and
concept.
The Company also
supports safe boating training and educational initiatives as well as safety
innovations for its products. BRP has been recognised by the U.S. Coast Guard
and the National Transportation Safety Board for its contribution to
recreational boating safety. In 2000, BRP introduced the Sea-Doo Learning Key,
which limits the top speed to approximately 35 mph for less experienced

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riders. The Sea-Doo Off-Power Assisted Steering System was introduced in 2001
to provide added manoeuvrability by assisting the steering of the watercraft in
off-throttle and off-power situations.
BRP's 2005 Sea-Doo
models carry suggested retail prices ranging from U.S.$6,299 - U.S.$12,999 for
the U.S. market. BRP also generates revenue from the sale of parts, accessories
and clothing related to its personal watercraft products.
All-Terrain
Vehicles. BRP offers a broad array of ATVs in all major segments of the
industry. In 2002, BRP was the first company to introduce a two-rider ATV. The
response from the specialised press, dealers and customers has been extremely
positive. BRP's ATVs have been recognised with many industry honours and awards.
The 2005 ATV models carry
suggested retail prices ranging from U.S.$3,299 - U.S.$8,599 (excluding the
youth models which retail between U.S.$1,799 - U.S.$2,399) for the U.S. market.
Sport Boats.
BRP has been manufacturing sport boats since 1994. Its model year 2004 line-up
is made of eight families of sport boats under the Sea-Doo brand name. BRP's
sport boats are available in both the sport performance segment, with the
Sportster and Speedster platforms, and the recreational all-purpose segment,
with the Challenger, Utopia and Islandia platforms. BRP's sport boats have
received many industry honours and awards.
For the 2005
season, BRP launched three new boats including the newly designed Challenger,
which is equipped with a 4-TEC engine supplied by Rotax. BRP's sport boats carry
suggested retail prices ranging from U.S.$11,599 to U.S.$33,899 for sport
performance boats and U.S.$21,999 to U.S.$36,999 for recreational all-purpose
boats for the U.S. market.
Engines. The
Company's facility in Gunskirchen, Austria designs, develops and manufactures
engines for a broad array of vehicles and equipment under the Rotax brand name.
Rotax engines are used in Ski-Doo and Lynx snowmobiles, Sea-Doo personal
watercraft and sport boats, and Bombardier ATVs, as well as in other
manufacturers' motorcycles, scooters, karts and small and ultra-light aircraft.
Motorcycle and Scooter Engines. The Company develops
  and produces motorcycle and scooter engines. Motorcycle engines represented
  over 74% of external engine units sold in fiscal year 2004/2005. The Company
  has long-standing relationships whereby it produces engines for BMW and
  Aprilia motorcycles and manufactures small engines for two-wheelers produced
  by Aprilia (now owned by Piaggio).
  Aircraft. The Company is a leading developer and
  supplier of engines for light-weight and ultralight aircraft.
  Kart. The Company has been developing and
  manufacturing engines for kart racing since 1983, and in 1997 entered the
  recreational karting market segment.Marine Engines

BRP's model year
2005 product line-up offers a full range of outboard engines available across
all three current technologies in the industry: Johnson 2-stroke carbureted and
4-stroke technology, and Evinrude 2-stroke direct injection and E-TEC direct
injection technologies. Johnson branded engines are targeted at consumers
desiring conventional 2-stroke and 4-stroke technology, ranging from 3.5 hp to
225 hp. The Evinrude brand focuses on delivering new and innovative technology
to consumers. In the model year 2005 product line-up, Evinrude 2-stroke direct
injection and E-TEC engines are offered in 59 models in North America ranging
from 40 hp to 250 hp. In addition, BRP's Evinrude E-TEC technology has won
several industry-related and other awards, including as a product that enhances
boating safety, due to the low carbon monoxide emission levels.

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In 2004, BRP
expanded the E-TEC line-up, launching V6 models from 200hp to 250hp. These
models have all of the attributes of the smaller platforms (40hp to 90hp),
including California Air Resources Board (CARB) "3-Star Ultra-Low Emission"
certification, no scheduled dealer maintenance required for three years for
recreational use and lower weights than comparable 4-stroke engines.
Manufacturing and Supply
The Company's
manufacturing operations are conducted through nine manufacturing facilities
worldwide. The Company's specific manufacturing facilities and their specific
businesses and supplier relationships are described below. The manufacturing of
most of the Company's parts, accessories and clothing business is outsourced.
Power Sports.
The Company's manufacturing facility in Valcourt, Québec produces Ski-Doo
snowmobiles, Sea-Doo personal watercraft, Bombardier ATVs and related
components. While ATV production is year-round, Valcourt maximises its
utilisation by producing snowmobiles and personal watercraft in opposite
seasons. At Valcourt, the Company has identified specific core manufacturing
competencies (including final assembly, aluminium forming and welding, steel
forming and welding and painting) and has chosen outside vendors to provide
other vehicle components. Valcourt's most significant supplier is the Company's Rotax unit. Most of Valcourt's other suppliers, which principally provide
tracks, hulls, plastics, seats, and transmission components are located near the
facility. In addition, in 2001 and 2002 the Company entered into agreements with
a Taiwanese manufacturer, whereby such manufacturer produces entry-level and
youth model ATVs and related parts for BRP. The Company expects the outsourcing
of these products will continue to provide considerable cost savings for BRP.
The Company's Rovaniemi, Finland facility produces Lynx and certain models of Ski-Doo
snowmobiles, and related components. This facility is focused on snowmobile
final assembly, steel forming, and painting. Its most significant supplier is
Rotax. To benefit from economies of scale and reduce tooling costs it purchases
several components in common with Valcourt. Most of Rovaniemi's other suppliers,
which principally provide tracks, plastics, seats, and suspension components,
are located near the facility or in continental Europe.
The Company's
manufacturing facility in Benton, Illinois produces sport boats. The Benton
facility focuses on manufacturing fiberglass hulls and decks, as well as boat
assembly. Benton's most significant supplier is Rotax. Most of Benton's other
suppliers, which principally provide trailers, plastics, raw materials for fiberglass hulls and boat accessories, are located in the continental U.S.
The Company's
facility in Gunskirchen, Austria produces Rotax engines for BRP's snowmobiles,
personal watercraft, sport boats and ATVs, as well as engines for other original
equipment manufacturers of motorcycles, karts and light aircraft. Manufacturing
operations are focused on engine assembly and machining of critical engine
components. Most of Rotax's suppliers, which principally provide castings,
electrical and mechanical components, are located in Europe.
Marine Engines.BRP has consolidated machining and final assembly of outboard engines at
facilities in Sturtevant, Wisconsin, Juarez, Mexico and Dongguan, China.
Facilities in Spruce Pine, North Carolina and Delavan, Wisconsin produce engine
components such as lost foam castings and direct injection fuel systems. These
two facilities are held for sale. Production of outboard engines runs
year-round.
Most of the
outboard engine suppliers are located in the United States, with a few suppliers
located in Asia. BRP has entered into an agreement with a Japanese manufacturer
which supplies 4-stroke engines, that are sold under the
Johnson brand name. With respect to the manufacture of outboard engines, the
Company believes that further cost synergies may be achieved by continued
optimisation of the manufacturing footprint and supplier network.

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Distribution, Sales and Marketing

Distribution and SalesPower Sports

BRP distributes
snowmobiles, personal watercraft and ATVs worldwide through a network of
approximately 1,600 power sports dealers, 1,800 marine dealers and 55 power
sports distributors and 70 marine distributors. BRP also distributes sport boats
through both power sport dealers and marine dealers throughout North America.
BRP's dealers enter into contractual arrangements pursuant to which the dealer
is authorised to market specific product lines and is required to stock service
parts and perform warranty and other services. Most of these contracts do not
require a dealer to market the Company's products exclusively. Based on volume
and other criteria, dealers become entitled to discounts, co-op advertising,
inventory financing and non-current unit discounts.

For snowmobiles
and personal watercraft, dealers place an annual order at dealer meetings held
in February for Ski-Doo and in September for Sea-Doo. For ATVs, BRP takes
biannual formal orders from dealers and on-going orders in between formal order
periods. The dealership base for Ski-Doo and Sea-Doo is stable and mostly
composed of dealers with whom BRP has enjoyed a long-standing relationship. For
ATVs, which require much broader geographical coverage, BRP continues to expand
its coverage while also enhancing its current dealer base. To promote new
dealerships and to service its existing dealer network, BRP employs district
sales managers and regional sales managers throughout North America.

Distribution and SalesMarine Engines

In North America,
outboard engines are distributed through two channels: boat builders and
independent marine dealers. The majority of new outboard-powered boats today are
sold by boat builders to dealers as a package (boat plus outboard engine). BRP
has entered into non-exclusive supply agreements with many independent boat
builders. BRP agrees with boat builders on a non-binding target order volume for
a model year, which allows it to plan production and the boat builder to plan
for a certain level of discount. BRP also maintains established relationships
with more than 1,800 independent outboard dealers (full-line and package only)
to distribute Johnson and Evinrude products, including parts and accessories.
Full-line dealers order products directly from the factory, while package
dealers order boats with BRP's outboard engines but do not order outboard
engines directly from BRP. Outside of North America, BRP's outboard engines are
sold through distributors. BRP sells its engines to over 70 countries.

Marketing

BRP's marketing
efforts are focused on two target customers: dealers/distributors and consumers.
To attract dealers and distributors and provide incentives for retailing its
products, BRP holds several dealer meetings, arranges for inventory financing,
makes available point-of-purchase material (including brochures, posters and
stands), and offers targeted discounts and rebate programs and other incentives.

BRP reaches
consumers directly by promoting its products using print advertising in industry
press, user groups, websites and newspapers, as well as via television
advertising. In January 2005, BRP launched a 30-minute infomercial for its
Evinrude E-TEC outboard engines. BRP also participates in a number of
sponsorship activities, and sponsors the Ski-Doo X-Team, a professional
snowmobile racing team, as well as other independent racers. The Company also
sponsors Team Evinrude, a team comprised of fishing professionals who compete on
professional circuits, as well as a number of fishing programs broadcast
primarily on Fox TV Sports Network.

During the year,
the Company and the Outdoor Life Network entered into an agreement to produce
and air a television show called "The Ultimate Playground - Powered by BRP." The
show's eight original episodes are planned to showcase the Company's products in
high-energy, adventure settings. The

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Company believes "The Ultimate Playground" concept, an industry first, will
be a highly effective marketing tool.
Competition
The Company's
businesses, including the snowmobile, ATV, personal watercraft, outboard engine
and sport boat businesses, are highly competitive. The Company competes
domestically and internationally with individual producers as well as with
vertically integrated manufacturers, some of which have resources greater than BRP does. Competition in such markets is based upon a number of factors,
including brand loyalty, price, quality, reliability, styling, product
innovations and features, and warranties. At the dealer level, competition is
based on a number of factors including sales and marketing support programs
(such as financing and co-operative advertising). In addition, BRP's products
compete with many other recreational products and activities for the
discretionary spending of consumers.
Power Sports.
BRP's power sports businesses are typically mature markets with a few large
international competitors with access to significant financial resources. BRP's
principal competitors in snowmobiles are Arctic Cat, Polaris and Yamaha; in
personal watercraft are Kawasaki, Yamaha, and Honda (Polaris announced its exit
from the market in 2004); in ATVs are Arctic Cat, Honda, John Deere, Kawasaki,
Polaris, Suzuki and Yamaha; and in sport boats are Sugar Sands and Yamaha
(Polaris announced its exit from the market in 2004).
Not all of these
competitors compete in each of the markets that the Company does, however, BRP
believes that most have the resources to do so. BRP believes that significant
barriers to entry currently exist in these businesses due to brand loyalty,
long-standing dealer and distribution networks, limited engine sources,
manufacturing and engineering expertise and high initial start-up costs. In some
cases, competitors offer similar products, with a smaller number of platforms
than BRP does, but in other markets, like ATVs, the Company's competitors have a
broader product offering.
Marine Engines.
The marine engine market is extremely competitive, with several major
international companies comprising the majority of the market. During Outboard
Marine Corporation's bankruptcy proceedings, many of its customers moved their
business largely to other competitors. Since acquiring assets of Outboard Marine
Corporation's outboard engine business, BRP has been working to regain that
company's historical market share. Key to regaining market share has been
regaining credibility with dealers and boat manufacturers by providing better
service, expanding BRP's product line and introducing new technologies.
Intellectual Property
The Company relies on a
combination of patent, design, copyright, trade secret, and trademark laws to
protect certain aspects of its business.
Over the past
several years, the Company has worked aggressively to expand the proprietary
position afforded by its patent portfolio, both through acquisitions and
original patent filings. As of January 31, 2005, the Company owned or had rights
to use more than 1,150 issued or pending U.S. patents and patent applications
directed to engine technologies and other important product features and product
designs. The Company also has related patents and patent applications in Canada,
Europe, and other jurisdictions. The Company plans to continue investing in this
area as it improves existing technologies and develops new ones.
In addition to
protecting BRP's technological innovations, the Company relies on a combination
of registered and unregistered trademark rights to protect its position as a
branded company with strong name recognition. The Company uses the registered
trademarks Ski-Doo®, Sea-Doo®, Bombardier®,
Johnson®, Evinrude®,
Lynx® and Rotax® in
association with their respective product lines and related accessories. BRP has
entered into a license agreement with Bombardier Inc. which, among other things,
enables it to continue to use certain marks owned by Bombardier Inc. (including
the Bombardier®

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trademark) which were not otherwise assigned to BRP in connection with the
Transactions in association with its products and at its products' dealerships.
Monitoring the
unauthorised use of the Company's intellectual property is difficult, and the
steps taken may not prevent unauthorised use by others. The failure to
adequately build, maintain and enforce the Company's intellectual property
portfolio could impair the strength of its technology and its brands, and harm
its competitive position.
Regulation
The Company's
operations are subject to extensive federal, state, provincial, territorial,
local and international environmental and safety laws and regulations relating
to, among other things, the generation, storage, handling, emission,
transportation, disposal and discharge of hazardous and nonhazardous substances
and materials into the environment and employee health and safety. Permits are
required for certain of the Company's operations, which are subject to
revocation, modification and renewal by issuing authorities. Governmental
authorities have the power to enforce compliance with their laws and
regulations, and violations may result in enforcement actions such as
convictions, the payment of fines or the issuing of injunctions, or some
combination of the foregoing. As the requirements of such laws and enforcement
policies have generally become stricter in recent years, the Company is unable
to predict the ultimate cost of compliance with environmental and health and
safety laws and enforcement policies. The Company endeavours to ensure that its
facilities comply with applicable environmental laws and regulations.
Laws and
regulations relating mostly to engine gaseous emissions, sound levels, safety
and construction standards or motorised recreational products are in place or
will gradually be implemented in jurisdictions where the Company's products are
manufactured and sold. BRP believes its products comply with all existing
legislative and regulatory requirements in the jurisdictions where they are
manufactured or sold. Moreover, BRP is taking appropriate measures to ensure
that its products will be compliant with anticipated more stringent regulations
as they become effective from time to time. Such measures include re-calibration
of existing engines/vehicles, development of revised engine combustion
chamber/vehicle configurations, as well as development of new technologies.
While these efforts require substantial expenditures, it is impractical at this
time to isolate these specific costs from total project costs.
Legal Proceedings
The Company is
engaged in a business which exposes it to potential claims from the use of its
products, many of which are motorised vehicles that may be operated at high
speeds and in a careless or reckless manner. The Company has approximately 140
pending legal proceedings, 70% of which are in the United States. The Company
vigorously defends all litigation to which it becomes subject, but there can be
no assurance that it will be successful or that, if not successful, that the
Company's insurance will be sufficient to cover any resulting liability.
Approximately half
of all pending litigation consists of product liability cases. The most common
product liability lawsuits the Company faces involve (i) allegations that its
personal watercraft are defectively designed or lack adequate warnings, because
they require power to steer, and operators sometimes let go of the throttle when
attempting to avoid a collision (this is commonly referred to as the
off-throttle steering issue), (ii) alleged fuel tank explosions for certain of
its personal watercraft that were subject to a recall campaign and (iii) crashes
of ultralight airplanes which use Rotax engines. With respect to product
liability claims which arise as a result of personal injury or property damage
that occurred prior to the consummation of the Transactions, currently
approximately 93% of the pending product liability cases, Bombardier Inc. has
agreed under the purchase agreement to indemnify BRP for certain amounts. The
Company has insurance with respect to any future claims in amounts determined by
it to be appropriate, however, claims may arise in the future in excess of its
indemnities and insurance coverage.

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The Company is
also subject to patent infringement claims or other claims involving its
intellectual property. The Company currently has one U.S. patent infringement
lawsuit outstanding against it, for an undetermined amount of damages. In 2000,
Boss Control, Inc. filed a claim alleging that the Company's safety lanyards on
its snowmobiles and personal watercraft infringe a patent held by Boss Control. BRP obtained summary judgement in its favour in April 2004 but the plaintiff
appealed. While the Company cannot predict with certainty the final outcome of
this action, it believes that its resolution will not materially affect its
business. If BRP is unsuccessful with respect to this matter, it may be enjoined
from using the technology that is the subject of Boss Control's patent or be
required to obtain a license agreement on less advantageous terms. If enjoined,
the Company will need to design around the patent it is alleged to be
infringing, which could take substantial time and resources.
C. Operational structure

The Company,
incorporated under the laws of Canada, is a wholly owned subsidiary of J.A.B.,
its parent, also incorporated under the laws of Canada. The Company's
significant subsidiaries, all of which are wholly owned, are:BRP US Inc., incorporated under the
  laws of the state of Delaware;

D. Property, plants and equipment

Properties

BRP owns its
executive offices located in Valcourt, Québec, Canada. BRP owns seven separate
manufacturing facilities worldwide and leases two manufacturing facilities in
Delavan, Wisconsin and Guangdong, China. BRP also owns or leases approximately
30 other sales, distribution, test and engineering facilities worldwide. The
obligations under the Company's senior secured Amended and Restated Credit
Agreement are secured by
the assets of the Company and certain of its subsidiaries. For a description of
any environmental issues that may affect the Company's utilization of its assets
see "Item 4 - Business Overview - B. Regulation." Each of BRP's
manufacturing facilities is set forth in the table below:

|                             | Approx.        |        |                                           
|---------------------------- | -------------- | ------ | ------------------------------------------
|Manufacturing
    facilities | Size (sq. ft.) | Status | Products                                  
|                             |                |        |                                           
|Power Sports Facilities:     |                |        |                                           
|                             |                |        |                                           
|Valcourt, Québec, Canada     | 935,600        | Owned  | Snowmobiles, personal watercraft, and ATVs
|Gunskirchen, Austria         | 570,000        | Owned  | Rotax engines and engine components       
|Benton, Illinois, U.S.       | 380,000        | Owned  | Sport boats                               
|Rovaniemi, Finland           | 60,000         | Owned  | Snowmobiles                               
|                             |                |        |                                           
|                             |                |        |                                           
|Marine Engines Facilities:   |                |        |                                           
|                             |                |        |                                           
|Sturtevant, Wisconsin, U.S.  | 450,000        | Owned  | Outboard engines, machining and assembling

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|Spruce Pine, North Carolina, U.S. | 260,800 | Owned  | Lost foam casting of components for outboard
    engines
|--------------------------------- | ------- | ------ | --------------------------------------------------------
|                                  |         |        |                                                         
|Juarez, Mexico                    | 199,100 | Owned  | Small outboard engines, components, parts and           
|                                  |         |        | accessories                                             
|Dongguan, Guangdong, China        | 119,300 | Leased | Electronic components and small outboard
    engines    
|Delavan, Wisconsin, U.S.          | 40,000  | Leased | Electronic, fuel injection and oiler
    components     







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ITEM 5- OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Management's Discussion and Analysis of Financial Condition and Results of
Operations
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 previously reported goodwill has been restated to account for the tax
effects of the acquired trademarks, which is further discussed in note 2 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 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 the 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 29 to the Consolidated Financial Statements.
All amounts presented in this MD&A are in Canadian dollars unless otherwise
indicated.
CONSOLIDATED OVERVIEW
Description of BusinessBRP 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.

- 28 -

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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 pillarsIn order to create value for shareholders, BRP focuses on opportunities and
challenges based on the following three pillars:Product Complexity ReductionDuring 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.Make, Buy, or Outsource DecisionMany 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.Footprint OptimisationIn 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 Andrews machining facility located in North
  Carolina, U.S.;The Burnsville facility located in North Carolina ,
  U.S.;The Troyhill distribution centre for parts and
  accessories located in New Jersey, U.S.;

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. 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      | three-month period
|                               | period ended     | ended January 31, 
|(millions of Canadian dollars) | January 31, 2005 | 2004[1]           
|Revenues                       | $ 634.3          | $ 726.2           
|Cost of sales                  | 528.9            | 640.3             
|Gross profit                   | 105.4            | 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              

- 29 -

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|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                                                                                                                                                                                                                                                                                                                                                                                                                                    | (11.8)   | (4.7)  
|Other Income and expense                                                                                                                                                                                                                                                                                                                                                                                                                                                     |          |        
|Financing costs                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 23.7     | 8.1    
|Accretion in carrying value
    of redeemable preferred shares                                                                                                                                                                                                                                                                                                                                                                                                               | -        | 0.5    
|Net loss on derivative
    financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                             | -        | 4.5    
|Foreign exchange (gain) loss on long-term
    debt                                                                                                                                                                                                                                                                                                                                                                                                                           | 3.9      | (1.3)  
|Loss from continuing operations before income
    taxes                                                                                                                                                                                                                                                                                                                                                                                                                      | (39.4)   | (16.5) 
|Income tax recovery                                                                                                                                                                                                                                                                                                                                                                                                                                                          | (18.8)   | (4.5)  
|Loss from continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                              | (20.6)   | (12.0) 
|Income from discontinued operations, net of
    tax                                                                                                                                                                                                                                                                                                                                                                                                                          | 0.3      | 2.3    
|Net loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | $ (20.3) | $ (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 $634.3 million, a decrease of $91.9 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 $24.0 million offset in part by favourable product and pricing
mix of approximately $29.0 million

Consolidated gross profit reached $105.4 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 $8.0 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
6.0% 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 5.6% 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.

- 30 -

---

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, 2004

BRP 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.



- 31 -

---



|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 $530.8 million for the
three-month period ended January

Power Sports segment operating income amounted to $26.8
million for the three-month period ended January 31, 2005 as compared to $20.5
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 $6.0 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

Marine Engines segment operating loss amounted to $24.8
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.

- 32 -

---



|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
|Revenues                                    | $ 2,467.0        | $ 2,409.1        | $ 2,383.4       
|Gross profit                                | 422.1            | 423.6            | 555.4           
|Gross profit percentage                     | 17.1%            | 17.6%            | 23.3%           
|Restructuring charges, impairment loss and  |                  |                  |                 
|curtailment
    gain                        | 14.9             |                 |                
|Operating income from continuing            |                  |                  |                 
|operations                                  | 29.8             | 36.1             | 175.8           
|Income from continuing operations           | 19.3             | 10.7             | 113.9           
|Income (loss) from discontinued operations, |                  |                  |                 
|net of
    tax                              | (3.3)            | 2.0              | 0.9             
|Net income                                  | 16.0             | 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
|--------------------------------------------------- | ---------------------------
|Effects of foreign currency on revenues             | $ (152)                    
|Effects of foreign currency
    on gross profit     | (96)                       
|Effects of foreign currency
    on operating income |                            
|from
    continuing operations                      | (86)                       

Consolidated revenues for fiscal 2005 reached $2,467.0
million, an increase of $57.9 million or 2.4% 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
$152.0 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 $422.1 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
17.1% of consolidated revenues which is the same as for 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 $96.0 million and increased
amortisation of intangibles of approximately $11.0 million.

- 33 -

---



Selling and marketing expense amounted to $141.4 million or
5.7% 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 199

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 Company expensed $12.9 million of deferred
financing cost as a result of

- 34 -

---

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 income tax recovery was $12.6 million for the year ended
January 31, 2005, a variation of $20.8 million when compared to an income tax
expense of $8.2million for the combined year ended January 31, 2004.
This decrease in income tax is mainly due to lower effective tax rates in
certain tax jurisdictions in the current periods compared to the corresponding
periods last year and also due to certain tax exempt expenses such as the $6.4
million loss on early redemption of preferred shares and 50% of the foreign
exchange gain on U.S. denominated long-term debt.

Income from continuing operations was $19.3 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 $16.0 million, an increase of $3.3 million compared to previous
combined fiscal year.

- 35 -

---



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

Consolidated 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

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.

- 36 -

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Risks

Effect of Foreign Exchange Rate Fluctuations

The 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, 2004
|----------- | ---------------- | ----------------
|U.S. dollar | 1.2380$CA/$US    | 1.3264$CA/$US   
|Euro        | 1.6157$CA/Euro   | 1.6520$CA/Euro  

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 ended      
|----------- | ---------------- | ------------------- | ----------------
|            | January 31, 2005 | January 31, 2004    | January 31, 2003
|U.S. dollar | 1.2962$CA/$US    | 1.3812$CA/$US       | 1.5655$CA/$US   
|Euro        | 1.6147$CA/Euro   | 1.5811$CA/Euro      | 1.5018$CA/Euro  

When 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 theCompany'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.

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Inflation and Price Fluctuations

The 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

The U.S.$200 million (approximately $248.0 million) senior subordinated notes
bear a fixed rate of 8

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.

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BUSINESS SEGMENT PERFORMANCE

BRP 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
|Effects of foreign currency on segmented revenues         |                 
|Power Sports                                              | $ (136)         
|Marine Engines                                            | (16)            
|                                                          | $ (152)         
|Effects of foreign currency on segmented operating income |                 
|Power
    Sports                                          | $ (90)          
|Marine Engines                                            | 2               
|                                                          | $ (88)          

The segmented revenues for the years ended January 31 were as follows:

|                                                                                          |                  | Combined year    |                 
|----------------------------------------------------------------------------------------- | ---------------- | ---------------- | ----------------
|                                                                                          | Year ended       | ended            | Year ended      
|                                                                                          | January 31, 2005 | January 31, 2004 | January 31, 2003
|(millions of Canadian dollars)                                                            |                  |                  |                 
|Power Sports                                                                              | $ 1,951.3        | $ 1,888,5        | $ 1,834.0       
|Marine Engines                                                                            | 561.1            | 559.8            | 579.9           
|Inter segment revenues                                                                    | (45.4)           | (39.2)           | (30.5)          
|Total consolidated revenues                                                               | $ 2,467.0        | $ 2,409.1        | $ 2,383.4       
|                                                                                          |                  |                  |                 
|The segmented operating income
    (loss) for the years ended January 31 were as follows:
|                                                                                          |                  | Combined year    |                 
|                                                                                          | Year ended       | ended            | Year ended      
|                                                                                          | January 31, 2005 | January 31, 2004 | January 31, 2003
|(millions of Canadian dollars)                                                            |                  |                  |                 
|Power Sports                                                                              | $ 93.7           | $ 84.2           | $ 186.9         
|Marine Engines                                                                            | (17.8)           | (14.6)           | 17.8            
|Total                                                                                     | $ 75.9           | $ 69.6           | $ 204.7         

Power Sports

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

Power Sports segment revenues reached $1,951.3 million for
the year ended January

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The Power Sports segment operating income amounted to $93.7
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 $90.0 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.
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

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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 ultralight 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

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 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

- 41 -

---

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.

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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
|----------------------------------------------------------- | ---------------- | -------------------
|                                                            | January 31, 2005 | January 31, 2004   
|(millions of Canadian dollars)                              |                  |                    
|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.

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Other current assets amounted to $74.5 million as at January
31, 2005, compared to $97.1 million as at January 31, 2004. This $22.6 million
decrease is mainly due to a reduction in derivative financial assets of $32.4
and prepaid expenses of $5.3 million offset in part by an increase in income
taxes receivable of $17.5 million.
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 2 of the Consolidated Financial
Statements, the previously reported amounts of goodwill and long-term deferred
income tax have been retroactively 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 toamortisation 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 $597.2 million as at
January 31, 2005, compared to $640.5 million as at January 31, 2004. This $43.3
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.

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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.

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

- 45 -

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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 semi-annual 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.
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,

- 46 -

---

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       | 3.8      
|U.S.$200 million Senior subordinated notes                                                                                   |           |          
|(including mandatory interest payments)                                                                                      | 20.7      | 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 January31, 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.

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.

- 47 -

---

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. 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.

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.

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

- 48 -

---

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 remeasured 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.

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.

- 49 -

---

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 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.

- 50 -

---



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" which 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.

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.

- 51 -

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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.





- 52 -

---



|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 and 5 to the
    Consolidated Financial Statements as at January 31, 2005.

- 53 -

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|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                                                                      
|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                                                            
|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 from discontinued operations, net of tax                                    
|Net Income (loss)                                                                  
|(1) See note 5 to the
    Consolidated Financial Statements as at January 31, 2005.



- 54 -

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|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                                                     
|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 from discontinued operations, net of tax                                    
|Net Income (loss)                                                                  
|(1) See note 5 to the
    Consolidated Financial Statements as at January 31, 2005.



- 55 -

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BOMBARDIER RECREATIONAL PRODUCTS INC.Interim Consolidated Statements of Cash Flows(millions of Canadian dollars)(Unaudited)Three-month period
    Three-month period
    Three-month
    Three-month period
  ended April 30, 2004
    ended July 31, 2004
    period ended
    ended January 31,
  (1)
    (1)
    October 31, 2004 (1)
    2005OPERATING ACTIVITIES:Income (loss) from continuing operation
    $ (34.5)
    $ 20.8
    $ 53.6
    $ (20.6)Non-cash items:Depreciation
    and amortisation
    30.1
    30.1
    32.3
    27.6Amortisation
    of deferred financing costs
    1.6
    1.6
    1.5
    14.7Employee stock
    compensation
    0.7
    0.6
    0.5
    0.4Deferred
    income taxes
    (14.4)
    (6.6)
    10.2
    (9.1)Loss (gain) 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 redemptionof preferred shares
    1.0
    1.0
    7.4
    Unrealised
    gains on derivative financial instruments
    
    (1.1)
    0.3
    (0.8)Other charges
    and income
    
    
    
    8.4Foreign
    exchange gain on long-term debt
    21.2
    (19.9)
    (51.9)
    3.9Net changes in non-cash working capital
    balances related tooperations
    (29.4)
    53.4
    (27.0)
    84.9
  Cash flows from operating activities
    (23.7)
    80.3
    27.2
    109.4
  INVESTING ACTIVITIESAdditions 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
    2.0Net 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 ACTIVITIESIncrease in bank loans
    
    
    
    12.3Redemption of preferred share
    
    
    (52.6)
    Increase in capital stock
    6.5
    
    53.1
    0.3Other liabilities
    (2.7)
    
    
    2.7Repayment 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)
    9.7Cash flow from continuing operations
    (38.0)
    57.0
    47.3
    (100.8)Cash flow from discontinued operations
    (5.7)
    (3.9)
    (2.0)
    0.2Net 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
    250.9Cash and cash equivalent at end of period
    $ 152.5
    $ 205.6
    $ 250.9
    $ 150.3(1) See note 5 to the
    Consolidated Financial Statements as at January 31, 2005.

- 56 -

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|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 (gain) 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 gains on derivative financial instruments                               
|Other
    charges and income                                                       
|Foreign
    exchange 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) See note 5 to the
    Consolidated Financial Statements as at January 31, 2005.

- 57 -

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Forward-looking Statements

This annual report 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 realise 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 to:
the Company's high degree of leverage and significant debt
  service obligations;
  restrictions under the Company's senior secured Amended and
  Restated 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.



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ITEM 6- DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and senior managementThe following table presents
certain information concerning BRP's directors and members of senior management
as of April 22, 2005:

|Name                  | Age | Position(s)                                                                         
|--------------------- | --- | ------------------------------------------------------------------------------------
|                      |     |                                                                                     
|Laurent Beaudoin      | 66  | Chairman of the Board                                                               
|                      |     |                                                                                     
|José Boisjoli         | 47  | President and Chief Executive Officer                                               
|                      |     |                                                                                     
|Louis Morin           | 48  | Chief Financial Officer                                                             
|                      |     |                                                                                     
|Pierre Arsenault      | 41  | Vice President and General Manager,
    Snowmobiles, Watercraft, ATV and Sport Boats
|                      |     |                                                                                     
|Christopher Dawson    | 36  | Vice President, Strategic Planning and
    Business Development                     
|                      |     |                                                                                     
|François Durand       | 53  | Vice President, Human Resources                                                     
|                      |     |                                                                                     
|Michel Hade           | 46  | Vice President and General Manager,
    International Sales and Marketing           
|                      |     |                                                                                     
|Roch Lambert          | 42  | Vice President and General Manager, Outboard
    Marine Engines                     
|                      |     |                                                                                     
|Yves Leduc            | 40  | Vice President and General Manager, BRP-Rotax                                       
|                      |     |                                                                                     
|Jennifer Millson      | 44  | Vice President, General Counsel and Secretary                                       
|                      |     |                                                                                     
|Alain Villemure       | 42  | Executive Vice President, Manufacturing and
    Operations, North America and China 
|                      |     |                                                                                     
|Pierre Beaudoin       | 43  | Director                                                                            
|                      |     |                                                                                     
|Joshua Bekenstein     | 46  | Director                                                                            
|                      |     |                                                                                     
|J.R. André Bombardier | 62  | Director                                                                            
|                      |     |                                                                                     
|Jean Gaulin           | 62  | Director                                                                            
|                      |     |                                                                                     
|Jordan Hitch          | 38  | Director                                                                            
|                      |     |                                                                                     
|Luc Houle             | 48  | Director                                                                            
|                      |     |                                                                                     
|Matthew Levin         | 39  | Director                                                                            
|                      |     |                                                                                     
|Carlos Mazzorin       | 63  | Director                                                                            
|                      |     |                                                                                     
|Pierre Michaud        | 61  | Director                                                                            
|                      |     |                                                                                     
|Nicholas G. Nomicos   | 42  | Director                                                                            
|                      |     |                                                                                     
|Daniel J. O'Neill     | 53  | Director                                                                            
|                      |     |                                                                                     
|Edward Philip         | 39  | Director                                                                            

- 59 -

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There are no
arrangements on understandings pursuant to which any directors or members of
senior management was selected as a director or a member of senior management,
other than as provided for in the shareholder's agreement described under "Item
10 - Additional Information - C. Material Contracts - Shareholders Agreement."

Set forth below is a brief
description of the business experience of each of the Company's directors and
executive officers:
Laurent Beaudoin
became Chairman of BRP on December 18, 2003. He is the Chairman of the board of
directors and the Chief Executive Officer of Bombardier Inc., a position he
assumed in December 2004. From 1979 to 1999, Mr. Beaudoin served as Bombardier
Inc.'s Chief Executive Officer and Chairman, and from 1993 to 2003, he was
Chairman of Bombardier Inc.'s board and executive committee. He is a Fellow
Chartered Accountant. Mr. Beaudoin holds a Bachelor of Arts degree from
Sainte-Anne College and a Master of Commerce degree from the University of
Sherbrooke. He has also received honorary doctorates from several universities,
and a number of business awards, including CEO of the Year (Financial Post),
Canada's Executive of the Year (International Chamber of Commerce) and
membership status in the World Trade Hall of Fame (World Trade Institute). He is
the father of Pierre Beaudoin and the brother-in-law of J.R. André Bombardier.
José Boisjoli
became President and Chief Executive Officer of BRP on December 18, 2003. He was
previously President of Bombardier Inc.'s snowmobile, personal watercraft and
ATV businesses, a position he had held since May 2001. From October 1998 to May
2001, he was President of Bombardier Inc.'s snowmobile and personal watercraft
divisions. Mr. Boisjoli joined Bombardier Inc. in February 1989 where he started
as Director of Purchasing and later held the positions of Vice President,
Material and Vice President and General Manager for all of its North American
operations. Mr. Boisjoli holds a Bachelor of Mechanical Engineering degree from
the University of Sherbrooke.
Louis Morin
became Chief Financial Officer of BRP on December 18, 2003. From June 2003 to
then, he served as a financial consultant for Beaudier. Prior to that, Mr. Morin
was Chief Financial Officer of Bombardier Inc., where he worked since 1982. Mr.
Morin holds a Masters degree and a Bachelors degree in Business Administration
from the University of Montréal and is a Chartered Accountant.
Pierre Arsenault
became Vice President and General Manager, Snowmobiles, Watercraft, ATV
and Sport Boats on October 25, 2004. Prior to that, he acted as Vice President,
Strategy and Business Development since March 1, 2004. He was previously Vice
President, Sales and Marketing - North America, for Bombardier Inc.'s
snowmobile, personal watercraft and ATV businesses, a position he had held since
September 1, 2002. Mr. Arsenault joined Bombardier Inc. in May 1995 as Director
Strategic Planning and had held various positions in marketing, business
development and as General Manager of Bombardier Inc.'s Neighbourhood Electric
vehicle business. He earned a Bachelors degree in Mechanical Engineering from
McGill University and a Masters degree in Business Administration from the
Harvard Business School.
Christopher Dawson
became Vice President, Strategic Planning and Business Development on October
25, 2004. He was previously Vice President, Marketing, North America covering
all of BRP's brands and held various marketing and strategic planning positions
since joining Bombardier Inc. in January 1998. Previously, he worked with
different multinational companies in various domestic and international
marketing positions. Mr. Dawson has a Bachelor of Commerce (Honours) degree from
Queen's University and a Masters degree in Business Administration from INSEAD
in France.
François Durand
became Vice President, Human Resources on November 15, 2004, after
having spent nearly six months as Vice President, Human Resources at BRP-Rotax
in Austria. Prior to that, he was Managing Director with Korn/Ferry
International, which acquired in 2000 Illsley Bourbonnais Inc., which he had
joined in 1987. Previously, Mr. Durand worked with different companies and
organizations in various human resources functions, including Bombardier Inc.
Mr. Durand has a Bachelor degree in

- 60 -

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Industrial Relations from Laval University.

Michel Hadebecame Vice President and General Manager, International Sales and Marketing on
December 18, 2003. He had held this position at Bombardier Inc. since June 2000.
Previously he worked at Bausch & Lomb Canada (1982-2000) where he rose from
Sales Representative to President and General Manager. Mr. Hade holds a Bachelor
of Industrial Relations degree from the University of Montréal.

Roch Lambert
became Vice President and General Manager, Outboard Marine Engines on October
25, 2004. Prior to that, he had acted as Executive Vice President, Product
Development, Sales and Marketing, North America, since January 1, 2004. He had
been the Vice President and General Manager of Marine Engines with Bombardier
Inc. since February 2001. Mr. Lambert joined Bombardier Inc. in 1994 and his
responsibilities with the company have included Vice President, Operations and
Vice President, Production. Mr. Lambert holds a Certificate of Business
Administration from Laval University and a Bachelor of Mechanical Engineering
degree from the University of Montréal École Polytechnique.

Yves Leduc 
became Vice President and General Manager of BRP-Rotax on March 1, 2004.
Previously, he was the Vice President of Material Management and Aircraft
Engines at Bombardier-Rotax (2000-2004), the Vice President, Strategic Planning
and Business Development for the Bombardier Recreational Products
division (1998-2000), and a Consultant with McKinsey & Company (1994-1998). Mr.
Leduc has a Law degree from the University of Montreal and an LLM from Columbia
University. He practised law with the firm of Stikeman Elliott in Montreal from
1988-1994.

Jennifer Millson
became Vice President, General Counsel and Secretary on January 1, 2004.
She joined Bombardier Inc. in August 1998 as Vice President, Legal Services of
the Bombardier Services group and was appointed Vice President, Legal Services
of Bombardier Recreational Products in February 1999. Previously, Ms. Millson
was Senior Legal Counsel of TRW Inc. (1990-1997) and an associate with Thompson,
Hine and Flory in Cleveland, Ohio (1985-1990). Ms. Millson has a J.D. degree
from Georgetown University Law Center and a Bachelor of Arts degree from Miami
University.

Alain Villemure
became Executive Vice President, Manufacturing and Operations, North
America and China on January 1, 2004. He was previously Vice President,
Manufacturing Operations for Bombardier Inc.'s snowmobile, personal watercraft
and ATV businesses, a position he had held since 2001. Mr. Villemure joined
Bombardier Inc. in 1995 as Director of Operations for the Utility Vehicles
division in Granby. He became Plant Manager two years later. He was then
transferred to the snowmobile and personal watercraft division as Vice President
of Engineering. He holds a Bachelors degree in Electrical Engineering from
l'École de Technologie Supérieure of Québec University.

Pierre Beaudoin
became a director on January 15, 2004. In December 2004, he was
appointed Executive Vice President of Bombardier Inc., Office of the President.
Mr. Beaudoin is also the President and Chief Operating Officer of Bombardier
Aerospace, a position he has held since October 2001. He joined Bombardier Inc.
in 1985 and helped organise the Marine Products division. In October 1990, he
was named Vice President of Product Development for Sea-Doo/Ski-Doo. From June
1992 to January 1994, Mr. Beaudoin served as Executive Vice President of the
Sea-Doo/Ski-Doo division, and from January 1994 to April 1996, he assumed the
role of its President, until he was appointed the President and Chief Operating
Officer of the Bombardier Recreational Products division from 1996 to February
2001. He was President of Bombardier Business Aircraft from February 2001 to
October 2001. Mr. Beaudoin studied Industrial Relations at McGill University. He
is the son of Chairman Laurent Beaudoin and the nephew of director J.R. André
Bombardier.

Joshua Bekenstein
became a director on December 18, 2003. He is a Managing Director at Bain
Capital. Prior to joining Bain Capital in 1984, Mr. Bekenstein spent several
years at Bain & Company where he was involved with companies in a variety of
industries. Mr. Bekenstein serves as a Director of several corporations,
including Dollarama, Shoppers Drug Mart, Waters Corporation, and Bright Horizons
Family Solutions. Mr. Bekenstein received a Masters degree in Business
Administration from Harvard

- 61 -

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Business School and a Bachelor of Arts degree from Yale University.
J.R. André
Bombardier became a director on January 15, 2004. He is the Vice
Chairman of Bombardier Inc., a position he has held since 1978. Mr. Bombardier
joined Bombardier Inc. in 1969 as Vice President, Industrial Division, and then
successively held the positions of Vice President, Research and Development,
Ski-Doo Division; Assistant to the President in charge of new products, Vice
President of Marketing, Marine Products Division, and President of the Roski
Ltd. subsidiary, before taking the position he now holds. Mr. Bombardier has a
Bachelor of Arts degree from the Séminaire de Sherbrooke as well as a Bachelor
of Business from the University of Sherbrooke. He is also a graduate of the
Harvard International Senior Managers Program. He is the brother-in-law of
Chairman Laurent Beaudoin and the uncle of director Pierre Beaudoin.
Jean Gaulin
became a director on July 23, 2004. He retired as Chairman, President and Chief
Executive Officer of Ultramar Diamond Shamrock as of January 1, 2002. In
December 1996 following the merger of Ultramar Corporation and Diamond Shamrock,
Inc., Mr. Gaulin was named Vice Chairman, President and Chief Operating Officer
of Ultramar Diamond Shamrock. He was promoted to Chief Executive Officer January
1, 1999. In January 2000, Mr. Gaulin assumed the role of Chairman in addition to
President and Chief Executive Officer. Mr. Gaulin also serves on the boards of
Crane Co.; National Bank Financial; Groupe St-Hubert Inc; Rona, Inc.;
Corporation de l'École Polytechnique; the International Council of l'École des
Hautes Etudes Commerciales and Saputo, Inc. Mr. Gaulin is a 1967 graduate of the
University of Montreal École Polytechnique where he received a bachelors degree
in chemical engineering and science. He also attended St. Jean Royal Military
College.
Jordan Hitch
became a director on January 15, 2004. He is a Managing Director at Bain
Capital. Prior to joining Bain Capital, Mr. Hitch was a consultant at Bain &
Company where he worked in the financial services, healthcare and utility
industries. Previously, Mr. Hitch worked for Nalco Chemical Co. as an Area
Manager. Mr. Hitch received a Masters degree in Business Administration, with
distinction, from the University of Chicago Graduate School of Business. He
received a Bachelor degree in Mechanical Engineering from Lehigh University.
Luc Houle
became a director on December 18, 2003. He is Senior Vice President,
Investments, CDP CapitalAmericas, a subsidiary of the Caisse de Dépôt et
Placement du Québec, a position he has held since 1995. Mr. Houle joined the
Caisse in 1985 and has held a variety of positions prior to his current
appointment, including with CDP CapitalPrivate Equity and CDP Capital - World
Markets. He sits on the advisory committees of Onex Partners LP and Blackstone.
Mr. Houle has a Bachelors degree in Finance from the University of Sherbrooke.
Matthew Levin
became a director on December 18, 2003. He is a Managing Director at Bain
Capital. Prior to joining Bain Capital, Mr. Levin was a consultant at Bain &
Company where he consulted in the consumer products and manufacturing
industries. He serves as a director of several corporations, including Dollarama
and Unisource. Mr. Levin received an M.B.A. from Harvard Business School where
he was a Baker Scholar. He received a Bachelor degree in Science from the
University of California at Berkeley.
Carlos
Mazzorin became a director on July 23, 2004. He is Chairman and Chief
Executive Officer for Magna Donnelly, a wholly owned subsidiary of Magna
International. Mr. Mazzorin joined Magna Donnelly in January 2003 after 30 years
at Ford Motor Company. At Ford he served as Group Vice President of Asia Pacific
Operations, South America Operations and Global Purchasing and previous to that
as Group Vice President of Ford, Mexico operations and Global Purchasing.
Pierre
Michaud became a director on January 15, 2004. He has been Chairman of
the Board of Provigo Inc. since June, 1993. He held several positions, including
President and Chairman of the Board, with Réno-Dépôt from 1969 until 2003, when
he oversaw its successful merger with Groupe Rona. He has been Vice Chairman of
the board of Laurentian Bank of Canada since 2003. Mr. Michaud sits on the board
of directors of Loblaw Companies Limited, Provigo Inc., Laurentian Trust of
Canada Inc., Gaz

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Metropolitain, Old Port of Montreal Corporation Inc. and
Tremblant Advisory Board and is actively involved in such non-profit and
charitable organisations as the Foundation du CHUM, the Québec Business Council
and the Ste-Justine Hospital Foundation.
Nicholas G.
Nomicos became a director on January 15, 2004. He is an Executive Vice
President at Bain Capital. Prior to joining Bain Capital, Mr. Nomicos held
several senior corporate and division management positions at Oak Industries
Inc. where he headed the WDM business unit of Lasertron, a semiconductor laser
manufacturer serving the telecommunications industry. Previously, Mr. Nomicos
was a manager at Bain & Company. He serves as a director of Dollarama. Mr.
Nomicos received a Masters degree in Business Administration from Harvard
Business School and a B.S.E., Phi Beta Kappa and magna cum laude, from Princeton
University.
Daniel J. O'Neill
became a director on July 23, 2004. He is Vice Chairman, Synergies & Integration
of Molson Coors Brewing Company. Mr. O'Neill was President and Chief Executive
Officer of Molson Inc. prior to its merger with Coors. Mr. O'Neill's career
encompasses over 30 years of experience in the consumer products area. Mr.
O'Neill graduated from Carleton University with a Bachelors degree in Art and
from Queen's University with a Masters degree in Business Administration. Mr.
O'Neill also participated in the Program for Management Development course at
Harvard Business School.Edward Philipbecame a director on
April 4, 2005. In 2004, he started the Decision Matrix Group (DMG), working in
the Information Services research and consulting industry. Prior to DMG, Mr.
Philip was one of the first employees and founding members of Lycos, serving at
various times as the President, COO and CFO. Before Lycos, Mr. Philip spent
nearly 5 years at Disney in various financial roles. Prior to Disney, he was an
investment banker at Salomon Brothers and Morgan Stanley. He is a member of the
board of directors of Hasbro, Inc. Mr. Philip graduated with a Bachelors degree
in Science from Vanderbilt University and a Masters degree in Business
Administration from Harvard University.

B. Compensation

The aggregate
amount of compensation the Company paid for the year ended January 31, 2005 to
its directors and the members of its administrative, supervisory or management
bodies as a group, including salaries and profit-sharing payments was
$4,781,427. For a description of material benefits provided to such directors
and employees see "Item 10 - Additional Information - C. Material Contracts."

Directors are
compensated for their participation on the Company's board of directors by
receiving an annual retainer fee, attendance fees and reimbursement for
out-of-pocket expenses incurred in connection with rendering such services. The
Company has no further arrangements pursuant to which the directors are
compensated for their services in their capacity as directors.

Pension and Retirement Benefits

The Company
maintains non-contributory defined benefit plans that provide for pensions and
post-retirement benefits to its employees in Canada. With the support of the
affected employees, BRP will establish a defined contribution plan as at June 1,
2005 in replacement of the non-senior executive defined benefit plan, for future service only. In the
United States, the Company provides for a defined contribution plan to its
employees and a supplemental defined benefit pension plan for its senior
management. A defined benefit pension plan is also offered to the Company's
employees in Austria, Belgium and Norway.

Following the
Transactions, new plans were set up in Canada and in the United States and
registered with government authorities. Ownership of certain benefit plans in
other countries has been transferred to the Company. As part of the
Transactions, an agreement was reached with Bombardier Inc. with respect to
Canadian pension plans, the purpose of which was to transfer a proportionate
share of assets to fully fund liabilities assumed by BRP under its new plans as
of December 18, 2003 on a funding basis. Government approval is still pending.
Funds will be transferred following this approval.

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C. Board practices

Reference is made to "Item 6 - Directors, Senior Management and Employees
-
A.Directors and senior management" for the current term of office, if
applicable, and the period during which the Company's directors and senior
management have served in that office.

The articles of
incorporation of BRP provide that its board of directors shall consist of a
minimum of three and a maximum of fifteen directors. Under Canadian law, 25% of
the members of the board of directors must be residents of Canada. Directors can
be either elected annually by the shareholders at the annual meeting of
shareholders or, subject to the articles of incorporation of BRP and applicable
law, appointed by the board of directors between annual meetings. Each director
shall hold office until the close of the next annual meeting of shareholders or
until he or she ceases to be a director by operation of law or until his or her
resignation becomes effective. No director has any contract or arrangement with
BRP entitling him to benefits upon termination of his directorship. BRP's
executive officers are appointed by, and serve at the discretion of, the board
of directors, except for the chief executive officer and the chief financial
officer, which serve at the discretion of the shareholders.

Board Committees

There are two
committees of the board of directors of BRP: the Executive Committee and the
Audit Committee. These committees meet regularly and operate under specific
terms of reference as approved by the board of directors. The Executive
Committee consists of four directors, a quorum of which requires at least one
Bain Director, one Beaudier Director and one Caisse Director (as such terms are
defined in the Unanimous Shareholders Agreement of J.A. Bombardier (J.A.B.) Inc.
dated December 18, 2003 (the "Shareholders Agreement"). The committee members
are Laurent Beaudoin, Joshua Bekenstein, Luc Houle and Matthew Levin. The
Company's board of directors has delegated to the Executive Committee, during
the intervals between meetings of the board of directors, all the powers of the
board of directors in respect of the management and direction of the business
and affairs of the Company, subject to the terms of the Shareholders Agreement.
The Audit Committee consists of three directors. The committee members are Jean Gaulin, Pierre Michaud and Nicolas G. Nomicos. The Company's board of directors
adopted the charter of the Audit Committee in light of the Sarbanes-Oxley Act of
2002. In general, the Company's audit committee assists the board of directors
in overseeing financial controls and reporting. The audit committee also
oversees the Company's compliance with financial covenants and legal and
regulatory requirements governing financial disclosure matters and financial
risk management.

D. Employees

BRP had approximately
7,450, 7,500 and 6,500 employees at January 31, 2003, 2004 and 2005,
respectively. As at January 31, 2005, BRP had approximately 2,900 employees in
Canada, 1,500 in the United States and 2,100 in Europe and other countries.
During the fiscal year ended January 31, 2005, BRP implemented a restructuring
program, which resulted in total workforce reductions of approximately 1,000
employees globally.

The Company believes
it has a good working relationship with its employees, which has resulted in
high productivity and low turnover in key production positions. Facilities in
North America are non-unionised but the Company has established an employee
relations committee at most of these facilities. Certain of BRP's Canadian
hourly employees are parties to a stability agreement which provides that
employees classified as "permanent employees" as of December 2, 2002, may not be
laid off except under specified circumstances. Additionally, these employees are
entitled to receive a portion of their salary upon assembly line shutdown due to
supply shortages. The Company's employees in Austria and Finland are members of
each country's national union.

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E. Share ownership

No member of the Company's board of directors or senior management owns any
shares of capital stock of the Company. BRP's parent holds all of the Company's
outstanding capital stock. For a summary of the major shareholders of BRP's
parent, including the shares held by members of BRP's board of directors and
senior management as a group, see "Item 7 -Major Shareholders and Related
Party Transactions - A. Major shareholders."

ITEM 7- MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major shareholders

BRP's parent,
J.A.B., holds all of the Company's outstanding capital stock, represented by one
(1) common share. The following table provides certain information as of January
31, 2005 with respect to the beneficial ownership of the equity interests of the
Company's parent by (i) each holder known by BRP who beneficially owns 5% or
more of the outstanding equity interests of the Company's parent, and (ii) all
of BRP's directors and members of senior management as a group.

|                                             | Common Shares (1) |            | Preference Shares (2)
|-------------------------------------------- | ----------------- | ---------- | ---------------------
|                                             |                   |            |                      
|                                             |                   | Percentage |                      
|                                             |                   | Ownership  |                      
|                                             |                   | Interest   |                      
|                                             | Class A           | Class A    | Class B              
|Beneficial Owner                             | Shares            | Shares     | Shares               
|                                             |                   |            |                      
|Bain Capital Luxembourg Investments S.ar.l.  | 152,299,950       | 50%        |                     
|                                             |                   |            |                      
|Beaudier Inc.                                | 63,965,979        | 21%        | 6,418,000            
|Caisse de dépôt et placement du Québec       | 45,689,985        | 15%        |                     
|4260937 Canada Inc.                          |                   |            |                      
|(formerly held by Jadier International Inc.) | 14,214,662        | 4.67%      | 1,425,000            
|4260911 Canada Inc.                          |                   |            |                      
|(formerly held by Gestion J.I.C.A. Inc.)     | 14,214,662        | 4.67%      | 1,425,000            
|4260929 Canada Inc.                          |                   |            |                      
|(formerly held by Fonds Achbee Inc.)         | 14,214,662        | 4.67%      | 1,425,000            
|Bombardier Inc.                              |                  |           |                     
|All BRP directors and members of senior      |                   |            |                      
|management as
    a group (3)                |                  |           | 7,641,550            
|                                             |                   |            |                      
|Total:                                       | 304,599,900       | 100%       | 18,334,550           

______________________

(1)         The Class
A Common Shares and Class B Common Shares are fully paid common equity of J.A.B.
These shares will participate together in distributions upon liquidation after
prior payment of the liquidation preference amount payable to holders of
preference shares. Class A Common Shares carry voting rights. Class B Common
Shares are non-voting, except as otherwise required by law. Class B Common
Shares are convertible into Class A Common Shares upon certain events, including
certain change in control transactions, on the third anniversary of an initial
public offering

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or at any time thereafter in connection with a transfer to a non-affiliate,
and immediately prior to any liquidation, dissolution or winding-up of BRP's
parent.
(2)         The Class
A Preference Shares are non-voting, non-participating and are not convertible
into any other class of equity of J.A.B. Class A Preference Shares are
redeemable at their original purchase price plus all accrued or declared but
unpaid dividends (i) at any time at the option of BRP's parent, (ii) upon a
change of control, (iii) subject to approval by BRP's parent's and BRP's
financing sources, upon an initial public offering or, (iv) upon the sale by
BRP's parent or BRP of all or substantially all of BRP's parent or BRP's assets.
Class A Preference Shares have a liquidation preference and carry a 6%
cumulative dividend right which, at the option of BRP's parent, may be paid in
cash or in-kind. So long as any Class A Preference Shares are outstanding, BRP's
parent has agreed not to pay or declare dividends in respect of BRP's Sponsors'
equity or repay or make any payments in respect of certain sponsor loans, unless
concurrent with such repayment or other payment all Class A Preference Shares
are redeemed, in each case unless the holders of preference shares receive
concurrently, but in priority, the full redemption price to which they are then
entitled (plus all accrued or declared but unpaid dividends). Upon liquidation,
the holders of Class A Preference Shares will be entitled to receive an amount
equal to the face amount of such shares plus any accrued or declared but unpaid
dividends prior to any distributions to holders of Class A Common Shares, Class
B Common Shares or Class B Preference Shares. In addition, J.A.B. has an
authorized, but unissued class of preference shares, the Class B Preference
Shares, which will rank junior to the Class A Preference Shares if and when
issued.
(3)         Certain
of the Company's directors, Joshua Bekenstein, Jordan Hitch and Matthew Levin,
are managing directors of the general partner of the owner of Bain Capital
Luxembourg Investments S.ar.l. These directors may be considered to beneficially
own the shares of the capital stock of the Company's parent held by such entity.
Notwithstanding, these directors explicitly disclaim any beneficial ownership of
such shares except to the extent of their pecuniary interest in such shares. As
such, this amount does not reflect any beneficial ownership of such shares.B. Related party transactions
Arrangements with the Company's Sponsors

In connection with
the Transactions, BRP entered into a shareholders agreement with its parent, the
Sponsors and Bombardier Inc. and a management agreement with its parent and
certain affiliates of its Sponsors. See "Item 10 - Additional Information
-
C. Material Contracts."

Under the Revolving
Facilities that are part of the Company's 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
CAD$41.0 million (including letters of credit) and has lent to the Company an
amount of approximately $9.0 million under the Revolving Facilities as of
January 31, 2005.

Pursuant to the terms
of the new Term Facility under the senior secured 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 ( approximately $8.0 million). .

Arrangements with Bombardier Inc.

Prior to the
consummation of the Transactions, the Company operated as the recreational
products business of Bombardier Inc. within its operational and administrative
infrastructure. The Company's chairman, Laurent Beaudoin, remains executive
chairman and a significant equity holder of Bombardier Inc. Mr. Beaudoin's wife,
Claire Bombardier Beaudoin, together with members of her family directly or

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indirectly control Bombardier Inc. In connection with the
Transactions, the Company entered into certain arrangements with Bombardier
Inc., including a trademark license agreement and floorplan and other financing
arrangements. See "Item 10 - Additional Information - C. Material Contracts."

Bombardier
Capital, an affiliate of Bombardier Inc., has historically provided a
significant portion of the Company's North American floorplan financing. In
connection with the Transactions, the Company amended and restated these
agreements, which include one with respect to Canadian dealers and one with
respect to U.S. dealers. The Company's floorplan financing arrangements with
Bombardier Capital provide for aggregate financing up to a maximum of U.S.$750.0
million. The amount outstanding under these facilities as of January 31, 2005
was $705.3 million.
In addition, in
connection with these arrangements, BRP entered into a five-year mutual
exclusivity arrangement with Bombardier Capital with respect to the Company's
North American floorplan financing. If BRP or Bombardier Capital breach this
exclusivity arrangement or terminate the arrangement without cause, the
breaching party will be liable for penalties equal to $12 million per year for
the remainder of the exclusivity period.
On April 18, 2005,
Bombardier Capital announced that it had agreed to sell its inventory finance
division to GE Commercial Finance and that the final closing of this transaction
is expected in the next several weeks.
C. Interests of experts and counsels

Not applicable.

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ITEM 8- FINANCIAL INFORMATION
A. Consolidated statements and other financial informationBRP's Financial Statements, which are set forth in the accompanying index to
Consolidated Financial Statements included in this annual report, are filed as a
part of this annual report pursuant to Item 17.
B. Significant changes

No significant change has occurred since the date of the Audited Consolidated
Financial Statements included in Item 17.ITEM 9- THE OFFER AND LISTING
A. Offer and listing detailsNot applicable.
B. Plan of distribution

Not applicable.
C. Markets

Not applicable.
D. Selling shareholders

Not applicable.
E. Dilution

Not applicable.
F. Expenses of the issue

Not applicable.

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ITEM 10- ADDITIONAL INFORMATION
A. Share capital

Not applicable.
B. Memorandum and articles of association

These items have
been previously filed with Bombardier Recreational Products Inc.'s Registration
Statement on Form F-4 (SEC No. 333-116582). Such items are incorporated by
reference into this Annual Report on Form 20-F.
C. Material contracts

Certain material
contracts of the Company are described below. These summaries are qualified in
their entirety by the terms of the specific contracts, each of which is filed as
an exhibit to this annual report and is incorporated herein by reference.
Indenture relating to US$200,000,000 83⁄4% Senior Subordinated
Notes due December 15, 2013, dated as of December 18, 2003 by and among the
Company, the guarantors party thereto and U.S. Bank National Association, as
trustee.
On December 18,
2003, the Company issued US$200.0 million in aggregate principal amount of 83⁄4%
Senior Subordinated Notes due December 15, 2013. The notes are unsecured and are
due on December 15, 2013. Interest on the notes is payable semi-annually in
arrears on June 15 and December 15 of each year. The Company's obligations under
the notes are guaranteed by most, but not all, of the Company's subsidiaries.
The notes are redeemable, at the Company's option, under certain circumstances
and at the redemption prices set forth in the indenture. The indenture contains
customary restrictive covenants with respect to the Company and certain of its
subsidiaries, and customary events of defaults. If an event of default occurs
and is continuing, other than the Company's bankruptcy or insolvency, the
trustee or the holders of at least 25% in principal amount at maturity of the
then-outstanding notes may declare all notes to be due and payable immediately.
Amendment and Restatement, dated as of February 9, 2005, of
the Credit Agreement dated as of December 18, 2003, among the Company, BRP US
Inc., the guarantors party thereto, the Bank of Montreal, as administrative
agent, and the lenders signatory thereto.

On February 9,
2005, the Company amended and restated its Credit Agreement dated as of December
18, 2003 by executing and delivering the Amended and Restated Credit Agreement
described above and following the satisfaction of certain conditions precedent.
The Company's credit agreement, as amended provides for (i) a $250.0 million
Revolving Facilities maturing in December 2008 and (ii) a US$50.0 million Term
Facility maturing in January 2011.
The proceeds of
the Company's Revolving Facilities are to be used exclusively for its general
corporate purposes and to fund working capital requirements. Advances under the
revolving credit facilities will bear interest at the Canadian or US prime rate,
the banker's acceptance rate, LIBOR, EUROLIBOR or U.S. base rate, plus in each
case an applicable margin. As of January 31, 2005, an aggregate of approximately
$12.3 million (U.S.$ 10.0 million) had been drawn under the Company's Revolving
Facilities.

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The Amended and Restated Credit Agreement contains customary
restrictive and financial covenants with respect to the Company and its
subsidiaries, and customary events of default. Such covenants, however, permit
the Company's repayment of interest on its subordinated debt, payment of
management fees or other similar expenses to its direct or indirect parent, and
transactions for the primary purpose of creating tax benefits.Floorplan Financing

The Company has agreements with various finance companies,
including Bombardier Capital, to provide floorplan financing to its dealers in
North America, Australia and New Zealand 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 the
Company's working capital. A significant percentage of the Company's sales of
snowmobiles, sport boats, personal watercraft, ATVs and outboard engines to
dealers in North America are financed under such arrangements.

Generally, the Company's floorplan financing arrangements
work as follows: after conducting a credit review of a dealer, the financing
company establishes a line of credit for such dealer on terms that the Company
has helped to arrange. The Company may then begin to ship products to the
dealer, up to the available credit line of the dealer and simultaneously
delivering a copy of the dealer's invoice to the financing company, which then
pays the Company for the product on behalf of the dealer. As a sales incentive,
the Company generally provides a "free floorplanning" period to its dealers
during which the Company pays interest to the financing company for a limited
period of time and thereafter, the dealer assumes responsibility for interest
payments to the financing company.

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.

Receivables Factoring Programs

The Company has agreements in place with various finance
companies, including Bombardier Capital, to provide receivables factoring as
part of the Company's plan to manage working capital. These factoring programs
generally relate to receivables from sales of products for which floorplan
financing is not available. Under these agreements, BRP typically receives the
face value of the receivable less some negotiated discount. Each of the
Company's factoring agreements is typically terminable, by either party, upon
short notice.

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.

In addition, in connection with the Transactions, with
respect to receivables originated in North America and not eligible for
floorplan financing and receivables originated in Scandinavia, the Company put
in place a new 18-month factoring facility with Bombardier Capital for
approximately U.S.$115.0 million of financing to replace an existing
securitization facility for North American receivables and an existing
Scandinavian factoring facility. The Company set up a bankruptcy-remote
subsidiary to which the Company and certain of its subsidiaries will sell
receivables originating in the United States, Canada and

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Scandinavia. The subsidiary then sells those receivables to
Bombardier Capital for cash at an advance rate to be determined by the parties
and for deferred compensation, to be paid upon collection of the receivables
owed by the obligors.
Trademark License Agreement

In connection with the Transactions, BRP entered into a
trademark license agreement with Bombardier Inc. The trademark license agreement
provides BRP with exclusive rights to certain trademarks currently used in its
business but which Bombardier Inc. will continue to own, such as the Bombardier
mark and cog-wheel design. The license is royalty-free and subject to certain
conditions. The license allows BRP to use "Bombardier" in its corporate name as
long as the Beaudier Group maintains at least a 10% ownership interest in BRP's
parent.

Shareholders Agreement

In connection with the Transactions, BRP entered into a
shareholders agreement with its parent, its Sponsors and Bombardier Inc. The
shareholders agreement contains agreements among the parties with respect to BRP,
its parent and BRP's subsidiaries that include the following provisions:

- The parties agree to fix the initial number of members of the
  board of directors of the Company's parent at thirteen members and elect
  certain enumerated persons as the initial members of the board of directors of
  its parent.
- Subject to their continued respective ownership of shares of
  the Company's parent, its Sponsors may designate ten of the thirteen directors
  of the Company's parent. BRP's Sponsors will also be entitled to collectively
  designate three independent members of the board of directors of BRP's parent.
- All decisions with respect to BRP, its parent and the
  respective subsidiaries will require the approval of at least a majority of
  the board of directors of BRP's parent. In addition, special shareholder
  consent will be required for certain enumerated corporate actions.
- The transfer of shares in BRP's parent will be generally
  prohibited, subject to certain enumerated exceptions. In addition, any
  proposed transfer of shares for value will be generally subject to a right of
  first offer in favor of the other shareholders, pro rata in accordance
  with their shareholdings of Class A and Class B Common Shares. Furthermore, in
  the event that the right of first offer is not elected by the other
  shareholders, and a selling shareholder proceeds with a sale of shares of
  BRP's parent to a third party, such sale shall be subject to tag-along rights
  in favor of the other shareholders, in an amount that is pro rata among
  those shareholders who elect to participate in the tag-along sale.
  Additionally, such a sale may be subject to drag-along rights under certain
  circumstances.
- The issuance and sale by BRP's parent of any shares, options,
  warrants or convertible securities will be subject to preemptive rights in
  favor of each holder of Class A and Class B Common Shares, pro rata in
  accordance with their shareholdings.

Any members of
management who hold shares or options of BRP's parent are required to become a
party to this agreement. In addition, simultaneous with the closing of the
Transactions, BRP entered into a registration rights agreement with its Sponsors
and its parent. Subject to specified restrictions, after an initial public
offering of the common shares of BRP's parent, and upon written request, BRP's
Sponsors may, individually or collectively, demand the registration of
registrable securities having an anticipated net aggregate offering price of at
least $10.0 million. Additionally, subject to certain exempted transactions,
BRP's Sponsors will have piggyback registration rights when its parent proposes
to register any of its equity securities, whether in connection with an initial
public offering or otherwise. The registration rights agreement contains
customary indemnification provisions.

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Management Agreement

Upon completion of
the Transactions, BRP and its parent entered into a management agreement with
affiliates of BRP's Sponsors to provide management services. Pursuant to such
agreement, affiliates of BRP's Sponsors received an aggregate annual management
fee of U.S. $2.25 million, and reimbursement for out-of-pocket expenses incurred
in connection with the Transactions prior to the closing date and in connection
with the provision of services pursuant to the agreement. In addition, pursuant
to such agreement, affiliates of BRP's Sponsors also received aggregate
transaction fees of approximately $24.5 million, in connection with the services
provided by such entities related to the Transactions. In addition, the
management agreement provides that affiliates of BRP's Sponsors will also
receive fees in connection with certain subsequent financing and acquisition
transactions (excluding an initial public offering). The management agreement
includes customary indemnification provisions in favour of BRP's Sponsors and
their affiliates. The term of the management agreement runs until January 31,
2014.

Management Share Subscription Agreement

On March 31, 2004,
the board of directors of the Company's parent approved a management share
subscription agreement for its directors, executive officers and certain of its
employees. Under the management share subscription agreement, the subscribers
are entitled to purchase a certain amount of Class B common shares of the
Company's parent for an amount equal to their fair value. The terms of the
management subscription agreement provide the Company's parent with the right to
repurchase all or a portion of the subscription shares, and provide the
subscribers with a right to sell to the parent all or a portion of their
subscription shares, in each case, under certain corporate transactions or other
circumstances. The call option and put option each expire on the occurrence of
an initial public offering or upon a change in control. As of January 31, 2005,
7,641,550 Class B common shares of the Company's parent were held by the
Company's directors, executive officers and certain of its employees.

Stock Option Plan

On March 31, 2004,
the board of directors of the Company's parent approved a new stock option plan
for BRP's executive officers and certain of its employees. The options are
exercisable into Class B common shares of the Company's parent at an exercise
price equal to the fair market value of the Class B common 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 annual
anniversary dates of the date of grant (the "Reference Date"). The remaining
two-thirds become eligible to vest in equal annual instalments on each of the
five annual anniversary dates of the Reference Date, and shall only vest upon
certain performance measures being achieved at the date of either a change in
control or an initial public offering. As of January 31, 2005, 20,074,650
options were held by participants of the stock option plan.

D. Exchange controls

There are no
government laws, decrees or regulations in Canada which restrict the export or
import of capital or, subject to the following sentence, which affect the
remittance of dividends or other payments to non-resident holders of the shares
of BRP's parent. However, any such remittance to a resident of the United States
is generally subject to non-resident tax pursuant to Article X of the 1980
Canada-United States Income Tax Convention.

There are
currently no limitations of general application imposed by Canadian federal or
provincial laws on the rights of non-residents of Canada to hold or vote the
shares of BRP's parent. There are, however, certain requirements on the
acquisition of control of the shares of BRP's parent by non-residents of Canada.
The Investment Canada Act requires notification to and, in certain cases,
advance review and approval by, the Government of Canada, of the acquisition by
a "non-Canadian" of "control" of a "Canadian business," all as defined in the Investment Canada Act. Generally speaking, in order for an

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acquisition to be subject to advance review and approval, the asset value of
the Canadian business being acquired must meet or exceed certain monetary
thresholds.
E. Taxation

Not applicable.
F. Dividends and paying agents

Not applicable.
G. Statement by experts

Not applicable.
H. Documents on display

Copies of documents that the Company has filed or
incorporated by reference as exhibits to this annual report may be read and
viewed at the Public Reference Room of the Securities and Exchange Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C., USA, 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission (the "SEC") at 1-800-SEC-0330. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The address of this Internet site is http://www.sec.gov. Any documents referred to in this annual report
may also be inspected at our offices at 726 St. Joseph Street, Valcourt, Quebec,
Canada J0E 2L0.
I. Subsidiary information

Not Applicable.



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ITEM 11- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
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, 2004
|----------- | ---------------- | ----------------
|U.S. dollar | 1.2380$CA/$US    | 1.3264$CA/$US   
|Euro        | 1.6157$CA/Euro   | 1.6520$CA/Euro  

When 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 ended      
|----------- | ---------------- | ------------------- | ----------------
|            | January 31, 2005 | January 31, 2004    | January 31, 2003
|U.S. dollar | 1.2962$CA/$US    | 1.3812$CA/$US       | 1.5655$CA/$US   
|Euro        | 1.6147$CA/Euro   | 1.5811$CA/Euro      | 1.5018$CA/Euro  

When 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.

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As at December 18,
2003, in connection with the Transactions, 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.
Interest Rates

The credit
agreements allow the Company to borrow up to $250 million under 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 the
senior secured 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 8
3/8%, with interest payable semi-annually in June and December.
ITEM 12- DESCRIPTION OF SECURITIES OTHER THAN EQUITY
SECURITIES

Not applicable.
ITEM 13- DEFAULTS, DIVIDEND ARREARAGES AND DELINQUINCIES

On February 9,
2005, the Company announced an amendment and restatement of its senior secured
credit facility. In connection with that amendment and restatement, certain
technical defaults were waived, and the Company repaid its $347 million (US$280
million) term loan facilities under the senior secured credit agreements,
replacing such facilities with a new term loan facility of $62 million (US $50
million), under the senior secured Amended and Restated Credit Agreement.
ITEM 14- MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS AND USE OF PROCEEDS

There have been no material modifications to the rights of security holders.
ITEM 15- CONTROLS AND PROCEDURES

The Board of
Directors has overall responsibility for reviewing the Company's disclosure to
ensure the Company provides full and plain disclosure to its equity holders and
other stakeholders. The Board discharges its responsibilities through its
committees, specifically, with respect to financial disclosure to the Audit
Committee, which is responsible for reviewing the Company's financial reporting
procedures and internal controls to ensure full and accurate disclosure of the
Company's financial position.

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Under the
supervision and with the participation of the Company's management, the Company
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures as of the end of the period covered by this annual
report. Based upon that evaluation, the Company's principal executive officer
and principal financial officer concluded that, as of such date, the Company's
disclosure controls and procedures were effective in ensuring that information
required to be disclosed in periodic SEC filings, to the extent the Company was
required to make such filings, is recorded, processed, summarised and reported
with the time periods specified in the SEC's rules and forms. In addition, such
officers concluded that the Company's disclosure controls and procedures were
also effective to ensure that information required to be disclosed in such
reports is accumulated and communicated to the Company's management, including
such officers, to allow timely decisions regarding required disclosure.
There were no
significant changes made in the Company's internal controls during the period
covered by this annual report or, to the Company's knowledge, in other factors
that could significantly affect these controls subsequent to the date of their
execution.
The Company's
management does not expect that its disclosure controls and procedures or
internal controls and procedures will prevent all error and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgements in decision-making
can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions; over time, control may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.ITEM 16- [RESERVED]
ITEM 16A- AUDIT COMMITTEE FINANCIAL EXPERTThe Company's
board of directors has determined that none of its members who serve on the
audit committee is an "audit committee financial expert" as that term is defined
by the SEC. The Company's board of directors has determined, however, that the
absence from its audit committee of a person who would qualify as an audit
committee financial expert does not impair the ability of the audit committee to
provide effective oversight of its external financial reporting and internal
control over financial reporting. Accordingly, the Company's board of directors
does not intend to add a person to its membership solely for the purpose of
adding an audit committee financial expert. In reaching its determination that
the members of the audit committee, as it is presently constituted, have
sufficient knowledge and experience to exercise effective oversight without the
addition of an audit committee financial expert, the Company's board of
directors considered the knowledge gained by the current members of the audit
committee in connection with their prior experience.

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ITEM 16B- CODE OF ETHICSThe Company has adopted a code of ethics that applies to all of its employees,
including its Chief Executive Officer and Chief Financial Officer. The Company
will provide without charge to each person, on the written or oral request of
such person, a copy of such code of ethics. Requests for such copies should be
directed to Bombardier Recreational Products Inc. at the following address: 726
St-Joseph, Valcourt, Quebec, Canada, J0E 2L0 Attention: Vice President, General
Counsel and Secretary, telephone number (450) 532-2211.

ITEM 16C- PRINCIPAL ACCOUNTANT FEES AND SERVICES

Accountant fees payable for the
years ended January 31, 2005 and January 31, 2004 to Ernst & Young LLP and its
affiliates were $2,856.9 million and $3,656.6 million, respectively.

The fees payable to Ernst & Young
LLP in 2005 and 2004 are detailed below.

|                               |                  | Combined        
|------------------------------ | ---------------- | ----------------
|                               | Year ended       | Year ended      
|(millions of Canadian dollars) | January 31, 2005 | January 31, 2004
|Audit fees                     | 2,246.9          | 3,274.0         
|Audit-related fees             | 99.7             | 131.9           
|Tax fees                       | 510.3            | 223.1           
|All other fees                 | -                | 27.6            
|Total                          | 2,856.9          | 3,,656.6        

The nature of each category of fees is described below.

Audit Fees

Audit fees were paid for
professional services rendered for the:

- 

Audit-Related Fees

Audit-related fees were paid for assurance and related services related to
information systems reviews not performed in connection with the audit and
Sarbanes-Oxley advisory services.

Tax Fees

Tax fees were paid for services
related to:

- 

- 77 -

---

Tax only valuation services executed
  as part of tax reorganization projects (such as roll over or other
  inter-company transfers of assets) to comply with tax legislation
  requirements;

All Other Fees

Fees disclosed in
the table above under the item "all other fees" were paid for translation of
certain financial information of BRP and its subsidiaries, including financial
statements, MD&As, press releases, annual and quarterly reports.

Pre-Approval Policies and Procedures

The Company's
Audit Committee has adopted a pre-approval policy with respect to permitted
audit and non-audit services. Non-audit fees are expected to relate primarily to
tax advisory services. Under the policy, estimated audit and non-audit fees
payable by the Company and its subsidiaries must be submitted prior to the
initiation of non-audit services and in advance of each financial quarter for
pre-approval by the Company's Audit Committee. Requests by the Company or its
subsidiaries for pre-approval of audit and non-audit fees within any financial
quarter must be submitted to the Company's chief financial officer and approved
by the Chair of the Audit Committee.

Prior to December
3, 2004, when the Audit Committee adopted the above pre-approval policy, none of
the services described above were approved by the Audit Committee pursuant to
paragraph (c) (7)(i)(C) of Rule 2-01 of Regulation S-X.

ITEM 16D- EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES

Not applicable.

ITEM 16E- PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
AFFILIATED PURCHASERS

Not applicable.

ITEM 17- FINANCIAL STATEMENTS

The Company's Audited Consolidated Financial Statements commence on page F-1
of this annual report.

ITEM 18- FINANCIAL STATEMENTS

Not applicable.

- 78 -

---

ITEM 19- EXHIBITS

The following documents are filed as exhibits to the Annual Report on Form
20-F:

|Exhibit |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|1.1*    | Articles of Incorporation of Bombardier Recreational Products Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|1.2*    | Bylaws of Bombardier Recreational Products Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2.1*    | Indenture with respect to the 83/8% Senior
    Subordinated Notes due 2013 between Bombardier Recreational Products Inc.,
    as issuer, the Guarantors listed on the signature pages thereto, as
    guarantors, and U.S. Bank, National Association as trustee, dated December
    18, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2.2*    | Supplemental Indenture, dated as of March 12, 2004, among Bombardier
    (Mexico) S.A. de C.V., as additional guarantor, Bombardier Recreational
    Products Inc., as issuer, the Other Guarantors, and U.S. Bank, National
    Association as trustee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2.3*    | Supplemental Indenture, dated as of March 12, 2004, among Bombardier
    Recreational Products Australia Pty Ltd., as additional guarantor,
    Bombardier Recreational Products Inc., as issuer, the Other Guarantors and
    U.S. Bank, National Association as trustee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2.4*    | Supplemental Indenture, dated as of March 12, 2004, among Bombardier
    Recreational Products Japan Co. Ltd., as additional guarantor, Bombardier
    Recreational Products Inc., as issuer, the Other Guarantors and U.S. Bank,
    National Association as trustee                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2.5     | Supplemental Indenture, dated as of February 9, 2005, among Aircraft Engine
    Services (AES) Inc., 4279174 Canada Inc., and BRP Holdings (Hungary) Assent
    Management Limited Liability Company, as additional guarantors, Bombardier
    Recreational Products Inc., as issuer, the Other Guarantors and U.S. Bank,
    National Association, as trustee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2.6*    | Form
    of 8
    3/8% Senior
    Subordinated Notes due 2013 (included in Exhibit 2.1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.1     | Amended and Restated Credit Agreement dated as of February 9, 2005, among
    Bombardier Recreational Products Inc., BRP US Inc., the Guarantors party
    thereto from time to time, Merrill Lynch & Co., Merrill Lynch, Pierce,
    Fenner & Smith Incorporated, as Global Transaction Coordinator, Royal Bank
    of Canada, as Canadian Transaction Coordinator, Merrill Lynch & Co., Merrill
    Lynch, Pierce, Fenner & Smith Incorporated and UBS Securities LLC, as Joint
    Book Runners and Lead Arrangers of the Term Facilities, BMO Nesbitt Burns
    Inc. and Royal Bank of Canada as Joint Book Runners and Lead Arrangers of
    the Revolving Facilities, Bank of Montreal, as Administrative Agent, Merrill
    Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, UBS
    Securities LLC and Royal Bank of Canada as Co-Syndication Agents, General
    Electric Capital Corporation, as Documentation Agent, and the Lenders party
    thereto from time to time.
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.2     | Amended and Restated U.S. Security Agreement by BRP US Inc., as U.S.
    Revolving Borrower, the Guarantors named therein and Bank of Montreal, as
    Administrative Agent, dated as of December 18, 2003 and Amended and Restated
    as of February 9, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.3     | Amended and Restated Canadian Security Agreement by Bombardier Recreational
    Products Inc., as Canadian Borrower, the Guarantors named therein and Bank
    of Montreal, as Administrative Agent, dated as of December 18, 2003 and
    Amended and Restated as of February 9, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.4*    | License Agreement dated December 18, 2003 between Bombardier Inc., as
    Trademark Owner, and 4145321 Canada Inc., as Licensee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.5*    | Second Amended and Restated Wholesale Financing Agreement, dated as of
    December 18, 2003, by and between Bombardier Motor Corporation of America
    and Bombardier Capital Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.5*    | Amended and Restated Wholesale Financing Agreement, dated as of December 18,
    2003, by and between 6090851 Canada Inc. and Bombardier Capital Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

- 79 -

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|Exhibit |                                                                                                                                                                                                                                                                                                           
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     | Description                                                                                                                                                                                                                                                                                               
|        |                                                                                                                                                                                                                                                                                                           
|4.6*    | Purchase Agreement, dated as of December 18, 2003, among Bombardier Motor
    Corporation of America, Bombardier Nordtrac AB, Bombardier Nordtrac AS and
    Bombardier-Nordtrac OY and Bombardier Recreational Products Inc. and BRP
    Receivables Funding, LLC.                                       
|        |                                                                                                                                                                                                                                                                                                           
|4.7*    | Receivables Purchase Agreement, dated as of December 18, 2003, among BRP
    Receivables Funding, LLC and Bombardier Capital Inc. and Bombardier Motor
    Corporation of America, Bombardier Nordtrac AB, Bombardier Nordtrac AS and
    Bombardier-Nordtrac OY and Bombardier Recreational Products Inc.
|        |                                                                                                                                                                                                                                                                                                           
|4.8     | J.
    A. Bombardier (J.A.B.) Inc. Management Option Plan, dated March 31, 2004.                                                                                                                                                                                                                          
|        |                                                                                                                                                                                                                                                                                                           
|4.9     | Management Share Subscription Agreement, dated March 31, 2004                                                                                                                                                                                                                                             
|        |                                                                                                                                                                                                                                                                                                           
|4.10*   | Unanimous Shareholders Agreement among J. A. Bombardier (J.A.B.) Inc.,
    Bombardier Recreational Products Inc., and the shareholders of J. A.
    Bombardier (J.A.B.) Inc., dated as of December 18, 2003.                                                                                              
|        |                                                                                                                                                                                                                                                                                                           
|4.11*   | Management Agreement among J. A. Bombardier (J.A.B.) Inc., Bombardier
    Recreational Products Inc., Beaudier Inc., Bain Capital Partners, LLC and
    Caisse de Dépôt et placement du Québec, dated as of December 18, 2003.                                                                            
|        |                                                                                                                                                                                                                                                                                                           
|8.1     | Subsidiaries of Bombardier Recreational Products Inc.                                                                                                                                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                           
|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                                                                                                                                                                                                               
|        |                                                                                                                                                                                                                                                                                                           
|*       | This
    item has been filed with Bombardier Recreational Product's Registration
    Statement on Form F-4 (SEC                                                                                                                                                                                           
|        | No.
    333-116582). Such item is incorporated by reference into this annual report
    on Form 20-F.                                                                                                                                                                                                     

INDEX TO FINANCIAL STATEMENTS

Bombardier Recreational Products Inc. Audited Consolidated Financial
Statements for the fiscal years ended January 31, 2005, the 44-day period ended
January 31, 2004, the 321-day period ended December 18, 2003 and the year ended
January 31, 2003:

|  |                                                                                                      |    
|- | ---------------------------------------------------------------------------------------------------- | ---
|- | Independent Auditors' Report
    - Ernst & Young LLP                                                 | F-2
|  |                                                                                                      |    
|- | Consolidated Balance Sheets                                                                          | F-3
|  |                                                                                                      |    
|- | Consolidated Statements of
    Income                                                                | F-4
|  |                                                                                                      |    
|- | Consolidated Statements of
    Cash Flows                                                            | F-5
|  |                                                                                                      |    
|- | Consolidated Statements of
    Deficit and Statements of Changes in Bombardier Inc.'s Net Investment | F-6
|  |                                                                                                      |    
|- | Notes to Consolidated
    Financial Statements                                                       | F-7

- 80 -

---





Consolidated Financial Statements Bombardier Recreational Products Inc.January 31, 2005



F-1

---





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.



|Montréal, Canada, |                      
|----------------- | ---------------------
|April 19, 2005.   | Chartered Accountants

F-2

---

CONSOLIDATED BALANCE SHEETS[millions of Canadian dollars]

|                                            |       | January 31, | January 31,   
|------------------------------------------- | ----- | ----------- | --------------
|                                            | Notes | 2005        | 2004          
|                                            |       |             | (Restated -   
|ASSETS                                      |       |             | Notes 2 and 5)
|Current assets                              |       |             |               
|Cash and cash equivalents                   |       | $ 150.3     | $ 196.2       
|Receivables                                 | 7     | 112.7       | 148.7         
|Inventories                                 | 8     | 302.1       | 331.3         
|Deferred income taxes                       | 24    | 62.4        | 68.1          
|Other assets                                | 9     | 74.5        | 97.1          
|Assets held for sale                        | 5     | 3.4         | 27.5          
|Total current assets                        |       | 705.4       | 868.9         
|Property, plant and equipment               | 10    | 425.8       | 490.3         
|Goodwill                                    | 11    | 119.9       | 117.6         
|Trademarks                                  |       | 151.1       | 151.1         
|Other intangible assets                     | 12    | 78.1        | 90.7          
|Deferred income taxes                       | 24    | 13.4        | 2.9           
|Other assets                                | 9     | 43.1        | 64.5          
|Assets held for sale                        | 5     | 10.0        | 35.1          
|                                            |       | $ 1,546.8   | $ 1,821.1     
|LIABILITIES AND SHAREHOLDER'S EQUITY        |       |             |               
|Current Liabilities                         |       |             |               
|Bank loans                                  | 13    | $ 12.3      | $            
|Accounts payable and accrued liabilities    | 14    | 597.2       | 640.5         
|Current portion of long-term debt           | 15    | 147.2       | 5.0           
|Deferred income taxes                       | 24    | 0.4         | 0.3           
|Liabilities related to assets held for sale | 5     |            | 12.3          
|Total current liabilities                   |       | 757.1       | 658.1         
|Long-term debt                              | 15    | 249.5       | 635.0         
|Deferred income taxes                       | 24    | 38.0        | 43.0          
|Employee future benefits obligations        | 16    | 122.2       | 118.6         
|Redeemable preferred shares                 | 17    |            | 43.2          
|Other long-term liabilities                 | 18    | 28.5        | 30.9          
|Liabilities related to assets held for sale | 5     |            | 3.3           
|Total liabilities                           |       | 1,195.3     | 1,532.1       
|Commitments and contingencies               | 27    |             |               
|                                            |       |             |               
|Shareholder's equity                        |       |             |               
|Capital stock                               | 19    | 364.4       | 304.5         
|Contributed surplus                         | 20    | 2.3         |              
|Deficit                                     |       | (1.5)       | (17.5)        
|Cumulative translation adjustment           | 21    | (13.7)      | 2.0           
|                                            |       | 351.5       | 289.0         
|                                            |       | $ 1,546.8   | $ 1,821.1     

The accompanying notes are an integral part of these Consolidated Financial
Statements.

On behalf of the Board:

Director                                                      
Director

F-3

---



Bombardier Recreational Products Inc.

CONSOLIDATED STATEMENTS OF INCOME

|                                             |       | The Company | Predecessor Business
|-------------------------------------------- | ----- | ----------- | --------------------
|                                             |       |             | 44-day              
|                                             |       | Year ended  | period ended        
|                                             |       | January 31, | January 31,         
|                                             | Notes | 2005        | 2004                
|                                             |       |             |                     
|                                             |       |             |                     
|Revenues                                     |       | $ 2,467.0   | $ 333.5             
|Cost of sales                                |       | 2,044.9     | 307.4               
|Gross profit                                 |       | 422.1       | 26.1                
|Operating expenses                           |       |             |                     
|Selling and marketing                        |       | 141.4       | 18.2                
|Research and development                     | 22    | 108.1       | 12.9                
|General and administrative                   |       | 127.9       | 7.1                 
|Other charges and (income)                   |       |             |                     
|Restructuring                                | 14    | 26.5        |                    
|Impairment loss                              | 14    | 12.1        |                    
|Curtailment gain                             | 16    | (23.7)      |                    
|Total operating expenses                     |       | 392.3       | 38.2                
|Operating income (loss) from continuing      |       |             |                     
|operations                                   |       | 29.8        | (12.1)              
|Other (income) and expenses                  |       |             |                     
|Financing costs                              | 23    | 60.4        | 7.0                 
|Accretion in carrying value and loss on      |       |             |                     
|early redemption of preferred
    shares     | 17    | 9.4         | 0.5                 
|Net loss on derivative financial instruments |       |            | 4.5                 
|Foreign exchange gain on long-term debt      |       | (46.7)      | (1.3)               
|Income (loss) from continuing operations     |       |             |                     
|before income taxes                          |       | 6.7         | (22.8)              
|Income tax expense (recovery)                | 24    | (12.6)      | (5.7)               
|Income (loss) from continuing operations     |       | 19.3        | (17.1)              
|Income (loss) from discontinued              |       |             |                     
|operations, net of tax                       | 5     | (3.3)       | (0.4)               
|Net income (loss)                            |       | $ 16.0      | $ (17.5)            

The accompanying notes are an integral part of these Consolidated Financial
Statements.

F-4

---



Bombardier Recreational Products Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                |       | The Company | Predecessor Business
|--------------------------------------------------------------- | ----- | ----------- | --------------------
|                                                                |       |             | 44-day              
|                                                                |       | Year ended  | period ended        
|                                                                |       | January 31, | January 31,         
|                                                                | Notes | 2005        | 2004                
|OPERATING ACTIVITIES                                            |       |             |                     
|Income (loss) from continuing operations                        |       | $ 19.3      | $ (17.1)            
|Non-cash items:                                                 |       |             |                     
|Depreciation and amortisation                                   |       | 120.1       | 14.1                
|Amortisation of deferred
    financing costs                    | 23    | 19.4        | 0.8                 
|Employee stock compensation                                     | 20    | 2.3         |                    
|Deferred income taxes                                           | 24    | (19.9)      | (8.6)               
|Loss (gain) on disposal of
    property, plant and equipment    |       | 1.0         |                    
|Gain on disposal of assets held
    for sale                    |       | (0.3)       |                    
|Employee future benefits                                        | 16    |            | 1.7                 
|Accretion in carrying value and
    loss on early redemption    |       |             |                     
|of preferred
    shares                                         | 17    | 9.4         | 0.5                 
|Unrealised gains on derivative
    financial instruments        |       | (1.6)       | (1.9)               
|Other charges and income                                        |       | 8.4         |                    
|Deferred foreign exchange gain
    on forward foreign           |       |             |                     
|exchange
    contracts                                          |       |            |                    
|Foreign exchange gain on
    long-term debt                     |       | (46.7)      | (1.3)               
|Net changes in non-cash working
    capital balances related to |       |             |                     
|operations                                                      | 25    | 81.8        | 94.6                
|Cash flows from operating activities                            |       | 193.2       | 82.8                
|INVESTING ACTIVITIES                                            |       |             |                     
|Additions to property, plant and equipment                      |       | (70.1)      | (21.0)              
|Proceeds on disposal of property, plant and
    equipment       |       | 1.3         |                    
|Proceeds on disposal of assets for sale                         |       | 3.4         |                    
|Proceeds from the disposal of the Utility
    Vehicles segment, |       |             |                     
|net of transaction costs of $ 1.6
    million                   |       | 40.3        |                    
|Business acquisition, net of cash acquired                      | 2     | (21.5)      | (757.2)`            
|Other                                                           |       |            |                    
|Cash flows from investing activities                            |       | (46.6)      | (778.2)             
|FINANCING ACTIVITIES                                            |       |             |                     
|Increase in bank loans                                          |       | 12.3        |                    
|Redemption of preferred shares                                  | 17    | (52.6)      |                    
|Net variation in advances (to) from related
    parties         |       |            |                    
|Net contribution from (to) Bombardier Inc.                      |       |            |                    
|Increase in capital stock                                       | 19    | 59.9        | 304.5               
|Issuance of long-term debt                                      |       |            | 638.0               
|Repayment of long-term debt                                     |       | (196.5)     | (0.5)               
|Debt issuance costs                                             |       | (1.4)       | (46.1)              
|Other                                                           |       | (2.7)       |                    
|Cash flows from financing activities                            |       | (181.0)     | 895.9               
|Effect of exchange rate changes on cash and cash equivalents    |       | (0.1)       | (1.1)               
|Cash flows from continuing operations                           |       | (34.5)      | 199.4               
|Cash flows from discontinued operations                         | 5     | (11.4)      | (3.2)               
|Net increase (decrease) in cash and cash equivalents            |       | (45.9)      | 196.2               
|Cash and cash equivalents at beginning of the period            |       | 196.2       |                    
|Cash and cash equivalents at end of the period                  |       | $ 150.3     | $ 196.2             
|Supplemental information                                        |       |             |                     
|Cash paid for:                                                  |       |             |                     
|Interest                                                        |       | $ 36.7      | $ 2.6               
|Income taxes                                                    |       | 15.7        | 1.6                 

The accompanying notes are an integral part of these Consolidated Financial
Statements.

F-5

---



Bombardier Recreational Products Inc.

CONSOLIDATED STATEMENTS OF DEFICIT AND STATEMENTS OF CHANGES IN BOMBARDIER
INC.'S NET INVESTMENT

|                                              |                       |              | Predecessor
    Business' Net
|--------------------------------------------- | --------------------- | ------------ | -----------------------------
|                                              | The Company's Deficit | Investment  
|                                              |                       | 44-day       | 321-day                      
|                                              | Year ended            | period ended | period ended                 
|                                              | January 31,           | January 31,  | December 18,                 
|                                              | 2005                  | 2004         | 2003                         
|                                              |                       |              | (Restated - note 5)          
|Balance at beginning of the period            | $ (17.5)              | $           | $ 170.2                      
|Net income (loss)                             | 16.0                  | (17.5)       | 30.2                         
|Net change in currency translation adjustment |                      |             | 9.6                          
|Net distribution from (to) Bombardier Inc.    |                      |             | 367.8                        
|Balance at end of the period                  | $ (1.5)               | $ (17.5)     | $ 577.8                      

The accompanying notes are an integral part of these Consolidated Financial
Statements.

F-6

---



Bombardier Recreational Products Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended January 31, 2005 
[Tabular figures in millions of Canadian dollars, unless otherwise indicated]

1.

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 2, 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.

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.



---

Bombardier Recreational Products Inc.

2.BUSINESS
ACQUISITION [Cont'd]

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:

|                                           | Purchase Price Allocation
|------------------------------------------ | -------------------------
|                                           | Initial                  
|Assets acquired and liabilities assumed    | (Restated -              
|                                           | see [1])                 
|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] The Company was required to
>   account for the tax effects of temporary differences related to all acquired
>   assets and liabilities, including identifiable intangible assets, except for
>   goodwill, which is not deductible for tax purposes. The previously reported
>   purchase price allocation did not account for 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. The previously
>   reported amounts have been retroactively restated to appropriately reflect for
>   the tax effect of these temporary differences. The effect of this retroactive
>   restatement resulted in an increase to the long-term deferred income tax of
>   $38.0 million and increase to goodwill of $38.0 million. There was no impact
>   of this restatement to previously reported shareholder's equity or net income.
>   [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.



---

Bombardier Recreational Products Inc.2.BUSINESS ACQUISITION
[Cont'd]

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.

3.

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 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 29.

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:

- 

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.



---

Bombardier Recreational Products Inc.3.SIGNIFICANT ACCOUNTING
POLICIES [Cont'd]

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) Self-sustaining foreign operations

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 and integrated foreign investees

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.

Cash and cash equivalents

Cash 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.



---

Bombardier Recreational Products Inc.3.SIGNIFICANT ACCOUNTING POLICIES[Cont'd]

Sales of receivables

In 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 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
cost of work in process and finished products includes the cost of raw
materials, direct labour and related manufacturing overhead.

Income taxes

The 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.



---

Bombardier Recreational Products Inc.

3. SIGNIFICANT ACCOUNTING POLICIES[Cont'd]

Property, plant and equipment

Property, 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.

Goodwill and other intangible assets

Goodwill 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 assets

The 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 investments

Restricted 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.



---

Bombardier Recreational Products Inc.3.SIGNIFICANT ACCOUNTING POLICIES[Cont'd]

Deferred financing costs

Deferred 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 benefits

The 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.

Redeemable preferred shares

The 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 instruments

The 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.



---

Bombardier Recreational Products Inc.3.SIGNIFICANT ACCOUNTING POLICIES[Cont'd]

Derivative financial
instruments[
Cont'd]

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 compensation

The 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 recognition

Revenue 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 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. 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 programs

Sale 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.

Shipping and handling

The 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.



---

Bombardier Recreational Products Inc.

3. SIGNIFICANT ACCOUNTING POLICIES[Cont'd]

Product warranties

The 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 costs

The 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 credits

Research 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.

4.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 16.

Variable interest entities

In June 2003, the CICA issued Accounting Guideline No. 15,
"Consolidation of Variable Interest Entities" ("AcG No. 15"). AcG No. 15
establishes the consolidation criteria for variable interest entities based on a
risks-and-rewards model rather than on a control-based model. The Accounting
Standards Board is expected to issue proposed revisions to AcG No. 15. These
proposed recommendations are effective as of the fourth quarter of fiscal year
2005 and do not have a material impact on the Consolidated Financial Statements.



---

Bombardier Recreational Products Inc.5.DISCONTINUED OPERATIONS
AND ASSETS HELD FOR SALE

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 16) in discontinued operations. As a
result, there was no gain or loss recorded in the disposal.

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)                 

10

---

Bombardier Recreational Products Inc.5.DISCONTINUED OPERATIONS
AND ASSETS HELD FOR SALE [Cont'd]

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).

6.

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) Transactions with sponsors

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.



---

Bombardier Recreational Products Inc.6.
RELATED PARTY TRANSACTIONS [Cont'd]

a) Transactions with sponsors
[cont'd]

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).

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) Sales of receivables

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

12

---



Bombardier Recreational Products Inc.

6.

c) Sales of receivables [cont'd]

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 $0.5million and $0.8 million, respectively. Also,
an amount of $16.4million and $22.0 million is owed to BCI as at January
31, 2005 and 2004, respectively with respect to collections on receivables
transferred to BCI pursuant to the arrangement.

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 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.



---

Bombardier Recreational Products Inc.6.
RELATED PARTY TRANSACTIONS [Cont'd]

e) Predecessor business
allocations from Bombardier

|                                             | 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) Predecessor business intercompany transactions

|                                                 | 321-day period         | Year
    ended
|------------------------------------------------ | ---------------------- | --------------
|                                                 | ended
    December 18, | January 31,   
|                                                 | 2003                   | 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. No material losses have been incurred under this
agreement during the periods presented. The total amount of floorplan financing
provided was $1.2 billion for the 321-day period ended December 18, 2003 and
$1.5 billion for the year ended January 31, 2003.

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.



---

Bombardier Recreational Products Inc.7.RECEIVABLES

The Company's receivables were as follows:

|                                | January 31, | January 31,
|------------------------------- | ----------- | -----------
|                                | 2005        | 2004       
|                                |             | (Restated -
|                                |             | note 5)    
|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.



---

Bombardier Recreational Products Inc.7. RECEIVABLES[Cont'd]

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                

8.

The Company's inventories were as follows:

|                                      | January 31, | January 31,
|------------------------------------- | ----------- | -----------
|                                      | 2005        | 2004       
|                                      |             | (Restated -
|                                      |             | note 5)    
|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.



---

Bombardier Recreational Products Inc.9.OTHER ASSETS

Other assets were as follows:

|                                           | January 31, | January 31,        
|------------------------------------------ | ----------- | -------------------
|                                           | 2005        | 2004               
|Current                                    |             | (Restated - note 5)
|Investment in retained interests [Note 6c] | $ 38.0      | $ 40.5             
|Derivative financial assets                | 3.2         | 35.6               
|Prepaid expenses                           | 13.3        | 18.6               
|Income taxes receivable                    | 19.9        | 2.4                
|Other                                      | 0.1         |                   
|                                           | $ 74.5      | $ 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.

10. PROPERTY, PLANT AND EQUIPMENT

|          | January 31,
    2005 |              | January 31,
    2004
|--------- | -------------------- | ------------ | --------------------
|          | Cost                 | Accumulated  | Net book            
|          |                      | depreciation | value               
|          |                      |              |                     
|Equipment | $ 186.4              | $ 51.7       | $ 134.7             
|Tooling   | 143.2                | 55.1         | 88.1                
|Buildings | 172.5                | 10.5         | 162.0               
|Land      | 41.0                 |             | 41.0                
|          | $ 543.1              | $ 117.3      | $ 425.8             

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.



---

Bombardier Recreational Products Inc.10. PROPERTY, PLANT AND EQUIPMENT
[
Cont'd]

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              

11. GOODWILL

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.

12. OTHER INTANGIBLE ASSETS

|                                 |                   | 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          
|                                 |                   |                 
|                                 |                   |                 
|                                 | 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          

18

---



Bombardier Recreational Products Inc.

12. OTHER INTANGIBLE ASSETS

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   

13. BANK LOANS

|                          | 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.



---



Bombardier Recreational Products Inc.

14. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

|                                            | January 31, | January 31,
|------------------------------------------- | ----------- | -----------
|                                            | 2005        | 2004       
|                                            |             | (Restated -
|                                            |             | note 5)    
|                                            |             |            
|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        | 3.4         | 7.2        
|Other                                       | 2.9         | 3.1        
|                                            | $ 597.2     | $ 640.5    

The change in the accrued warranty provision was as follows:

|                                        | The Company    | Predecessor Business
|--------------------------------------- | -------------- | --------------------
|                                        |                | 44-day              
|                                        | Year
    ended | period ended        
|                                        | January 31,    | January 31,         
|                                        | 2005           | 2004                
|                                        |                |                     
|Balance at
    beginning of the period  | $
    77.7     | $ 77.4              
|Expensed during the
    period          | 48.5           | 4.9                 
|Change in estimate                      | (12.6)         | 0.3                 
|Claims paid during the
    period       | (40.3)         | (5.1)               
|Effect of foreign
    currency exchange |                |                     
|rate changes                            | (2.1)          | 0.2                 
|Balance at end of the period            | $ 71.2         | $ 77.7              

a) 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.



---

Bombardier Recreational Products Inc.14.ACCOUNTS PAYABLE AND ACCRUED LIABILITIES[Cont'd]

a) Restructuring provisions
related to business acquisition
[Cont'd]

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) Restructuring provisions of November 2004

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
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.



---

Bombardier Recreational Products Inc.14.ACCOUNTS PAYABLE AND ACCRUED LIABILITIES[Cont'd]

b) Restructuring provisions of
November 2004[
Cont'd]

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.

15. LONG-TERM DEBT

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]

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, semi-annual 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.

22

---



Bombardier Recreational Products Inc.

15. LONG-TERM DEBT

Senior Secured Credit
Facilities[
Cont'd]:

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

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%        

23

---



Bombardier Recreational Products Inc.

15. LONG-TERM DEBT

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

16.

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) Canadian employee future benefits

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.



---

Bombardier Recreational Products Inc.16.EMPLOYEE FUTURE BENEFITS[Cont'd]

a) Canadian employee future benefits[
Cont'd]

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) United States employee future benefits

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.

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) Other employee future benefits

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.



---

Bombardier Recreational Products Inc.16.EMPLOYEE FUTURE BENEFITS[Cont'd]

c) Other employee future benefits[
Cont'd]

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              
|                                                           | Year ended  | period ended | period ended | Year ended          
|                                                           | January 31, | January 31,  | December 18, | January 31,         
|                                                           |             | 2005         |              | 2004                
|                                                           | Domestic    | Foreign      | Domestic     | Foreign             
|Benefit cost actuarial assumptions (1)                     |             |              |              |                     
|Discount rate                                              | 6.00%       | 5.01%        | 6.00%        | 5.01%               
|Rate of compensation increase                              | 4.09%       | 3.51%        | 4.10%        | 3.51%               
|Expected long-term rate of return on plan                  | 6.81%       | 6.00%        | 6.81%        | 6.00%               
|assets                                                     |             |              |              |                     
|Projected benefit obligation
    actuarial assumptions (2) |             |              |              |                     
|Discount rate                                              | 6.00%       | 5.01%        | 6.00%        | 5.01%               
|Rate of compensation increase                              | 4.07%       | 3.51%        | 4.09%        | 3.51%               

(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.



---

Bombardier Recreational Products Inc.16.EMPLOYEE FUTURE BENEFITS[Cont'd]

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          
|                                                  |                  |                 
|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]

[2] Following finalisation
  of negotiations with Bombardier plan assets have been adjusted.

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]

All of the pension plans had projected benefit obligations in excess of plan
assets. 27

27

---



Bombardier Recreational Products Inc.

16.

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)        

Components of the net benefit plan cost were as follows:

|                                       |             | The Company  |              | Predecessor
    Business |         
|-------------------------------------- | ----------- | ------------ | ------------ | ------------------------ | --------
|                                       |             |              |              | 44-day                   |         
|                                       | Year ended  | period ended | period ended | Year ended              
|                                       | January 31, | January 31,  | December 18, | January 31              
|                                       |             | 2005         |              | 2004                     |         
|                                       | Domestic    | Foreign      | Domestic     | Foreign                  | Domestic
|Net benefit plan cost (1)              |             |              |              |                          |         
|Current service cost                   | $ 10.6      | $ 2.9        | $ 1.3        | $ 0.4                    | $ 8.1   
|Interest cost                          | 8.3         | 3.5          | 1.0          | 0.4                      | 11.2    
|Actual return on plan assets           | (8.2)       |             | (0.2)        |                         | (8.1)   
|Actuarial loss                         | 1.1         | 1.2          | (1.6)        | (0.4)                    | 1.5     
|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          | 0.5          | 0.4                      | 12.7    
|Difference between actual and          |             |              |              |                          |         
|expected return on plan assets         | 1.6         |             | (0.6)        |                         |        
|Difference between actual and          |             |              |              |                          |         
|actuarial gain and the amount          |             |              |              |                          |         
|recognised                             | (1.1)       | (1.2)        | 1.6          | 0.4                      |        
|Amortisation of past service costs     |            |             |             |                         | 0.9     
|Benefit cost recognised                | $ 7.6       | $ 6.4        | $ 1.5        | $ 0.8                    | $ 13.6  

> (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.

28

---



Bombardier Recreational Products Inc.

16.

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 

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



---

Bombardier Recreational Products Inc.

16. EMPLOYEE FUTURE BENEFITS[Cont'd]

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, 2005 | January 31, 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:

|                                      | January 31, 2005 | January 31, 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]

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               

30

---

Bombardier Recreational Products Inc.16.EMPLOYEE FUTURE BENEFITS
[
Cont'd]

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                 

17.

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.

18.

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

31

---



Bombardier Recreational Products Inc.

19.

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          | $ 304.5         

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

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.

20.

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.



---

Bombardier Recreational Products Inc.20.
MANAGEMENT SHARE SUBSCRIPTION
AGREEMENT AND STOCK OPTION PLAN [Cont'd]

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%      

33

---

Bombardier Recreational Products Inc.21.
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.

22.

|                                     | 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              

23.

|                                      | 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.



---

Bombardier Recreational Products Inc.24.
INCOME TAX

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

|                           |                  | The Company |              | Predecessor business |           
|-------------------------- | ---------------- | ----------- | ------------ | -------------------- | ----------
|                           |                  |             | 44-day       | 321-day              |           
|                           |                  |             | period ended | period ended         | Year ended
|                           | Year ended       | January 31, | December 18, | January 31,         
|                           | January 31, 2005 | 2004        | 2003         | 2003                
|Income taxes calculated at |                  |             |              |                      |           
|statutory rates            | $ 2.1            | 31.3%       | $ (7.3)      | 31.8%                | $ 13.8    
|Increase (decrease)        |                  |             |              |                      |           
|resulting from:            |                  |             |              |                      |           
|Income tax rate            |                  |             |              |                      |           
|differential of foreign    |                  |             |              |                      |           
|subsidiaries               | (12.6)           |             | 0.6          |                      | (3.4)     
|Effect of income tax rate  |                  |             |              |                      |           
|changes                    | 0.6              |             | 0.1          |                      | 0.3       
|Tax benefits from losses   |                  |             |              |                      |           
|and temporary              |                  |             |              |                      |           
|differences not            |                  |             |              |                      |           
|recognised                 | 0.3              |             |             |                      | 0.3       
|Recognition of             |                  |             |              |                      |           
|previously unrecorded      |                  |             |              |                      |           
|tax benefit                | (0.2)            |             | (0.1)        |                      |          
|Tax-exempt items           | (3.8)            |             | 0.5          |                      | 2.0       
|Large corporation tax      | 1.1              |             | 0.2          |                      |          
|Manufacturing and          |                  |             |              |                      |           
|processing credit          |                 |             | 0.2          |                      | (0.5)     
|Other                      | (0.1)            |             | 0.1          |                      | 1.4       
|Income tax expense         |                  |             |              |                      |           
|(recovery)                 | $ (12.6)         |             | $ (5.7)      |                      | $ 13.9    

35

---



Bombardier Recreational Products Inc.

24.

Details of income tax recovery are as follows:

|                               | The Company    | Predecessor Business
|------------------------------ | -------------- | --------------------
|                               |                | 44-day              
|                               | Year
    ended | period ended        
|                               | January 31,    | January 31,         
|                               | 2005           | 2004                
|                               |                |                     
|Current income tax
    expense |                |                     
|Domestic                       | $
    (0.5)    | $ 1.6               
|Foreign                        | 7.8            | 1.3                 
|                               | 7.3            | 2.9                 
|Deferred income tax            |                |                     
|recovery                       |                |                     
|Temporary
    differences      | (20.3)         | (8.6)               
|Effect of
    income tax rate  |                |                     
|changes                        | 0.6            | 0.1                 
|Recognition of previously      |                |                     
|unrecorded tax benefits        | (0.2)          | (0.1)               
|                               | (19.9)         | (8.6)               
|Income tax expense             |                |                     
|(recovery)                     | $ (12.6)       | $ (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 -   
|                                         |             | notes 2 and 5)
|Accounts payable and accrued liabilities | $ 53.7      | $ 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                     | (3.1)       | (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           
|                                         | 39.0        | 29.2          
|Valuation allowance                      | (1.6)       | (1.5)         
|Net amount                               | $ 37.4      | $ 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.



---

Bombardier Recreational Products Inc.24.
INCOME TAXES [Cont'd]

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.

25.

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 | 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.



---

Bombardier Recreational Products Inc.26.
FINANCIAL INSTRUMENTS

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 prior to the beginning of the year,
and on the contract inception date 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. 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.

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     | buy              | Average | Notional  
|                      | currency | currency         | rate    | amount    
|Sell contracts        |          |                  |         |           
|Less than 1 year      | USD      | CAD              | 0.7495  | USD 337.1 
|Between 1 and 2 years | USD      | CAD              | 0.7865  | USD 157.4 
|Buy contracts         |          |                  |         |           
|Less than 1 year      | CAD      | Euro             | 0.6042  | Euro 111.1
|Between 1 and 2 years | CAD      | Euro             | 0.6114  | Euro 55.3 
|                      |          |                  |         |           
|                      |          | January 31, 2004 |         |           
|                      |          |                  |         |           
|                      |          |                  |         |           
|                      | sell     | buy              | Average | Notional  
|                      | currency | currency         | rate    | amount    
|Sell contracts        |          |                  |         |           
|Less than 1 year      | USD      | CAD              | 0.7108  | USD 417.7 
|Between 1 and 2 years | USD      | CAD              | 0.7525  | USD 194.0 
|Less than 1 year      | USD      | JPY              | 0.0095  | USD 1.8   
|Less than 1 year      | AUD      | USD              | 1.4580  | AUD 46.5  
|Buy contracts         |          |                  |         |           
|Less than 1 year      | CAD      | Euro             | 0.6120  | Euro 148.0
|Between 1 and 2 years | CAD      | Euro             | 0.6123  | Euro 66.0 

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.

38

---



Bombardier Recreational Products Inc.

26.

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,
approximates the fair values of these items due to their short-term nature.

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      
|Senior subordinated notes              | $ 247.6          | $ 264.9         
|Redeemable preferred
    shares        |                 |                
|Forward foreign
    exchange contracts |                  |                 
|Favourable                             | 1.6              | 41.2            
|Unfavourable                           | (3.4)            | (6.7)           

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.



---

Bombardier Recreational Products Inc.
26.
FINANCIAL INSTRUMENTS [Cont'd]

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.

27.

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) Operating leases

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:

|     | 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) Floorplan financing

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) Sale of receivables

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).



---

Bombardier Recreational Products Inc.27.COMMITMENTS AND CONTINGENCIES[Cont'd]

d) Purchase agreement

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) Litigation

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) Countervailing and anti-dumping duties

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 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.



---

Bombardier Recreational Products Inc.28.
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.



---

Bombardier Recreational Products Inc.28.SEGMENT DISCLOSURE[Cont'd]

|                                                    |              | The Company  |              
|--------------------------------------------------- | ------------ | ------------ | -------------
|                                                    | Consolidated | Power Sports | Marine Engine
|                                                    |              | 44-day       |              
|                                                    | Year ended   | period ended | Year ended   
|                                                    | January 31,  | January 31,  | January 31,  
|                                                    | 2005         | 2004         | 2005         
|External revenues                                   | $2,467.0     | $ 333.5      | $1,927.7     
|Intersegment revenues                               |             |             | 23.6         
|Segment revenues                                    | 2,467.0      | 333.5        | 1,951.3      
|Cost of sales and operating expenses                | 2,273.1      | 328.3        | 1,761.3      
|Depreciation and amortisation                       | 118.0        | 13.9         | 96.3         
|                                                    | 2,391.1      | 342.2        | 1,857.6      
|Segment operating income (loss) from continuing     |              |              |              
|operations                                          | 75.9         | (8.7)        | $ 93.7       
|Corporate and other                                 | 29.3         | 3.2          |              
|Restructuring, impairment and other charges
    and |              |              |              
|(income)                                            | 14.9         |              |              
|Depreciation dealer network                         | 1.9          | 0.2          |              
|Operating income from continuing operations         | 29.8         | (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 on derivative financial instruments        |             | 4.5          |              
|Foreign exchange gain on long-term debt             | (46.7)       | (1.3)        |              
|Income from continuing operations before income     |              |              |              
|taxes                                               | $ 6.7        | $ (22.8)     |              

43

---



Bombardier Recreational Products Inc.

28.

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 
|------------------------------------------------ | ------------
|                                                 |             
|                                                 | Consolidated
|Net segment assets                               | $ 522.9     
|Net corporate office and other                   | 31.2        
|Goodwill                                         | 119.9       
|Dealer network                                   | 44.2        
|License agreement                                | 13.8        
|Accounts payable and accrued liabilities         | 588.7       
|Deferred income taxes                            | 75.8        
|Cash and cash equivalents                        | 150.3       
|Assets held for sale of Utility Vehicles Segment |            
|Total assets                                     | $1,546.8    



|                                                      |              |              | Predecessor Business |             |             
|----------------------------------------------------- | ------------ | ------------ | -------------------- | ----------- | ------------
|                                                      | Consolidated | Power Sports | Marine Engine       
|                                                      | 321-day      |              | 321-day              |             | 321-day     
|                                                      | period ended | Year ended   | period ended         | Year ended  | period ended
|                                                      | December 18, | January 31,  | December 18,         | January 31, | December 18,
|                                                      | 2003         | 2003         | 2003                 | 2003        | 2003        
|External revenues                                     | $ 2,075.6    | $ 2,383.4    | $ 1,593.1            | $ 1,819.9   | $ 482.5     
|Intersegment revenues                                 |             |             | 18.0                 | 14.1        | 15.5        
|Segment revenues                                      | 2,075.6      | 2,383.4      | 1,611.1              | 1,834.0     | 498.0       
|Cost of sales and operating expenses                  | 1,906.6      | 2,082.4      | 1,448.7              | 1,575.6     | 491.4       
|Depreciation and amortisation                         | 90.7         | 96.3         | 71.1                 | 71.5        | 19.6        
|                                                      | 1,997.3      | 2,178.7      | 1,519.8              | 1,647.1     | 511.0       
|Segment operating income (loss) from
    continuing   |              |              |                      |             |             
|operations                                            | 78.3         | 204.7        | $ 91.3               | $ 186.9     | $ (13.0)    
|Corporate and other                                   | 30.1         | 28.9         |                      |             |             
|Depreciation dealer network                           |             |             |                      |             |             
|Operating income from continuing operations           | 48.2         | 175.8        |                      |             |             
|Financing costs                                       | 6.5          | 12.6         |                      |             |             
|Income from continuing operations before income taxes | $ 41.7       | $ 163.2      |                      |             |             

44

---



Bombardier Recreational Products Inc.

28.

|                    | 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                                    

Geographic information:

|                 |             |                                |              |             | Property, plant
    and equipment,
|---------------- | ----------- | ------------------------------ | ------------ | ----------- | ----------------------------------
|                 | Revenues 1  | goodwill and 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,                       
|                 | 2005        | 2004                           | 2003         | 2003        | 2005                              
|Canada           | $ 395.5     | $ 45.3                         | $ 362.5      | $ 402.7     | $ 462.2                           
|United States    | 1,376.6     | 177.1                          | 1,183.7      | 1,389.5     | 173.5                             
|Australia        | 79.9        | 11.7                           | 44.4         | 48.6        | 0.3                               
|Finland          | 45.4        | 3.8                            | 35.6         | 33.0        | 8.7                               
|Austria          | 16.6        | 1.0                            | 13.7         | 17.6        | 121.3                             
|Scandinavia      | 88.0        | 14.7                           | 68.3         | 80.2        | 0.2                               
|Russia           | 46.8        | 3.3                            | 22.0         | 7.4         |                                  
|Other - Americas | 51.8        | 7.9                            | 42.8         | 47.7        | 6.2                               
|Other - Europe   | 229.2       | 51.9                           | 205.1        | 264.4       |                                  
|Other            | 137.2       | 16.8                           | 97.5         | 92.3        | 2.5                               
|                 | $ 2,467.0   | $ 333.5                        | $ 2 075.6    | $2, 383.4   | $ 774.9                           

1



---

Bombardier Recreational Products Inc.29.
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, | January 31,             
|                                                | 2005        | 2004                    
|                                                |             |                         
|                                                |             |                         
|Net income under Canadian GAAP                  | $ 16.0      | $ (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                       | 27.5        | (23.7)                  
|Minimum pension liability adjustment, net       |             |                         
|of 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 (b)                                      | 36.3        |                        
|Comprehensive income under                      |             |                         
|U.S. GAAP                                       | $ 48.2      | $ (25.7)                

46

---

Bombardier Recreational Products Inc.29.DIFFERENCES BETWEEN CANADIAN AND U.S.GAAP [Cont'd]

Reconciliation of consolidated balance
sheet captions

|                                | As at
    January 31, 2005 | As at
    January 31, 2004
|------------------------------- | -------------------------- | --------------------------
|                                | Canadian                   |                           
|                                | GAAP                       | Adjustments               
|                                |                            |                           
|Other current assets (b)        | $ 74.5                     | $ 39.6                    
|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)                 | 597.2                      | 3.3                       
|Current deferred income taxes   |                            |                           
|liabilities                     | 0.4                        |                          
|Retained earning (deficit)      | (1.5)                      | (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)       |                           | 36.3                      
|Redeemable preferred shares (d) |                           |                          
|Mezzanine preferred shares (d)  |                           |                          
|Total assets                    | $ 1,546.8                  | $35.1                     

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) | (47.3)                                
|                         |                                       
|                         | Predecessor business                  
|                         | 321-day period ended December 18, 2003
|                         | Canadian                              
|                         | GAAP                                  
|Cash flows from:         |                                       
|operating activities (c) | $ (77.3)                              
|investing activities (c) | (72.3)                                

47

---



Bombardier Recreational Products Inc.

29.

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) Foreign exchange contracts

The Company

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.

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) Development costs

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 2, 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.



---

Bombardier Recreational Products Inc.29.DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP[Cont'd]

d) Redeemable preferred shares

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.

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) Income taxes

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

g) FAS 130 "Comprehensive Income"

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.

30.

(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").



---

Bombardier Recreational Products Inc.30.
CONDENSED CONSOLIDATING FINANCIAL
INFORMATION[Cont'd]

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 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.



---

Bombardier Recreational Products Inc.30.
CONDENSED CONSOLIDATING FINANCIAL
INFORMATION[
Cont'd]

Condensed Consolidating Balance Sheet as at January 31, 2005

|                                         |           |              |               |              |             
|---------------------------------------- | --------- | ------------ | ------------- | ------------ | ------------
|                                         |           | Guarantor    | Non-Guarantor |              |             
|                                         | Parent    | Subsidiaries | Subsidiaries  | Eliminations | Consolidated
|ASSETS                                   |           |              |               |              |             
|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                    | 15.4      | 37.4         | 3.3           | 6.3          | 62.4        
|Intercompany accounts                    | 167.2     | 252.7        | 398.3         | (818.2)      |            
|Other assets                             | 20.5      | 9.9          | 44.1          |             | 74.5        
|Assets held for sale                     |          | 3.4          |              |             | 3.4         
|Total current assets                     | 460.6     | 444.7        | 628.3         | (828.2)      | 705.4       
|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        
|                                         | $ 1,190.8 | $ 685.6      | $ 781.0       | $ (1,110.6)  | $ 1,546.8   
|LIABILITIES AND SHAREHOLDER'S EQUITY     |           |              |               |              |             
|Current Liabilities                      |           |              |               |              |             
|Bank loans                               | $ 12.3    | $           | $            | $           | $ 12.3      
|Accounts payable and accrued liabilities | 236.7     | 183.9        | 176.6         |             | 597.2       
|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                | 480.7     | 353.4        | 613.7         | (690.7)      | 757.1       
|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                        | 825.6     | 365.6        | 694.8         | (690.7)      | 1,195.3     
|Shareholder's equity                     |           |              |               |              |             
|Capital stock                            | 364.4     | 339.0        | 59.7          | (398.7)      | 364.4       
|Contributed surplus                      | 2.3       |             |              |             | 2.3         
|Retained earnings (deficit)              | (1.5)     | (6.5)        | 27.5          | (21.0)       | (1.5)       
|Cumulative translation adjustment        |          | (12.5)       | (1.0)         | (0.2)        | (13.7)      
|                                         | 365.2     | 320.0        | 86.2          | (419.9)      | 351.5       
|                                         | $ 1,190.8 | $ 685.6      | $ 781.0       | $ (1,110.6)  | $ 1,546.8   

51

---



Bombardier Recreational Products Inc.

30.

Condensed Consolidating Balance Sheet as at January 31, 2004

|                                            |           | Guarantor    | Non-Guarantor            |              |             
|------------------------------------------- | --------- | ------------ | ------------------------ | ------------ | ------------
|                                            | Parent    | Subsidiaries | Subsidiaries             | Eliminations | Consolidated
|                                            |           |              | Restated - Notes 2 and 5 |              |             
|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                | $ 256.1   | $ 199.4      | $ 188.3                  | $ (3.3)      | $ 640.5     
|liabilities                                 |           |              |                          |              |             
|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   

52

---



Bombardier Recreational Products Inc.

30.

The Company's Condensed Consolidating Statements of Income

|                                | For the year ended January 31, 2005
|------------------------------- | -----------------------------------
|                                |                                    
|                                | Parent                             
|                                |                                    
|Revenues                        | $ 1,490.4                          
|Cost of sales                   | 1,340.6                            
|Gross profit                    | 149.8                              
|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           | 46.0                               
|Other (income) and expense      |                                    
|Financing costs                 | 48.0                               
|Accretion in carrying value and |                                    
|loss on early redemption of     |                                    
|preferred shares                | 9.4                                
|Foreign exchange loss gain on   |                                    
|long term debt                  | (38.4)                             
|Share in earnings of equity     |                                    
|accounted investees             | 20.3                               
|Income (loss) from continuing   |                                    
|operations before income        |                                    
|taxes                           | 6.7                                
|Income tax expense (recovery)   | (12.6)                             
|Income (loss) from continuing   |                                    
|operations                      | 19.3                               
|Income (loss) from              |                                    
|discontinued operations,        |                                    
|net of tax                      | (3.3)                              
|Net income (loss)               | $ 16.0                             

53

---



Bombardier Recreational Products Inc.

30.

|                                 | 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 tax                       | 0.2                                   
|Net income (loss)                | $ (17.5)                              

54

---



Bombardier Recreational Products Inc.

30.

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 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 tax                    | (1.4)                              
|Net income                    | $ 60.3                             

55

---



Bombardier Recreational Products Inc.

30.

THE COMPANY'S CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW

|                                                                | For the year ended January 31, 2005
|--------------------------------------------------------------- | -----------------------------------
|                                                                |                                    
|                                                                |                                    
|                                                                | Parent                             
|OPERATING ACTIVITIES                                            |                                    
|Income from continuing operations                               | $ 19.3                             
|Non-cash items:                                                 |                                    
|Depreciation and amortisation                                   | 56.8                               
|Amortisation of deferred
    financing costs                    | 13.6                               
|Employee stock compensation                                     | 2.3                                
|Deferred income taxes                                           | 2.6                                
|Loss on disposal of property,
    plant and equipment           | 0.4                                
|Gain on disposal of asset held
    for sale                     |                                   
|Change in fair value of
    derivative financial instruments    | (1.1)                              
|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                                

56

---



Bombardier Recreational Products Inc.

30.

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 of period    | $ 56.9                                      
|Supplemental information                     |                                             
|Cash paid for:                               |                                             
|Interest                                     | $ 1.7                                       
|Income taxes                                 |                                            

57

---



Bombardier Recreational Products Inc.

30.

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                                     |                                              

58

---



Bombardier Recreational Products Inc.

30.

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                                 |                                   

59

---



Bombardier Recreational Products Inc.

30.

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 | Adjustments            | U.S.                      
|                  | GAAP     |                        | GAAP                      
|Other current     |          |                        |                           
|assets (b)        | $ 20.5   | $ 39.6                 | $ 60.1                    
|Long-term         |          |                        |                           
|deferred income   |          |                        |                           
|tax assets        |         |                       |                          
|Other long-term   |          |                        |                           
|assets            | 22.9     | (0.3)                  | 22.6                      
|Accounts payable  |          |                        |                           
|and accrued       |          |                        |                           
|liabilities (b)   | 236.4    | 3.3                    | 239.7                     
|Retained earnings |          |                        |                           
|(deficit)         | (1.5)    | (0.3)                  | (1.8)                     
|Cumulative        |          |                        |                           
|translation       |          |                        |                           
|adjustment        |         |                       |                          
|Accumulated       |          |                        |                           
|other             |          |                        |                           
|comprehensive     |          |                        |                           
|income:           |          |                        |                           
|Cumulative        |          |                        |                           
|translation       |          |                        |                           
|adjustment        |         |                       |                          
|Total assets      | $1,190.8 | $ 39.3 $               | 1,230.1                   

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

|                       |        |           | Parent      | Non-Guarantor Subsidiaries
|---------------------- | ------ | --------- | ----------- | --------------------------
|                       | Note   | Canadian  | Adjustments | U.S.                      
|                       |        | GAAP      |             | GAAP                      
|Long-term deferred     |        |           |             |                           
|income tax assets      |        | $ (0.1)   | $ 0.1       | $                        
|Other long-term assets |        | 35.6      | (0.8)       | 34.8                      
|Retained earnings      |        |           |             |                           
|(deficit)              |        | (17.5)    | (0.7)       | (18.2)                    
|Cumulative translation |        |           |             |                           
|adjustment             |        |          |            |                          
|Accumulated other      |        |           |             |                           
|comprehensive          |        |           |             |                           
|income:                |        |           |             |                           
|Cumulative translatio  |        |           |             |                           
|adjustment             |        |          |            |                          
|Redeemable preferred   |        |           |             |                           
|shares                 | 23 (c) | 43.2      | (43.2)      |                          
|Mezzanine preferred    |        |           |             |                           
|shares                 | 23 (c) |          | 43.2        | 43.2                      
|Total assets           |        | $ 1,420.5 | $ (0.7)     | $ 1,419.8                 

60

---



Bombardier Recreational Products Inc.

30.

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

|                                              | For the year ended January 31, 2005         
|--------------------------------------------- | --------------------------------------------
|                                              |                                             
|                                              | Parent                                      
|                                              |                                             
|Net income (loss) under Canadian GAAP         | $ 16.0                                      
|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             | 25.8                                        
|Change in cumulative translation adjustment   |                                            
|Unrealised gains on derivative financial      |                                             
|instrument arising during the period (b):     | 36.3                                        
|Comprehensive income (loss) under U.S.        |                                             
|GAAP                                          | $ 62.1                                      
|                                              |                                             
|                                              | 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
    redeemable | 0.5                                         
|preferred shares                              |                                             
|Total adjustments before the following:       | (0.3)                                       
|Income tax expense (recovery)                 | (0.1)                                       
|Total adjustments                             | (0.2)                                       
|Net income (loss) under U.S. GAAP             | (17.7)                                      
|Change in cumulative translation adjustment   |                                            
|Comprehensive income (loss) under U.S.        |                                             
|GAAP                                          | $ (17.7)                                    

61

---



Bombardier Recreational Products Inc.

30.

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                                        
|                                          |                                               
|                                          | 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                                        

62

---



Bombardier Recreational Products Inc.

30.

Reconciliation of Condensed Statements of Cash Flows

|                     | The Company                     
|-------------------- | --------------------------------
|                     | For the year
    ended          
|                     | January 31, 2005                
|                     | Parent                          
|                     | Canadian                        
|                     | GAAP                            
|Cash flows from      |                                 
|operating activities | $ 138.9                         
|Cash flows from      |                                 
|investing activities | $ 24.1                          
|                     |                                 
|                     | Predecessor
    business        
|                     | For the 321-day
    period ended
|                     | December 18, 2003               
|                     | Parent                          
|                     | Canadian                        
|                     | GAAP                            
|Cash flows from      |                                 
|operating activities | $ (84.2)                        
|Cash flows from      |                                 
|investing activities | $ (38.9)                        

31.

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.





---



SIGNATURES

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

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


Date: April 26, 2005



---

Exhibit 2.5 -

|SUPPLEMENTAL INDENTURE,                                                    
|---------------------------------------------------------------------------
|DATED AS OF FEBRUARY 9, 2005,                                              
|AMONG AIRCRAFT ENGINES SERVICES (AES)
    INC.,                            
|4279174 CANADA INC.,                                                       
|AND BRP HOLDINGS (HUNGARY) ASSENT
    MANAGEMENT LIMITED LIABILITY COMPANY,
|AS ADDITIONAL GUARANTORS,                                                  
|BOMBARDIER RECREATIONAL PRODUCTS INC.,                                     
|AS ISSUER, THE OTHER GUARANTORS                                            
|AND U.S. BANK, NATIONAL ASSOCIATION AS
    TRUSTEE.                        







---

Exhibit 4.1 -

|AMENDED AND RESTATED CREDIT AGREEMENT                                      
|---------------------------------------------------------------------------
|DATED AS OF FEBRUARY 9, 2005,                                              
|AMONG BOMBARDIER RECREATIONAL PRODUCTS
    INC.,                           
|BRP US INC., THE GUARANTORS PARTY
    THERETO                              
|FROM TIME TO TIME, MERRILL LYNCH & CO.,                                    
|MERRILL LYUNCH, PIERCE, FENNER & SMITH
    INCORPORATED,                   
|AS GLOBAL TRANSACTION COORDINATOR,                                         
|ROYAL BANK OF Canada, AS CANADIAN
    TRANSACTION COORDINATOR,             
|MERRILL LYNCH & CO., MERRILL LYNCH,                                        
|PIERCE, FENNER & SMITH INCORPORATED AND                                    
|UBS SECURITIES LLC, AS JOINT BOOK
    RUNNERS AND LEAD ARRANGERS           
|OF THE TERM FACILITIES, BMO NESBITT
    BURNS INC.                         
|AND ROYAL BANK OF Canada AS JOINT BOOK
    RUNNERS AND                     
|LEAD ARRANGERS OF THE REVOLVING
    FACILITIES, BANK OF MONTREAL,          
|AS ADMINISTRATIVE AGENT, MERRILL LYNCH
    & CO.,                          
|MERRILL LYNCH, PIERCE, FENNER & SMITH
    INCORPORATED,                    
|UBS SECURITIES LLC AND ROYAL BANK OF
    CANADA                            
|AS CO-SYNDICATION AGENTS, GENERAL
    ELECTRIC CAPITAL CORPORATION,        
|AS DOCUMENTATION AGENT, AND THE LENDERS
    PARTY THERETO FROM TIME TO TIME







---

Exhibit 4.2 -

|AMENDED AND RESTATED U.S. SECURITY
    AGREEMENT BY
|---------------------------------------------------
|BRP US INC., AS U.S. REVOLVING
    BORROWER,       
|THE GUARANTORS NAMED THEREIN AND                   
|BANK OF MONTREAL, AS ADMINISTRATIVE
    AGENT,     
|DATED AS OF DECEMBER 18, 2003                      
|AND AMENDED AND RESTATED AS OF FEBRUARY
    9, 2005







---

Exhibit 4.3 -

|AMENDED AND RESTATED CANADIAN SECURITY
    AGREEMENT      
|----------------------------------------------------------
|BY BOMBARDIER RECREATIONAL PRODUCTS
    INC.,             
|AS CANADIAN BORROWER, THE GUARANTORS
    NAMED            
|THEREIN AND BANK OF MONTREAL, AS
    ADMINISTRATIVE AGENT,
|DATED AS OF DECEMBER 18, 2003 AND
    AMENDED AND RESTATED
|AS OF FEBRUARY 9, 2005                                    





---

Exhibit 4.8 -

|J.A. BOMBARDIER (J.A.B.) INC.
|-----------------------------
|MANAGEMENT OPTION PLAN,      
|DATED MARCH 31, 2004         







---

Exhibit 4.9 -

|MANAGEMENT SHARE SUBSCRIPTION
    AGREEMENT,
|--------------------------------------------
|DATED MARCH 31, 2004                        







---

Exhibit 8.1 -
SUBSIDIARIES OF BOMBARDIER RECREATIONAL PRODUCTS INC.

The Company's significant subsidiaries, all of which are wholly owned, are:BRP US Inc., incorporated under the
  laws of the state of Delaware;





---

Exhibit 12.1 -
CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, José Boisjoli, certify that:
1. I have reviewed this annual
report on Form 20-F of Bombardier Recreational Products Inc.;
2. 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;
3. 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;
4. 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 annual report) that
  has materially affected, or is reasonably likely to materially affect, the
  registrant's internal control over financial reporting; and
5. 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 BOISJOLI                
|-------------------------------------
|José Boisjoli                        
|President and Chief Executive Officer
|                                     
|Date: April 26, 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 2002I, Louis Morin, certify that:
1. I have reviewed this annual
report on Form 20-F of Bombardier Recreational Products Inc;
2. 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;
3. 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;
4. 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 annual report) that
  has materially affected, or is reasonably likely to materially affect, the
  registrant's internal control over financial reporting; and
5. 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 MorinChief Financial OfficerDate:April 26, 2005

---



Exhibit 13.1 -

CERTIFICATIONS PURSUANT TO THE SARBANES-OXLEY ACT18 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:

1. This Annual
Report on Form 20-F 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

2. The information contained in
the report fairly presents, in all material respects, the financial condition
and results of operations of the Company.

|/s/ JOSÉ BOISJOLI                    
|-------------------------------------
|José Boisjoli                        
|President and Chief Executive Officer
|                                     
|Date:April 26, 2005                  



---



Exhibit 13.2 -

CERTIFICATIONS PURSUANT TO THE SARBANES-OXLEY ACT18 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:

1. This Annual
Report on Form 20-F 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

2. The information contained in
the report fairly presents, in all material respects, the financial condition
and results of operations of the Company.

|/s/ LOUIS MORIN        
|-----------------------
|Louis Morin            
|Chief Financial Officer
|                       
|Date:April 26, 2005    

---