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<SEC-DOCUMENT>0001173382-08-000018.txt : 20080815
<SEC-HEADER>0001173382-08-000018.hdr.sgml : 20080814
<ACCEPTANCE-DATETIME>20080815113358
ACCESSION NUMBER:		0001173382-08-000018
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20080630
FILED AS OF DATE:		20080815
DATE AS OF CHANGE:		20080815

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CAE INC
		CENTRAL INDEX KEY:			0001173382
		STANDARD INDUSTRIAL CLASSIFICATION:	MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690]
		IRS NUMBER:				000000000

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-31402
		FILM NUMBER:		081021826

	BUSINESS ADDRESS:	
		STREET 1:		2025 LOGISTICS DRIVE
		CITY:			MISSISSAUGA
		STATE:			A6
		ZIP:			L5S 1Z9
		BUSINESS PHONE:		514-341-6780

	MAIL ADDRESS:	
		STREET 1:		8585 COTE DE LIESSE, CP 1800
		STREET 2:		DEPT. 04
		CITY:			ST-LAURENT, QUEBEC
		STATE:			A6
		ZIP:			H4L 4X4
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>q1fy2009.htm
<DESCRIPTION>FORM 6K AND 2009 FIRST QUARTER REPORT
<TEXT>

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<P align=center><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">SECURITIES AND EXCHANGE COMMISSION</FONT></B><BR>
<B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Washington, DC 20549</FONT></B></P>
<P align=center>
<TABLE>
<TR>
     <TD noWrap align=center><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Form 6-K</FONT></B></TD></TR></TABLE></P>
<P align=center><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Report of Foreign Issuer</FONT><BR>
<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Pursuant to Rule 13a-16 or 15d-16 of</FONT><BR>
<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">the Securities Exchange Act of 1934</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">For the month of: August 2008&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Commission File Number: 1-31402</FONT></P>
<P align=center>
<TABLE>
<TR>
     <TD noWrap align=center><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">CAE INC.</FONT></B><BR>
<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(Name of Registrant)</FONT></TD></TR></TABLE></P>
<P align=center>
<TABLE>
<TR>
     <TD noWrap align=center><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">8585 Cote de Liesse</FONT></B><BR>
<B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Saint-Laurent, Quebec</FONT></B><BR>
<B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Canada H4T 1G6</FONT></B><BR>
<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">(Address of Principal Executive Offices)</FONT></TD></TR></TABLE></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:</FONT></P>
<P align=center><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Form 20-F&nbsp;&nbsp;<FONT face=Wingdings>&#168;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Form 40-F <FONT face=Wingdings>x</FONT></FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): <FONT face=Wingdings>x</FONT></FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the SEC pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:</FONT></P>
<P align=center><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Yes&nbsp;&nbsp;<FONT face=Wingdings>&#168;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">No <FONT face=Wingdings>x</FONT></FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">If &#147;Yes&#148; is marked, indicate the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A</FONT></P>
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<P align=center>
<TABLE>
<TR>
     <TD noWrap align=center><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">SIGNATURES</FONT></B></TD></TR></TABLE></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="30%"></TD>
     <TD width="1%"></TD>
     <TD width="2%">&nbsp;</TD>
     <TD width="8%"></TD>
     <TD width="2%">&nbsp;</TD>
     <TD width="8%"></TD>
     <TD width="11%">&nbsp;</TD>
     <TD width="2%"></TD>
     <TD width="36%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD></TD>
     <TD>&nbsp;</TD>
     <TD></TD>
     <TD>&nbsp;</TD>
     <TD>&nbsp; </TD>
     <TD align=left colSpan=3><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=4>CAE Inc.</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD colSpan=9>&nbsp; </TD></TR>
<TR>
     <TD colSpan=9>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Date: August 14, 2008</FONT>&nbsp; </TD>
     <TD></TD>
     <TD>&nbsp;</TD>
     <TD></TD>
     <TD>&nbsp;</TD>
     <TD>&nbsp; </TD>
     <TD align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">By:</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">/s/ Hartland Paterson</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD></TD>
     <TD>&nbsp;</TD>
     <TD></TD>
     <TD>&nbsp;</TD>
     <TD>&nbsp; </TD>
     <TD align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Name:</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Hartland J. Paterson</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD></TD>
     <TD>&nbsp;</TD>
     <TD></TD>
     <TD>&nbsp;</TD>
     <TD>&nbsp; </TD>
     <TD align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Title:</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">Vice President Legal, General Counsel</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD></TD>
     <TD>&nbsp;</TD>
     <TD></TD>
     <TD>&nbsp;</TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif">and Corporate Secretary</FONT>&nbsp; </TD></TR></TABLE><BR>
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	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">1</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><B><FONT size=2 face="HelveticaNeue-Bold,Arial,Helvetica,sans-serif">Report to Shareholders</FONT></B></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">4</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><B><FONT size=2 face="HelveticaNeue-Bold,Arial,Helvetica,sans-serif">Management&#146;s Discussion and Analysis</FONT></B></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">4</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">1. Highlights</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">5</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">2. Introduction</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">6</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">3. About CAE</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">6</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">3.1 Who we are</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">6</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">3.2 Our vision</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">6</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">3.3 Our operations</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">9</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">4. Foreign exchange</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">11</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">5. Consolidated results</FONT></P>
	</TD>
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	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">11</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">5.1 Results of our operations &#150; First quarter of fiscal 2009</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">12</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">5.2 Consolidated orders and backlog</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">13</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">6. Results by segment</FONT></P>
	</TD>
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	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">14</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">6.1 Civil segments</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">16</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">6.2 Military segments</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">18</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">7. Consolidated cash movements and liquidity</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">19</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">7.1 Consolidated cash movements</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">20</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">8. Consolidated financial position</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">20</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">8.1 Consolidated capital employed</FONT></P>
	</TD>
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<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">21</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">9. Acquisitions</FONT></P>
	</TD>
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	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">21</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">10. Changes in accounting standards</FONT></P>
	</TD>
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	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">22</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">11. International financial reporting standards (IFRS) implementation</FONT></P>
	</TD>
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	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">22</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">12. Subsequent events</FONT></P>
	</TD>
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	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">22</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">13. Controls and procedures</FONT></P>
	</TD>
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	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">22</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">13.1 Evaluation of disclosure controls and procedures</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">23</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><B><FONT size=2 face="HelveticaNeue-Bold,Arial,Helvetica,sans-serif">Consolidated Financial Statements</FONT></B></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">23</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Consolidated balance sheets</FONT></P>
	</TD>
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	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">24</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Consolidated statements of earnings</FONT></P>
	</TD>
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	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">25</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Consolidated statements of changes in shareholders&#146; equity</FONT></P>
	</TD>
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<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">26</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Consolidated statements of comprehensive income (loss)</FONT></P>
	</TD>
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	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">26</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Consolidated statement of accumulated other comprehensive loss</FONT></P>
	</TD>
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	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">27</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Consolidated statements of cash flows</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">28</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><B><FONT size=2 face="HelveticaNeue-Bold,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></B></P>
	</TD>
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<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">28</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 1 &#150; Nature of operations and significant accounting policies</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">29</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 2 &#150; Change in accounting policies</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">30</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 3 &#150; Business acquisitions</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">30</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 4 &#150; Investments in joint ventures</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">31</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 5 &#150; Interest expense, net</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">32</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 6 &#150; Accounts receivable</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">33</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 7 &#150; Supplementary information</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">33</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 8 &#150; Government cost sharing</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">34</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 9 &#150; Employee future benefits</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">34</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 10 &#150; Capital management</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">36</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 11 &#150; Financial instruments and financial risk management</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">40</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 12 &#150; Operating segments and geographic information</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">42</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="HelveticaNeue-Light,Arial,Helvetica,sans-serif">Note 13 &#150; Subsequent events</FONT></P>
	</TD>
</TR>
</TABLE>

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<P align="left">
<FONT size=5 face="ArialMT,Arial,Helvetica,sans-serif">Report to Shareholders</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE reported financial results for the first quarter ended June 30, 2008. Earnings from continuing operations were &#36;47.0 million (&#36;0.18 per share) this quarter, compared to &#36;38.7
million (&#36;0.15 per share) in the first quarter of last year. All financial information is in Canadian dollars.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Summary of consolidated results</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Consolidated revenue this quarter was &#36;392.1 million compared to &#36;358.3 million in the first quarter last year.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Net earnings, including the impact of discontinued operations, were &#36;46.1 million in the first quarter.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">First quarter consolidated earnings before interest and taxes (EBIT) were &#36;71.3 million, or 18.2% of revenue compared to &#36;58.0 million or 16.2% of revenue last year.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#147;We had a good performance this quarter, with overall revenue and earnings growth in our business,&#148; said Robert E. Brown, CAE&#146;s President and Chief Executive Officer. &#147;Our
strategy to diversify CAE geographically, between civil and military markets, and between products and services provides us with a level of stability and predictability. No company is immune to economic and market fluctuations, but the majority of
our revenue is now derived from military or recurring training revenue sources. We remain positive about our long-term opportunities. We have continued to use our flexibility to make bolt-on acquisitions to selectively expand our capabilities and
enhance our market position.&#148;</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Business segment highlights</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">During the first quarter, Training and Services/Civil acquired Sabena Flight Academy to further address the global pilot shortage by expanding our ab-initio training capability and the CAE
Global Academy. On the demand side, we also expanded our pilot provisioning initiative by signing agreements to supply more than 600 candidate pilots over a four-year period to Jazeera Airways, Kingfisher Airlines and Wizz Air. We extended our
authorized training provider agreement with Bombardier to include Learjet 40/40 XR and Learjet 45/45 XR aircraft for European customers. We signed &#36;89 million in contracts during the quarter and had an average of 114 RSEUs (Revenue Simulator
Equivalent Units).</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">In Simulation Products/Civil we won orders for 13 full-flight simulators (FFSs) during the quarter. Year to date, we have announced 14 FFS sales. Based on forecast aircraft deliveries and
ongoing discussions with customers, we continue to expect to receive approximately 34 orders for the year as a whole. As we have done in the past, we intend to update this estimate as the year progresses.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">We were awarded a number of new military contracts this quarter totalling &#36;138.2 million. In Simulation Products/Military we increased our dealings with the U.S. Navy with the order of an
additional MH-60R avionics maintenance trainer and we made important progress in the lead-in jet trainer market with the selection of CAE to provide two Hawk 128 full-mission simulators (FMS) for use by the U.K. military. Also in the fast jet
market, we received a synthetic environment update contract for the Eurofighter training systems being used by a variety of European nations. In Training and Services/Military we received a five-year contract extension to manage and support
simulators for the Australian Air Force. Subsequent to the end of the quarter, Rotorsim, the consortium owned equally by CAE and AgustaWestland, signed approximately &#36;80 million in contracts with the Netherlands Ministry of Defence to provide
comprehensive NH90 helicopter training systems and services. Also following the end of the quarter, we signed an agreement to acquire xwave&#146;s Defence, Security and Aerospace (DSA) unit to expand our range of defence products and
services.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Civil segments</FONT></B></P>
<P align="left">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Training &amp; Services/Civil (TS/C)</FONT></I></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">For the first quarter, revenue in the TS/C segment increased 16% over the same period last year from stronger demand in most of our training centres and the addition of nine RSEUs to our
training network. As well, we integrated into our results Flightscape Inc. and Sabena Flight Academy &#150; two companies recently acquired by CAE. The Canadian dollar strengthened against the British pound and the U.S. dollar over the comparable
prior year period, which impacted our results upon translation, but this was partially relieved by a stronger euro.</FONT></P>
<P align="right">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE First Quarter Report 2009 | 1</FONT></P>

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<P align="left">
<TABLE><TR><TD nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Report to Shareholders</FONT></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Segment operating income was &#36;20.7 million (18.8% of revenue) in the first quarter, compared to &#36;19.6 million (20.7% of revenue) in the first quarter last year. The addition of nine more
RSEUs mainly explains the 6% increase over last year, but this would have been higher if not for costs incurred in the deployment of new simulators to our network. We also incurred instructor training costs during the quarter for the recently
deployed training programs as well as costs for new programs to follow in the coming quarters.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">New orders totalled &#36;89.0 million, and segment backlog was &#36;932.7 million. The book-to-sales ratio was 0.8x for the quarter and 1.2x for the last 12 months.</FONT></P>
<P align="left">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Simulation Products/Civil (SP/C)</FONT></I></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Revenue in the SP/C segment was &#36;136.6 million during the first quarter, up by 21% over last year. The increase was mainly attributed to a higher number of orders and revenue recognized on
simulators that were being manufactured and near completion at the time sales contracts were obtained for them during the quarter.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Segment operating income was &#36;27.4 million (20.1% of revenue) in the first quarter, up by 39% over last year. The operating margin increased over last year because of overall execution cost
reductions. Our overall hedge position on U.S. dollar contracts is now closer to parity with the Canadian dollar; however the sustained continuous improvements in our development and manufacturing processes are enabling us to maintain SP/C&#146;s
operating margin above 20%.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">During the quarter, we received orders for 13 civil FFSs. Orders totalled &#36;129.7 million, and segment backlog was &#36;373.2 million. The book-to-sales ratio was 1.0x for the quarter and
0.9x for the last 12 months.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Military segments</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Combined revenue in the first quarter for the Military business as a whole was &#36;145.3 million and combined operating income was &#36;23.2 million, resulting in an operating margin of 16.0%
..</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Combined new orders totaled &#36;138.2 million and, consistent with prior patterns, the combined book-to-sales ratio was 1.0x for the quarter and 1.4x for the last 12 months.</FONT></P>
<P align="left">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Simulation Products/Military (SP/M)</FONT></I></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Revenue in the SP/M segment was &#36;88.4 million for the first quarter, compared with &#36;95.5 million generated during the same period last year. Comparably lower activity on some European
programs and the appreciation of the Canadian dollar during the period contributed to this decrease.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Segment operating income this quarter was &#36;13.6 million (15.4% of revenue), up 11% year over year. Despite lower revenue, operating income increased mainly because of a more favourable
program mix resulting from cost savings on some specific programs.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">New orders for the quarter totalled &#36;76.9 million and segment backlog was &#36;752.6 million.</FONT></P>
<P align="left">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Training &amp; Services/Military (TS/M)</FONT></I></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Revenue in the TS/M segment was &#36;56.9 million for the first quarter, up by 3% over the same period last year. The increase is mainly from additional work on some of our maintenance services
agreements with the German military, and an annual labour rate adjustment on some U.S. military contracts. This was somewhat offset by the stronger Canadian dollar.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Segment operating income was &#36;9.6 million this quarter, up 50% from the same period last year. The increase results from higher revenue and the receipt of a recurring dividend from a
U.K.-based investment, which is not always received by CAE in the same fiscal quarter.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">New orders this quarter totalled &#36;61.3 million and segment backlog was &#36;789.4 million.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2 | CAE First Quarter Report 2009</FONT></P>

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<P align=right>
<TABLE>
<TR>
     <TD noWrap align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Report to Shareholders</FONT></TD></TR></TABLE></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Cash flow and financial position</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>As of the end of the first quarter, cash provided by continuing operations was $70.4 million. This was offset by higher investment in non-cash working capital, which is common at the start of our fiscal year. Similar to the end of the first quarter last year, net cash from continuing operations was negative $28.7 million. As a result, we generated free cash flow of minus $42.4 million this quarter.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net debt was $254.5 million at June 30, 2008, up $130.4 million from the preceding quarter. The increase stems from the higher investment in non-cash working capital, growth capital expenditures and recent acquisitions, which together resulted in an $111.1 million net decrease in cash, before proceeds and repayment of long-term debt and from the assumption of debt held by acquired businesses.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE will pay a dividend of $0.03 per share on September 30, 2008 to shareholders of record at the close of business on September 15, 2008</FONT><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>.</FONT></B></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Additional consolidated financial results</FONT></B></P>
<P align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Backlog</FONT></I></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Our consolidated backlog was $2.848 billion at the end of this quarter. New orders of $356.9 million were added to backlog this quarter, offset by $392.1 million in revenue generated from backlog and a decrease of $16.8 million mainly from the appreciation of the Canadian dollar against the euro, the British pound and the U.S. dollar.</FONT></P>
<P align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Capital expenditures</FONT></I></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital expenditures this quarter totalled $38.4 million, comprised of $5.5 million for maintenance and $32.9 million for growth in support of our training network expansion to serve additional training requirements.</FONT></P>
<P align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Income taxes</FONT></I></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Income taxes were $20.0 million this quarter, representing an effective tax rate of 30%. We expect the effective income tax rate for fiscal 2009 to remain approximately 30%.</FONT></P>
<P align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE First Quarter Report 2009 | 3</FONT></P>
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<P align="left">
<FONT size=5 face="ArialMT,Arial,Helvetica,sans-serif">Management&#146;s Discussion and Analysis</FONT></P>
<P align="left">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">for the three months ended June 30, 2008</FONT></I></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1. HIGHLIGHTS</FONT></B></P>
<P align="left">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">FINANCIAL</FONT></B></P>
<P align="left">
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">FIRST QUARTER OF FISCAL 2009</FONT></P>
<P align="left">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Higher revenue over last quarter and year over year</FONT></B></P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Consolidated revenue was &#36;392.1 million this quarter, &#36;25.5 million higher than last quarter and &#36;33.8 million or 9%</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">higher than the same quarter last year.</FONT></P></LI>
</UL>
<P align="left">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Higher earnings, net earnings and diluted earnings per share from continuing operations year over year</FONT></B></P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Earnings from continuing operations were &#36;47.0 million (or &#36;0.18 per share) this quarter, compared to &#36;47.0 million</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(or &#36;0.18 per share) last quarter, and &#36;38.7 million (or &#36;0.15 per share) in the first quarter of last year, representing</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">an increase
of &#36;8.3 million or 21%.</FONT></P></LI>
</UL>
<P align="left">
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Negative free cash flow</FONT></B><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1 </FONT></SUP><B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">at &#36;42.4
million</FONT></B></TD></TR></TABLE>
</P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Net cash provided by continuing operations was at negative &#36;28.7 million this quarter, mainly due to an investment</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">in non-cash working capital accounts;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Maintenance capital expenditures</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2 </FONT></SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">and
other costs were &#36;6.6 million this quarter, compared to &#36;10.2 million last</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">quarter and &#36;10.0 million in the first quarter of last year;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Cash dividends were &#36;7.1 million this quarter, compared to &#36;2.4 million last quarter and &#36;2.4 million in the first</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">quarter of last year.</FONT></P></LI>
</UL>
<P align="left">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Capital employed</FONT></B><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">3 </FONT></SUP><B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">increased by 16% or
&#36;169.6 million this quarter</FONT></B></P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Non-cash working capital</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">4 </FONT></SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">increased by
&#36;105.3 million this quarter, ending at negative &#36;32.8 million;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Long-term assets increased by &#36;73.1 million resulting from investments in our network and business acquisition;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Net debt</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">5 </FONT></SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">ended at &#36;254.5
million.</FONT></P></LI>
</UL>
<P align="left">
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">ORDERS</FONT></B><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">6</FONT></SUP></TD></TR></TABLE>
</P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The book-to-sale ratio for the quarter was 0.9x. The ratio for the last 12 months was 1.2x;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Total order intake was &#36;356.9 million, compared to &#36;437.6 million last quarter and &#36;307.5 million in the first quarter</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">of last year;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Total backlog was &#36;2,847.9 million as at June 30, 2008.</FONT></P></LI>
</UL>
<P align="left">
<TABLE><TR><TD nowrap>
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Civil segments</FONT></I></B></TD></TR></TABLE>
</P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Training &amp; Services/Civil was awarded &#36;89 million in contracts;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Simulation Products/Civil won over &#36;129 million of orders including 13 full-flight simulators (FFSs).</FONT></P></LI>
</UL>
<P align="left">
<TABLE><TR><TD nowrap>
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Military segments</FONT></I></B></TD></TR></TABLE>
</P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Simulation Products/Military won orders for approximately &#36;77 million for new training systems and upgrades;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Training &amp; Services/Military was awarded contracts over &#36;61 million.</FONT></P></LI>
</UL>
<P align="left">
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">ACQUISITIONS</FONT></B></TD></TR></TABLE>
</P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Acquired Sabena Flight Academy, which offers cadet training, advanced training and aviation consulting for airlines</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">and self-sponsored pilot candidates;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Signed an agreement in August 2008 (after quarter-end) to acquire Bell Aliant&#146;s Defence, Security and Aerospace</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">business unit for approximately &#36;15.1 million. This amount does not include a potential additional consideration of</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;11.0 million that is
contingent on certain conditions being satisfied;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Signed an agreement in July 2008 (after quarter-end) to increase its participation in Academia Aeronautica</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">De
Evora S.A. to 90% in a non-cash transaction.</FONT></P></LI>
</UL>
<P align="left">
<TABLE><TR><TD nowrap>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">1 </FONT></SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Non-GAAP measure (see Section 7.1) .</FONT><BR>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">2 </FONT></SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Non-GAAP measure (see Section 7.1) .</FONT><BR>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">3 </FONT></SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Non-GAAP measure (see Section 8.1) .</FONT><BR>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">4 </FONT></SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Non-GAAP measure (see Section 8.1) .</FONT><BR>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">5 </FONT></SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Non-GAAP measure (see Section 8.1) .</FONT><BR>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">6 </FONT></SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Non-GAAP measure (see Section 5.2) .</FONT><BR>
<BR>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">4 | CAE First Quarter Report 2009</FONT></TD></TR></TABLE>
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     <TD noWrap align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Management&#146;s Discussion and Analysis</FONT></TD></TR></TABLE></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>2. INTRODUCTION</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>In this report, </FONT><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>we, us, our, CAE </FONT></I><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>and </FONT><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>company </FONT></I><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>refer to CAE Inc. and its subsidiaries. Unless we have indicated otherwise:</FONT></P>
<UL>
<LI>
<P align=justify><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>This year </FONT></I><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>and </FONT><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>2009 </FONT></I><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>mean the fiscal year ending March 31, 2009;</FONT></P>
<LI>
<P align=justify><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Last year</FONT></I><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>, </FONT><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>prior year </FONT></I><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>and </FONT><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>a year ago</FONT></I><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>, mean the fiscal year ended March 31, 2008;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Dollar amounts are in Canadian dollars.</FONT></P>
</LI></UL>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>This report was prepared as of August 13, 2008, and includes our management&#146;s discussion and analysis (MD&amp;A), unaudited consolidated financial statements and notes for the first quarter ended June 30, 2008. We have written it to help you understand our business, performance and financial condition for the first quarter of fiscal 2009. Except as otherwise indicated, all financial information has been reported according to Canadian generally accepted accounting principles (GAAP). All tables disclosed are based on unaudited figures.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>For additional information, please refer to our consolidated financial statements for the quarter ended June 30, 2008, and our annual consolidated financial statements, which you will find in our annual report for the year ended March 31, 2008. The MD&amp;A section of our 2008 annual report also contains more information about:</FONT></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Our vision, our strategy and key performance drivers;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Our operations;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Foreign exchange;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Financial measures;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Acquisitions, business combinations and divestitures;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Business risk and uncertainty;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Controls and procedures;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The oversight role of the Audit Committee and Board of Directors.</FONT></P>
</LI></UL>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>You will find our most recent annual report and annual information form (AIF) on our website at www.cae.com, on SEDAR at www.sedar.com or on EDGAR at www.sec.gov.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>ABOUT MATERIAL INFORMATION</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>This report includes the information we believe is material to investors after considering all circumstances, including potential market sensitivity. We consider something to be material if:</FONT></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>It results in, or would reasonably be expected to result in, a significant change in the market price or value of our</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>shares, or;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>It is quite likely that a reasonable investor would consider the information to be important in making an investment</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>decision.</FONT></P>
</LI></UL>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>ABOUT FORWARD-LOOKING STATEMENTS</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>This report includes forward-looking statements about our markets, future financial performance, business strategy, plans, goals and objectives. Forward-looking statements normally contain words like </FONT><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>believe, expect, anticipate, intend, continue, estimate, may, will, should </FONT></I><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>and similar expressions.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>We have based these statements on estimates and assumptions that we believed were reasonable when the statements were prepared. Our actual results could be substantially different because of the risks and uncertainties associated with our business, or because of events that are announced or completed after the date of this report, including mergers, acquisitions, other business combinations and divestitures. You will find more information about the risks and uncertainties associated with our business in our 2008 annual report.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>We do not update or revise forward-looking information even if new information becomes available unless legislation requires us to do so. You should not place undue reliance on forward-looking statements.</FONT></P>
<P align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE First Quarter Report 2009 | 5</FONT></P>
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<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Management&#146;s Discussion and Analysis</FONT></TD></TR></TABLE>
</P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
	<TD nowrap valign=top>
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">3.</FONT></B>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">ABOUT CAE</FONT></B></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">3.1</FONT></B>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Who we are</FONT></B></P>
	</TD>
</TR>
</TABLE>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE is a world leader in providing simulation and modelling technologies and integrated training services to the civil aviation industry and defence forces around the globe.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">We design, manufacture and supply simulation equipment and provide training and services. This includes integrated modelling, simulation and training solutions for commercial airlines, business
aircraft operators, aircraft manufacturers and military organizations, and a global network of training centres for pilots, and in some instances, cabin crew and maintenance workers.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Our full-flight simulators (FFSs) replicate aircraft performance in a full array of situations and environmental conditions. Sophisticated visual systems simulate hundreds of airports around the
world, as well as a wide range of landing areas and flying environments. These work with motion and sound to create a realistic training environment for pilots and crews at all levels.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Founded in 1947 and headquartered in Montreal, Canada, CAE has built an excellent reputation and long-standing customer relationships based on more than 60 years of experience, strong technical
capabilities, a highly trained workforce and global reach. CAE employs approximately 7,000 people at more than 75 sites and training locations in 20 countries. Approximately 90% of CAE&#146;s annual revenues come from worldwide exports and
international activities.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE&#146;s common shares are listed on the following exchanges:</FONT></P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Toronto Stock Exchange, under the symbol CAE;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">New York Stock Exchange, under the symbol CGT.</FONT></P></LI>
</UL>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">3.2 Our vision</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Our vision is to be a world leader in modelling, simulation and technical training to enhance safety and to lower risk and costs in complex environments.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">We are ranked number one or two in the world in most of our core businesses, but competition is intense and maintaining our technological leadership and cost effectiveness is key to continued
success. We have been successful at changing the way we do business, strengthening our financial position and building a solid foundation for creating shareholder value in the future.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Our focus continues to be to position CAE for growth and to move ahead in achieving our vision.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">3.3 Our operations</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE serves two markets globally:</FONT></P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The civil market includes aircraft manufacturers, major commercial airlines, regional airlines, business aircraft</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">operators, helicopter operators, training centres and pilot provisioning;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The military market includes original equipment manufacturers (OEMs) and defence forces worldwide.</FONT></P></LI>
</UL>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">We manage our operations and report our results in four segments, one for products and one for services, for each market. Each segment is a significant contributor to our overall
results.</FONT></P>
<P align="left">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">CIVIL MARKET</FONT></B></P>
<P align="left">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Training &amp; Services/Civil (TS/C)</FONT></B></P>
<P align="left">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Provides business and commercial aviation training for all flight and ground personnel and all associated services</FONT></I></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Our TS/C segment is the second largest provider of civil aviation training services in the world, and serves all sectors of the market including general aviation, regional airlines, commercial
airlines and business aviation. We also offer a full range of support services, such as training centre management, simulator maintenance services, spare parts inventory management, curriculum development and consulting services. We achieved our
leading position through acquisitions, joint ventures and by building new facilities. We currently have more than 130 FFSs installed in more than 20 training centres around the world. We intend to increase the number of revenue simulator equivalent
units (RSEUs) in our network to maintain our position and address new market opportunities. We are developing our training network primarily to meet the long-term, steady stream of recurring training needs so that as a company, we continue to become
less dependent on new aircraft deliveries to drive revenue.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">6 | CAE First Quarter Report 2009</FONT></P>

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<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Simulation Products/Civil (SP/C)</FONT></B></P>
<P align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Designs, manufactures and supplies civil flight simulation, training devices and visual systems</FONT></I></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Our SP/C segment is the world leader in civil flight simulation. We design and manufacture more civil FFSs and visual systems for major and regional carriers, third-party training centres and OEMs than any other company. We have a wealth of experience in developing simulators for new types of aircraft, including over 20 models in the past and, more recently, the Boeing 787, Boeing 747-8, Airbus A380, Bombardier Global Express, Embraer Phenom 100/300 and Dassault Falcon 7X. We also offer a full range of support services including sales of spare parts, simulator updates and simulator relocations.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Market trends and outlook</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Our outlook for the civil market remains relatively positive. We are monitoring key economic factors that could impact the business. The following trends support our view:</FONT></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>New and more fuel-efficient platforms and strong aircraft backlogs;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Demand in emerging markets arising from secular growth;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Growth in revenue per passenger kilometer;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Growing demand for trained crew members.</FONT></P>
</LI></UL>
<P align=left><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>New and more fuel-efficient platforms and strong aircraft backlogs</FONT></I></B></P>
<P align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>New and more fuel-efficient aircraft platforms</FONT></I></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>OEMs are introducing new platforms, which will drive worldwide demand for simulators and training services. The Boeing 787, Boeing 747-8, Airbus A350XWB, Embraer 190, Dassault Falcon 7X, Embraer Phenom 100 VLJ and 300 LJ aircraft, Eclipse 500 VLJ and the Bombardier CSeries are some recent examples.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>New platforms will drive the demand for new kinds of simulators. One of our strategic priorities is to partner with manufacturers to strengthen relationships and position ourselves for future opportunities. For example, CAE has been designated as Bombardier&#146;s authorized training provider for the Global Express, Global 5000 and Global Express XRS aircraft programs. CAE has also established a joint venture with Embraer to provide comprehensive training for the new Phenom 100 VLJ and Phenom 300 LJ aircraft. It is important to note that deliveries of new model aircrafts are susceptible to delays of program launches, which in turn will affect the timing of our orders and deliveries.</FONT></P>
<P align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Strong aircraft orders contribute to lengthy backlogs</FONT></I></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>In calendar 2007, Boeing received a total of 1,413 net orders for new aircraft and Airbus received a total of 1,341 orders. As of July 20, 2008, new aircraft orders for Boeing and Airbus were 542 and 730 respectively. While the pace of order activity will likely slowdown in calendar 2008, their record backlog levels and increased production of narrow body models are expected to help generate opportunities for our full portfolio of training products and services.</FONT></P>
<P align=left><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>Demand in emerging markets arising from secular growth</FONT></I></B></P>
<P align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>New and emerging markets</FONT></I></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Emerging markets such as Southeast Asia, the Indian sub-continent and the Middle East continue to experience higher air traffic and economic growth than mature markets, as well as an increasing liberalization of air policy and bilateral air agreements. We expect these markets to drive the demand for FFSs and training centres. Furthermore, CAE has been introducing new products designed specifically to address new and emerging markets, such as the CAE 5000 Series FFS and CAE True</FONT><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>TM </FONT></SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Environment for more realistic air traffic control environment simulation.</FONT></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>Growth in revenue per passenger kilometer</FONT></I></B><BR>
<I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Steady growth in air travel</FONT></I></TD></TR></TABLE></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>While passenger traffic growth is expected to moderate from the strong growth in calendar year 2007, we anticipate that growth in passenger traffic should continue for the foreseeable future. Passenger growth in calendar year 2007 increased by 7.4% compared to 2006 and, as of April 2008, passenger growth increased by 5.6% as compared to the same period in 2007 according to the International Air Transport Association (IATA). Possible impediments to the steady growth progression in air travel include major disruptions like regional political instability, acts of terrorism, pandemics, major economic recession or other world events. Other factors which have a limiting effect on market growth include the recent record-high fuel prices, which are negatively affecting the profitability of commercial airline operations and causing flight capacity and demand reductions in market segments most acutely affected by the price of fuel.</FONT></P>
<P align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE First Quarter Report 2009 | 7</FONT></P>
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<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Management&#146;s Discussion and Analysis</FONT><BR>
<BR>
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Growing demand for trained crew members</FONT></I></B><BR>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Worldwide demand is increasing</FONT></I></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Growth in the civil aviation market is continuing to drive the demand for pilots, maintenance technicians and flight attendants worldwide, which is creating a shortage of qualified crew members.
The shortage is even more pronounced because of aging demographics, fewer military pilots transferring to civil airlines, and low enrolment in technical schools. Emerging markets like Southeast Asia and China are experiencing this even more severely
because air traffic is growing at a more rapid pace than in developed countries, and the infrastructure available to meet the current and projected demand for crew members is lacking.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">This creates opportunities for pilot provisioning, our turnkey service that includes recruiting, screening, selection and training. It is also prompting us to seek out partners to develop a
global pipeline for developing and supplying pilots to meet market demand.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">A shortage is also surfacing on the maintenance technician side and has created an opportunity for CAE to accelerate its technical training solutions. This trend is, to a lesser degree, also
affecting cabin crew, where we are also exploring new training solutions.</FONT></P>
<P align="left">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">New pilot certification process requires simulation-based training</FONT></I></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Simulation-based pilot certification training will begin taking on an even greater role with the new Multi-crew Pilot License (MPL) certification process developed by the International Civil
Aviation Organization (ICAO) and which is expected to be approved for adoption in the near future by individual national regulatory bodies. The MPL process places more emphasis on simulation-based training to develop </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">ab initio </FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">students into first officers for modern aircraft. MPL is expected to be widely adopted in emerging markets like China, India
and Southeast Asia where there is the greatest requirement for a large supply of qualified pilots in the most efficient and effective manner.</FONT></P>
<P align="left">
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Economics factors</FONT></I></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Economic growth rates continue to be supportive of demand for air travel globally, despite the economic slowing in mature markets like the U.S. and Europe. We are, however, monitoring a number
of factors which could constrain growth in the broader global market: sustained high prices of jet fuel, which has an impact on airline profitability; the possibility of a protracted economic recession in the U.S., which could impact global growth;
merger of airlines leading to fleet and route rationalization; and the availability of credit resources to aircraft operators given the recent tightening of credit markets.</FONT></P>
<P align="left">
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">MILITARY MARKET</FONT></B><BR>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Simulation Products/Military (SP/M)</FONT></B></TD></TR></TABLE>
</P>
<P align="left">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Designs, manufactures and supplies advanced military training equipment and software tools for air forces, armies and navies</FONT></I></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Our SP/M segment is a world leader in the design and production of military flight simulation equipment. We develop simulation equipment, training systems and software tools for a variety of
military aircraft, including fast jets, helicopters and maritime patrol and transport aircraft. We have designed the broadest range of military helicopter simulators in the world. Our military simulators provide high-fidelity combat environments
that include interactive enemy and friendly forces, as well as weapon and sensor systems. We have delivered simulation products and training systems to the military forces of more than 35 countries, including all of the U.S. services. We have also
developed more training systems for the C-130 Hercules aircraft than any other company.</FONT></P>
<P align="left">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Training &amp; Services/Military (TS/M)</FONT></B></P>
<P align="left">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Supplies turnkey training services, support services, systems maintenance and modelling and simulation solutions</FONT></I></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Our TS/M segment provides contractor logistics support, maintenance services and simulator training at over 60 sites around the world. It also provides a variety of modelling and
simulation-based services.</FONT></P>
<P align="left">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Market trends and outlook</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">While we expect defence budgets around the world to continue to grow modestly, including in the United States which is the world&#146;s largest defence market, we believe that our share of that
spending will increase for the following reasons:</FONT></P>
<UL>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Demand for our type of specialized products and services is growing;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The nature of warfare has changed.</FONT></P></LI>
</UL>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">8 | CAE First Quarter Report 2009</FONT></P>

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<P align=right>
<TABLE>
<TR>
     <TD noWrap align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Management&#146;s Discussion and Analysis</FONT></TD></TR></TABLE></P>
<P align=left><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>Demand for our type of specialized products and services is growing</FONT></I></B></P>
<P align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>New aircraft platforms</FONT></I></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>One of our strategic priorities is to partner with manufacturers in the military market to strengthen relationships and position ourselves for future opportunities. Original equipment manufacturers are introducing new platforms that will drive worldwide demand for simulators and training. For example, Boeing is developing a new maritime patrol aircraft called the P-8A Poseidon, NH Industries is starting to deliver the NH90 helicopter, EADS CASA is aggressively marketing the C-295 transport aircraft worldwide, and Sikorsky is offering new models of its H-60 helicopter to armies and navies worldwide, all of which fuel the demand for new simulators and training.</FONT></P>
<P align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Trend towards outsourcing</FONT></I></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>With finite defence budgets and resources, defence forces and governments continue to scrutinize expenditures to find ways to save money and allow active-duty personnel to focus on operational requirements. There has been a growing trend among defence forces to outsource a variety of training services and we expect this trend to continue. Governments are outsourcing training services because they can be delivered more quickly and more cost-effectively. For example, CAE is part of a consortium that is expected to begin offering NH90 training to Germany and other militaries in 2008.</FONT></P>
<P align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Greater use of simulation</FONT></I></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>More defence forces and governments are adopting simulation in training programs because it improves realism, significantly lowers costs all the more considerable in the context of sustained high fuel prices, reduces operational demands on aircraft, and lowers risk compared to operating actual weapon system platforms. Using a simulator for training also reduces actual aircraft flying hours and allows training for situations where an actual aircraft and/or its crew and passengers would be at risk. The high operational tempo stemming from ongoing global conflicts has meant that assets are being depreciated faster than originally planned. Unlike the commercial aerospace sector, where simulation-based training is already widely proliferated, there remains significant room for the adoption of simulation within the defence sector. In addition, we are seeing an increased use of simulation throughout the defence systems lifecycle, from concept develo
pment and experimentation to training and operations.</FONT></P>
<P align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Extension and upgrade of existing weapon system platforms</FONT></I></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Original equipment manufacturers are extending the life of existing weapon system platforms by introducing upgrades or adding new features, which increases the demand for upgrading simulators to meet the new standards.</FONT></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>The nature of warfare has changed</FONT></I></B><BR>
<I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Demand for networking</FONT></I></TD></TR></TABLE></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The nature of warfare has changed. Allies are cooperating and creating joint and coalition forces, which is driving the demand for joint and networked training and operations. Training devices can be networked to train different crews and allows for networked training across a range of platforms.</FONT></P>
<P align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Growing acceptance of synthetic training for mission rehearsal</FONT></I></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>There is a growing trend among defence forces to use synthetic training to meet more of their training requirements. Synthetic environment software allows defence clients to plan sophisticated missions and carry out full mission rehearsals as a complement to traditional live training or mission preparation. Synthetic training offers militaries a cost-effective way to provide realistic training for a wide variety of scenarios while ensuring they maintain a high state of readiness. For example, over the past year we have delivered MH-47G and MH-60L combat mission simulators to the U.S. Army&#146;s 160</FONT><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>th </FONT></SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Special Operations Aviation Regiment that feature the CAE-developed Common Database (CDB). The CDB promises to significantly enhance rapid simulation-based mission rehearsal capabilities.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>4. FOREIGN EXCHANGE</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>We report all dollar amounts in Canadian dollars. We value assets, liabilities and transactions that are measured in foreign currencies using various exchange rates as required by GAAP.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The tables below show the variations of the closing and average exchange rates for our three main operating currencies.</FONT></P>
<P align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE First Quarter Report 2009 | 9</FONT></P>
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<P align="left">
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Management&#146;s Discussion and Analysis</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">We used the foreign exchange rates below to value our assets, liabilities and backlog in Canadian dollars at the end of each of the following periods:</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD width=23%></TD>
     <TD width=2%></TD>
     <TD width=15%></TD>
     <TD width=2%></TD>
     <TD width=12%></TD>
     <TD width=2%></TD>
     <TD width=13%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=10%></TD>
     <TD width=2%></TD>
     <TD width=9%></TD>
     <TD width=2%></TD></TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">June 30</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">March 31</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2008</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Decrease</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">U.S. dollar (US&#36; or USD)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.0186</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.0279</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(1</FONT></I>
	</TD>
	<TD align=left>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">%)</FONT></I>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Euro (&#128;)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.6041</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.6244</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(1</FONT></I>
	</TD>
	<TD align=left>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">%)</FONT></I>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">British pound (&#163; or GBP)</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2.0276</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.0407</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(1</FONT></I>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">%)</FONT></I>&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=13>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left colspan=7>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">We used the average foreign exchange rates below to value our revenues and expenses:</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=13>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">June 30</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">March 31</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">June 30</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=center>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Increase</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2008</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Increase</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2007</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(decrease)</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">U.S. dollar (US&#36; or USD)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.0106</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.0050</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">1</FONT></I>
	</TD>
	<TD align=left>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">%</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.1007</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(8</FONT></I>
	</TD>
	<TD align=left>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">%)</FONT></I>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Euro (&#128;)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.5802</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.5067</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">5</FONT></I>
	</TD>
	<TD align=left>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">%</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.4852</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">6</FONT></I>
	</TD>
	<TD align=left>
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">%</FONT></I>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">British pound (&#163; or GBP)</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.9929</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.9880</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">&#150;</FONT></I>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.1869</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(9</FONT></I>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">%)</FONT></I>&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Three areas of our business are affected by changes in foreign exchange rates:</FONT></P>
<UL>
<LI>
<P align="justify"><B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Our networks of civil and military training centres</FONT></B><BR>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Most of our training network revenue and costs are in local currencies. Changes in the value of local currencies</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">relative to the
Canadian dollar therefore have an impact on the network&#146;s net profitability and net investment. Under</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">GAAP, gains or losses in the net investment in a self-sustaining subsidiary that
result from changes in foreign</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">exchange rates are deferred in the foreign currency translation adjustment (accumulated other comprehensive</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">loss), which is part of the shareholders&#146; equity section of the balance sheet. Any effect on the fluctuation between</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">currencies on the net
profitability has an immediate translation impact on the earnings statement and an impact on</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">year-to-year and quarter-to-quarter comparisons.</FONT></P></LI>
<LI>
<P align="justify"><B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Our simulation products operations outside of Canada (Germany, U.S., U.K., Australia and India)</FONT></B><BR>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Most of the revenue and costs in these operations from self-sustaining subsidiaries are generated in their local</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">currency except for
some data and equipment they buy in different currencies from time to time as well as any work</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">performed by our Canadian manufacturing operations. Changes in the value of the local
currency relative to the</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Canadian dollar therefore have a translation impact on the operation&#146;s net profitability and net investment when</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">expressed in Canadian dollars.</FONT></P></LI>
<LI>
<P align="justify"><B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Our simulation products operations in Canada</FONT></B><BR>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Although the net assets of our Canadian operations are not exposed to changes in the value of foreign currencies</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(except for
receivables and payables in foreign currencies), approximately 85% of our annual revenue generated</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">from Canada is in foreign currencies (mostly the U.S. dollar and euro), while a
significant portion of our expenses</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">are in Canadian dollars.</FONT><BR>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">We generally hedge the milestone payments in sales contracts denominated in foreign currencies to protect</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">ourselves from some of the
foreign exchange exposure. Since less than 100% of our revenues are hedged, it is not</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">possible to completely offset the effects of changing foreign currency values, leaving some residual
exposure that</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">can affect the statement of earnings.</FONT><BR>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Over the long term, our manufacturing operations in Canada are exposed to changes in the value of the Canadian</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">dollar because we do
not enter into hedges of expected future revenues until the contracts are signed.</FONT><BR>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">To reduce the variability of certain U.S. denominated manufacturing costs, we currently enter into hedges on</FONT> <FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">foreign currency costs
incurred in our manufacturing process.</FONT></P></LI>
</UL>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">10 | CAE First Quarter Report 2009</FONT></P>

<HR noshade align="center" width="100%" size=2 style="page-break-after:always;">


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<A name="page_15"></A>
<P align=right>
<TABLE>
<TR>
     <TD noWrap align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Management&#146;s Discussion and Analysis</FONT></TD></TR></TABLE></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD vAlign=top noWrap><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>5.</FONT></B>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%">
<P align=justify><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>CONSOLIDATED RESULTS</FONT></B></P>
</TD></TR>
<TR>
     <TD vAlign=top noWrap><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>5.1</FONT></B>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%">
<P align=justify><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Results of our operations &#150; first quarter of fiscal 2009</FONT></B></P>
</TD></TR></TABLE>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="33%"></TD>
     <TD width="2%"></TD>
     <TD width="6%"></TD>
     <TD width="1%"></TD>
     <TD width="8%"></TD>
     <TD width="4%"></TD>
     <TD width="2%"></TD>
     <TD width="7%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="7%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="7%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="6%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Summary of consolidated results</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left></TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions, except per share amounts)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Q1-2009</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q4-2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q3-2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q2-2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q1-2008</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Revenue</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>392.1</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>366.6</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>344.8</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>353.9</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>358.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Earnings before interest and income taxes (EBIT)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>71.3</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>69.7</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>61.7</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>62.1</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>58.0</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=center><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>As a % of revenue</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>%</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>18.2</FONT></I></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>19.0</FONT></I> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>17.9</FONT></I> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>17.5</FONT></I> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>16.2</FONT></I>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Interest expense, net</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>4.3</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>4.7</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>4.8</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>5.4</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2.6</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Earnings from continuing operations (before taxes)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>67.0</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>65.0</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>56.9</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>56.7</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>55.4</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Income tax expense</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>20.0</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>18.0</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>16.8</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>17.7</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>16.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Earnings from continuing operations</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>47.0</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>47.0</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>40.1</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>39.0</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>38.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Results from discontinued operations</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(0.9</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(11.4</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(0.6</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(0.1</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net earnings</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>46.1</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>35.6</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>39.5</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>38.9</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>38.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Basic EPS from continuing operations</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>0.18</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.19</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.16</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.15</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.15</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Diluted EPS from continuing operations</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>0.18</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.18</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.16</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.15</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.15</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Basic and diluted EPS</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>0.18</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.14</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.16</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.15</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.15</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Revenue was 7% higher than last quarter and 9% higher year over year</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Revenue was $25.5 million higher than last quarter mainly because:</FONT></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>SP/C&#146;s revenue increased by $30.1 million, or 28%, mainly due to higher number of orders and revenue recognized</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>on simulators that were being manufactured and near completion for which sales contracts were obtained during</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>the quarter;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>TS/C&#146;s revenue increased by $5.7 million, or 5%, mainly due to strong demand in our European and Middle East</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>training centres and the addition of four RSEUs in the network, mainly resulting from the acquisition of Sabena</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Flight Academy;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>TS/M&#146;s revenue increased by $2.8 million, or 5%, mainly attributed to an increased level of effort on some of our</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>maintenance services contracts on various German military bases and an annual labor rate adjustment related to</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>U.S. military contracts.</FONT></P>
</LI></UL>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>These increases were partially offset by the decrease in SP/M&#146;s revenue of $13.1 million, or 13%, mainly due to lower activity on some helicopter programs, particularly the German NH90 program and some U.S. Navy programs, both of which are the result of timing related to sub-contract work.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Revenue was $33.8 million higher than the same period last year largely because:</FONT></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>SP/C&#146;s revenue increased by $23.6 million, or 21%, due to the above-mentioned quarterly comparative reasons;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>TS/C&#146;s revenue increased by $15.4 million, or 16%, mainly due to a strong demand in most of our training centres,</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>nine additional RSEUs, combined with the integration into our results of the acquired companies Flightscape Inc.</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>and Sabena Flight Academy;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>TS/M&#146;s revenue increased by $1.9 million, or 3%, due to the above-mentioned quarterly comparative reasons.</FONT></P>
</LI></UL>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>These increases were partially offset by the decrease in SP/M&#146;s revenue of $7.1 million, or 7%, mainly due to lower level of activity on the German NH90 program and the achievement of some significant milestones on the Eurofighter program during the first quarter of last year.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The growth of 9% over last year was achieved despite the appreciation of the Canadian dollar against the British pound and the U.S dollar.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>You will find more details in </FONT><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Results by segment</FONT></I><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>.</FONT></P>
<P align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE First Quarter Report 2009 | 11</FONT></P>
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<P align="left">
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Management&#146;s Discussion and Analysis</FONT></P>
<P align="left">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">EBIT</FONT></B><B><SUP><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">7 </FONT></SUP></B><B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">was &#36;1.6 million
higher than last quarter and &#36;13.3 million higher year over year</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">EBIT for this quarter was &#36;71.3 million, or 18.2% of revenue.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Compared to the last quarter, EBIT was up by 2%, or &#36;1.6 million. Increased segment operating income</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">8 </FONT></SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">from the SP/C and TS/M segments were partially offset by a decrease in the TS/C and SP/M segments.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Year over year, EBIT was up by 23%, or &#36;13.3 million, mainly because of higher segment operating income from all four segments. Segment operating income increased by &#36;7.7 million for
SP/C, &#36;3.2 million for TS/M, &#36;1.3 million for SP/M and &#36;1.1 million for TS/C.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">You will find more details in </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Results by segment</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">.</FONT></P>
<P align="left">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Net interest expense was similar to last quarter and &#36;1.7 million higher year over year</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Net interest expense was higher than the same period last year because the non-recourse financing was secured at the end of the first quarter of fiscal 2008.</FONT></P>
<P align="left">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Effective income tax rate is 30% this quarter</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Income taxes this quarter were &#36;20.0 million, representing an effective tax rate of 30%, compared to 28% for the last quarter and 30% for the first quarter of fiscal 2008.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The tax rate was lower in the fourth quarter of fiscal 2008 mainly because of a change in the mix of income from various jurisdictions.</FONT></P>
<P align="left">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Results from discontinued operations</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Net loss from discontinued operations was attributed to fees incurred in the litigation by the Company for further payment following the disposal of the assets of the sawmill division of the
Company&#146;s Forestry Systems.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">5.2 Consolidated orders and backlog</FONT></B><B><SUP><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">9</FONT></SUP></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Our consolidated backlog was &#36;2,847.9 million at the end of this quarter. New orders of &#36;356.9 million were added to backlog this quarter, offset by &#36;392.1 million in revenue
generated from backlog and a decrease of &#36;16.8 million mainly caused by the appreciation of the Canadian dollar against the U.S. dollar, the British pound and the euro.</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD width=71%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
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	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Backlog down by 2% over last quarter</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
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&nbsp;
	</TD>
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&nbsp;
	</TD>
</TR>
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&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
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&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Three months ended</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">June 30, 2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Backlog, beginning of period</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2,899.9</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">+ orders</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">356.9</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">- revenue</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(392.1</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">+ / - adjustments (mainly FX)</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(16.8</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Backlog, end of period</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2,847.9</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=6>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The book-to-sale ratio for the quarter was 0.9x. The ratio for the last 12 months was 1.2x.</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=6>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">You will find more details in </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Results by segment</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">.</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
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&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">7 </FONT></SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Earnings before interest and taxes (EBIT) is a non-GAAP measure that shows us how we have performed before the effects
of certain financing decisions and tax structures. We track EBIT because we believe it makes it easier to compare our performance with previous periods, and with companies and industries that do not have the same capital structure or tax
laws.</FONT></P>
<P align="left">
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">8 </FONT></SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Segment operating income (SOI) is a non-GAAP measure and our key indicator of each segment&#146;s financial
performance. This measure gives us a good indication of the profitability of each segment because it does not include the impact of any items not specifically related to the segment&#146;s performance. We calculate it by using earnings before other
income (expense), interest, income taxes and discontinued operations.</FONT></P>
<P align="left">
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">9 </FONT></SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Backlog is a non-GAAP measure that tells us the expected value of orders we have received but have not yet
executed.</FONT></P>
<UL>
<LI>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">For the SP/C, SP/M and TS/M segments, we consider an item part of our backlog when we have a legally binding commercial agreement with a client that</FONT> <FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">includes enough detail about each party&#146;s obligations to form the basis for a contract or an order;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Military contracts are usually executed over a long-term period and some of them must be renewed each year. For the SP/M and TS/M segments, we only</FONT> <FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">include a contract item in backlog when the customer has authorized and received funding for it;</FONT></P></LI>
<LI>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">For the TS/C segment, we include revenues from customers with both long-term and short-term contracts when these customers commit to paying us</FONT> <FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">training fees, or when we reasonably expect them from current customers.</FONT><BR>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">The book-to-sale ratio is calculated as being total orders divided by total revenue in the period.</FONT></P></LI>
</UL>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">12 | CAE First Quarter Report 2009</FONT></TD></TR></TABLE>
</P>

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<P align=right>
<TABLE>
<TR>
     <TD noWrap align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Management&#146;s Discussion and Analysis</FONT></TD></TR></TABLE></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>6. RESULTS BY SEGMENT</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>We manage our business and report our results in four segments:</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Civil segments:</FONT></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Training &amp; Services/Civil (TS/C);</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Simulation Products/Civil (SP/C).</FONT></P>
</LI></UL>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Military segments:</FONT></TD></TR></TABLE></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Simulation Products/Military (SP/M);</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Training &amp; Services/Military (TS/M).</FONT></P>
</LI></UL>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Transactions between segments are mainly transfers of simulators from SP/C to TS/C and are recorded at cost at the consolidated level.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>If we can measure a segment&#146;s use of jointly used assets, costs and liabilities (mostly corporate costs), we allocate them to the segment in that proportion. If we cannot measure a segment&#146;s use, we allocate in proportion to the segment&#146;s cost of sales.</FONT></P>
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     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>KEY PERFORMANCE INDICATORS</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left></TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=12>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Segment operating income</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left></TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions, except operating margins)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Q1-2009</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q4-2008</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q3-2008</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q2-2008</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q1-2008</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Civil segments</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp;</TD>
     <TD align=left></TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Training &amp; Services/Civil</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>20.7</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>23.8</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>15.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>14.6</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>19.6</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp;<I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>%</FONT></I> </TD>
     <TD align=right><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>18.8</FONT></I></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>22.8</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>16.7</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>16.2</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>20.7</FONT></I>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Simulation Products/Civil</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>27.4</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>23.8</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>25.2</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>26.2</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>19.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>%</FONT></I> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>20.1</FONT></I></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>22.3</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>24.3</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>23.3</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>17.4</FONT></I>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Military segments</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left></TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Simulation Products/Military</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>13.6</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>14.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>11.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>13.4</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>12.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>%</FONT></I> </TD>
     <TD align=right><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>15.4</FONT></I></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>14.3</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>12.8</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>13.8</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>12.9</FONT></I>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Training &amp; Services/Military</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>9.6</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>7.6</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>9.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>7.9</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>6.4</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>%</FONT></I> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>16.9</FONT></I></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>14.0</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>16.1</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>14.5</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>11.6</FONT></I>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Total segment operating income (EBIT)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>71.3</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>69.7</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>61.7</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>62.1</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>58.0</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>We use segment operating income to measure the profitability of our four operating segments, and to help us make decisions about allocating resources. We calculate segment operating income by using a segment&#146;s net earnings before other income, interest, income taxes and discontinued operations. This allows us to assess the profitability of a segment before the impact of elements not specifically related to its performance.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="25%"></TD>
     <TD width="2%"></TD>
     <TD width="10%"></TD>
     <TD width="11%"></TD>
     <TD width="3%"></TD>
     <TD width="2%"></TD>
     <TD width="8%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="9%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="9%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="6%"></TD>
     <TD width="2%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Capital employed</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp;</TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Q1-2009</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q4-2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q3-2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q2-2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q1-2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Civil segments</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Training &amp; Services/Civil</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>919.0</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>868.3</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>774.3</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>762.5</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>734.7</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Simulation Products/Civil</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(12.5</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(81.9</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(38.7</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(26.9</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(13.0</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Military segments</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Simulation Products/Military</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>106.7</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>68.4</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>100.1</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>98.1</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>90.1</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Training &amp; Services/Military</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>150.5</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>136.5</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>138.4</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>135.8</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>142.4</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>1,163.7</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>991.3</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>974.1</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>969.5</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>954.2</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE First Quarter Report 2009 | 13</FONT></P>
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<TABLE>
<TR>
     <TD noWrap><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Management&#146;s Discussion and Analysis</FONT><BR>
<BR>
<B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>6.1 Civil segments</FONT></B><BR>
<BR>
<B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>TRAINING &amp; SERVICES/CIVIL</FONT></B><BR>
<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>TS/C was awarded $89.0 million in contracts this quarter:</FONT></TD></TR></TABLE></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Signed a five-year contract with Air Transat A.T. Inc. to provide pilot training on Airbus A330 and A310 platforms;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Signed a three-year contract with Jet Alliance for the provision of ground-school and simulator training on the</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>GV/550;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Signed an agreement with Air Nostrum to extend their current contract on the CRJ-200 and Dash-8 until 2014 and</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>to provide additional training platforms;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Signed agreements to source, recruit and train more than 600 candidate pilots over a four-year period for Jazeera</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Airways, Kingfisher Airlines and Wizz Air.</FONT></P>
</LI></UL>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Expansion and new initiatives</FONT></B></TD></TR></TABLE></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>We acquired Sabena Flight Academy, a company specializing in ab-initio pilot training and type-rating training for</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>airlines. The company operates in Arizona, USA and Brussels, Belgium. The acquisition is aimed at expanding our</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>ab-initio training capability and CAE Global Academy, as well as providing new type-rating training programs in</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Europe;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>We expanded our 20-year authorized training provider agreement with Bombardier to include Learjet 40/40 XR and</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Learjet 45/45 XR aircraft for European customers. We also achieved a first operational milestone of the agreement</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>by offering pilot and technical training on the Global Express aircraft at the CAE Burgess Hill training centre in the</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>U.K;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>We will provide the International Air Transport Association (IATA) a foundation for its Implementation Program for</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Safe Operations in Africa through the application of our Flightscape flight data analysis technology.</FONT></P>
</LI></UL>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="34%"></TD>
     <TD width="2%"></TD>
     <TD width="7%"></TD>
     <TD width="1%"></TD>
     <TD width="2%"></TD>
     <TD width="9%"></TD>
     <TD width="2%"></TD>
     <TD width="10%"></TD>
     <TD width="2%"></TD>
     <TD width="9%"></TD>
     <TD width="3%"></TD>
     <TD width="9%"></TD>
     <TD width="2%"></TD>
     <TD width="8%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Financial results</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions, except operating margins, RSEU</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>and FFSs deployed)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Q1-2009</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q4-2008</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q3-2008</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q2-2008</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q1-2008</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Revenue</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>110.2</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>104.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>92.8</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>90.0</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>94.8</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Segment operating income</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>20.7</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>23.8</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>15.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>14.6</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>19.6</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Operating margins</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>%</FONT></I> </TD>
     <TD align=right colSpan=3><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>18.8</FONT></I></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>22.8</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>16.7</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>16.2</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>20.7</FONT></I>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Amortization &amp; depreciation</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>13.8</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>12.9</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>12.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>13.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>13.1</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital expenditures</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>34.2</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>41.6</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>14.1</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>79.3</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>26.8</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital employed</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>919.0</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>868.3</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>774.3</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>762.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>734.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Backlog</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>932.7</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>963.3</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>896.1</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>887.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>853.4</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>RSEU</FONT><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>10</FONT></SUP>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>114</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>110</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>109</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>106</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>105</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>FFSs deployed</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>132</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>124</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>123</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>119</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>117</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Revenue up by 5% over last quarter and by 16% year over year</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase over last quarter was mainly attributed to a strong demand in our European and Middle East training centres and the addition of four RSEUs in the network, mainly resulting from the acquisition of Sabena Flight Academy.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase year over year was mainly due to a stronger demand in most of our training centres, nine additional RSEUs, combined with the integration into our results of the acquired companies Flightscape Inc. and Sabena Flight Academy. The increase was achieved despite the appreciation of the Canadian dollar against the British pound and the U.S. dollar, partially offset by a weaker Canadian dollar against the euro.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Segment operating income was $20.7 million (18.8% of revenue) this quarter</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Segment operating income was $20.7 million (18.8% of revenue) this quarter, compared to $23.8 million (22.8% of revenue) in the last quarter and $19.6 million (20.7% of revenue) in the same period last year.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Segment operating income decreased by $3.1 million, or 13%, over last quarter. This decrease was mainly attributed to costs associated with the deployment of additional FFSs in our network. Furthermore, a gain of $0.5 million from the disposal of one FFS was recognized last quarter.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Segment operating income increased by $1.1 million, or 6%, over the same period last year. The increase in segment operating income was affected by the above-mentioned explanations, the deployment of nine additional RSEUs and the</FONT></P>
<P align=left><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>10 </FONT></SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>Revenue simulator equivalent unit (RSEU) is a financial measure we use to show the total average number of FFSs available to generate revenue during the period. For example, in the case of a 50/50 flight training joint venture, we will report only 50% of the FFSs deployed under this joint venture as an RSEU. If a FFS is being powered down and relocated, it will not be included as an RSEU until the FFS is re-installed and available to generate revenue.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>14 | CAE First Quarter Report 2009</FONT></P>
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<P align=right>
<TABLE>
<TR>
     <TD noWrap align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Management&#146;s Discussion and Analysis</FONT></TD></TR></TABLE></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>related instructor training costs. Furthermore, we incurred instructor training costs in the quarter in preparation of the deployment of additional FFSs in the coming quarters.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Capital employed increased by $50.7 million over last quarter</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase over last quarter was mainly due to the integration into our capital employed of the newly-acquired company Sabena Flight Academy and as a result, investments in our training network. This was partially offset by a reduction in the non-cash working capital over last quarter.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Capital expenditures at $34.2 million this quarter</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital expenditures were lower this quarter than last quarter mainly due to the timing on various growth projects. The level of capital expenditures reflects our ongoing investment to expand the training network in response to increased training demands.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="71%"></TD>
     <TD width="2%"></TD>
     <TD width="3%"></TD>
     <TD width="21%"></TD>
     <TD width="2%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Backlog was at $932.7 million at the end of the quarter</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Three months ended</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>June 30, 2008</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Backlog, beginning of period</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>963.3</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>+ orders</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>89.0</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>- revenue</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(110.2</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>+ / - adjustments (mainly FX)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(9.4</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Backlog, end of period</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>932.7</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>This quarter&#146;s book-to-sale ratio was 0.8x. The ratio for the last 12 months was 1.2x.</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>SIMULATION PRODUCTS/CIVIL</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>SP/C was awarded contracts for the following 13 FFSs this quarter:</FONT></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>One B777 FFS to Lufthansa Flight Training GmbH;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>One B757 FFS to Flight Training Finance;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>One Embraer 190 FFS to Swiss Aviation Training;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Two CAE 5000 Series A320 FFSs to Zhuhai Flight Training Centre, a joint venture between China Southern Airlines</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>and CAE;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>One CAE 5000 Series A320 FFS to Aeroflot Russian Airlines;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>One B737 FFS to Skymark Airlines of Japan;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>One A320 FFS to Ansett Aviation Training;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>One A320 FFS and one B737NG FFS to CAE Bangalore training centre, a joint venture in which CAE holds a 50%</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>ownership;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>One Global Express FFS to Bombardier;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>One A320 FFS to British Airways;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>One EMB 170/190 FFS to Embraer.</FONT></P>
</LI></UL>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="30%"></TD>
     <TD width="2%"></TD>
     <TD width="8%"></TD>
     <TD width="1%"></TD>
     <TD width="2%"></TD>
     <TD width="8%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="7%"></TD>
     <TD width="2%"></TD>
     <TD width="3%"></TD>
     <TD width="7%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="9%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="6%"></TD>
     <TD width="2%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Financial results</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions, except operating margins)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Q1-2009</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q4-2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q3-2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q2-2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q1-2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Revenue</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>136.6</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>106.5</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>103.5</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>112.3</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>113.0</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Segment operating income</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>27.4</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>23.8</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>25.2</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>26.2</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>19.7</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Operating margins</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp;<I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>%</FONT></I> </TD>
     <TD align=right colSpan=3><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>20.1</FONT></I></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>22.3</FONT></I> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>24.3</FONT></I> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>23.3</FONT></I> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>17.4</FONT></I> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Amortization &amp; depreciation</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>1.5</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1.8</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1.6</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2.0</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1.5</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital expenditures</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>0.6</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1.2</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1.2</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1.4</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.8</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital employed</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(12.5</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(81.9</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(38.7</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(26.9</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(13.0</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Backlog</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>373.2</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>381.8</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>388.7</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>373.3</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>413.3</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE First Quarter Report 2009 | 15</FONT></P>
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<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Management&#146;s Discussion and Analysis</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Revenue up by 28% over last quarter and by 21% year over year</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase over last quarter and year over year was mainly attributed to higher number of orders and revenue recognized on simulators that were being manufactured and near completion for which sales contracts were obtained during the quarter.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Segment operating income up by 15% over last quarter and by 39% year over year</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Segment operating income increased over last quarter and year over year was mainly because of the above-mentioned increase in revenue.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>SP/C&#146;s operating margin was 20.1% this quarter. The increase compared to last year resulted from overall execution cost reductions. The decrease compared to last quarter mainly resulted from a less favorable program mix. In addition, our overall hedge position on sale contracts is now at rates closer to par impacting SP/C&#146;s operating margin. However, our ability to sustain continuous improvements in our development and manufacturing processes are maintaining SP/C&#146;s operating margin above 20%.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Capital employed increased by $69.4 million over last quarter</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital employed increased over last quarter due to higher working capital accounts, mainly due to increased inventories from long-term contracts and a higher level of accounts payable at year-end.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="69%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="21%"></TD>
     <TD width="2%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Backlog down by 2% over last quarter</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Three months ended</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>June 30, 2008</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Backlog, beginning of period</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>381.8</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>+ orders</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>129.7</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>- revenue</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(136.6</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>+ / - adjustments (mainly FX)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(1.7</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Backlog, end of period</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>373.2</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=6>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>This quarter&#146;s book-to-sale ratio was 1.0x. The ratio for the last 12 months was 0.9x.</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=6>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>6.2 Military segments</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>SIMULATION PRODUCTS/MILITARY</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>SP/M was awarded $76.9 million in orders this quarter, including:</FONT></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Two Hawk 128 full-mission simulators (FMSs) for the Lockheed Martin and VT Group joint venture, which will</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>provide comprehensive training to all new U.K. military aircrew across the Royal Navy, Army and Royal Air Force;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>One MH-60R avionics maintenance trainer for the U.S. Navy;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Updated Synthetic Environment for the Eurofighter FMS and cockpit trainer in operation by various European</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>nations.</FONT></P>
</LI></UL>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="35%"></TD>
     <TD width="2%"></TD>
     <TD width="8%"></TD>
     <TD width="3%"></TD>
     <TD width="2%"></TD>
     <TD width="8%"></TD>
     <TD width="3%"></TD>
     <TD width="8%"></TD>
     <TD width="2%"></TD>
     <TD width="9%"></TD>
     <TD width="2%"></TD>
     <TD width="8%"></TD>
     <TD width="2%"></TD>
     <TD width="8%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Financial results</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp;</TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions, except operating margins)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Q1-2009</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q4-2008</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q3-2008</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q2-2008</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q1-2008</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Revenue</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>88.4</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>101.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>89.6</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>97.1</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>95.5</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Segment operating income</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>13.6</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>14.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>11.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>13.4</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>12.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Operating margins</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>%</FONT></I> </TD>
     <TD align=right colSpan=3><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>15.4</FONT></I></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>14.3</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>12.8</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>13.8</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>12.9</FONT></I>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Amortization &amp; depreciation</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>2.6</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2.8</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>3.0</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2.2</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital expenditures</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>1.2</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2.1</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2.4</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital employed</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>106.7</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>68.4</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>100.1</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>98.1</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>90.1</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Backlog</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>752.6</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>765.1</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>704.4</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>535.3</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>560.5</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>16 | CAE First Quarter Report 2009</FONT></P>
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<P align=right>
<TABLE>
<TR>
     <TD noWrap align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Management&#146;s Discussion and Analysis</FONT></TD></TR></TABLE></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Revenue down by 13% over last quarter and by 7% year over year</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The decrease over last quarter was mainly due to lower activity on some helicopter programs, particularly the German NH90 program and some U.S. Navy programs, both of which are the result of timing related to sub-contract work. The decrease was partially offset by the depreciation of the Canadian dollar against the euro and the Australian dollar during the quarter.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The decrease year over year was mainly due to the above-mentioned lower level of activity on the German NH90 program, the achievement of some significant milestones on the Eurofighter program during the first quarter of last year, combined with the negative impact of the appreciation of the Canadian dollar against the U.S. dollar and the British pound.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Segment operating income down by 6% over last quarter and up by 11% year over year</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The decrease over last quarter was mainly due to the above-mentioned decrease in revenue, as well as lower funding from Technology Partnerships Canada (TPC) and Investissement Qu&#233;bec (IQ) to our R&amp;D initiative, Project Phoenix.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase year over year was mainly due to a more favorable program mix resulting from cost savings on some specific programs, as well as higher funding from Technology Partnership Canada (TPC) and Investissement Qu&#233;bec (IQ) to our R&amp;D initiative, Project Phoenix. The increase was partially offset by the above-mentioned decrease in revenue.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>SP/M&#146;s operating margin was 15.4% this quarter, compared to 14.3% last quarter and 12.9% year over year.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Capital employed increased by $38.3 million over last quarter</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase this quarter was mainly because of higher working capital accounts, primarily due to increased inventories from long-term contracts and a higher level of accounts payable at year-end.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="71%"></TD>
     <TD width="2%"></TD>
     <TD width="3%"></TD>
     <TD width="21%"></TD>
     <TD width="2%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Backlog down by 2% over last quarter</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Three months ended</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>June 30, 2008</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Backlog, beginning of period</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>765.1</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>+ orders</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>76.9</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>- revenue</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(88.4</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>+ / - adjustments (mainly FX)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(1.0</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Backlog, end of period</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>752.6</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>This quarter&#146;s book-to-sale ratio was 0.9x. The ratio for the last 12 months was 1.5x.</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>TRAINING &amp; SERVICES/MILITARY</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>TS/M was awarded $61.3 million in orders this quarter, including:</FONT></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>A five-year extension of the management and support of Australian Defence Forces aerospace simulators contract</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>under which CAE Australia maintains simulators of the Australian Air Force. The contract was originally awarded to</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE in 2003.</FONT></P>
</LI></UL>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="35%"></TD>
     <TD width="2%"></TD>
     <TD width="8%"></TD>
     <TD width="3%"></TD>
     <TD width="2%"></TD>
     <TD width="8%"></TD>
     <TD width="3%"></TD>
     <TD width="8%"></TD>
     <TD width="2%"></TD>
     <TD width="9%"></TD>
     <TD width="2%"></TD>
     <TD width="8%"></TD>
     <TD width="2%"></TD>
     <TD width="8%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Financial results</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions, except operating margins)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Q1-2009</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q4-2008</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q3-2008</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q2-2008</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Q1-2008</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Revenue</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>56.9</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>54.1</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>58.9</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>54.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>55.0</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Segment operating income</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>9.6</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>7.6</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>9.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>7.9</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>6.4</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Operating margins</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>%</FONT></I> </TD>
     <TD align=right colSpan=3><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>16.9</FONT></I></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>14.0</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>16.1</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>14.5</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>11.6</FONT></I>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Amortization &amp; depreciation</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>2.0</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1.8</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2.4</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2.2</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital expenditures</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>2.4</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>3.4</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>4.3</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>4.3</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>3.8</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital employed</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>150.5</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>136.5</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>138.4</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>135.8</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>142.4</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Backlog</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>789.4</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>789.7</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>721.5</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>717.2</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>772.3</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE First Quarter Report 2009 | 17</FONT></P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" noShade SIZE=2>

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<A name="page_22"></A>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Management&#146;s Discussion and Analysis</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Revenue up by 5% over last quarter and by 3% year over year</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase over last quarter was mainly attributable to an increased level of effort on some of our maintenance services contracts on various German military bases, an annual labor rate adjustment related to U.S. military contracts, as well as the depreciation of the Canadian dollar against the euro and the Australian dollar during the quarter.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase year over year was mainly a result of the above-mentioned reasons, partially offset by the negative impact from the appreciation of the Canadian dollar against the U.S. dollar and the British pound.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Segment operating income up by 26% over last quarter and by 50% year over year</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase over last quarter and year over year was mainly due to the above-mentioned increase in revenue and because we received a dividend from a U.K.-based investment of TS/M. The dividend is a component of TS/M&#146;s recurring business, even though it is not received evenly throughout the year.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Capital employed increased by $14.0 million over last quarter</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase this quarter was mainly the result of higher payments made to some of our key suppliers.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="70%"></TD>
     <TD width="2%"></TD>
     <TD width="5%"></TD>
     <TD width="12%"></TD>
     <TD width="2%"></TD>
     <TD width="6%"></TD>
     <TD width="3%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Backlog stable over last quarter</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Three months ended</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>June 30, 2008</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Backlog, beginning of period</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>789.7</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>+ orders</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>61.3</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>- revenue</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(56.9</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>+ / - adjustments (mainly FX)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(4.7</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Backlog, end of period</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right colSpan=3><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>789.4</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>This quarter&#146;s book-to-sale ratio was 1.1x. The ratio for the last 12 months was 1.1x.</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left colSpan=4><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The combined military book-to-sale ratio was 1.0x for the quarter and 1.4x on a trailing 12-month basis.</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>7. CONSOLIDATED CASH MOVEMENTS AND LIQUIDITY</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>We actively manage liquidity and regularly monitor the factors that could affect it, including:</FONT></P>
<UL>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Cash generated from operations, including timing of milestone payments and management of working capital;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital expenditure requirements;</FONT></P>
<LI>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Scheduled repayments of long-term debt obligations, our credit capacity and expected future debt market</FONT> <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>conditions.</FONT></P>
</LI></UL>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>18 | CAE First Quarter Report 2009</FONT></P>
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     <TD width="9%"></TD>
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<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
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     <TD align=right colSpan=6><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Management&#146;s Discussion and Analysis</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=16>&nbsp; </TD></TR>
<TR>
     <TD colSpan=16>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>7.1 Consolidated cash movements</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
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     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>For the three-month period ending</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>June 30</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>March 31</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>June 30</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>(amounts in millions)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>2008</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2007</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>Restated</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>Restated</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Cash provided by continuing operating activities*</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>70.4</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>57.7</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>69.2</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Changes in non-cash working capital</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(99.1</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>73.2</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(97.9</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net cash (used in) provided by continuing operations</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(28.7</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>130.9</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(28.7</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Maintenance capital expenditures</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(5.5</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(9.0</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(7.5</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Other assets</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(1.1</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(1.2</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(2.5</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Cash dividends</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(7.1</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(2.4</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(2.4</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Free cash flow</FONT><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>11</FONT></SUP>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(42.4</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>118.3</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(41.1</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Growth capital expenditures</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(32.9</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(39.3</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(25.2</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Deferred development costs</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(1.9</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(2.6</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(4.8</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Deferred pre-operating costs</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(0.2</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(3.0</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(0.3</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Other cash movements, net</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>7.4</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.1</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>6.9</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Business acquisitions (net of cash and cash</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=center><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>equivalents acquired)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(38.8</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(1.1</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(38.9</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Effect of foreign exchange rate changes on cash and</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>cash equivalents</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(2.3</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>12.8</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(6.7</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net (decrease) increase in cash before proceeds and</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>repayment of long-term debt</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(111.1</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>85.2</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(110.1</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>* before changes in non-cash working capital</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>On April 1</FONT><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>st</FONT></SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>, 2008, we adopted a change to our definition of free cash flow to exclude the growth capital expenditures, capitalized costs and its corresponding asset &#150; specific financing (including non-recourse debt).</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Free cash flow down $160.7 million from last quarter and down $1.3 million year over year</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The decrease over last quarter was mainly attributable to net cash provided by continuing operations decreasing by $159.6 million over last quarter, explained largely by higher investment in non-cash working capital, particularly lower accounts payable, which is common at the start of our fiscal year, as well as additional cash dividends issued this quarter. This was partially offset by lower maintenance capital expenditures and other capitalized costs.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The decrease year over year was mainly due to additional cash dividends issued this quarter, offset by lower maintenance capital expenditures and other capitalized costs.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Capital expenditures of $38.4 million</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Growth capital expenditures</FONT><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>12 </FONT></SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>of $32.9 million this quarter were for the ongoing investment to expand our training network to address additional market share and in response to increased training demands in new markets. Maintenance capital expenditures</FONT><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>13 </FONT></SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>were $5.5 million this quarter.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>11</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%">
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>Free cash flow is a non-GAAP measure that tells us how much cash we have available to build the business, repay debt and meet ongoing financial obligations. We use it as an indicator of our financial strength and liquidity. We calculate it by taking the net cash generated by our continuing operating activities, subtracting maintenance capital expenditures, other assets and dividends paid. Dividends are deducted in the calculation of free cash flow because we consider them an obligation, like interest on debt, which means that amount is not available for other uses.</FONT></P>
</TD></TR>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>12</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%">
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>Growth capital expenditure is a non-GAAP measure we use to calculate the investment needed to increase the current level of economic activity.</FONT></P>
</TD></TR>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>13</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%">
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>Maintenance capital expenditure is a non-GAAP measure we use to calculate the capital investment needed to sustain a current level of economic activity.</FONT></P>
</TD></TR></TABLE>
<P align=right>
<TABLE>
<TR>
     <TD noWrap><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE First Quarter Report 2009 | 19</FONT></TD></TR></TABLE></P>
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<TABLE>
<TR>
     <TD width=5>&nbsp;</TD>
     <TD noWrap><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Management&#146;s Discussion and Analysis</FONT></TD></TR></TABLE></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD vAlign=top noWrap><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>8.</FONT></B>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%">
<P align=justify><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>CONSOLIDATED FINANCIAL POSITION</FONT></B></P>
</TD></TR>
<TR>
     <TD vAlign=top noWrap><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>8.1</FONT></B>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%">
<P align=justify><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Consolidated capital employed</FONT></B></P>
</TD></TR></TABLE>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="47%"></TD>
     <TD width="2%"></TD>
     <TD width="3%"></TD>
     <TD width="2%"></TD>
     <TD width="18%"></TD>
     <TD width="6%">&nbsp;</TD>
     <TD width="2%"></TD>
     <TD width="3%"></TD>
     <TD width="14%"></TD>
     <TD width="2%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>As at June 30</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>As at March 31</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>2008</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Use of capital:</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Non-cash working capital</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(32.8</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(138.1</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Property, plant and equipment, net</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>1,081.3</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1,046.8</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Other long-term assets</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>418.6</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>380.0</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Other long-term liabilities</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(224.9</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(216.1</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Total capital employed</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>1,242.2</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1,072.6</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Source of capital:</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net debt</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>254.5</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>124.1</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Shareholders&#146; equity</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>987.7</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>948.5</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Source of capital</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>1,242.2</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1,072.6</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Capital employed</FONT></B><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>14 </FONT></SUP><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>increased 16% this quarter</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase was mainly the result of higher non-cash working capital, higher property, plant and equipment, and higher other long-term assets partially offset by higher long-term liabilities.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Our return on capital employed</FONT><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>15 </FONT></SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(ROCE) was 16.9% (14.8% adjusted for operating leases) this quarter compared to 14.9% (12.4% adjusted for operating leases) for the first quarter of last year.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Non-cash working capital</FONT></B><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>16 </FONT></SUP><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>increased by $105.3 million this quarter</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase was mainly from higher inventories as well as a decrease in accounts payable and accrued liabilities, and deposits on contracts. The increase was partially offset by a reduction in accounts receivable and prepaid expenses.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Net property, plant and equipment up $34.5 million since last quarter</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase from capital expenditures combined with the assets from the newly-acquired company Sabena Flight Academy were partially offset by normal depreciation and by an impact caused by foreign exchange variation.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>14</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%" colSpan=2>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>Capital employed is a non-GAAP measure we use to evaluate and monitor how much we are investing in our business. We measure it from two perspectives: Capital used:</FONT></P>
</TD></TR>
<TR>
     <TD>&nbsp;</TD>
     <TD vAlign=top noWrap>
<LI></LI></TD>
     <TD width="100%">
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>For the company as a whole, we take total assets (not including cash and cash equivalents), and subtract total liabilities (not including long-term debt and its current portion);</FONT></P>
</TD></TR>
<TR>
     <TD>&nbsp;</TD>
     <TD vAlign=top noWrap>
<LI></LI></TD>
     <TD width="100%">
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>For each segment, we take the total assets (not including cash and cash equivalents, tax accounts and other non-operating assets), and subtract total liabilities (not including tax accounts, long-term debt and its current portion and other non-operating liabilities).</FONT></P>
</TD></TR>
<TR>
     <TD>&nbsp;</TD>
     <TD width="100%" colSpan=2>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>Source of capital:</FONT></P>
</TD></TR>
<TR>
     <TD>&nbsp;</TD>
     <TD vAlign=top noWrap>
<LI></LI></TD>
     <TD width="100%">
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>We add net debt to total shareholders&#146; equity to understand where our capital is coming from.</FONT></P>
</TD></TR>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>15</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%" colSpan=2>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>Return on capital employed (ROCE) is a non-GAAP measure that we use to evaluate the profitability of our invested capital. We calculate this ratio over a rolling four-quarter period by taking earnings from continuing operations excluding non-recurring items and interest expenses, after tax, divided by the average capital employed. In addition, we also calculate this ratio adjusting earnings and capital employed to reflect the ordinary off-balance sheet operating leases.</FONT></P>
</TD></TR>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>16</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%" colSpan=2>
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>Non-cash working capital is non-GAAP measure we use to monitor how much money we have committed in the day-to-day operation of our business. We calculate it by taking current assets (not including cash and cash equivalents or the current portion of assets held for sale) and subtracting current liabilities (not including the current portion of long-term debt or the current portion of liabilities related to assets held for sale).</FONT></P>
</TD></TR></TABLE>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>20 | CAE First Quarter Report 2009</FONT></P>
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<P align=right>
<TABLE>
<TR>
     <TD noWrap align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Management&#146;s Discussion and Analysis</FONT></TD></TR></TABLE></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Net debt</FONT></B><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>17 </FONT></SUP><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>increased by $130.4 million this quarter</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The increase was largely caused by a $111.1 million net decrease in cash, before proceeds and repayment of long-term debt and by assumption of debt held by acquired businesses.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="59%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="20%"></TD>
     <TD width="12%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Change in net debt</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Three months ended</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>June 30, 2008</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net debt, beginning of period</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>124.1</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Impact of cash movements on net debt</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(see table in the cash movements section)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>111.1</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Business acquisitions and others</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>22.2</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Effect of foreign exchange rate changes on long-term debt</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(2.9</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Increase in net debt during the period</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>130.4</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net debt, end of period</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>254.5</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>9. ACQUISITION</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>In June 2008, the Company acquired Sabena Flight Academy (Sabena) for a total cost, including acquisition costs, of $66.9 million composed primarily of cash and assumed debt. Sabena offers cadet training, advanced training and aviation consulting for airlines and self-sponsored pilot candidates. The total costs do not include a potential additional consideration of $6.3 million that is contingent on certain conditions being satisfied, which, if met, would be recorded as additional goodwill.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Goodwill recognized for this transaction, which is not deductible for tax purposes, amounts to $15.3 million. As well, a customer relationship intangible asset in the amount of $15.6 million has been recognized regarding this transaction. The acquisition was accounted for under the purchase method and the operating results have been included in the consolidated results on the Company since the date of acquisition. The net assets of Sabena are included in the Training &amp; Services/Civil segment. The allocation of the purchase price is preliminary and is expected to be completed in the near future.</FONT></P>
<P align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif color=#00a652 size=2>10. CHANGES IN ACCOUNTING STANDARDS</FONT></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>We prepare our financial statements according to Canadian GAAP as published by the Accounting Standards Board (AcSB) of the Canadian Institute of Chartered Accountants (CICA) in its Handbook Sections, Accounting Guidelines (AcG) and Emerging Issues Committee.</FONT></P>
<P align=left><B><I><FONT face=Arial-BoldItalicMT,Arial,Helvetica,sans-serif size=2>Financial instruments &#150; disclosures and presentation</FONT></I></B></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Effective April 1, 2008, the Company adopted CICA Handbook Section 3862, </FONT><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Financial instruments &#150; Disclosures </FONT></I><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>and Section 3863, </FONT><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Financial instruments &#150; Presentation</FONT></I><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>. Under CICA 3862, an entity is required to disclose information that enables users to evaluate the significance of a financial instrument on an entity&#146;s financial position and performance, to evaluate the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the consolidated balance sheet date, and to evaluate how the entity manages those risks.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CICA 3863 establishes standards for presentation of financial instruments and non-financial derivatives. It deals with the classification of financial instruments, from the perspective of the issuer, between liabilities and equities, the classification of related interest, dividends, gains and losses, and circumstances in which financial assets and financial liabilities are offset.</FONT></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>The adoption of these standards did not have any impact on the classification and measurement of the Company&#146;s financial statements. The new disclosures pursuant to these new Handbook Sections are included in Note 11 of our consolidated financial statements for the first quarter ended June 30, 2008.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>17</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%">
<P align=justify><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>Net debt is a non-GAAP measure we use to monitor how much debt we have after taking into account liquid assets such as cash and cash equivalents. We use it as an indicator or our overall financial position, and calculate it by taking our total long-term debt (debt that matures in more than one year), including the current portion, and subtracting cash and cash equivalents.</FONT></P>
</TD></TR></TABLE>
<P align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE First Quarter Report 2009 | 21</FONT></P>
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<P align="left">
<TABLE><TR><TD nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Management&#146;s Discussion and Analysis</FONT><BR>
<BR>
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Capital disclosures</FONT></I></B></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Effective April 1, 2008, the Company adopted CICA Handbook Section 1535, </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Capital Disclosures</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">, which establishes guidelines for the disclosure of information regarding an entity&#146;s capital and how it is managed. This standard requires disclosure of an entity&#146;s objectives, policies and
processes for managing capital, quantitative data about what the entity regards as capital and whether the entity has complied with any capital requirements and, if it has not complied, the consequences of such non-compliance. The new disclosures
are included in Note 10 of our consolidated financial statements for the first quarter ended June 30, 2008.</FONT></P>
<P align="left">
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Inventories</FONT></I></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Effective April 1, 2008, the Company adopted CICA Handbook Section 3031, </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Inventories</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">, which replaces existing Section 3030 with the same title. The new section specifies the measurement of inventory at the lower of cost and net realizable value with the possibility of reversing previous
write-downs. It provides more extensive guidance on the determination of cost including allocation of overhead, and narrows the permitted cost formula to apply for the recognition to expense as well as expanding disclosure requirements. There were
no adjustments to the Company&#146;s consolidated financial statements upon adoption of this new standard.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">11. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) IMPLEMENTATION</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">We are currently evaluating the impact and potential effect that could result from preparing our consolidated financial statements in accordance with IFRS given that the Canadian Accounting
Standards Board confirmed that IFRS will replace current Canadian standards and interpretations as Canadian generally accepted accounting principles for publicly accountable enterprises. The adoption of IFRS will have an impact on our reported
consolidated financial statements as well as on a wide range of operational and internal performance measures for fiscal 2012.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">As of June 30, 2008, we dedicated a team who performed a high-level accounting diagnostic and identified differences between IFRS and accounting policies and procedures currently adopted by CAE.
The Company is currently evaluating the impact of adopting IFRS 1, </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">First-time Adoption of International Financial Reporting Standards</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">, elections. Furthermore, we are in the process of finalizing the design and planning phase of the IFRS implementation to identify possible accounting, information system and business solutions for the
long-term implementation plan. We commenced IFRS training for our senior finance personnel to inform them of the impact on CAE&#146;s current reporting standards.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">We will continue to make regular disclosure regarding the status of our implementation plan.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">12. SUBSEQUENT EVENTS</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">In August 2008, the Company has signed an asset purchase agreement to acquire Bell Aliant&#146;s Defence, Security and Aerospace business unit which currently operates under the xwave brand for
approximately &#36;15.1 million. This amount does not include a potential additional consideration of &#36;11.0 million that is contingent on certain conditions being satisfied. This transaction is anticipated to close at the end of the
year.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">In July 2008, the Company increased its participation in Academia Aeronautica De Evora S.A. to 90% in a non-cash transaction.</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
	<TD nowrap valign=top>
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">13.</FONT></B>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">CONTROLS AND PROCEDURES</FONT></B></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">13.1</FONT></B>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Evaluation of disclosure controls and procedures</FONT></B></P>
	</TD>
</TR>
</TABLE>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">In the quarter ended June 30, 2008, the Company did not make any significant changes in, nor take any significant corrective actions regarding its internal controls or other factors that could
significantly affect such internal controls. The Company&#146;s CEO and CFO periodically review the Company&#146;s disclosure controls and procedures for effectiveness and conduct an evaluation each quarter. As of the end of the first quarter, the
Company&#146;s CEO and CFO were satisfied with the effectiveness of the Company&#146;s disclosure controls and procedures.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">22 | CAE First Quarter Report 2009</FONT></P>

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<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="62%"></TD>
     <TD width="2%"></TD>
     <TD width="3%"></TD>
     <TD width="13%"></TD>
     <TD width="1%"></TD>
     <TD width="2%"></TD>
     <TD width="13%"></TD>
     <TD width="3%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right colSpan=4><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Consolidated Financial Statements</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=8>&nbsp; </TD></TR>
<TR>
     <TD colSpan=8>&nbsp; </TD></TR>
<TR>
     <TD colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=5>Consolidated Balance Sheets</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right></TD>
     <TD align=left>&nbsp;</TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right></TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(Unaudited)</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>As at June 30</FONT></B></TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right>&nbsp; <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>As at March 31</FONT></TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions of Canadian dollars)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>2008</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2008</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Assets</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Current assets</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Cash and cash equivalents</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>147.7</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>255.7</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Accounts receivable </FONT><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>(Note 6)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>241.1</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>255.0</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Inventories</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>277.0</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>229.9</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Prepaid expenses</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>28.3</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>32.7</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Income taxes recoverable</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>39.1</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>39.0</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Future income taxes</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>11.3</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>14.1</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>744.5</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>826.4</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Property, plant and equipment, net</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>1,081.3</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1,046.8</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Future income taxes</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>75.7</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>64.3</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Intangible assets</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>77.1</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>62.0</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Goodwill</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>130.0</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>115.5</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Other assets</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>135.8</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>138.2</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>2,244.4</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2,253.2</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Liabilities and shareholders&#146; equity</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>Current liabilities</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Accounts payable and accrued liabilities</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>416.8</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>482.7</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Deposits on contracts</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>197.6</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>209.3</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Current portion of long-term debt</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>100.4</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>27.3</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Future income taxes</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>15.2</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>16.8</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>730.0</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>736.1</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Long-term debt</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>301.8</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>352.5</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Deferred gains and other long-term liabilities</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>180.1</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>184.9</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Future income taxes</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>44.8</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>31.2</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>1,256.7</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1,304.7</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Shareholders&#146; equity</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Capital stock</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>428.4</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>418.9</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Contributed surplus</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>8.8</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>8.3</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Retained earnings</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>683.0</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>644.5</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Accumulated other comprehensive loss</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(132.5</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(123.2</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>987.7</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>948.5</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>2,244.4</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2,253.2</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=8>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>The accompanying notes form an integral part of these Consolidated Financial Statements.</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE First Quarter Report 2009 | 23</FONT></P>
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     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Consolidated Financial Statements</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=10>&nbsp; </TD></TR>
<TR>
     <TD colSpan=10>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=5>Consolidated Statements of Earnings</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=10>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(Unaudited)</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>three months ended June 30</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions of Canadian dollars, except per share amounts)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>2008</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2007</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Revenue</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>392.1</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>358.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Earnings before interest and income taxes </FONT><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>(Note 12)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>71.3</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>58.0</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Interest expense, net </FONT><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>(Note 5)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>4.3</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2.6</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Earnings before income taxes</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>67.0</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>55.4</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Income tax expense</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>20.0</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>16.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Earnings from continuing operations</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>47.0</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>38.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Results of discontinued operations</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(0.9</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Net earnings</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>46.1</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>38.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Basic and diluted earnings per share from continuing operations</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>0.18</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.15</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Basic and diluted earnings per share</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>0.18</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.15</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Weighted average number of shares outstanding (basic)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>254.3</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>252.4</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Weighted average number of shares outstanding (diluted)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>255.1</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>253.8</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=10>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>The accompanying notes form an integral part of these Consolidated Financial Statements.</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>24 | CAE First Quarter Report 2009</FONT></P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" noShade SIZE=2>

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<P align=right>
<TABLE>
<TR>
     <TD noWrap align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Consolidated Financial Statements</FONT></TD></TR></TABLE></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=5>Consolidated Statements of Changes in Shareholders&#146; Equity</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="18%"></TD>
     <TD width="8%"></TD>
     <TD width="5%"></TD>
     <TD width="3%"></TD>
     <TD width="4%"></TD>
     <TD width="9%"></TD>
     <TD width="6%"></TD>
     <TD width="2%"></TD>
     <TD width="4%"></TD>
     <TD width="1%"></TD>
     <TD width="2%"></TD>
     <TD width="4%"></TD>
     <TD width="1%"></TD>
     <TD width="2%"></TD>
     <TD width="11%"></TD>
     <TD width="4%"></TD>
     <TD width="1%"></TD>
     <TD width="2%"></TD>
     <TD width="9%"></TD>
     <TD width="3%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(Unaudited)</FONT></I>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left colSpan=2><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>three months ended June 30, 2008</FONT></I>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left colSpan=4><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions of Canadian dollars, except number of shares)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right>&nbsp; <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Common</FONT></TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Accumulated</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Shares</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Other</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Total</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Number of</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Stated</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Contributed</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right colSpan=3><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Retained</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Comprehensive</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Shareholders&#146;</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp;</TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Shares</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Value</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Surplus</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right colSpan=3><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Earnings</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Loss</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Equity</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Balances,</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp;</TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>beginning of period</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>253,969,836</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>418.9</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>8.3</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>644.5</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(123.2</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>948.5</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Stock options exercised</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>845,875</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>8.4</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>8.4</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Transfer upon exercise of</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>stock options</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.6</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(0.6</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Stock dividends</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>41,980</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.5</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(0.5</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Stock-based</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>compensation</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1.1</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>1.1</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net earnings</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>46.1</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>46.1</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Dividends</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(7.1</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(7.1</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Other comprehensive</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>loss</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(9.3</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(9.3</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Balances,</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>end of period</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>254,857,691</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>428.4</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>8.8</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right colSpan=3><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>683.0</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(132.5</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>987.7</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=20>&nbsp; </TD></TR>
<TR>
     <TD colSpan=20>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(Unaudited)</FONT></I>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
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     <TD>&nbsp; </TD>
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     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left colSpan=2><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>three months ended June 30, 2007</FONT></I>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
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     <TD align=right>&nbsp; </TD>
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     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left colSpan=4><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions of Canadian dollars, except number of shares)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
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     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right>&nbsp; <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Common</FONT></TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Accumulated</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&nbsp;Shares</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Other</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Total</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Number of</FONT>&nbsp; </TD>
     <TD align=right>&nbsp;</TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Stated</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Contributed</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right colSpan=3><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Retained</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Comprehensive</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Shareholders&#146;</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Shares</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Value</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Surplus</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right colSpan=3><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Earnings</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Loss</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Equity</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Balances,</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; <FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>beginning of period</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>251,960,449</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>401.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>5.7</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right colSpan=3><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>510.2</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(87.7</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>829.9</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Stock options exercised</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1,455,520</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>11.6</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>11.6</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Transfer upon exercise of</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>stock options</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>1.5</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(1.5</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Stock dividends</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>5,539</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.1</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(0.1</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Stock-based</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>compensation</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.6</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.6</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Cumulative effect of</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>implementing</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>accounting standards</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>(Note 2)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(8.3</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(3.5</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(11.8</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net earnings</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>38.7</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>38.7</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Dividends</FONT>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(2.4</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(2.4</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Other comprehensive loss</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(46.4</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(46.4</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Balances,</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>end of period</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>253,421,508</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>414.9</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>4.8</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right colSpan=3><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>538.1</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(137.6</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>820.2</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=20>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left colSpan=9><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>The accompanying notes form an integral part of these Consolidated Financial Statements.</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>CAE First Quarter Report 2009 | 25</FONT></P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" noShade SIZE=2>

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<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=ArialMT,Arial,Helvetica,sans-serif color=#00a652 size=2>Consolidated Financial Statements</FONT></TD></TR></TABLE></P>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=5>Consolidated Statements of Comprehensive Income (Loss)</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="61%"></TD>
     <TD width="2%"></TD>
     <TD width="6%"></TD>
     <TD width="10%"></TD>
     <TD width="3%"></TD>
     <TD width="2%"></TD>
     <TD width="2%"></TD>
     <TD width="10%"></TD>
     <TD width="3%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(Unaudited)</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp;</TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>three months ended June 30</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions of Canadian dollars)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>2008</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>2007</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Net earnings</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>46.1</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>38.7</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Other comprehensive income (loss), net of income taxes:</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Foreign currency translation adjustment</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net foreign exchange losses on translation of financial</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>statements of self-sustaining foreign operations</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(13.1</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(67.5</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net change in gains on certain long-term debt</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>denominated in foreign currency and designated as</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>hedges on net investments of self-sustaining foreign</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>operations</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>0.3</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>8.3</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Income tax adjustment</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>0.5</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(12.8</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(58.7</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Net changes in cash flow hedge</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net change in gains on derivative items designated as</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>hedges of cash flows</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>8.1</FONT></B> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>24.0</FONT> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Reclassifications to income or to the related</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>non-financial assets or liabilities</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(3.1</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(5.9</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Income tax adjustment</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(1.5</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(5.8</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>3.5</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>12.3</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Total other comprehensive loss</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(9.3</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(46.4</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Comprehensive income (loss)</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>36.8</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(7.7</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=9>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>The accompanying notes form an integral part of these Consolidated Financial Statements.</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=5>Consolidated Statement of Accumulated Other Comprehensive Loss</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD width="34%"></TD>
     <TD width="2%"></TD>
     <TD width="10%"></TD>
     <TD width="11%"></TD>
     <TD width="2%"></TD>
     <TD width="3%"></TD>
     <TD width="6%"></TD>
     <TD width="8%"></TD>
     <TD width="2%"></TD>
     <TD width="3%"></TD>
     <TD width="2%"></TD>
     <TD width="13%"></TD>
     <TD width="3%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Foreign</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Accumulated</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=2>(</FONT></I><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>Unaudited)</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Currency</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Other</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>as at June 30, 2008</FONT></I>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Translation</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Cash Flow</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Comprehensive</FONT></B> </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><I><FONT face=Arial-ItalicMT,Arial,Helvetica,sans-serif size=1>(amounts in millions of Canadian dollars)</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Adjustment</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Hedge</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>Loss</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Balance in accumulated other comprehensive</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp;</TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=center><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>loss at beginning of the period</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(122.8</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(0.4</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(123.2</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Details of other comprehensive loss:</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp;</TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Net change in gains (losses)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(12.8</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>8.1</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(4.7</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Reclassification to income or to the related</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>non-financial assets or liabilities</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(3.1</FONT> </TD>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(3.1</FONT></B> </TD>
     <TD align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=center><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Income tax adjustment</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>&#150;</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(1.5</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(1.5</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Total other comprehensive loss</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(12.8</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>3.5</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(9.3</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>Balance in accumulated other comprehensive</FONT>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>loss at end of period</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>(135.6</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>$</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>3.1</FONT> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>$</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>(132.5</FONT></B> </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B><FONT face=Arial-BoldMT,Arial,Helvetica,sans-serif size=2>)</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD colSpan=13>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left colSpan=4><FONT face=ArialMT,Arial,Helvetica,sans-serif size=1>The accompanying notes form an integral part of these Consolidated Financial Statements.</FONT> </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=ArialMT,Arial,Helvetica,sans-serif size=2>26 | CAE First Quarter Report 2009</FONT></P>
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<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Consolidated Financial Statements</FONT>
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&nbsp;
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<FONT size=5 face="ArialMT,Arial,Helvetica,sans-serif">Consolidated Statements of Cash Flows</FONT>&nbsp;
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<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
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	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">three months ended June 30</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions of Canadian dollars)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2007</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Operating activities</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Net earnings</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">46.1</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">38.7</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Results of discontinued operations</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.9</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Earnings from continuing operations</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">47.0</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">38.7</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Adjustments to reconcile earnings to cash flows from operating activities:</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Depreciation</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">15.7</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">14.6</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Financing cost amortization</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.2</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Amortization and write down of intangible and other assets</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">4.2</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">3.9</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Future income taxes</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">5.7</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">4.8</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Investment tax credits</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">3.4</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">3.8</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Stock-based compensation plans</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(4.2</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(2.9</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Employee future benefit &#150; net</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.2</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(0.1</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(1.8</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">6.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Changes in non-cash working capital </FONT><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(Note 7)</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(99.1</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(97.9</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Net cash used in operating activities</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(28.7</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(28.7</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Investing activities</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Business acquisitions (net of cash and cash equivalents acquired) </FONT><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(Note 3)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(38.8</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(38.9</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Capital expenditures</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(38.4</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(32.7</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Deferred development costs</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(1.9</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(4.8</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Deferred pre-operating costs</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(0.2</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(0.3</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(1.1</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(2.5</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Net cash used in investing activities</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(80.4</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(79.2</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Financing activities</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Net borrowing under revolving unsecured credit facilities</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#150;</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">15.0</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Proceeds from long-term debt, net of transaction costs</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=center>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">and debt basis adjustment</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">8.6</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">84.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Reimbursement of long-term debt</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(5.5</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(4.3</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Dividends paid</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(7.1</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(2.4</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Common stock issuance</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">8.4</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">11.6</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(1.0</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(4.7</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Net cash provided by financing activities</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">3.4</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">99.4</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Effect of foreign exchange rate changes on cash and</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=center style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">cash equivalents</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(2.3</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(6.7</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Net decrease in cash and cash equivalents</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(108.0</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(15.2</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Cash and cash equivalents at beginning of period</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">255.7</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">150.2</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Cash and cash equivalents at end of period</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">147.7</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">135.0</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">The accompanying notes form an integral part of these Consolidated Financial Statements.</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="right">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE First Quarter Report 2009 | 27</FONT></P>

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<P align="left">
<TABLE><TR><TD nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=5 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements (Unaudited)</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 1 &#150; NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES</FONT></B></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Nature of operations</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE Inc. (or the Company) designs, manufactures and supplies simulation equipment and services and develops integrated training solutions for the military, commercial airlines, business aircraft
operators and aircraft manufacturers. CAE&#146;s flight simulators replicate aircraft performance in normal and abnormal operations as well as a comprehensive set of environmental conditions utilizing visual systems that contain an extensive
database of airports, other landing areas, flying environments, motion and sound cues to create a fully immersive training environment. The Company offers a full range of flight training devices based on the same software used on its simulators. The
Company also operates a global network of training centres in locations around the world.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company&#146;s operations are managed through four segments:</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(i)</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Simulation Products/Civil &#150; Designs, manufactures and supplies civil flight simulators, training devices and visual systems;</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(ii)</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Simulation Products/Military &#150; Designs, manufactures and supplies advanced military training equipment and software tools for air forces, armies and navies;</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(iii)</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Training &amp; Services/Civil &#150; Provides business and commercial aviation training for all flight and ground personnel and all associated services;</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(iv)</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Training &amp; Services/Military &#150; Supplies turnkey training services, support services, systems maintenance and modelling and simulation solutions.</FONT></P>
	</TD>
</TR>
</TABLE>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Seasonality and cyclicality of the business</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company&#146;s business operating segments are affected in varying degrees by market cyclicality and/or seasonality. As such, operating performance over a given interim period should not
necessarily be considered indicative of full fiscal year performance.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Simulation Products/Civil segment sells equipment directly to airlines and to the extent that the entire commercial airline industry is affected by cycles of expansion and contraction, the
Company&#146;s performance will also be affected. The Training &amp; Services/Civil segment activities are affected by the seasonality of its industry &#150; in times of peak travel (such as holidays), airline and business jet pilots are generally
occupied flying aircraft rather than attending training sessions. The opposite also holds true &#150; slower travel periods tend to be more active training periods for pilots. Therefore, the Company has historically experienced greater demand for
training services in the first and fourth quarters of the fiscal year and lower demand during the second and third quarters.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Order intake for the Military segments can be impacted by the unique nature of military contracts and the irregular timing in which they are awarded.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Use of estimates</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The preparation of consolidated financial statements in conformity with GAAP requires CAE&#146;s management (Management) to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses for the period reported. Management reviews its estimates on an ongoing
basis, particularly as they relate to accounting of long-term contracts, useful lives, employee future benefits, income taxes, impairment of long-lived assets, fair value of certain financial instruments, goodwill and intangible, based on
Management&#146;s best knowledge of current events and actions that the Company may undertake in the future. Actual results could differ from those estimates; significant changes in estimates and/or assumptions could result in the impairment of
certain assets.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Generally accepted accounting principles and financial statement presentation</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">These interim unaudited consolidated financial statements have been prepared, in all material respects, in accordance with generally accepted accounting principles in Canada (GAAP) as defined by
the Canadian Institute of Chartered Accountants (CICA).</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">28 | CAE First Quarter Report 2009</FONT></P>

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<P align="right">
<TABLE><TR><TD align="right" nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">These consolidated financial statements comply with generally accepted accounting principles applicable to interim financial statements and, except as otherwise indicated hereunder, have been
prepared on a basis consistent with the Company&#146;s annual consolidated financial statements for the year ended March 31, 2008, except for the adoption of the new accounting standards described in Note 2.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">These consolidated statements do not include all of the disclosures applicable to annual consolidated financial statements; for a full description of the Company&#146;s accounting policies,
refer to the Company&#146;s annual consolidated financial statements for the year ended March 31, 2008 available on-line at www.sedar.com, at www.sec.gov, as well as on the Company&#146;s website at www.cae.com. While Management believes that the
disclosures presented are adequate and that the disclosures highlight all material changes during the quarter, these interim consolidated financial statements should be read in conjunction with the most recent annual consolidated financial
statements.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Certain comparative figures have been reclassified to conform with the presentation adopted during the current year.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Except where otherwise noted, all amounts in these consolidated financial statements are expressed in Canadian dollars.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Basis of consolidation</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The consolidated financial statements include the accounts of CAE Inc. and all majority-owned subsidiaries and variable interest entities for which the Company is the primary beneficiary. They
also include the Company&#146;s proportionate share of assets, liabilities and earnings of joint ventures in which the Company has an interest. All significant intercompany accounts and transactions have been eliminated. Investments over which the
Company exercises significant influence are accounted for using the equity method and portfolio investments are accounted at fair value unless there is no readily available market value.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 2 &#150; CHANGE IN ACCOUNTING POLICIES</FONT></B></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Implemented in fiscal 2009</FONT></B></P>
<P align="left">
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Financial instruments &#150; disclosures and presentation</FONT></I></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Effective April 1, 2008, the Company adopted CICA Handbook Section 3862, </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Financial instruments &#150; Disclosures
</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">and Section 3863, </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Financial instruments &#150; Presentation</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">. Under CICA 3862, an entity is required to disclose information that enables users to evaluate the significance of a financial instrument on an entity&#146;s financial position and performance, to evaluate
the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the consolidated balance sheet date, and to evaluate how the entity manages those risks.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CICA 3863 establishes standards for presentation of financial instruments and non-financial derivatives. It deals with the classification of financial instruments, from the perspective of the
issuer, between liabilities and equities, the classification of related interest, dividends, gains and losses, and circumstances in which financial assets and financial liabilities are offset.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The adoption of these standards did not have any impact on the classification and measurement of the Company&#146;s financial statements. The new disclosures pursuant to these new Handbook
Sections are included in Note 11.</FONT></P>
<P align="left">
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Capital disclosures</FONT></I></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Effective April 1, 2008, the Company adopted CICA Handbook Section 1535, </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Capital Disclosures</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">, which establishes guidelines for the disclosure of information regarding an entity&#146;s capital and how it is managed. This standard requires disclosure of an entity&#146;s objectives, policies and
processes for managing capital, quantitative data about what the entity regards as capital and whether the entity has complied with any capital requirements and, if it has not complied, the consequences of such non-compliance. The new disclosures
are included in Note 10.</FONT></P>
<P align="left">
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Inventories</FONT></I></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Effective April 1, 2008, the Company adopted CICA Handbook Section 3031, </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Inventories</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">, which replaces existing Section 3030 with the same title. The new section specifies the measurement of inventory at the lower of cost and net realizable value with the possibility of reversing previous
write downs. It provides more extensive guidance on the determination of cost including allocation of overhead, and narrows the permitted cost formula to apply for the recognition to expense as well as expanding disclosure requirements. There were
no adjustments to the Company&#146;s consolidated financial statements upon adoption of this new standard.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE First Quarter Report 2009 | 29</FONT></P>

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<P align="left">
<TABLE><TR><TD nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The amount of inventory, excluding long-term contracts, recognized as cost of sales for the three months ended June 30, 2008 was as follows:</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD width=83%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=9%></TD></TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">three months ended June 30</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Work in progress</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">17.6</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Raw materials, supplies and manufacturing products</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">16.0</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">33.6</FONT></B>&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=5>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The carrying amount of inventories pledged as security for loans was &#36;2.5 million as at June 30, 2008.</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<TABLE><TR><TD nowrap>
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Implemented in fiscal 2008</FONT></B><BR>
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Accounting changes</FONT></I></B></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">On April 1, 2007, the Company adopted CICA Handbook Section 1506, </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Accounting Changes</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">. This standard establishes criteria for changing accounting policies, along with the accounting treatment and disclosure regarding changes in accounting policies, estimates and correction of errors. The
application of this revised standard had no effect to the Company&#146;s consolidated financial statements.</FONT></P>
<P align="left">
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Financial instrument and hedging relationships</FONT></I></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">On April 1, 2007, the Company adopted CICA Handbook Section 1530, </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Comprehensive Income</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">, Section 3855,</FONT></P>
<P align="left">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Financial Instruments &#150; Recognition and Measurement</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">, and Section 3865, </FONT><I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Hedges</FONT></I><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">, which provided accounting guidelines for recognition and measurement of financial assets, financial liabilities and
non-financial derivatives, and described when and how hedge accounting may be applied.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company&#146;s adoption of these financial instruments standards resulted in changes in accounting for financial instruments and hedges. The impact of these new standards is presented as a
transitional adjustment in opening retained earnings and opening accumulated other comprehensive loss, as applicable as at April 1</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">st</FONT></SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">, 2007. These standards were applied without restatement of prior periods, with the exception of the reclassification of the foreign currency translation adjustment, which is now disclosed as part of
accumulated other comprehensive loss. All other transitional adjustments ensuing from these standards resulted in a decrease in retained earnings, net of income taxes, of &#36;8.3 million and a decrease in accumulated other comprehensive loss, net
of income taxes, of &#36;3.5 million as at April 1</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">st</FONT></SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">, 2007 as more fully described in Note 2 of the annual
consolidated financial statements for the year ended March 31, 2008.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 3 &#150; BUSINESS ACQUISITIONS</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">In June 2008, the Company acquired Sabena Flight Academy (Sabena) for a total cost, including acquisition costs, of &#36;66.9 million composed primarily of cash and assumed debt. Sabena offers
cadet training, advanced training and aviation consulting for airlines and self-sponsored pilot candidates. The total costs do not include potential additional consideration of &#36;6.3 million that is contingent on certain conditions being
satisfied, which, if met, would be recorded as additional goodwill.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Goodwill recognized for this transaction, which is not deductible for tax purposes, amounts to &#36;15.3 million. As well, a customer relationship intangible asset in the amount of &#36;15.6
million has been recognized regarding this transaction. The acquisition was accounted for under the purchase method and the operating results have been included in the consolidated results on the Company since the date of acquisition. The net assets
of Sabena are included in the Training &amp; Services/Civil segment. The allocation of the purchase price is preliminary and is expected to be completed in the near future.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 4 &#150; INVESTMENTS IN JOINT VENTURES</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company&#146;s consolidated balance sheets and consolidated statements of earnings and cash flows include, on a proportionate consolidation basis, the impact of its joint venture companies
of Zhuhai Xiang Yi Aviation Technology Company Limited &#150; 49%, Helicopter Training Media International GmbH &#150; 50%, Helicopter Flight Training Services GmbH &#150; 25%, the Emirates-CAE Flight Training centre &#150; 50%, Embraer CAE Training
Services LLC &#150; 49% (starting fiscal 2008), Hatsoff Helicopter Training Private Limited &#150; 50% (starting fiscal 2008), National Flying Training Institute Private Limited &#150; 51% (starting fiscal 2009), and CAE Bangalore training centre
&#150; 50% (starting fiscal 2009).</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">30 | CAE First Quarter Report 2009</FONT></P>

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<P align="right">
<TABLE><TR><TD align="right" nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Except for the Helicopter Training Media International GmbH joint venture, whose operations are essentially focused on designing, manufacturing and supplying advanced helicopter military
training product applications, the other joint venture companies&#146; operations are focused on providing civil and military aviation training and related services.</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD width=49%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=20%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=11%></TD>
     <TD width=2%></TD></TR>
<TR valign="bottom">
	<TD align=left colspan=5>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The impact on the Company&#146;s consolidated financial statements from all joint ventures is as follows:</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">As at June 30</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">As at March 31</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2008</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Assets</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Current assets</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">52.7</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">33.8</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Property, plant and equipment and other non-current assets</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">177.8</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">163.1</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Liabilities</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Current liabilities</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">23.6</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">22.9</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Long-term debt (including current portion)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">83.4</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">75.9</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Deferred gains and other long-term liabilities</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.7</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">three months ended June 30</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2007</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Earnings</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Revenue</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">13.7</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">13.8</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Net earnings</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">4.3</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.6</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Segmented operating income</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Simulation Products/Military</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.0</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.6</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Training and Services/Civil</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">3.9</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.7</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Training and Services/Military</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(0.2</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(0.1</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">three months ended June 30</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2007</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Cash flows provided by (used in):</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Operating activities</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">6.4</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">7.6</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Investing activities</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(4.3</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(5.1</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Financing activities</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">8.2</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">8.8</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 5 &#150; INTEREST EXPENSE, NET</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Details of interest expense (income) are as follows:</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">three months ended June 30</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2007</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Long-term debt interest expense</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">6.1</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">4.3</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Amortization of deferred financing costs and other</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.8</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.6</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Interest capitalized</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(1.3</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(1.0</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Interest on long-term debt</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">5.6</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">3.9</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Interest income</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(0.7</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(0.7</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other interest expense (income), net</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(0.6</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(0.6</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Interest income, net</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(1.3</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(1.3</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Interest expense, net</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">4.3</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.6</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE First Quarter Report 2009 | 31</FONT></P>

<HR noshade align="center" width="100%" size=2 style="page-break-after:always;">



<!--$$/page=-->
<A name="page_36"></A>

<P align="left">
<TABLE><TR><TD nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></TD></TR></TABLE>
</P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 6 &#150; ACCOUNTS RECEIVABLE</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Accounts receivable are carried on the consolidated balance sheet net of allowance for doubtful accounts. This provision is established based on the Company&#146;s best estimates regarding the
ultimate recovery of balances for which collection is uncertain. Uncertainty of ultimate collection may become apparent from various indicators, such as a deterioration of the credit situation of a given client and of delay in collection when aging
of invoices exceeds the contractually agreed upon payment terms. Management regularly reviews accounts receivable, monitors past due balances and assesses the appropriateness of the allowance for doubtful accounts.</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD width=55%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=13%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=12%></TD>
     <TD width=2%></TD></TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Details of accounts receivable were as follows:</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">As at June 30</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">As at March 31</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2008</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Past due trade receivables</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1-30 days</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">37.3</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">38.0</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">31-60 days</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">16.1</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">10.7</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">61-90 days</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">9.4</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">6.3</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Greater than 90 days</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">19.1</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">20.6</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Total</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">81.9</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">75.6</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Allowance for doubtful accounts</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(8.8</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(7.4</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Current trade receivables</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">69.6</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">81.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Accrued receivables</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">52.8</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">48.5</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Derivative assets</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">14.7</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">17.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other receivables</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">30.9</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">39.9</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Total accounts receivable</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">241.1</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">255.0</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Changes in the allowance for doubtful accounts were as follows as at June 30:</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">three months ended June 30</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Balance at beginning of period</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(7.4</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Additions</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(2.9</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Amounts charged off</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.4</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Foreign exchange</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.1</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Balance at end of period</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(8.8</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">32 | CAE First Quarter Report 2009</FONT></P>

<HR noshade align="center" width="100%" size=2 style="page-break-after:always;">



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<TABLE border=0 cellspacing=0 cellpadding=0>
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     <TD width=43%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=17%></TD>
     <TD width=2%></TD>
     <TD width=8%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=11%></TD>
     <TD width=2%></TD></TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left colspan=8>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=13>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=13>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 7 &#150; SUPPLEMENTARY INFORMATION</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=13>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">three months ended June 30</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2007</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Cash provided by (used in) non-cash working capital:</FONT></I></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Accounts receivable</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right colspan=3>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">21.5</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(41.6</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Inventories</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(38.1</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(2.5</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Prepaid expenses</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">5.2</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.3</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Income taxes recoverable</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(3.2</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(9.3</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Accounts payable and accrued liabilities</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(73.4</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(63.9</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Deposits on contracts</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(11.1</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">19.1</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Changes in non-cash working capital</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right colspan=3 style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(99.1</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(97.9</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=13>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Supplemental cash flow disclosure:</FONT></I></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Interest paid</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right colspan=3>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">8.8</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">6.8</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Income taxes paid (received)</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right colspan=3 style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">9.2</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">11.3</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=13>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Supplemental statements of earnings disclosure:</FONT></I></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left colspan=5>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Foreign exchange gains (losses) on financial instruments recognized in earnings:</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Loans and receivables</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right colspan=3>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(1.6</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(7.3</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Financial assets and financial liabilities required to be</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">classified as held for trading</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(0.2</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(4.3</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other financial liabilities</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2.4</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">9.4</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Foreign exchange gain (loss)</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right colspan=3 style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.6</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(2.2</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 8 &#150; GOVERNMENT COST SHARING</FONT></B></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Project Phoenix</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The following table provides information regarding contributions recognized and amounts not yet received for the aggregate project:</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD width=61%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=28%></TD>
     <TD width=2%></TD></TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">three months ended June 30</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Outstanding contribution receivable, beginning of period</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">24.2</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Contributions</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">11.2</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Payments received</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(16.2</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Outstanding contribution receivable, end of period</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">19.2</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE First Quarter Report 2009 | 33</FONT></P>

<HR noshade align="center" width="100%" size=2 style="page-break-after:always;">



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<A name="page_38"></A>

<P align="left">
<TABLE><TR><TD nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></TD></TR></TABLE>
</P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Aggregate information about programs</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The following table provides information on the aggregate contributions recognized and aggregate royalty expenditures recognized for all programs:</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD width=60%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=10%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=10%></TD>
     <TD width=2%></TD></TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">three months ended June 30</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2007</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Contributions credited to capitalized costs:</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Project Phoenix</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2.7</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">4.3</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Contributions credited to income:</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Project Phoenix</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">8.5</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">9.5</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Total contributions:</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Project Phoenix</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">11.2</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">13.8</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Royalty expenses:</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Project Phoenix</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Previous programs</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2.6</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.1</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 9 &#150; EMPLOYEE FUTURE BENEFITS</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The total benefit cost for the periods ended June 30 includes the following components:</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">three months ended June 30</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2007</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Current service cost</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2.2</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.1</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Interest cost on projected pension obligations</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">3.3</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">3.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Expected return on plan assets</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(3.3</FONT></B>
	</TD>
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(3.2</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Amortization of net actuarial loss</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.5</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.6</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Amortization of past service costs</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.1</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.1</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Net pension expense</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2.8</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.8</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 10 &#150; CAPITAL MANAGEMENT</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=11>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company&#146;s objectives when managing capital are threefold:</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
</TABLE><BR>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(i)</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Optimize the use of debt in relation to managing the cost of capital of the Company;</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(ii)</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Keep the debt level at an amount where the Company&#146;s financial strength and credit quality is maintained in order to withstand economic cycles;</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(iii)</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Provide the Company&#146;s shareholders with an appropriate rate of return on their investment.</FONT></P>
	</TD>
</TR>
</TABLE>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company sets the amount of capital in proportion to risk. The Company manages the capital structure and makes corresponding adjustments based on changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or use cash to reduce
debt.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">In view of this, the Company monitors its capital on the basis of the adjusted net debt to capital ratio. This ratio is calculated as adjusted net debt divided by the sum of the adjusted net
debt and equity. Adjusted net debt is calculated as total debt (as presented in the consolidated balance sheet and including non-recourse debt) added to the present value of operating leases (held off balance sheet) less cash and cash equivalents.
Equity comprises all components of shareholders&#146; equity (i.e. capital stock, contributed surplus, retained earnings and accumulated other comprehensive loss).</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">34 | CAE First Quarter Report 2009</FONT></P>

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<P align="right">
<TABLE><TR><TD align="right" nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The level of debt versus equity in the capital structure will be maintained at levels appropriate for a given economic cycle and according to the Company&#146;s growth strategy relative to the
different business segments and therefore adjusted over time to appropriate levels ensuring the achievement of the objectives as stated above. The ratios as at June 30, 2008 and as at March 31, 2008 were as follows:</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD width=49%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=20%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=12%></TD>
     <TD width=2%></TD></TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">As at June 30</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">As at March 31</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2008</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Total debt</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">402.2</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">379.8</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Add: Present value of operating leases (held off balance sheet)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">199.6</FONT></B>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">200.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Less: Cash and cash equivalents</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">(147.7</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">)</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(255.7</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Adjusted net debt</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">454.1</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">324.3</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Shareholders&#146; equity</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">987.7</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">948.5</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Adjusted net debt : shareholders&#146; equity</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">31:69</FONT></B>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">25:75</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The increase in the adjusted net debt to equity ratio during first quarter of fiscal 2009 resulted primarily from the increase in net debt that occurred as a result of cash used for the
acquisition of Sabena Flight Academy and other general corporate and working capital purposes.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">In the first quarter of fiscal 2009, the Board of Directors approved an increase in the quarterly dividend per share to &#36;0.03 from &#36;0.01.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company has certain debt agreements which require the maintenance of a certain level of capital. As at June 30, 2008, the Company is compliant with all its capital maintenance
covenants.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE First Quarter Report 2009 | 35</FONT></P>

<HR noshade align="center" width="100%" size=2 style="page-break-after:always;">



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<A name="page_40"></A>

<P align="left">
<TABLE><TR><TD nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></TD></TR></TABLE>
</P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 11 &#150; FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT</FONT></B></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Financial instruments</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The carrying values and fair values of financial instruments, by class, are as follows:</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD width=20%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=5%></TD>
     <TD width=1%></TD>
     <TD width=4%></TD>
     <TD width=1%></TD>
     <TD width=3%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=7%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=8%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=11%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=8%></TD></TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">as at June 30, 2008</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Carrying Value</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Fair Value</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Held for</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Available</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Loans &amp;</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Trading</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">for Sale</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Receivables</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Total</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Financial assets</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Cash and cash equivalents</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right colspan=3>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">147.7</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">147.7</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">147.7</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Accounts receivable</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(a)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#150;</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#150;</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">202.8</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(b)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">202.8</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">202.8</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other assets</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(a)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">10.1</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(c)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">22.5</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(d)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.4</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(e)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">34.0</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">34.0</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Derivative assets</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">9.9</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(f)</FONT></SUP>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#150;</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#150;</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">9.9</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">9.9</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:3px double #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right colspan=3 style="border-bottom:3px double #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">167.7</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:3px double #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">22.5</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:3px double #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">204.2</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:3px double #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">394.4</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">394.4</FONT></B>&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=29>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=29>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Carrying Value</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Fair Value</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Other</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Held for</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Financial</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right colspan=3 style="border-bottom:1px solid #000000;">
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Trading</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Liabilities</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=1 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Total</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Financial liabilities</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left colspan=5>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Accounts payable and accrued liabilities</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(a)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">290.4</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(g)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">290.4</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">290.4</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Total long-term debt</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#150;</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">402.2</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">402.2</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">409.7</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left colspan=7>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Deferred gains and other long-term liabilities</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(a)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#150;</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.5</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(h)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.5</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.5</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Derivative liabilities</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">14.5</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(f)</FONT></SUP>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#150;</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">14.5</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">14.5</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">14.5</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">693.1</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">707.6</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">715.1</FONT></B>&nbsp;
	</TD>
</TR>
</TABLE><BR>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(a)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Excludes derivative financial instruments that have been presented separately.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(b)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes trade receivables, accrued receivables and certain other receivables.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(c)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes restricted cash.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(d)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Represents the Company&#146;s investment in CVS Leasing Ltd.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(e)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes long-term receivables.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(f)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes embedded derivatives accounted for separately and derivatives not designated in a hedging relationship but that are economic hedges and excludes derivatives that are
designated and effective hedging instruments.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(g)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes trade accounts payable, accrued liabilities, interest payable and certain payroll-related liabilities.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(h)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes a long-term payable that meets the definition of a financial liability.</FONT></P>
	</TD>
</TR>
</TABLE>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">36 | CAE First Quarter Report 2009</FONT></P>

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&nbsp;
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	<TD>
&nbsp;	</TD>
	<TD align=right colspan=11>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=29>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=29>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=29>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
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&nbsp;
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&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">as at March 31, 2008</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
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	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Carrying Value</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Fair Value</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Held for</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right colspan=3>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Available</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Loans &amp;</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Trading</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">for Sale</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Receivables</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Total</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Financial assets</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Cash and cash equivalents</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right colspan=3>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">255.7</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">255.7</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">255.7</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Accounts receivable</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(a)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">205.5</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(b)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">205.5</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">205.5</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other assets</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(a)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">8.6</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(c)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">22.6</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(d)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.2</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(e)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">32.4</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">32.4</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Derivative assets</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">12.0</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(f)</FONT></SUP>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">12.0</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">12.0</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:3px double #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right colspan=3 style="border-bottom:3px double #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">276.3</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:3px double #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">22.6</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:3px double #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">206.7</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:3px double #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">505.6</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:3px double #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:3px double #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">505.6</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=29>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=29>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Carrying Value</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Fair Value</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Other</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Held for</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Financial</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Trading</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Liabilities</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Total</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Financial liabilities</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left colspan=5>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Accounts payable and accrued liabilities</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(a)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">346.9</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(g)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">346.9</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">346.9</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Total long-term debt</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">379.8</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">379.8</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">389.3</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left colspan=7>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Deferred gains and other long-term liabilities</FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(a)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.5</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(h)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.5</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.5</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Derivative liabilities</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">15.5</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(f)</FONT></SUP>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">15.5</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">15.5</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">15.5</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">727.2</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">742.7</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">752.2</FONT>&nbsp;
	</TD>
</TR>
</TABLE><BR>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(a)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Excludes derivative financial instruments that have been presented separately.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(b)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes trade receivables, accrued receivables and certain other receivables.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(c)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes restricted cash.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(d)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Represents the Company&#146;s investment in CVS Leasing Ltd.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(e)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes long-term receivables.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(f)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes embedded derivatives accounted for separately and derivatives not designated in a hedging relationship but that are economic hedges and excludes derivatives that are
designated and effective hedging instruments.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(g)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes trade accounts payable, accrued liabilities, interest payable and certain payroll-related liabilities.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(h)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes a long-term payable that meets the definition of a financial liability.</FONT></P>
	</TD>
</TR>
</TABLE>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company did not elect to voluntarily designate any financial instruments as held for trading; moreover, there have not been any changes to the classification of the financial instruments
since March 31, 2008.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">As part of its financing transactions, the Company, through its subsidiaries, has pledged certain financial assets including cash and cash equivalents, accounts receivables, other assets and
derivative assets. The aggregate carrying value of these pledged financial assets was &#36;67.6 million as at June 30, 2008 (&#36;70.7 million as at March 31, 2008).</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Financial risk management</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company is primarily exposed to credit risk, liquidity risk and market risk as a result of holding financial instruments.</FONT></P>
<P align="left">
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Credit risk</FONT></I></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Credit risk is defined as the Company&#146;s exposure to a financial loss if a debtor fails to meet its obligations in accordance with the terms and conditions of its arrangements with the
Company, in relation to financial instruments. The Company is exposed to credit risk on its account receivables and certain other assets through its normal commercial activities. The Company is also exposed to credit risk through its normal treasury
activities on its cash and cash equivalents, and derivative financial instrument assets.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE First Quarter Report 2009 | 37</FONT></P>

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<P align="left">
<TABLE><TR><TD nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Credit risks arising from the Company&#146;s normal commercial activities are independently managed and controlled by its four segments, specifically in regards to customer credit risk. Trade
accounts receivable are recognized initially at fair value and subsequently measured at amortized cost less allowance for doubtful accounts. An allowance for doubtful accounts is established when there is a reasonable expectation that the Company
will not be able to collect all amounts due according to the original terms of the receivables (see note 6). The carrying amount of the trade accounts receivable is reduced through the use of the allowance account and the amount of any increase to
the allowance is recognized in the consolidated statement of earnings. When a trade receivable is uncollectible, it is written-off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written-off are
recognized in the consolidated statement of earnings.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company&#146;s customers are primarily established companies with publicly available credit ratings and government agencies, which facilitates risk monitoring. In addition, the Company
typically receives substantial non-refundable deposits on contracts. The Company closely monitors its exposure to major airlines in order to mitigate its risk to the extent possible. Furthermore, the Company&#146;s trade accounts receivable are not
concentrated to any specific customers but rather are held from a wide range of commercial and government organizations. As well, the Company&#146;s credit exposure is further reduced by the sale of certain of its accounts receivable to a
third-party for a cash consideration on a non-recourse basis. The Company does not hold any collateral as security. The credit risk on cash and cash equivalents is mitigated by the fact that they are in place with major financial
institutions.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company is exposed to credit risk in the event of non-performance by counterparties to its derivative financial instruments. The Company minimizes this exposure by entering into contracts
with counterparties that are of high credit quality. Collateral or other security to support financial instruments subject to credit risk is usually not obtained. The credit standing of counterparties is regularly monitored.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">As presented in the previous financial instrument tables, the carrying amount represents the maximum exposure to credit risk for each respective financial asset as at the relevant dates. In
addition, an amount of &#36;11.5 million (&#36;15.6 million as at March 31, 2008) represents the maximum exposure to credit risk for elements excluded from the previous table.</FONT></P>
<P align="left">
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Liquidity risk</FONT></I></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Liquidity risk is defined as the potential that the Company cannot meet a demand for cash or meet its obligations as they become due.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company manages this risk by establishing detailed cash forecasts, as well as long-term operating and strategic plans. The management of consolidated liquidity requires a constant monitoring
of expected cash inflows and outflows which is achieved through a detailed forecast of the Company&#146;s consolidated liquidity position, to ensure adequacy and efficient use of cash resources. Liquidity adequacy is assessed in view of seasonal
needs, growth requirements and capital expenditures, and the maturity profile of indebtedness, including off-balance sheet indebtedness. The Company manages its liquidity risk to maintain sufficient liquid financial resources to fund its operations
and meet its commitments and obligations in a cost-efficient manner. In managing its liquidity risk, the Company has access to revolving unsecured term credit facilities of US&#36;400.0 million and &#128;100.0 million. As well, the Company has an
agreement to sell certain of its accounts receivable up to &#36;50 million. The Company also constantly monitors any financing opportunities to optimize its capital structure and maintain appropriate financial flexibility.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">38 | CAE First Quarter Report 2009</FONT></P>

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<P align="right">
<TABLE><TR><TD align="right" nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The following table presents a maturity analysis, from the consolidated balance sheet date to the contractual maturity date, of the Company&#146;s financial liabilities based on expected cash
flows. The amounts are the contractual undiscounted cash flows. All amounts contractually denominated in foreign currency are presented in Canadian dollar equivalent amounts using the period-end spot rate except as otherwise stated:</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
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     <TD width=6%></TD>
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<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
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&nbsp;
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&nbsp;
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&nbsp;
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&nbsp;
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&nbsp;
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</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">as at June 30, 2008</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Carrying</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
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&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
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&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Contractual</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
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&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">0-12</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
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&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">13-24</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
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&nbsp;	</TD>
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&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">25-36</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
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&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
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&nbsp;	</TD>
	<TD align=right>
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">37-48</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
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&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
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<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">49-60</FONT>
	</TD>
	<TD align=left>
&nbsp;
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&nbsp;
	</TD>
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&nbsp;
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&nbsp;
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</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Amount</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
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	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Cash Flows</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
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&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Months</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
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&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
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&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Months</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
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&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Months</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Months</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Months</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Thereafter</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Accounts payable and</FONT>&nbsp;
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&nbsp;
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&nbsp;
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&nbsp;
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&nbsp;
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&nbsp;
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&nbsp;
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&nbsp;
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&nbsp;
	</TD>
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&nbsp;	</TD>
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&nbsp;
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&nbsp;
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&nbsp;
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	<TD align=left>
&nbsp;
	</TD>
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&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(a, f)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
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	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
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&nbsp;
	</TD>
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&nbsp;
	</TD>
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&nbsp;
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&nbsp;
	</TD>
	<TD>
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	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
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	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">accrued liabilities</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">290.4</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">290.4</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">290.4</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36; &#150;</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Foreign exchange forward</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=center>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">contracts </FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(b)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(6.7</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Outflow</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">581.7</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">463.6</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">94.1</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">18.5</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">4.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.3</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Inflow</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(588.7</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(467.5</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(95.7</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(19.6</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(4.5</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(1.4</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Total long-term debt </FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(c)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">402.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">512.0</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">125.8</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">58.9</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">48.1</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">66.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">52.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">160.8</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Swap derivatives on total</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">long-term debt </FONT><SUP><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(d)</FONT></SUP>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(4.0</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Outflow</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">92.5</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">10.3</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">11.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">11.6</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">11.5</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">8.2</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">39.7</FONT>
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Inflow</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(95.2</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(10.7</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(11.7</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(12.0</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(11.6</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(8.4</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">(40.8</FONT>
	</TD>
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(e, f)</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other long-term liabilities</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.5</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.5</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.2</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.2</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.1</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#150;</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">682.4</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">793.2</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">412.1</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">57.0</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">46.7</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">65.8</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">51.9</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">159.7</FONT>
	</TD>
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
</TR>
</TABLE><BR>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(a)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes trade accounts payable, accrued liabilities, interest payable and certain payroll-related liabilities.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(b)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes foreign exchange forward contracts, but excludes all embedded derivatives, either presented as derivative liabilities or derivative assets. Outflows and inflows are
presented in CAD equivalent using the contractual foreign exchange forward rate.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(c)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Contractual cash flows include contractual interest and principal payments related to debt obligations.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(d)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes interest rate swaps and foreign exchange swap contracts either designated as cash flow hedges or as fair value hedges of long-term debt either presented as derivative
liabilities or derivative assets.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(e)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Includes certain other long-term liabilities.</FONT></P>
	</TD>
</TR>
<TR>
	<TD nowrap valign=top>
<SUP><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">(f)</FONT></SUP>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<P align="justify"><FONT size=1 face="ArialMT,Arial,Helvetica,sans-serif">Excludes derivative financial liabilities which have been presented separately.</FONT></P>
	</TD>
</TR>
</TABLE>
<P align="left">
<B><I><FONT size=2 face="Arial-BoldItalicMT,Arial,Helvetica,sans-serif">Market risk</FONT></I></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Market risk is defined as the Company&#146;s exposure to an earnings loss or a loss to the value of its financial instruments as a result of changes in market prices, whether those changes are
caused by factors specific to the individual financial instruments or its issuer, or factors affecting all similar financial instruments traded in the market. The Company is mainly exposed to foreign currency risk and interest rate risk.</FONT></P>
<P align="left">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Foreign currency risk</FONT></I></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Foreign currency risk is defined as the Company&#146;s exposure to an earnings loss or a loss to the value of its financial instruments as a result in the fluctuations of foreign exchange rates.
The Company is exposed to foreign currency rate variability primarily in relation to certain sale commitments, expected purchase transactions and debt denominated in a foreign currency. As well, CAE&#146;s foreign operations are essentially
self-sustaining and these foreign operations&#146; functional currencies are other than the Canadian dollar (in particular the USD, &#128; and &#163;). The Company&#146;s related exposure to the foreign currency exchange rates is primarily through
cash and cash equivalents and other working capital elements of these foreign operations.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The segments also mitigate foreign currency risks by transacting, in their functional currency for material procurement, sale contracts and financing activities.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company uses foreign exchange forward contracts and foreign exchange swap agreements to manage the Company&#146;s exposure from transactions in foreign currencies and to synthetically modify
the currency of exposure of certain balance sheet items. The Company applies hedge accounting for a significant portion of anticipated transactions and firm commitments denominated in foreign currencies, designated as cash flow hedges. Notably, the
Company enters into foreign exchange forward contracts and foreign exchange swap agreements to reduce the risk of variability of future cash flows resulting from firm sales commitments, forecasted purchases and debt denominated in foreign
currencies.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE First Quarter Report 2009 | 39</FONT></P>

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<P align="left">
<TABLE><TR><TD nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company&#146;s foreign currency hedging programs are typically unaffected by changes in market conditions, as related derivative financial instruments are generally held to maturity,
consistent with the objective to fix currency rates on the hedged item.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company&#146;s exposure to foreign exchange variation of 5% of our main three currencies, which is reasonably possible, does not have a significant impact on the Company&#146;s net earnings.
The pre-tax impact on the OCI is &#36;14.7 million.</FONT></P>
<P align="left">
<I><FONT size=2 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">Interest rate risk</FONT></I></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Interest rate risk is defined as the Company&#146;s exposure to a loss on earnings or a loss to the value of its financial instruments as a result of the fluctuations in interest rates. The
Company bears some interest rate fluctuation risk on its floating rate long-term debt and some fair value risk on its fixed interest long-term debt. The Company mainly manages interest rate risk by fixing project-specific floating rate debt in order
to reduce cash flow variability. The Company also has a floating rate debt through unhedged bank borrowing, a specific fair value hedge and other asset-specific floating rate debt. An appropriate mix of fixed and floating interest rate debt is
sought to reduce the net impact of fluctuating interest rates. Derivative financial instruments used to synthetically convert interest rate exposures are mainly on interest rate swap agreements.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company&#146;s interest rate hedging programs are typically unaffected by changes in market conditions, as related derivative financial instruments are generally held to maturity to ensure
proper asset and liability management matching, consistent with the objective to reduce risks arising from interest rate movements. As a result, the changes in variable interest rates do not have a significant impact on the Company&#146;s
consolidated net income and other comprehensive income.</FONT></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 12 &#150; OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION</FONT></B></P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Results by segment</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The profitability measure employed by the Company for making decisions about allocating resources to segments and assessing segment performance is earnings before other income (expense),
interest, income taxes and discontinued operations (hereinafter referred to as segment operating income). The accounting principles used to prepare the information by operating segments are the same as those used to prepare the Company&#146;s
Consolidated Financial Statements. Transactions between operating segments are mainly simulator transfers from the Simulation Products/Civil segment to the Training &amp; Services/Civil segment, which are recorded at cost. The method used for the
allocation of assets jointly used by operating segments and costs and liabilities jointly incurred (mostly corporate costs) between operating segments is based on the level of utilization when determinable and measurable, otherwise the allocation is
made based on a proportion of each segment&#146;s cost of sales.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">40 | CAE First Quarter Report 2009</FONT></P>

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<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD width=22%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=8%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=8%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=8%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=9%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=8%></TD>
     <TD width=1%></TD>
     <TD width=2%></TD>
     <TD width=1%></TD>
     <TD width=8%></TD></TR>
<TR valign="bottom">
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right colspan=13>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=25>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=25>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right colspan=5>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Simulation Products</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right colspan=5>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Training &amp; Services</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Total</FONT></B>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">three months ended June 30</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2007</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2007</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2007</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Civil</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">External revenue</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">136.6</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">113.0</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">110.2</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">94.8</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">246.8</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">207.8</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Segment operating income</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">27.4</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">19.7</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">20.7</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">19.6</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">48.1</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">39.3</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Depreciation and amortization</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="SymbolMT,Times New Roman,Times,serif">  </FONT><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Property, plant and equipment</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.1</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.0</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">11.9</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">11.0</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">13.0</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">12.0</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="SymbolMT,Times New Roman,Times,serif">  </FONT><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Intangible and other assets</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.4</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.5</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.9</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.1</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2.3</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.6</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Capital expenditures</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.6</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.8</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">34.2</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">26.8</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">34.8</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">27.6</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Military</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">External revenue</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">88.4</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">95.5</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">56.9</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">55.0</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">145.3</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">150.5</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Segment operating income</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">13.6</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">12.3</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">9.6</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">6.4</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">23.2</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">18.7</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Depreciation and amortization</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="SymbolMT,Times New Roman,Times,serif">  </FONT><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Property, plant and equipment</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.4</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.4</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.3</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.2</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2.7</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.6</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="SymbolMT,Times New Roman,Times,serif">  </FONT><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Intangible and other assets</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.2</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.8</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">0.7</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">0.5</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.9</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.3</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Capital expenditures</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.2</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.3</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2.4</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">3.8</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">3.6</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">5.1</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Total</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">External revenue</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">225.0</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">208.5</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">167.1</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">149.8</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">392.1</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">358.3</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Segment operating income</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">41.0</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">32.0</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">30.3</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">26.0</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">71.3</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">58.0</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Depreciation and amortization</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="SymbolMT,Times New Roman,Times,serif">  </FONT><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Property, plant and equipment</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2.5</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.4</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">13.2</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">12.2</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">15.7</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">14.6</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="SymbolMT,Times New Roman,Times,serif">  </FONT><FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Intangible and other assets</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.6</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1.3</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2.6</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.6</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">4.2</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">3.9</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Capital expenditures</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1.8</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2.1</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">36.6</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">30.6</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">38.4</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">32.7</FONT>&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Assets employed by segment</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company uses assets employed to assess resources allocated to each segment. Assets employed include accounts receivable, inventories, prepaid expenses, property, plant and equipment,
goodwill, intangible assets and other assets. Assets employed exclude cash, income tax accounts and assets of certain non-operating subsidiaries.</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD width=44%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=29%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=13%></TD></TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">As at June 30</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">As at March 31</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2008</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Simulation Products/Civil</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">230.5</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">208.3</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Simulation Products/Military</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">306.8</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">302.8</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Training &amp; Services/Civil</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1,136.7</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1,067.6</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Training &amp; Services/Military</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">222.1</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">219.8</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Total assets employed</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1,896.1</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1,798.5</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Assets not included in assets employed</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">348.3</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">454.7</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Total assets</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2,244.4</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2,253.2</FONT>&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">CAE First Quarter Report 2009 | 41</FONT></P>

<HR noshade align="center" width="100%" size=2 style="page-break-after:always;">



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<A name="page_46"></A>

<P align="left">
<TABLE><TR><TD nowrap>
<FONT color="#00a652" size=2 face="ArialMT,Arial,Helvetica,sans-serif">Notes to the Consolidated Financial Statements</FONT></TD></TR></TABLE>
</P>
<P align="left">
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">Geographic information</FONT></B></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">The Company markets its products and services in over 20 countries. Sales are attributed to countries based on the location of customers.</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
     <TD width=51%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=21%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=2%></TD>
     <TD width=13%></TD></TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">three months ended June 30</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2007</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Revenue from external customers</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Canada</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">23.2</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">32.9</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">United States</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">138.8</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">107.6</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">United Kingdom</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">25.2</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">24.4</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Germany</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">47.3</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">43.4</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Netherlands</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">17.7</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">32.8</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other European countries</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">43.1</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">37.9</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">China</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">17.9</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">18.7</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">United Arab Emirates</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">15.2</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">14.7</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other Asian countries</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">29.9</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">20.1</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Australia</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">19.0</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">8.1</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other countries</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">14.8</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">17.7</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">392.1</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">358.3</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=9>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(Unaudited)</FONT></I>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">As at June 30</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">As at March 31</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
<I><FONT size=1 face="Arial-ItalicMT,Arial,Helvetica,sans-serif">(amounts in millions)</FONT></I>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">2008</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">2008</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Property, plant and equipment, goodwill and intangible assets</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Canada</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">189.1</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">205.9</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">United States</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">316.8</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">297.2</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">South America</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">66.6</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">66.1</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">United Kingdom</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">166.8</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">166.3</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Spain</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">92.9</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">95.4</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Germany</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">68.1</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">67.2</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Belgium</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">77.3</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">27.1</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Netherlands</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">133.2</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">134.0</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other European countries</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">33.9</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">34.2</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">United Arab Emirates</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">64.1</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">63.6</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Asia</FONT>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">66.1</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">54.3</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">Other countries</FONT>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">13.5</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">13.0</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left style="border-bottom:1px solid #000000;">
&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">&#36;</FONT></B>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">1,288.4</FONT></B>&nbsp;
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">&#36;</FONT>
	</TD>
	<TD style="border-bottom:1px solid #000000;">
&nbsp;	</TD>
	<TD align=right style="border-bottom:1px solid #000000;">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">1,224.3</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=9>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left>
<B><FONT color="#00a652" size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">NOTE 13 &#150; SUBSEQUENT EVENTS</FONT></B>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=right>
&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD align=left>
&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">In August 2008, the Company has signed an asset purchase agreement to acquire Bell Aliant&#146;s Defence, Security and Aerospace business unit which currently operates under the xwave brand for
approximately &#36;15.1 million. This amount does not include a potential additional consideration of &#36;11.0 million that is contingent on certain conditions being satisfied. This transaction is anticipated to close at the end of the
year.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">In July 2008, the Company increased its participation in Academia Aeronautica De Evora S.A. to 90% in a non-cash transaction.</FONT></P>
<P align="left">
<FONT size=2 face="ArialMT,Arial,Helvetica,sans-serif">42 | CAE First Quarter Report 2009</FONT></P>

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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
