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Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good afternoon, ladies and gentlemen. Welcome to the CAE fourth quarter conference call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Mr. Andrew Arnovitz, you may now proceed, Mr. Arnovitz.
ANDREW ARNOVITZ, DIRECTOR IR, CAE: Thank you. Good afternoon, everyone, and thank you for joining us today. Before we begin, I need to read the following. Certain statements made during this conference, including but not limited to statements that are historical facts, are forward-looking and are subject to important risks, uncertainties, and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events. These statements do not reflect the potential impact of any nonrecurring or special items or events that are announced or completed after the date of this conference, including mergers, acquisitions, or other business combinations and divestitures.
You'll find more information about the risks and uncertainties associated with our business in the MD&A section of our annual report and the annual information form for the year ended March 31, 2006. These documents have been filed with the Canadian Securities Commissions and are available on our Web site CAE.com and on SEDAR.com. They have also been filed with the U.S. Securities and Exchange Commission on form 40-F and are available on Edgar at SEC.gov. Forward-looking statements in this conference represent our expectations as of May 31, 2007, and accordingly are subject to change after this date. 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.
Robert E Brown, CAE's President and Chief Executive Officer, and Alain Raquepas, our Chief Financial Officer, are participating in the call today. Following their remarks, we will invite questions from financial analysts and institutional investors. Once we have concluded the question-and-answer period with analysts and institutional investors, we will then invite questions from the Media. For your convenience, this conference call will be archived on CAE's Web site.
Let me now turn the line over to Bob.
ROBERT BROWN, PRESIDENT, CEO, CAE: Thank you, Andrew, and thank you everyone, for joining us today. Let me begin with a few comments about the fourth quarter and our performance last year. Then Alain will walk you through some more specific financial highlights. After that, I will say a few words about the way forward.
In summary, we had a very good year. Our results reflect both the strength of our financial position and our renewed competitive position. With these advantages, we are benefiting more fully from the positive market conditions we have been experiencing. Our business is well-diversified between products and services across military and civil markets and geographically. All of our business segments have combined to contribute to a solid performance for the quarter and for the year as a whole.
We are making progress by leveraging our core capabilities to grow the company. Annual revenue increased 13% to reach $1.25 billion. We also delivered double digit growth in our order backlog and operating margin. On an apples to apples basis, net earnings from continuing operations increased 85% to reach $129 million, and we generated more than $90 million of free cash during the year. This is a testament to the quality of our earnings. We took in $1.45 billion of new orders and concluded the year with a backlog of nearly $2.8 billion.
Now let's look at the business segments and our activities for the quarter. In Simulation Product Civil, we signed orders for seven full flight simulators with customers in Asia and Europe, including an Airbus A-320 order from Lufthansa Flight Training. One of the launch customers for the new CAE 5000 series full flight simulator. We sold a total of 34 full flight simulators during the year, including a long lead time order from Ryanair for six Boeing 737 simulators. We also sold the first simulators ordered by airlines for the new Boeing 787 to Qantas and China Eastern Airlines. Since the start of the new fiscal year, we have announced another 10 simulator orders, including one recently from Nippon Cargo Airlines for the new Boeing 747-8. This is the first simulator contract to be awarded for the new aircraft model. We also sold two Boeing 787 simulators to Japan Airlines.
We are now two-thirds of the way through our first quarter, so it is still too early to accurately forecast the number of orders we expect to receive this year. At this point we expect to take orders for approximately 30 civil simulators. As we have done in the past, we intend to update you on this estimate as the year progresses. In keeping with the higher level of activity and our increased efficiencies, revenue for the year was up 35% and our operating margin reached 17.4%.
Training and Services/Civil was awarded more than $450 million in new trading contracts during the year, including 50 new business aviation contracts with many Fortune 1000 companies and government entities. We also signed 20 new commercial and regional aviation training contracts with airlines around the world. During the quarter, we announced plans to open CAE's first Indian flight training center in Bangalore and more recently we announced the addition of three new Alliance members to the CAE Global Academy, which is designed to address the global shortage of pilots.
Average revenue per simulator in fiscal 2007 was $3.4 million, on a basis of 99 revenue simulator equivalent units. We experienced strong demand for training, which saw revenue increase by 5% despite the disruption caused by the redeployment of simulators around our network. Note that the average number of RSEUs remained flat because of this redeployment. As well, we faced a stronger Canadian dollar for the year as a whole. The fourth quarter is typically our strongest for training and it contributed to a 19.1% operating margin for the year.
In the combined Military segments, our backlog reached a record $1.47 billion last year. We took in nearly $600 million worth of orders, involving a diverse range of product and service programs for the Australia, British, Canadian, German, Italian, and U.S. forces. The war on terror has presented unique requirements …