Royal Group announces potential non-compliance of Royal Building System with smoke generation elements of certain US building co
July 28 2005 - 8:04AM
PR Newswire (US)
Royal Group announces potential non-compliance of Royal Building
System with smoke generation elements of certain US building codes
TORONTO, July 28 /PRNewswire-FirstCall/ -- Royal Group Technologies
Limited (RYG-TSX; RYG-NYSE) today announced that recent testing of
one of its product lines, Royal Building Systems (RBS), suggests
that RBS does not consistently meet the smoke generation
requirements of applicable US building codes for interior
unfinished surfaces in non-utility buildings. Over 550 non- utility
RBS structures, which include car washes, office buildings,
factories and houses, have been built in the US in the last 8
years. Approximately 350 of these structures are car washes, which
principally have limited human occupancy. RBS is a modular,
component-based concrete forming system, involving hollow panels
that interconnect to create walls. Concrete is poured into these
vertically assembled panels to construct a durable, low-maintenance
structure. RBS also includes a car wash interior refinishing
product line, known as the Royal Renew Paneling System, which
involves unfilled panels that are fastened to the walls of an
existing car wash. Approximately 950 car washes have been
retrofitted with Royal Renew, which are also subject to the smoke
generation requirements of applicable US building codes. These
systems are marketed by Royal Building Technologies, a subsidiary
of Royal Group Technologies Limited. During the 12 months ended
December 2004, approximately $8.5 million of RBS, including the
Royal Renew Paneling System, was sold into the US, representing
less than 1% of Royal Group's consolidated sales. Management has
decided to immediately cease production and shipment of non-utility
structures utilizing RBS components, in the US and global
locations. Furthermore, with the assistance of appropriate
consultants, the Company is presently evaluating buildings
previously constructed or under construction with the System to
determine any additional appropriate steps to address the concerns
raised by the recent testing. Royal Group will then assess the
applications of the System appropriate for future production and
shipment. The Company advised that its RBS components comply with
applicable Canadian building codes and that it is presently
reviewing RBS's smoke generation performance vis-a-vis other
applicable international building codes. Since its market
introduction in 1992, over 20,000 structures of various sizes have
been built globally using components of RBS, in over 65 countries.
The Company is not aware of any injuries involving smoke in these
RBS structures. Furthermore, the Company noted that RBS components
will not burn in the absence of continuous contact with an external
flame source. In addition, the self-ignition temperature of RBS is
significantly higher than most wood-based construction products.
Commenting on these recent findings, Royal Group's President and
CEO, Lawrence J. Blanford stated that management "will be guided in
this situation by best practices in product stewardship" and "is
committed to meeting customers' expectations for safe, durable,
low-maintenance building products, which Royal Group has cultivated
as a core strategy". Royal Group Technologies is a manufacturer of
innovative, polymer-based home improvement, consumer, and
construction products. The company has extensive vertical
integration, with operations dedicated to provision of materials,
machinery, tooling, real estate, and transportation services to its
plants producing finished products. Royal Group's manufacturing
facilities are primarily located throughout North America, with
international operations in South America, Europe, and Asia.
Additional investment information is available on Royal Group's web
site at http://www.royalgrouptech.com/ under the "Investor
Relations" section. The information in this document contains
certain forward-looking statements with respect to Royal Group
Technologies Limited, its subsidiaries and affiliates. These
statements are often, but not always made through the use of words
or phrases such as "expect", "should continue", "continue",
"believe", "anticipate", "estimate", "contemplate", "target",
"plan", "budget", "may", "will", "schedule", and "intend" or
similar formulations. By their nature, these forward-looking
statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by management, are
inherently subject to significant, known and unknown, business,
economic, competitive and other risks, uncertainties and other
factors affecting Royal Group specifically or its industry
generally that could cause actual performance, achievements and
financial results to differ materially from those contemplated by
the forward-looking statements. These risks and uncertainties
include the ongoing shareholder value maximization process and its
outcome; the outcome of the ongoing internal review and
investigations by the Special Committee of the Board of Directors;
fluctuations in the level of renovation, remodelling and
construction activity; changes in product costs and pricing; an
inability to achieve or delays in achieving savings related to the
cost reductions or increases in revenues related to sales price
increases; the sufficiency of our restructuring activities,
including the potential for higher actual costs to be incurred in
connection with restructuring activities compared to the estimated
costs of such actions; the ability to recruit and retain qualified
employees; the level of outstanding debt and our current debt
ratings; the ability to meet the financial covenants in our credit
facilities; changes in product mix; the growth rate of the markets
into which Royal Group's products are sold; market acceptance and
demand for Royal's products; changes in availability or prices for
raw materials; pricing pressures resulting from competition;
difficulty in developing and introducing new products; failure to
penetrate new markets effectively; the effect on foreign operations
of currency fluctuations, tariffs, nationalization, exchange
controls, limitations on foreign investment in local business and
other political, economic and regulatory risks; difficulty in
preserving proprietary technology; adverse resolution of any
litigation, investigations, administrative and regulatory matters,
intellectual property disputes, or similar matters; changes in
securities or environmental laws, rules and regulations; currency
risk exposure and other risks described from time to time in
publicly filed disclosure documents and securities commission
reports of Royal Group Technologies Limited and its subsidiaries
and affiliates. In view of these uncertainties we caution readers
not to place undue reliance on these forward-looking statements.
Statements made in this document are made as of July 28, 2005 and
Royal disclaims any intention or obligation to update or revise any
statements made herein, whether as a result of new information,
future events or otherwise. DATASOURCE: Royal Group Technologies
Limited CONTACT: Media and Investors: Mark Badger, Vice President
of Marketing and Corporate Communications, Royal Group Technologies
Limited, Phone (905) 264-0701
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