- New segmented reporting reflects restructured business -
Previously announced charges related to restructuring recorded in
fourth quarter - Net earnings realized in fiscal 2005, excluding
discontinued operations and restructuring related charges - Fourth
quarter reported sales increase 12.6% from Q4 2004 - Raw material
cost increases in fourth quarter fully recovered via price
increases - Sale process proceeds to final stage with potential
bidders receiving 2005 financial statements TORONTO, May 1
/PRNewswire-FirstCall/ -- Royal Group Technologies Limited (RYG -
TSX; NYSE) today announced audited financial results for the year
ended December 31, 2005. During fiscal 2004, Royal Group changed
its fiscal year from September 30 to December 31, reporting audited
results for the 15-month period ended December 31, 2004. To provide
meaningful analysis of comparative results with 2005, Royal Group
has also presented its unaudited results for the 12-month period
ended December 31, 2004. On a reported basis, in accordance with
Canadian Generally Accepted Accounting Principles (GAAP), Royal
Group reported a net loss of $270.4 million in fiscal 2005. On a
reported basis, in accordance with GAAP, Royal Group reported a net
loss of $271.1 million for the 3-month period ended December 31,
2005. New Segmented Reporting and Restructuring Charges On July 15,
2005 Royal Group announced that its Board of Directors had approved
a four-part Management Improvement Plan, involving: I. Business
unit portfolio restructuring; II. Cost and margin improvement
initiatives; III. Strategies to unlock the potential of the seven
core businesses; and, IV. Financing alternatives that capitalize on
the strength of Royal Group's balance sheet. As Royal Group has
previously stated, its Management Improvement Plan aims to enhance
shareholder value, whether the company is sold or remains a public
entity. As a result of the implementation of the Management
Improvement Plan, Royal Group has changed the reporting of its
segments to better reflect how management now views the operations
of the Company going forward. Detailed segmented financial results
are contained in Royal Group's Financial Statements and
Management's Discussion and Analysis, which were filed via SEDAR
and posted on Royal Group's web site concurrent with the issuance
of this news release. The Company's new segmented financial
presentation, reflecting its core businesses going forward, is
outlined in the following table:
-------------------------------------------------------------------------
Reportable Segments Core Product Divisions
-------------------------------------------------------------------------
Custom Profiles & Custom Window Profiles Division and Interior
& Mouldings Exterior Mouldings Division
-------------------------------------------------------------------------
Building Products Exterior Cladding Division
-------------------------------------------------------------------------
Construction Products Pipe and Fittings Division and Building
Systems Division
-------------------------------------------------------------------------
Home Improvement Deck, Fence and Railing Division and Outdoor
Products Storage Division
-------------------------------------------------------------------------
Window Covering Window Coverings Division Products
-------------------------------------------------------------------------
Materials Materials Division
-------------------------------------------------------------------------
Support Real Estate Division
-------------------------------------------------------------------------
Royal Group has previously announced significant progress with its
business unit portfolio restructuring initiative, with a series of
divestitures completed and others being pursued. Statements of
earnings for all comparative prior periods have been restated to
reflect the required accounting treatment for discontinued
operations in accordance with GAAP. In fiscal 2005, Royal Group
incurred a number of significant unusual and primarily non-cash
restructuring charges, totaling $226.4 million after tax. The
write-downs are consistent with Royal Group's announcement made on
December 21, 2005, wherein it stated that it expected to record
fourth-quarter charges of approximately $210 million to $250
million related to its planned divestitures of non-core businesses
and restructuring charges. Royal Group has presented its
comparative year-end and fourth quarter 2005 results on a GAAP
basis, as well as a normalized basis to allow investors to assess
the Company's financial performance on an on-going basis. The
normalized basis summarizes and clarifies a complex set of
transactions. The normalized presentation reflects results
excluding adjustments related to restructuring and other charges,
with this presentation being for information purposes only. For the
12-month period ended December 31, 2005, adjustments related to
restructuring and other charges totaled $278.7 million after tax
(Footnote (8) page 3), compared to $24.6 million after tax of other
charges for the 12-month period ended December 31, 2004. For the
3-month period ended December 31, 2005, adjustments related to
restructuring and other charges totalled $275.0 million after tax
(Footnote (8) page 5), compared with $22.2 million after tax of
other charges for the 3-month period ended December 31, 2004.
Fiscal 2005 Financial Results The following table outlines both
GAAP and normalized financial results for the 12-month period ended
December 31, 2005 and 2004, with the normalized presentation being
for information purposes only as it does not conform to GAAP:
Consolidated Statement of Earnings (in thousands of Canadian
dollars, except percentage amounts)
------------------------------------------------- Reported
Normalized 12 months Adjustments Other 12 months ended for Unusual
ended Dec. 31/05 Write-downs Charges Dec. 31/05
-------------------------------------------------------------------------
(audited) (unaudited) (A) Net sales $1,696,353 $ - $ - $1,696,353
Cost of sales 1,298,090 (12,023)(1) 1,286,067
-------------------------------------------------------------------------
Gross profit 398,263 12,023 410,286 Operating expenses 444,202
(52,266)(2) (33,558)(7) 358,378 Other costs 29,589 (29,589)(3) -
-------------------------------------------------------------------------
Operating earnings (loss) (75,528) 93,878 33,558 51,908 Interest
and financing charges 25,441 1,076 (7) 26,517
-------------------------------------------------------------------------
Earnings (loss) from continuing operations before income taxes and
minority interest (100,969) 93,878 32,482 25,391 Income taxes
(recovery) 8,461 19,462 (4) (19,756)(6) 8,167
-------------------------------------------------------------------------
Earnings (loss) from continuing operations before minority interest
(109,430) 74,416 52,238 17,224 Minority interest 584 161 745
-------------------------------------------------------------------------
Earnings (loss) from continuing operations (108,846) 74,577 52,238
17,969 Discontinued operations, net of income tax Loss from
discontinued operations (9,740) (9,740) Loss from write-down of
businesses (151,856) 151,856 (5) -
-------------------------------------------------------------------------
Loss from discontinued operations (161,596) 151,856 (9,740)
-------------------------------------------------------------------------
Net earnings (loss) $ (270,442) $226,433 (8) $52,238 (8) $ 8,229
-------------------------------------------------------------------------
-------------------------------------------------------------------------
------------------------------------------------------- Normalized
12 months ended Dec. 31/05 vs. Dec. 31/04 Reported Normalized
------------------ 12 months Other 12 months Per- ended Unusual
ended Dollar centage Dec. 31/04 Charges Dec. 31/04 Change Change
-------------------------------------------------------------------------
(unaudited) (unaudited) (B) (A) - (B) Net sales $1,664,661 $ -
$1,664,661 $ 31,692 1.9% Cost of sales 1,207,710 (12,936)(7)
1,194,774 91,293 7.6%
-------------------------------------------------------------------------
Gross profit 456,951 12,936 469,887 (59,601) -12.7% Operating
expenses 339,252 1,762 (7) 341,014 17,364 5.1% Other costs -
-------------------------------------------------------------------------
Operating earnings (loss) 117,699 11,174 128,873 (76,965) -59.7%
Interest and financing charges 26,150 26,150 367 1.4%
-------------------------------------------------------------------------
Earnings (loss) from continuing operations before income taxes and
minority interest 91,549 11,174 102,723 (77,332) -75.3% Income
taxes (recovery) 17,576 4,080 (7) 21,656 (13,489) -62.3%
-------------------------------------------------------------------------
Earnings (loss) from continuing operations before minority interest
73,973 7,094 81,067 (63,843) -78.8% Minority interest (285) (285)
1,030 -361.4%
-------------------------------------------------------------------------
Earnings (loss) from continuing operations 73,688 7,094 80,782
(62,813) -77.8% Discontinued operations, net of income tax Loss
from discontinued operations (40,565) 17,523 (7) (23,042) 13,302
-57.7% Loss from write-down of businesses -
-------------------------------------------------------------------------
Loss from discontinued operations (40,565) 17,523 (23,042) 13,302
-57.7% Net earnings (loss) $ 33,123 $24,617 $ 57,740 $(49,511)
-85.7%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Cost of Sales predominately relates to a write-down for
inventory to net realized value relating to discontinued operations
and restructuring activities. (2) Operating expenses includes a
write-down for redundant fixed assets. (3) Other cost includes a
write-down primarily related to the Company's equity investments
including Royal Building Systems Philippines, Royal Building
Systems Hawaii and Aristoea. (4) There was a net income tax
recovery as a result of the above mentioned transactions. (5) Loss
from write-down of businesses reflects a net after tax write-down
of the Company's investment in its non-core and non-performing
operations. These businesses are identified in Note 4 of the
audited Consolidated Financial Statements. (6) The tax adjustment
includes a future tax valuation allowance of $26,002 booked in Q4
of 2005. (7) For further detail on the remaining items see the
"Details of Write-downs and Unusual Charges" section of this
MD&A. (8) Adjustments for Write-downs and Unusual Charges
totals $278.7 million after tax, comprised of write-downs of $226.4
million and unusual charges of $52.2 million. Net sales, excluding
discontinued operations that Royal Group had designated for sale as
at December 31, 2005, were $1,696.4 million in fiscal 2005, up
slightly from net sales of $1,664.7 million recorded in the same
period in 2004. The sales increase was primarily driven by price
increases initiated in the fourth quarter, with volume increases
occurring throughout the year in certain business segments. The
price and volume increases were partially offset by the impact of
the weakening US dollar on sales exported from Canada to the US. On
a GAAP basis, fiscal 2005 gross profit declined by $58.7 million
from the same period in the prior year. Royal Group's normalized
gross profit declined by $59.6 million, primarily as a result of
escalating raw material costs experienced throughout the year, with
raw material cost increases incurred during the first nine months
of 2005 substantially not recovered via finished product price
increases. The average cost of Poly Vinyl Chloride (PVC), which is
the Company's primary raw material, increased by approximately 24
percent from the comparative 12- month period in 2004. The Company
experienced a rise in normalized operating expenses of $17.4
million, as a result of rising transportation, energy and fuel
charges, increased staffing, higher marketing expenses, initial
implementation of a new enterprise management system, professional
fees and compliance costs related to the Sarbanes-Oxley Act. Royal
Group reported a net loss for 2005 of $270.4 million on a GAAP
basis, including a net loss of $161.6 million from discontinued
operations. During the same period in 2004, the Company's net
profit on a GAAP basis was $33.1 million, inclusive of a loss from
discontinued operations of $40.6 million. On a normalized basis,
Royal Group recorded net earnings in 2005 of $8.2 million, compared
with a normalized net profit in 2004 of $57.7 million. Among the
more significant charges taken in 2005 were $226.4 million after
tax of write-downs and restructuring charges, mainly comprised of
$151.9 million for write-downs of discontinued businesses; $52.3
million before tax for certain operating expenses related to the
restructuring, including a write-down for redundant fixed assets no
longer being used; $29.6 million before tax for other costs,
including a write-down primarily related to the company's equity
investments in several offshore locations; and $12.0 million before
tax mainly for the write-down of inventory to net realized value.
These charges were partially offset by a $19.5 million recovery of
income taxes. In addition, the Company recognized $52.2 million
after tax of other unusual charges, inclusive of a $26.0 million US
tax loss valuation allowance, as well as continuing costs
principally related to the sale process and investigations. In
2004, the Company's normalized financial results include $24.6
million after tax of other non-operating charges. Fourth Quarter
2005 Financial Results The following table outlines both GAAP and
normalized financial results for the 3-month period ended December
31, 2005 and 2004, with the normalized presentation being for
information purposes only as it does not conform to GAAP:
Consolidated Statement of Earnings (in thousands of Canadian
dollars, except percentage amounts)
------------------------------------------------- Reported
Normalized 3 months Adjustments Other 3 months ended for Unusual
ended Dec. 31/05 Write-downs Charges Dec. 31/05
-------------------------------------------------------------------------
(audited) (unaudited) (A) Net sales $ 404,408 $ - $ - $ 404,408
Cost of sales 323,018 (12,023)(1) 310,995
-------------------------------------------------------------------------
Gross profit 81,390 12,023 93,413 Operating expenses 160,705
(52,266)(2) (18,921)(7) 89,518 Other costs 29,589 (29,589)(3) -
-------------------------------------------------------------------------
Operating earnings (loss) (108,904) 93,878 18,921 3,895 Interest
and financing charges 3,183 3,183
-------------------------------------------------------------------------
Earnings (loss) from continuing operations before income taxes and
minority interest (112,087) 93,878 18,921 712 Income taxes
(recovery) 5,680 19,462 (4) (29,678)(6) (4,536)
------------------------------------------------------- Earnings
(loss) from continuing operations before minority interest
(117,767) 74,416 48,599 5,248 Minority interest 1,084 161 1,245
-------------------------------------------------------------------------
Earnings (loss) from continuing operations (116,683) 74,577 48,599
6,493 Discontinued operations, net of income tax Loss from
discontinued operations (2,588) (2,588) Loss from write-down of
businesses (151,856) 151,856 (5) -
-------------------------------------------------------------------------
Loss from discontinued operations (154,444) 151,856 (2,588)
-------------------------------------------------------------------------
Net earnings (loss) $(271,127) $226,433 (8) $48,599 (8) $ 3,905
-------------------------------------------------------------------------
-------------------------------------------------------------------------
------------------------------------------------------- Normalized
3 months ended Dec. 31/05 vs. Dec. 31/04 Reported Normalized
------------------ 3 months Other 3 months Per- ended Unusual ended
Dollar centage Dec. 31/04 Charges Dec. 31/04 Change Change
-------------------------------------------------------------------------
(unaudited) (unaudited) (B) (A) - (B) Net sales $ 359,035 $ - $
359,035 $ 45,373 12.6% Cost of sales 290,860 (12,936)(7) 277,924
33,071 11.9%
-------------------------------------------------------------------------
Gross profit 68,175 12,936 81,111 12,302 15.2% Operating expenses
81,613 5,125 (7) 86,738 2,780 3.2% Other costs -
-------------------------------------------------------------------------
Operating earnings (loss) (13,438) 7,811 (5,627) 9,522 -169.2%
Interest and financing charges 5,328 5,328 (2,145) -40.3%
-------------------------------------------------------------------------
Earnings (loss) from continuing operations before income taxes and
minority interest (18,766) 7,811 (10,955) 11,667 -106.5% Income
taxes (recovery) (9,862) 3,107 (7) (6,755) 2,219 -32.8%
------------------------------------------------------- Earnings
(loss) from continuing operations before minority interest (8,904)
4,704 (4,200) 9,448 -224.9% Minority interest (370) (370) 1,615
-436.5%
-------------------------------------------------------------------------
Earnings (loss) from continuing operations (9,274) 4,704 (4,570)
11,063 -242.1% Discontinued operations, net of income tax Loss from
discontinued operations (26,916) 17,523 (7) (9,393) 6,805 -72.4%
Loss from write-down of businesses -
-------------------------------------------------------------------------
Loss from discontinued operations (26,916) 17,523 (9,393) 6,805
-72.4%
-------------------------------------------------------------------------
Net earnings (loss) $ (36,190) $22,227 $(13,963) $ 17,868 -128.0%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Cost of Sales predominately relates to a write-down for
inventory to net realized value relating to discontinued operations
and restructuring activities. (2) Operating expenses includes a
write-down for redundant fixed assets. (3) Other cost includes a
write-down primarily related to the Company's equity investments
including Royal Building Systems Philippines, Royal Building
Systems Hawaii and Aristoea. (4) There was a net income tax
recovery as a result of the above mentioned transactions. (5) Loss
from write-down of businesses reflects a net after tax write-down
of the Company's investment in its non-core and non-performing
operations. These businesses are identified in Note 4 of the
audited Consolidated Financial Statements. (6) The tax adjustment
includes a future tax valuation allowance of $26,002 booked in Q4
of 2005. (7) For further detail on the remaining items see the
"Details of Write-downs and Unusual Charges" section of this
MD&A. (8) Adjustments for Write-downs and Unusual Charges
totals $275.0 million after tax, comprised of write-downs of $226.4
million and unusual charges of $48.6 million. For the 3-month
period ended December 31, 2005, Royal Group's net sales excluding
discontinued operations that Royal Group had designated for sale as
at December 31, 2005, on both a GAAP and normalized basis, were
$404.4 million, representing a 12.6 percent increase from the same
period in 2004. Double-digit sales growth was primarily a result of
selling price increases, with volume increases being recorded in
certain business segments. The selling price and volume increases
were partially offset by the impact of a weakening US dollar on
sales exported from Canada to the US. On a GAAP basis, Royal
Group's gross profit increased $13.2 million. On a normalized
basis, gross profit increased $12.3 million. The increase in gross
profit is attributable to volume increases, with selling price
increases entirely offsetting higher raw material costs during the
fourth quarter of 2005. An increase in normalized operating
expenses of $2.8 million was due to an increase in staffing, higher
marketing costs, implementation of a new enterprise management
system, professional fees and compliance costs. The majority of the
write-downs and other charges related to the Company's
restructuring were recorded in the fourth quarter of 2005. These
write-downs and charges contributed to a GAAP net loss of $271.1
million for the fourth quarter. On a normalized basis, Royal Group
recorded a net profit of $3.9 million during the 3-month period
ended December 31, 2005, compared to a normalized net loss of $14.0
million during the same quarter in the previous year. Included in
the net loss of $271.1 million on a GAAP basis is the write-down of
$226.4 million, noted earlier in the 12-month period December 31,
2005 discussion. In addition, of the $52.2 million of other charges
presented in fiscal 2005, $48.6 million were recorded in the fourth
quarter. "Royal Group began to make significant progress in 2005,
taking decisive actions that aim to enable the Company to prosper
in the years ahead," said Lawrence J. Blanford, who was appointed
the Company's President and Chief Executive Officer in May 2005.
"Our increased sales in the fourth quarter, full recovery of
Hurricane Katrina related raw material cost increases via finished
product price increases and progress with divestitures are just
three encouraging signs that we are now heading in the right
direction," added Mr. Blanford. "During 2005, we greatly enhanced
our corporate governance, adding five new independent directors and
converting to a single class of common voting shares. We bolstered
our senior management team, with the new team developing and
commencing implementation of a comprehensive four-part Management
Improvement Plan. Executing our Plan has required some up-front
expenditures, as well as some write-downs related to the planned
divestitures of our non-core businesses. These expenditures and
write-downs had a significant impact on our 2005 financial results,
particularly in the fourth quarter as we moved ahead with our Plan.
As we move through 2006, we expect to increasingly realize the
benefits of our comprehensive Management Improvement Plan,"
concluded Mr. Blanford. Sale Process With respect to the previously
announced sale process, it is expected that the due diligence with
a few select prospective bidders will continue for a short period
following the release of the 2005 annual audited financial
statements. No offer for shares of Royal Group has yet been made
and there is no assurance that an offer will be made or a
transaction concluded. Royal Group Technologies Limited Royal Group
Technologies is a leading producer of innovative, attractive,
durable, and low-maintenance home improvement and building
products, which are primarily utilized in both the renovation and
new construction sectors of the North American construction
industry. Royal Group is the recipient of several industry awards
for product innovation. The company has manufacturing operations
located throughout North America in order to provide
industry-leading service to its extensive customer network.
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", "suggest", "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 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 ongoing
internal review and investigations by the Audit Committee of the
Board of Directors and its outcome; the negative impact that may be
caused by the delay in filing of Royal Group's 2005 financial
statements, including, without limitation, a breach by Royal Group
of its banking agreement, an adverse effect on Royal Group's
business and the market price of its publicly traded securities,
and a breach by Royal Group of the continued listing requirements
of the New York Stock Exchange and Toronto Stock Exchange;
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; Royal's ability to maintain adequate liquidity and
refinance its debt structure by December 31, 2006, the expiry date
of its current bank credit facility; 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 Group'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 May 1, 2006 and Royal Group disclaims
any intention or obligation to update or revise any statements made
herein, whether as a result of new information, future events or
otherwise. ROYAL GROUP TECHNOLOGIES LIMITED CONSOLIDATED BALANCE
SHEETS (in thousands of Canadian dollars)
-------------------------------------------------------------------------
Dec. 31/05 Dec. 31/04
-------------------------------------------------------------------------
(audited) (audited) ASSETS Current assets: Cash $ - $ 112,088
Accounts receivable 228,584 257,346 Inventories 346,887 456,339
Prepaid expenses 15,461 13,893 Current assets held for sale 174,593
-
-------------------------------------------------------------------------
765,525 839,666 Property, plant and equipment 981,037 1,324,549
Future income tax assets - 16,561 Goodwill 194,355 213,620 Other
assets 11,348 44,525 Long-term assets held for sale 83,988 6,051
-------------------------------------------------------------------------
$ 2,036,253 $ 2,444,972
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank
indebtedness $ 158,789 $ - Accounts payable and accrued liabilities
274,746 268,348 Term bank loan - 324,836 Term debt due within one
year 46,902 18,303 Current liabilities held for sale 119,026 -
-------------------------------------------------------------------------
599,463 611,487 Term debt 250,721 303,214 Future income tax
liabilities 74,910 149,049 Minority interest 856 15,761
Shareholders' equity: Capital stock 634,866 633,754 Contributed
surplus 8,020 3,703 Retained earnings 599,637 878,779 Currency
translation adjustment (132,220) (150,775)
-------------------------------------------------------------------------
1,110,303 1,365,461
-------------------------------------------------------------------------
$ 2,036,253 $ 2,444,972
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ROYAL GROUP TECHNOLOGIES LIMITED CONSOLIDATED STATEMENTS OF
EARNINGS (in thousands of Canadian dollars, except per share
amounts)
-------------------------------------------------------------------------
3 months 3 months 12 months 12 months ended ended ended ended Dec.
31/05 Dec. 31/04 Dec. 31/05 Dec. 31/04
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (unaudited) Net sales $ 404,408 $
359,035 $ 1,696,353 $ 1,664,661 Cost of sales 323,018 290,860
1,298,090 1,207,710
-------------------------------------------------------------------------
Gross profit 81,390 68,175 398,263 456,951 Operating expenses
160,705 81,613 444,202 339,252 Other costs 29,589 - 29,589 -
-------------------------------------------------------------------------
Operating earnings (loss) (108,904) (13,438) (75,528) 117,699
Interest and financing charges 3,183 5,328 25,441 26,150
-------------------------------------------------------------------------
Earnings (loss) from continuing operations before income taxes and
minority interest (112,087) (18,766) (100,969) 91,549 Income tax
expense (recovery) 5,680 (9,862) 8,461 17,576
-------------------------------------------------------------------------
Earnings (loss) from continuing operations before minority interest
(117,767) (8,904) (109,430) 73,973 Minority interest 1,084 (370)
584 (285)
-------------------------------------------------------------------------
Earnings (loss) from continuing operations (116,683) (9,274)
(108,846) 73,688
-------------------------------------------------------------------------
Discontinued operations, net of income taxes: Loss from operations
(2,588) (26,916) (9,740) (40,565) Loss on write-down of businesses
(151,856) - (151,856) -
-------------------------------------------------------------------------
Loss from discontinued operations (154,444) (26,916) (161,596)
(40,565)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net earnings (loss) $ (271,127) $ (36,190) $ (270,442) $ 33,123
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic Earnings (loss) per share: Earnings (loss) per share from
continuing operations $ (1.25) $ (0.10) $ (1.16) $ 0.79 Earnings
(loss) per share from discontinued operations $ (1.65) $ (0.29) $
(1.73) $ (0.43)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings (loss) per share $ (2.90) $ (0.39) $ (2.89) $ 0.35
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Diluted Earnings (loss) per share: Earnings (loss) per share from
continuing operations $ (1.25) $ (0.10) $ (1.16) $ 0.78 Earnings
(loss) per share from discontinued operations $ (1.65) $ (0.29) $
(1.73) $ (0.43)
-------------------------------------------------------------------------
Earnings (loss) per share $ (2.90) $ (0.39) $ (2.89) $ 0.35
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (in thousands of
Canadian dollars)
-------------------------------------------------------------------------
3 months 3 months 12 months 12 months ended ended ended ended Dec.
31/05 Dec. 31/04 Dec. 31/05 Dec. 31/04
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (unaudited) Retained earnings,
beginning of period $ 870,764 $ 914,969 $ 878,779 $ 845,656 Net
earnings (loss) (271,127) (36,190) (270,442) 33,123 Premium on
conversion of multiple voting shares - - (8,700) -
-------------------------------------------------------------------------
Retained earnings, end of period $ 599,637 $ 878,779 $ 599,637 $
878,779
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ROYAL GROUP TECHNOLOGIES LIMITED CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands of Canadian dollars)
-------------------------------------------------------------------------
3 months 3 months 12 months 12 months ended ended ended ended Dec.
31/05 Dec. 31/04 Dec. 31/05 Dec. 31/04
-------------------------------------------------------------------------
(unaudited) (unaudited) (audited) (unaudited) Cash provided by
(used in): Operating activities: Net earnings (loss) $ (271,127) $
(36,190) $ (270,442) $ 33,123 Loss from discontinued operations
154,444 26,916 161,596 40,565
-------------------------------------------------------------------------
Earnings (loss) from continuing operations (116,683) (9,274)
(108,846) 73,688 Items not affecting cash (bank indebtedness) of
continuing operations 90,736 39,920 189,661 147,601 Change in
non-cash working capital 89,537 41,006 31,332 15,426
-------------------------------------------------------------------------
63,590 71,652 112,147 236,715 Financing activities: Repayment of
term bank loan - (1,129) (324,836) (175,164) Repayment of term debt
(64) (69) (18,725) (53,217) Proceeds from issuance of shares under
stock option plan - - - 145
-------------------------------------------------------------------------
(64) (1,198) (343,561) (228,236) Investing activities: Acquisition
of property, plant and equipment (12,995) (20,778) (66,440)
(83,673) Proceeds from the sale of non-strategic assets 153 22,227
7,905 31,934 Change in investments (141) 1,320 (272) (2,014) Change
in other assets 2,901 (261) 2,813 (1,088) Change in minority
interest 635 1,216 (1,120) 1,092
-------------------------------------------------------------------------
(9,447) 3,724 (57,114) (53,749) Discontinued operations: Operating
activities 1,240 (26,916) (5,912) (40,565) Investing activities
(6,462) - (6,462) -
-------------------------------------------------------------------------
(5,222) (26,916) (12,374) (40,565) Effect of foreign exchange rate
changes on cash 1,180 (6) (5) (656)
-------------------------------------------------------------------------
Increase (decrease) in cash 50,037 47,256 (300,907) (86,491) Cash
(bank indebtedness), beginning of period (238,856) 64,832 112,088
198,579
-------------------------------------------------------------------------
Cash (bank indebtedness), end of period $ (188,819) $ 112,088 $
(188,819) $ 112,088
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consists of: Cash (bank indebtedness) of continuing operations
(158,789) 112,088 (158,789) 112,088 Cash (bank indebtedness) of
discontinued operations (30,030) - (30,030) -
-------------------------------------------------------------------------
Cash (bank indebtedness), end of period $ (188,819) $ 112,088 $
(188,819) $ 112,088
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ROYAL GROUP TECHNOLOGIES LIMITED Additional Financial Information
(unaudited) (in thousands of Canadian dollars, except percentages)
-------------------------------------------------------------------------
3 months 3 months 12 months 12 months ended ended ended ended Dec.
31/05 Dec. 31/04(i) Dec. 31/05 Dec. 31/04(i)
-------------------------------------------------------------------------
Net Sales by Segment Custom Profiles & Mouldings $ 181,935 $
164,812 $ 727,248 $ 743,990 Building Products 78,655 67,280 324,948
314,966 Construction Products 87,328 66,918 332,627 287,722 Home
Improvement Products 21,933 21,782 155,791 148,957 Window Covering
Products 30,226 33,630 136,078 149,256 Materials 4,120 4,102 16,345
17,643 Support 211 511 3,316 2,127
--------------------------------------------------- Consolidated
Net Sales $ 404,408 $ 359,035 $ 1,696,353 $ 1,664,661
---------------------------------------------------
--------------------------------------------------- Net Sales by
Geographic Region Canada 36% 39% 36% 35% US 62% 59% 62% 63% Foreign
2% 2% 2% 2% ---------------------------------------------------
Consolidated Net Sales 100% 100% 100% 100%
---------------------------------------------------
--------------------------------------------------- Percentage of
Sales Analysis Gross profit 20.1% 19.0% 23.5% 27.5% EBITDA -12.8%
4.8% 4.3% 14.2% Cost of sales 79.9% 81.0% 76.5% 72.5% Selling
expenses 14.1% 15.7% 14.4% 13.8% G&A expenses 25.6% 7.0% 11.8%
6.6% Other Net Funded Debt as a percentage of Total Capitalization
29.1% 27.9% 29.1% 27.9% Free Cash Flow $ 49,370 $ 26,493 $ 44,851 $
111,535 (i) Certain percentages for the three month and twelve
month periods ended December 31, 2004 have been reclassified to
reflect the current presentation adopted in fiscal 2005.
DATASOURCE: Royal Group Technologies Limited CONTACT: Mark Badger,
Vice President of Marketing and Corporate Communications, Royal
Group Technologies Limited, Phone: (905) 264-0701
Copyright