MATERIAL CHANGE REPORT UNDER
SECTION 85 OF THE SECURITIES ACT (BRITISH COLUMBIA)
SECTION 146 OF THE SECURITIES ACT (ALBERTA)
SECTION 84 OF THE SECURITIES ACT (SASKATCHEWAN)
SECTION 75 OF THE SECURITIES ACT (ONTARIO)
SECTION 81 OF THE SECURITIES ACT (NOVA SCOTIA)
SECTION 76 OF THE SECURITIES ACT, 1990 (NEWFOUNDLAND)
ITEM 1. REPORTING ISSUER
Royal Group Technologies Limited (the "Company")
1 Royal Gate Boulevard
Vaughan, Ontario
L4L 8Z7
ITEM 2. DATE OF MATERIAL CHANGE
The date of the material change herein reported is November 19,
2003.
ITEM 3. PRESS RELEASE
A press release disclosing the material change was issued on
November 19, 2003 in Toronto, Ontario and disseminated across
Canada by CCN Matthews.
ITEM 4. SUMMARY OF MATERIAL CHANGE
On November 19, 2003, the Company announced that it has taken
pre-tax charges totalling $116 million in the final quarter of
fiscal 2003, ended September 30, 2003. The charges relate to
Royal Building Systems and Foreign Operations, certain capital
assets and inventories, remaining costs associated with the exit
from certain window coverings programs, as well as costs
associated with the pursuit of a possible sale of shares of the
Company. As a result of the transitioning of executive management
during the last few quarters of fiscal 2003, and the review
process conducted during the exploration of a possible sale of
shares of the Company, the strategy and focus of the Company is
being repositioned.
ITEM 5. FULL DESCRIPTION OF MATERIAL CHANGE
Please see the press release attached hereto as Schedule "A".
ITEM 6. CONFIDENTIAL REPORT
Not applicable.
ITEM 7. OMITTED INFORMATION
No significant facts have been omitted from this report.
ITEM 8. SENIOR OFFICER
For further information, please contact:
Mark Badger
Vice President, Corporate Communications
Tel: (905) 264-0701
Fax: (905) 264-0702
ITEM 9. STATEMENT OF SENIOR OFFICER
The foregoing accurately discloses the material change referred
to herein.
DATED this 27th day of November, 2003 at Vaughan, Ontario.
ROYAL GROUP TECHNOLOGIES LIMITED
Per: "Scott D. Bates"
-----------------------------------
Scott D. Bates
General Counsel and
Corporate Secretary
SCHEDULE "A"
[ROYAL GROUP TECHNOLOGIES LOGO]
FOR: ROYAL GROUP TECHNOLOGIES LIMITED
TSX, NYSE SYMBOL: RYG
NOVEMBER 19, 2003 - 07:01 ET
ROYAL GROUP ANNOUNCES CHARGES FOR RBS AND FOREIGN OPERATIONS, AND OTHER ASSETS
TORONTO, ONTARIO--Royal Group Technologies Limited (RYG: TSX,NYSE) announced
today that it has taken pre-tax charges totalling $116 million in the final
quarter of Fiscal 2003, ended September 30, 2003. The charges relate to RBS and
Foreign Operations, certain capital assets and inventories, remaining costs
associated with the exit from certain window coverings programs, as well as
costs associated with pursuit of sale of shares of the Company.
For a period of several months ending in September of 2003, the Company explored
financial alternatives to enhance shareholder value, including pursuit of the
sale of the Company to certain strategic and financial buyers. The process was
concluded without the sale of any shares, and an expense of $2.5 million
relating to the process has been recorded in September 2003.
As a result of the transitioning of executive management during the last few
quarters of fiscal 2003, and the review process conducted during the exploration
of a possible sale of shares of the Company, the strategy and focus of the
Company is being repositioned.
The Company's RBS and Foreign Operations are being repositioned to focus on the
primary building products that the Company has to offer, with the Royal Building
System being positioned as one of many products in the line-up. Furthermore, the
Company has chosen to focus primarily on its operations in Mexico, China and
Poland. Accordingly, the Company has recorded charges relating to its assets in
Argentina and those in the Philippines and Hawaii, as well as impairment charges
relating to the repositioning of export and project activities. The total charge
recorded in this respect was $57 million.
The Company's various building products are being repositioned to focus on home
improvement products and certain niche profitable consumer and construction
products. The Company's window coverings business began a repositioning in May
of this fiscal year, and in the month of September, achieved a positive EBITDA
contribution. Costs associated with the exit process concluded as expected, with
the final $5 million being recorded this quarter. Certain other building
products (primarily injection molding related), some manufacturing assets and
certain management information systems are being repositioned or abandoned. The
total charge recorded in respect of this was $34 million, all in respect of
fixed assets.
The Company also recorded an additional inventory charge in the amount of $17
million, relating to excess regrind, shavings, wide and off-spec materials and
certain other raw material inventories, as a consequence of repositioned product
line-ups.
Royal Group Co-Chief Executive Officer and President, Douglas Dunsmuir,
commented on the strategic thinking that led to the charges saying, "as a result
of a series of reviews that have very critically evaluated all aspects of our
business, we are refocusing Royal Group on those business activities that fully
lever our core competencies".
It should be noted that EBITDA is a widely used term in financial markets, but
is a non-GAAP measurement. EBITDA is defined as earnings before interest, taxes,
depreciation, amortization and minority interest.
Royal Group Technologies Limited 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'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 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 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 fluctuations
in the level of renovation, remodeling and construction activity; changes in
product costs and pricing; an inability to achieve or delays in achieving
savings related to the cost reductions or 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'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 litigation and administrative and intellectual
property disputes; changes in environmental 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
November 19, 2003 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.
- -30-
FOR FURTHER INFORMATION PLEASE CONTACT:
ROYAL GROUP TECHNOLOGIES LIMITED
RON GOEGAN
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
(905) 264-0701
(905) 264-0702 (FAX)
OR
ROYAL GROUP TECHNOLOGIES LIMITED
MARK BADGER
VICE PRESIDENT, CORPORATE COMMUNICATIONS
(905) 264-0701
(905) 264-0702 (FAX)