Exhibit 1
[ROYAL GROUP
TECHNOLOGIES LOGO]
SECOND QUARTER
REPORT
ENDED
MARCH 31
2002
MESSAGE TO SHAREHOLDERS
Royal's second quarter results continued to be in line with our expectations,
with organic sales growth of 9% and margins improving by 100 basis points over
the same quarter last year. Including sales generated by the acquisition of
Marley Mouldings, we achieved sales growth of 21%. During the quarter, we
improved working capital use and curtailed capital expenditures, resulting in
significantly less cash outflow in our seasonally slower second quarter.
BROAD BASED GROWTH - WITH TWO EXCEPTIONS
During the second quarter, sales growth was broadly based, with all product
lines other than Window Coverings and Royal Building Systems and Foreign
Operations, posting strong increases. We are encouraged by recent signs that
home owners are increasing home improvement activity, evidenced by 28% sales
growth in Siding and Roofing Products, 16% organic growth in Custom Profile
Products and 20% sales growth in Outdoor Products.
Our Outdoor Products, which are primarily sold through retail home
improvement stores, are off to a strong start to the season. Orders for vinyl
fencing and decking for April are much stronger than last year, reflecting
strengthening consumer demand and our successful introductions of many
innovative pre-assembled systems. The reports that we receive electronically
from stores are showing their rates of sales of our Outdoor Products are equally
as encouraging.
We expect the popularity of our unique, high-quality fencing and decking
products to continue to strengthen amidst increasing demand to phase out certain
types of pressure treated wood. We believe that the fencing and decking market
is at the same stage in its life cycle that vinyl window profiles were 20 years
ago.
Royal's sales growth in the first six months of the fiscal year has been held
back by Window Covering Products, as well as Royal Building Systems and Foreign
Operations. Historically, Window Covering's sales performance has been tied to
general economic activity and we expect to gradually see sales activity improve
during the year. The improvement will be enhanced by the recent introductions of
a series of window covering products, including wood-look horizontal blinds,
roller shades and a shutter programme. We are entering growing segments of the
window
covering market with innovative custom products, becoming less reliant on
stock-size vertical window blinds, which have approached a more mature stage in
their life cycle.
While the North American home improvement sector continues to be Royal's
primary market, international operations have caused additional drag on overall
sales performance. These operations are still in their infancy and therefore we
acknowledge that demand patterns will be bumpy. As well, they are immediately
impacted by negative international and domestic events.
In pursuit of smooth and profitable growth in international locations, we
now manufacture in our foreign plants some of our core building products in
addition to Royal Building Systems(TM) profiles. As an example, vinyl window
profiles are being produced in Poland and we are reaching break-even levels in
our plant, thanks to incremental sales volumes from window profiles. Our
fabricator base in Poland and surrounding countries increases monthly. We are
introducing PVC fencing to the European Market, which will be produced at our
plant in Poland.
In China, we are now the largest foreign extruder of PVC window profiles.
Our window systems are being specified by numerous developers, particularly for
usage in high and medium rise residential buildings, which is the main building
type used in the Chinese residential market. We are also having success with the
Royal Building Systems(TM) in Industrial and Commercial applications, including
various projects in the Song Jiang district of Shanghai. Over 1 million square
feet of industrial space will be erected this calendar year in China using the
System. As we become better known in China, many opportunities are surfacing to
produce additional Royal building products, such as siding which we presently
market in China.
PRICE INCREASES TO RECOVER RAW MATERIAL COST INCREASES
There have recently been some increases in prices for PVC resin, which is our
largest raw material. It is important to keep these increases in perspective, as
prices are well below their zenith in June of 2000. We also need to remember
that Royal produces approximately 50% of its own PVC resin and the spread
between input costs and PVC pricing have been widening. Finally, and most
important, price increases for many finished products have begun to go through.
Given that there presently is very little inventory between manufacturers and
consumers, manufacturers have more pricing power today than they have had in
years.
OUTLOOK
The third quarter has started off positively, with sales growth rates continuing
to meet our expectations. We are encouraged by demand patterns from our
customers, which are more stable, consistent and predictable. We remain on track
to achieve sales of $2 billion in 2002, with margins improving as lower cost raw
material works its way through inventory and higher volumes create manufacturing
efficiency.
Thank you for your support as we have invested in new products, new markets
and efficient manufacturing expansion, to position us for profitable growth,
debt reduction and improving returns.
/s/ Vic De Zen /s/ Douglas Dunsmuir
Vic De Zen Douglas Dunsmuir
Chairman and C.E.O. President
May 25, 2002
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)
MAR. 31/02 Sept. 30/01 Mar. 31/01
----------- ----------- -----------
(UNAUDITED) (audited) (unaudited)
ASSETS
Current assets:
Accounts receivable $ 377,641 $ 370,030 $ 338,570
Inventories 503,474 420,597 477,585
Prepaid expenses and deposits 29,585 30,609 29,260
----------- ----------- -----------
910,700 821,236 845,415
Property, plant and equipment 1,708,955 1,604,499 1,565,774
Future income tax assets 26,547 22,847 20,826
Goodwill and other assets 282,509 245,729 248,075
----------- ----------- -----------
$ 2,928,711 $ 2,694,311 $ 2,680,090
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 549,947 $ 405,367 $ 452,987
Accounts payable and accrued liabilities 211,135 211,472 253,963
Term debt due within one year 103,619 24,635 479
----------- ----------- -----------
864,701 641,474 707,429
Term debt 468,828 544,861 548,201
Future income tax liabilities 138,187 127,487 116,924
Minority interest 19,965 18,802 20,452
Shareholders' equity:
Capital stock 628,733 608,776 607,038
Retained earnings 826,303 775,229 675,383
Currency translation adjustments (18,006) (22,318) 4,663
----------- ----------- -----------
1,437,030 1,361,687 1,287,084
----------- ----------- -----------
$ 2,928,711 $ 2,694,311 $ 2,680,090
=========== =========== ===========
On behalf of the Board:
/s/ Vic De Zen /s/ Ron Goegan
Director Director
Vic De Zen Ron Goegan
Chairman and C.E.O. Chief Financial Officer
CONSOLIDATED
STATEMENTS OF EARNINGS
(in thousands of Canadian dollars, except per share amounts)
3 MONTHS 3 months 6 MONTHS 6 months
ENDED ended ENDED ended
MAR. 31/02 Mar. 31/01 MAR. 31/02 Mar. 31/01
---------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited) (unaudited)
Net sales $ 404,744 $ 334,043 $ 788,964 $ 687,691
Cost of sales and operating expenses (323,181) (301,829) (629,100) (583,069)
--------- --------- --------- ---------
Operating margin 81,563 32,214 159,864 104,622
Amortization charges (30,109) (26,109) (59,149) (50,220)
Interest and financing charges (13,640) (13,475) (27,349) (27,241)
--------- --------- --------- ---------
Earnings (loss) before income taxes and minority 37,814 (7,370) 73,366 27,161
interest
(Income taxes) recovery (11,344) 2,432 (22,010) (8,990)
--------- --------- --------- ---------
Earnings (loss) before minority interest 26,470 (4,938) 51,356 18,171
Minority interest (263) (196) (282) (580)
--------- --------- --------- ---------
Net earnings (loss) $ 26,207 $ (5,134) $ 51,074 $ 17,591
========= ========= ========= =========
Basic net earnings (loss) per share (note 4) $ 0.28 $ (0.06) $ 0.55 $ 0.19
========= ========= ========= =========
Diluted net earnings (loss) per share (note 4) $ 0.28 $ (0.06) $ 0.55 $ 0.19
========= ========= ========= =========
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(in thousands of Canadian dollars)
3 MONTHS 3 months 6 MONTHS 6 months
ENDED ended ENDED ended
MAR. 31/02 Mar. 31/01 MAR. 31/02 Mar. 31/01
---------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited) (unaudited)
Retained earnings, beginning of period: $ 800,096 $ 680,517 $ 775,229 $ 657,792
Net earnings (loss) 26,207 (5,134) 51,074 17,591
--------- --------- --------- ---------
Retained earnings, end of period $ 826,303 $ 675,383 $ 826,303 $ 675,383
========= ========= ========= =========
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars, except per share amounts)
3 MONTHS 3 months 6 MONTHS 6 months
ENDED ended ENDED ended
MAR. 31/02 Mar. 31/01 MAR. 31/02 Mar. 31/01
--------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited) (unaudited)
Cash provided by (used in):
Operating activities:
Earnings (loss) before minority interest $ 26,470 $ (4,938) $ 51,356 $ 18,171
Items not affecting cash 30,354 52,293 64,004 81,023
Change in non-cash operating working capital (50,676) (68,649) (69,957) (101,355)
--------- --------- --------- ---------
6,148 (21,294) 45,403 (2,161)
Financing activities:
Increase (decrease) in bank indebtedness 37,607 61,530 144,580 122,441
Term debt repayments (224) (112) (447) (220)
Issuance of shares under stock option plan 3,729 1,236 19,957 1,326
--------- --------- --------- ---------
41,112 62,654 164,090 123,547
Investing activities:
Acquisition of property, plant and equipment, net (44,264) (48,373) (72,838) (123,210)
Acquisition of other businesses -- -- (149,250) (641)
Increase in investments (62) (600) 9,809 (1,034)
Increase in other assets (50) (1,047) (249) (1,047)
--------- --------- --------- ---------
(44,376) (50,020) (212,528) (125,932)
Effect of exchange rate changes (2,884) 8,660 3,035 4,546
--------- --------- --------- ---------
Change in cash, being cash, end of period $ -- $ -- $ -- $ --
========= ========= ========= =========
Operating cash flow, being earnings before
minority interest plus items not affecting cash $ 56,824 $ 47,355 $ 115,360 $ 99,194
========= ========= ========= =========
Basic operating cash flow per share (note 4) $ 0.61 $ 0.52 $ 1.25 $ 1.09
========= ========= ========= =========
Diluted operating cash flow per share (note 4) $ 0.60 $ 0.51 $ 1.24 $ 1.06
========= ========= ========= =========
Free cash flow (use), being operating cash flow,
less change in non-cash working capital items, less
acquisition of property, plant and equipment $ (38,116) $ (69,667) $ (27,435) $(125,371)
========= ========= ========= =========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share amounts)
1. CONSOLIDATED FINANCIAL STATEMENTS
These consolidated financial statements have been prepared by management in
accordance with Canadian generally accepted accounting principles, and include
the accounts of Royal Group Technologies Limited, its subsidiaries and its
proportionate share of its joint ventures.
In the opinion of management, the unaudited interim consolidated financial
statements reflect all adjustments, which consist only of normal and recurring
adjustments, necessary to present fairly the financial position at March 31,
2002 and the results of operations and cash flows for the three month and six
month periods ended March 31, 2002.
Currently the Company operates substantially in the North American
renovation, remodeling and construction markets, which are seasonal.
Accordingly, approximately three-fifths of Company's net sales and operating
margin and two-thirds of its net earnings occur in the last two quarters.
2. CHANGE IN ACCOUNTING POLICIES
Except as outlined below, the Company's accounting principles remain unchanged
from the most recent fiscal year ended September 30, 2001. For details, please
refer to note 1 of the Company's 2001 annual report.
In August 2001, the Accounting Standards Board of the CICA issued Handbook
Section 3062, Goodwill and Other Intangible Assets. The Company has adopted this
effective October 1, 2001. In accordance with the requirements of Section 3062,
this change in accounting policy has not been applied retroactively and the
amounts presented for prior periods have not been restated.
Section 3062 replaces the requirement to amortize goodwill with a
requirement to test for impairment annually at a reporting unit level. Any
impairment loss would be charged against current period earnings and shown as a
separate line item in the statement of earnings. As of the date of adoption of
Section 3062, the Company had unamortized goodwill in the amount of $187M which
is no longer being amortized. This change in accounting policy resulted in a
reduction in amortization expense related to goodwill of $1.5M for the quarter
ended and $2.9M for the 6 months ended March 31, 2002. No impairment loss has
been recorded in the quarter ended and 6 months ended March 31, 2002.
Section 3062 requires transitional disclosure of reported net income
exclusive of amortization expense related to goodwill that will no longer be
amortized for each period presented. Also required is a reconciliation of
reported net income to adjusted net income as well as per-share amounts. This
disclosure is presented in note 5.
3. SEGMENT REPORTING INFORMATION
Products Support Intra -
Segment Segment Group Consolidated
----------- ----------- ----------- ------------
For the quarter ended March 31, 2002
Net sales $ 398,464 $ 137,102 $ (130,822) $ 404,744
Operating margin 39,607 41,956 81,563
Amortization charges 21,261 8,848 30,109
Acquisition of property, plant and equipment 26,827 17,437 44,264
Property, plant and equipment 822,350 886,425 1,708,955
Total assets 1,743,067 1,185,644 2,928,711
For the 6 months ended March 31, 2002
Net sales $ 767,254 $ 284,932 $ (263,222) $ 788,964
Operating margin 74,012 85,852 159,864
Amortization charges 41,564 17,585 59.149
Acquisition of property, plant and equipment 46,505 26,333 72,838
Property, plant and equipment 822,530 886,425 1,708,955
Total assets 1,743,067 1,185,644 2,928,711
For the quarter ended March 31, 2001
Net sales $ 325,811 $ 169,232 $ (161,000) $ 334,043
Operating margin (4,333) 36,547 32,214
Amortization charges 18,134 7,975 26,109
Acquisition of property, plant and equipment 37,173 11,200 48,373
Property, plant and equipment 711,037 854,737 1,565,774
Total assets 1,502,429 1,177,661 2,680,090
For the 6 months ended March 31, 2001
Net sales $ 668,253 $ 351,438 $ (332,000) $ 687,691
Operating margin 34,865 69,757 104,622
Amortization charges 34,839 15,381 50,220
Acquisition of property, plant and equipment 68,904 54,306 123,210
Property, plant and equipment 711,037 854,737 1,565,774
Total assets 1,502,429 1,177,661 2,680,090
Net sales by geographic region for the 3 months ending March 31, 2002 were 67%
to the U.S. (2001 - 61%), 26% to Canada (2001 - 28%) and 7% to foreign markets
(2001 - 11%) and for the 6 months ended March 31, 2002 were 64% to the U.S.
(2001 - 58%), 28% to Canada (2001 - 30%) and 8% to foreign markets (2001 - 12%).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share amounts)
4. EARNINGS PER SHARE
Basic and fully diluted net earnings per share have been calculated using the
weighted average and maximum dilutive number of shares outstanding for the three
month period of 92,795,090 (2001 - 90,798,986) and 94,470,713 (2001 -
92,863,100) and for the six month period of 92,086,724 (2001 - 90,787,033) and
93,382,957 (2001 - 93,153,760) respectively. As at March 31, 2002, the Company
had outstanding 15,935,444 multiple voting shares, 76,981,296 subordinate voting
shares, and 9,776,739 options to acquire subordinate voting shares under the
Company's employee stock option plan.
5. GOODWILL AND OTHER INTANGIBLE ASSETS - ADOPTION OF SECTION 3062
3 MONTHS 3 months 6 MONTHS 6 months
ENDED ended ENDED ended
MAR. 31/02 Mar. 31/01 MAR. 31/02 Mar. 31/01
---------- ---------- ---------- ----------
Reported net earnings (loss) $ 26,207 $ (5,134) $ 51,074 $ 17,591
Add back amortization of goodwill -- 1,462 -- 2,860
---------- --------- ---------- ----------
Adjusted net earnings (loss) $ 26,207 $ (3,672) $ 51,074 $ 20,451
---------- --------- ---------- ----------
Reported basic net earnings (loss) per share $ 0.28 $ (0.06) $ 0.55 $ 0.19
Add back amortization of goodwill -- 0.02 -- 0.03
---------- --------- ---------- ----------
Adjusted basic net earnings (loss) per share $ 0.28 $ (0.04) $ 0.55 $ 0.22
---------- --------- ---------- ----------
Reported diluted net earnings (loss) per share $ 0.28 $ (0.06) $ 0.55 $ 0.19
Add back amortization of goodwill -- 0.02 -- 0.03
---------- --------- ---------- ----------
Adjusted diluted net earnings (loss) per share $ 0.28 $ (0.04) $ 0.55 $ 0.22
---------- --------- ---------- ----------
6. BUSINESS DEVELOPMENT
There were no acquisitions in the quarter ended March 31, 2002. During the first
quarter ended December 31, 2001, the Company acquired the assets and business of
Marley Mouldings LLC ("Marley"). Marley is the largest U.S. manufacturer and
marketer of mouldings and millwork made from polyvinylchloride and polystyrene
using cellular/foam extrusion technology. Marley is located in Marion, Virginia.
The purchase closed on December 10, 2001 for a cash price of U.S. $88
million based on the net tangible assets having a value of U.S. $59 million. The
results of Marley have been included in the company's financial statements as of
this date.
The acquisition is summarized below:
Working capital $ 21,845
Property, plant and equipment 72,130
---------
$ 93,975
Intangible assets 7,327
Goodwill 38,864
---------
Total purchase price $ 140,166
=========
Intangible assets relate to patents and trademarks that continue to be amortized
over their estimated useful lives.
MANAGEMENT'S DISCUSSION AND ANALYSIS
QUARTER ENDED MARCH 21, 2002, AS COMPARED TO THE QUARTER ENDED MARCH 31, 2001
Consolidated net sales for the second quarter grew by 21% to $405 million
compared to $334 million for 2001. The growth in sales was primarily due to unit
volume increases in most product categories and the inclusion of a full
quarter's sales of Marley Mouldings Limited ("Marley"), acquired in December
2001. Excluding the acquisition of Marley, the growth in sales was 9%,
consistent with expectations for the quarter.
Products segment sales for the quarter, excluding Marley, increased $31
million or 10% to $357 million. The Products segment growth was attributed as
follows: Custom Profiles sales, excluding Marley, increased 16% reflecting a
stronger renovation and remodeling market; Siding and Roofing increased 28% due
to a market segment experiencing double digit growth and our own gain in market
share; Outdoor Products, primarily sheds and fencing, increased 19% due to new
accounts and higher volumes; Housewares and Furniture increased 16% as new
product introductions continued to drive solid growth as well as some smoothing
of the seasonal variance related to patio furniture sales experienced in the
past; Pipe and Fittings increased 9%, reflecting current infrastructure projects
and market penetration of our fitting products. Window Covering sales decreased
only 1% compared to last year as new window covering products gained
penetration, new customers were added and foreign competition abated. Royal
Building Systems and Foreign Operations sales decreased 32% as a result of the
continuing Argentine situation and the timing of large single projects in other
countries.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Support segment sales for the quarter decreased $32 million or 19% to $137
million. Sales in the support segment are largely eliminated on consolidation
due to the nature of the Group's vertical integration. Sales of Materials grew
3% reflecting volume growth in the Products segment offset by lower prices.
Sales in Machinery & Tooling declined 33% to $14 million as the Group's current
capacities reduced the need for near term additions. Sales in the Services
category decreased 49% to $29 million, primarily due to the substantial
completion of the industrial complex in Woodbridge.
During the quarter, sales to non-Canadian customers including foreign
based sales and exports from Canadian operations increased to 74% or $301
million of total sales from 72% or $240 million for the same period last year.
The increase is sales outside of Canada is due primarily to higher exports to
the US and the acquisition of Marley.
The Group's overall operating margin (or "EBITDA"), for the quarter ended
March 31, 2002, increased $17 million or 27% to $82 million compared to $64
million last year. EBITDA as a percentage of sales was 20.2% compared to 19.2%
last year. The prior year comparatives exclude the $32 million pre-tax
additional charge booked in the quarter ended March 31, 2001.
The following discussion of cost percentages is before the $32 million
pre-tax charge booked in the prior year comparatives. Raw material costs as a
percentage of sales decreased to 41.3% from 42.1% in the preceding quarter and
43.7% last year due to lower cost raw materials working their way through the
system. Labor costs decreased slightly as a percent of sales to 13.8% from 14.0%
in the preceding quarter and 14.2% last year as volume increases improved
efficiencies. Other manufacturing costs decreased to 10.5% of sales from 12.0%
in the preceding quarter as volume increases improved absorption of fixed costs.
These costs are up from 9.7% in the same quarter last year as not all capital
expenditures had been completed or put into productive use in the prior year.
Improvements in the percentages are due to our continued efforts to balance
production efficiencies against our initiatives to reduce inventory levels in
our Products segment. Selling and distribution costs increased to 14.3% of sales
compared to 12.1% in the preceding quarter and 13.6% last year. This is due to
higher volumes being shipped into the US market (i.e. higher distribution cost
per unit), typically higher costs in this quarter as we prepare for the busy
season in the next quarter, and to the impact of the Marley acquisition, which
is more in-store and sales oriented. General and administration costs as a
percent of sales remained unchanged at 7.4% compared to last year, but are up
slightly from the preceding quarter at 6.9%.
Product segment EBITDA for the quarter ended March 31, 2002 increased to
$40 million compared to $28 million last year, excluding the $32 million pre-tax
charge booked in the quarter ended March 31, 2001. The increase is due to lower
material cost and increased use of our existing plant , labour and
infrastructure capacities. Support segment EBITDA for the quarter ended March
31, 2002 increased by $5 million to $42 million compared to $37 million last
year. EBITDA as a percentage of sales increased to 30.6% from 21.6% due
primarily to lower raw material costs experienced in the Materials category.
Amortization expense increased $4 million to $30 million from $26 million
last year. As a percentage of sales amortization expense is 7.4% compared to
7.8% last year. The higher amortization expense reflects the forth quarter
completion last year of the Group's industrial complex in Woodbridge. In the
Products segment amortization as a percentage of sales is 5.3% compared to 5.6%
last year reflecting added capacities in Custom Profile and Pipe & Fittings
product lines. In the Support segment amortization expense as a percentage of
sales is 6.5%, up from 4.7% last year, reflecting added capacities in the
Materials and Services categories. Effective October 1, 2001 the Company adopted
new CICA Handbook Section 3062, Goodwill and Other Intangible Assets (see note 2
to the accompanying quarterly financial statements). This change in accounting
policy resulted in a reduction in amortization charges related to goodwill of
$1.5 million for the quarter ended March 31, 2002. As disclosed in note 5 of the
accompanying quarterly financial statements, this represents approximately
$0.015 per share per quarter during fiscal 2001.
Interest and financing charges remain constant at $13.6 million compared
to $13.5 million last year and $13.7 million last quarter. Lower interest rates
on floating rate debt is offset by less interest capitalized to assets under
construction, $1 million compared to $3 million during the same quarter last
year, and an increased amount of debt outstanding for the quarter due to the
Marley acquisition.
During the quarter income tax expense as a percentage of pre-tax earnings
decreased to 30% from 33% last year. The rate is consistent with the Group's
overall expected effective rate for fiscal 2002 of 30%.
Net earnings during the quarter are $26 million or 6.5% of sales compared
with $16 million or 4.9% of sales in the prior year. The prior year is excluding
the additional pre-tax charge of $32 million recorded in the quarter ended March
31, 2001. Including the additional pre-tax charge in the prior year, Royal
recorded a net loss of $5 million. On a fully diluted basis, earnings per share
for the period was $0.28 compared to $0.18 in the prior period, again excluding
the additional pre-tax charge of $32 million ($0.24 after tax). With the
additional charge loss per share in the prior year was $0.06. The average number
of shares outstanding for the quarter on a fully diluted basis was approximately
94.5 million, up approximately 1.6 million from the prior year.
LIQUIDITY AND CAPITAL RESOURCES
During the quarter the Group generated operating cash flow of $57 million or
$0.60 diluted cash flow per share, an increase of 20% over the $47 million or
$0.51 per share for the previous year. Free cash flow (defined as cash flow from
operations less change in non-cash working capital items, less acquisition of
property, plant and equipment) use during the quarter of $38 million represents
an improvement of $32 million over the prior year cash flow use of $70 million.
Our continuing improvement in free cash flow together with proceeds from the
sale of non-strategic assets and from the exercise of options will be directed
to reducing our outstanding debt. Due to the seasonal nature of the Building
Products Industry the first and second quarters are traditional periods of
working capital buildup for spring demand. Non-cash working capital is $700
million at March 31, 2002 compared to $649 million at December 31, 2001 and $610
million at September 30, 2001. At March 31, 2002, approximately $256 million was
drawn on the bank credit facility and $296 million of commercial paper was
drawn. The Group's $700 million bank credit facility, which also acts as backup
credit to its commercial paper outstanding, was effectively 79% utilized. The
increase was directly related to the $US88,000,000 acquisition price for Marley
in December 2001. The funded debt to capital ratio was 43.5% compared to 43.1%
at December 31, 2001 and 43.4% at March 31, 2001. Management believes that the
Company's anticipated cash flow from operations and available credit under its
existing financing arrangements are sufficient to meet its working capital and
capital spending requirements, as well as debt service requirements, including
the seasonal natures thereof.
CORPORATE DIRECTORY
CORPORATE OFFICE:
Royal Group Technologies Limited
1 Royal Gate Blvd.,
Woodbridge, Ontario
Canada L4L 8Z7
Telephone: (905) 264-0701
Facsimile: (905) 264-0702
Web site: www.royalgrouptech.com
SHARES LISTED ("RYG"):
Toronto Stock Exchange,
New York Stock Exchange
INDEX LISTINGS
S&P/TSX60 Index
S&P/TSX Composite Index
Morgan Stanley World Index
TRANSFER AGENTS AND REGISTRARS:
Computershare Trust Company of Canada
100 University Avenue, 9th Floor
Toronto, Ontario M5J 2Y1
Tel: 1-800-663-9097 or (416) 981-9633
Facsimile: (416) 981-9507
E-mail: caregistryinfo@computershare.com
Co-Transfer Agent (U.S.A.)
Computershare Trust Company, Inc.
12039 W. Alameda Parkway, Site 2-2
Lakewood, CO 80228
Tel: (303) 956-5400
Fax: (303) 986-2444
SHAREHOLDER INQUIRIES
Responses to shareholder inquiries as well as information published by the
Company for its shareholders and others, including annual reports, quarterly
reports and annual information forms may be obtained from:
Investor Relations
Royal Group Technologies Limited
1 Royal Gate Blvd.,
Woodbridge, Ontario L4L 8Z7
Telephone: (905) 264-0701
Facsimile: (905) 264-0702
E-mail: info@royplas.com
Web site: www.royalgrouptech.com
TRADING DATA
High Low Close Volume
(TSE) (TSE) (TSE) (in 000's)
TSE/NYSE
-------- -------- -------- ----------
Fiscal 2001
Q1 $C 31.40 $C 16.10 $C 18.75 12,740
Q2 27.20 18.55 23.25 12,135
Q3 29.50 20.00 27.95 12,739
Q4 30.00 19.94 23.95 12,763
Fiscal 2002
Q1 29.49 21.90 29.38 17,216
Q2 32.40 28.05 30.15 14,460
FORWARD LOOKING STATEMENTS:
The information in this document contains certain forward-looking statements
with respect to Royal Group Technologies Limited, its subsidiaries and
affiliates. By their nature, these forward-looking statements involve known and
unknown risks, uncertainties and other factors affecting Royal specifically or
its industry generally that could cause actual performance and financial results
to differ materially from those contemplated by the forward-looking statements.
These risks and uncertainties include fluctuations in the level of construction
activity, changes in product costs and pricing, an inability to achieve or
delays in achieving savings related to the cost reductions, consolidation and
restructuring programs, 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 (particularly markets in
developing countries), the effect on foreign operations of currency
fluctuations, tariffs, nationalization, exchange contracts, limitations on
foreign investment in local business and other political, economic and
regulatory risks, difficulty in preserving proprietary technology, 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.
Statements made in this document are made as of May 25, 2002 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.
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