Royal Group announces completion of one aspect of its investigation into prior period reporting
May 01 2006 - 8:00AM
PR Newswire (US)
TORONTO, May 1 /PRNewswire-FirstCall/ -- Royal Group Technologies
Limited (RYG: TSC; NYSE) announced today that in October 2005 the
Special Committee advised OSC staff, the RCMP and SEC staff of
emails and documents authored by a former financial employee of the
Company that relate to certain financial accounting and disclosure
matters. The Company understands that the SEC staff made a referral
to the U.S. Department of Justice, Criminal Division, in connection
with those documents. Also in October 2005, the Audit Committee
assumed responsibility for the Special Committee's mandate and the
Special Committee was dissolved. Independent forensic accountants
were retained to investigate issues raised by these documents (the
"Investigation"). The Investigation focuses on the period from 2000
to 2003. The Investigation to date has included a review of certain
of the Company's historical accounting records, available
supporting documentation at the Company's head office and email
communications of various individuals during the period under
review, as well as interviews with numerous current and former
employees. The Investigation identified entries of concern relating
to the year end financial statements for the fiscal years 2000 to
2003. The Company has now concluded that no restatement is required
of year end financial statements for fiscal years 2000 to 2003. The
auditors have not withdrawn their reports for the fiscal years 2000
to 2003. The Audit Committee has determined that no further action
be taken in respect of these year end financial statements. The
Investigation also identified certain monthly and quarterly
accounting and reporting issues of concern for the period under
review, such as support for monthly sales growth announcements for
certain months in 2001, whether month end closes were extended for
certain months in 2000 and 2001 by a few days, and certain
quarterly journal entries for the period under review. The
quarterly statements were not reviewed by the external auditors
during this time period. Based on the Investigation to date, the
Audit Committee has determined that further investigation should be
made of these issues. The Investigation and the ongoing
investigations by the OSC, RCMP and SEC could produce results that
have a material impact on the Company and could result in further
information being discovered that could require adjustments to the
financial statements. 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", "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 the
Company's actual performance, achievements and financial results to
differ materially from past results and from those expressed in any
forward-looking statements made by or on behalf of the Company.
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 outcome of the ongoing investigations by the
United States Department of Justice, RCMP, OSC and SEC; the outcome
of the discussions with the SEC on the Company's historical
disclosure; the outcome of class action shareholders lawsuits
against the Company filed in the United States and Canada; 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 cost reductions or increases in revenues related to
sales price increases; the sufficiency of any restructuring
activities, including the potential for higher actual costs to be
incurred in connection with any restructuring activities compared
to the estimated costs of such actions; the ability to recruit and
retain qualified employees; the level of Royal's outstanding debt
and 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 Company's
ability to complete the required processes and provide the internal
control report that will be required under U.S. securities law in
respect of fiscal 2006; the ability to meet the financial covenants
in Royal's credit facilities; changes in Royal's 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 any litigation,
investigations, administrative and regulatory matters, intellectual
property disputes, or similar matters; changes in securities,
environmental or health and safety 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 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: Dick Wertheim, Wertheim and Company, Work (416)
594-1600, Mobile (416) 518-8479
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