royal laser tech corporation - morningstar, inc

ROYAL LASER TECH CORPORATION

A N N U A L R E P O R T 2 0 0 0

E N G I N E E R I N G • P R O T O T Y P I N G • P R O D U C T I O N • S T A M P I N G • A S S E M B L Y

Brought to you by Global Reports

A N N U A L R E P O R T 2 0 0 0 R O Y A L L A S E R

FISCAL 2000 HIGHLIGHTS

In the most significant transaction in the company’s history, Royal Laser sold its

seven continents division and acquired a 15% minority interest in OSF Inc.,

North America’s largest manufacturer of retail store fixtures. An after-tax gain

of approximately $16 million was recorded on the transaction. This transaction

also resulted in Royal Laser receiving approximately $31 million in cash, which

substantially improved the Company’s financial position.

Revenue from all operations grew for the 9th year in a row to $60 million.

Shareholders equity grew to approximately $57 million by year end, and net

book value per common share was approximately $5.40 at April 30, 2000.

At year end, our automotive and industrial sales order backlog was at

record levels.

The Company received its first two hydroform presses by July 2000 and

completed construction of its Brampton hydroform building in April 2000.

The Company negotiated the acquisition of SCS International before the end

of the fiscal year and closed the transaction on July 12, 2000.

T A B L E O F C O N T E N T S

Message to Shareholders2 Acquisitions and

Divestitures6 Technologies and Capabilities10 Strengthened

ManagementTeam

14 AutomotiveIndustry

16 ManagementDiscussion andAnalysis

18 23 Financials



F I S C A L 2 0 0 0

HIGHLIGHTSFINANCIAL

$66

60

54

48

42

36

30

24

18

12

6

0 1996 1997 1998 1999 2000

mill

ions

of

$

$5.5$9.7

$19.4

$45.4

$60.3

A N N U A L S A L E S

$22

20

18

16

14

12

10

8

6

4

2

0 1996 1997 1998 1999 2000

mill

ions

of

$

$0.7 $1.5$3.3

$5.6

$19.8

N E T E A R N I N G S


2

AN INCREDIBLE YEAR

Royal Laser continued to grow its operations and sales in fiscal 2000. Combined sales from

continued and discontinued operations were $60.3 million compared to $45.4 million in the

previous fiscal year. Revenues from our automotive/industrial operations increased to

$26.9 million, a 37% increase from the previous fiscal year. Revenue from our store fixture

operations during the period of ownership in fiscal 2000 was $33.4 million.

With continued growth came the need to focus our customer services on either one or both of

these sectors. It became increasingly obvious to management that in both the store fixture industry

and the automotive/industrial sectors, which are extremely competitive and consolidating, we had

to continue to grow rapidly and to focus our operations and our array of customer services. We

also needed to make some significant, immediate decisions that would impact the long-term future

and success of the Company.

Fiscal 2000 became a watershed year in which three of the most significant transactions in the

history of the Company were completed or negotiated: first, the combination of our store fixture

operations with those of OSF Inc. through the sale of our seven continents store fixture division in

return for a significant minority equity interest and cash; second, the installation of hydroforming

technology in our Brampton facility; third the acquisition of SCS International, a stamping, seat

assembly and pulley manufacturer operating primarily in the automotive sector, in a transaction

negotiated in fiscal 2000 and successfully completed in the first quarter of fiscal 2001.

OSF INC. TRANSACTION

Our take-over bid for OSF Inc., launched in the fall of 1999, was premised on the desire to become

a major player in the retail store fixture industry. However, once the auction process raised bidding

MESSAGE TOSHAREHOLDERS

Fiscal 2000 was a year of

continued financial and

customer growth for

Royal Laser. It was also a

watershed year in which

three of the most significant

transactions in the history

of the Company were

completed or negotiated.



3

levels to prices above which we and our shareholders were willing to pay, the sale of our sevencontinents store fixture division and the related acquisition of a significant minority equity interest

in OSF Inc. became, in our view, the ideal solution. We completed this transaction only after significant

deliberations amongst our management and shareholders regarding the future direction of Royal

Laser. The substantial cash proceeds from this transaction and the opportunity to hold a significant

minority 15% interest in North America’s largest retail store fixture manufacturer made this an

outstanding transaction for Royal Laser and our shareholders, as well as the most significant

transaction in our history.

HYDROFORMING TECHNOLOGY INITIATIVE

Royal Laser made a significant investment in two new hydroforming machines, which will produce

revenue in fiscal 2001. As well, we completed the construction of the Brampton hydroform

facilities. Our commitment to developing expertise in hydroforming will continue to advance Royal

Laser’s already strong reputation as a leading edge user of new technology in manufacturing. The

number of hydroform components in the automotive sector has been increasing yearly and it is

projected that hydroforming applications will continue to substantially increase. We are also

positioned to provide hydroforming services to non-automotive sectors.

SCS INTERNATIONAL ACQUISITION

The third significant transaction in fiscal 2000 was the acquisition of SCS International, which

closed in July, 2000. The acquisition of SCS provides Royal Laser with additional strong stamping,

seat assembly and pulley fabrication capabilities.

In summary, these three key transactions have provided Royal Laser with a strong financial position,

the expanded technologies and capabilities to be successful moving forward. We believe we have the

ability and focus to provide a full basket of services to customers in the automotive and industrial

sectors. In this report we will discuss in greater detail our capabilities and services.

STRENGTH IN MANAGEMENT AND OPERATIONS

The Company has also strengthened it’s senior management team over the past year. In January,

2000, Mike Farrugia joined our team as our Chief Operating Officer. With the completion of the SCS

transaction, Mr. George Schacht, a senior automotive industry executive, also joined our senior

management team. These are important additions. At Royal Laser, we continue to maintain our

traditional lean management style, but at the same time add depth where required.

Operationally, we have structured our operations and services and set up our sales approach to

truly provide a full basket of services to meet our customer needs. However, consistent with our

traditional approach, we intend to continue to focus on certain niche services for our customers.

We consider prototyping, assemblies and smaller volume production runs as examples of niches

that fit our skill sets and potentially provide higher profit margins for the Company.

The result of the seven

continents transaction

and the proceeds generated

thereby gave impetus to

an accelerated expansion

of Royal Laser’s automotive

/industrial operations.



4

EARNINGS INCREASE

Our net income for fiscal 2000 was almost $20 million, a record, compared to approximately

$5.6 million in the prior fiscal year. The significant jump in earnings is primarily attributable to the

net earnings from discontinued operations of approximately $18.6 million. Our continuing

operations during the 2000 fiscal year suffered from the change in focus of the Company,

some idle capacity resulting from the seven continents transaction, by an expensive and

costly outsourcing relationship in our Lakeshore plant (which has been terminated), by a union

organizing drive at that plant that failed and, to some extent, as a result of the high degree of

management attention required in our seven continents and OSF initiatives. Both the take-over

bid and the OSF merger transaction required a significant amount of management time and focus.

We believe that Royal Laser’s operations will be significantly more profitable commencing the

middle of the current fiscal year.

STRONG CUSTOMER RELATIONSHIPS

The success of Royal Laser has primarily come from the services provided by our people and

technology, and the ongoing support of our customers. During the fiscal year we have taken steps

to deepen our relationships with key customers. We have taken steps to continue to improve our

quality and our on-time delivery systems as we grow.

Heading into fiscal 2001 we are also forging new customer relationships. OSF is now a significant

customer as a result of a supply agreement. The customers of SCS now have a new array of services

and a financially stronger supplier as a result of the purchase by Royal Laser. With the expansion

of our business into hydroforming, Royal Laser has created a whole new set of customers.

COMMITTED ORDERS

Our sales order backlog for automotive/industrial is greater than it ever has been. As a result of the

continued growth we have taken the following steps to continue to ensure customer focus and

quality service:

A We have divided our sales group into general industrial markets and the automotive sector. Our

sales people must have strong industry knowledge to support customer needs.

B We have continued the implementation of a full manufacturing resource planning (MRP)

process to ensure accurate scheduling, tracking and product being manufactured.

C We have established an ongoing review program for non-profitable customer relationships and

have taken steps to improve their profitability or else redirected our resources to customers that

provide appropriate margins. We have upgraded the role of quality in the organization and recently

hired a senior director of quality.

Customers have been a critical element to the success of Royal Laser and our customer focus will

not be diminished as we continue to grow.

Committed sales orders

for automotive/industrial

is greater than ever.

Customers have been a critical

element to the success of

Royal Laser and our customer

focus will not be diminished

as we continue to grow.



5

POTENTIAL FOR GROWTH

As we end one fiscal year and enter into another, we always take stock of our Company and its

prospects. While fiscal 2000 has been a watershed year, we are confident that Royal Laser’s

position is as strong as it has ever been. Our shareholders’ equity has grown to approximately

$57 million and net book value per common share was approximately $5.40 at April 30, 2000. We

have modern, state of the art plant and equipment, including over 400,000 square feet of space.

We have an increasingly sophisticated workforce of over 500 employees. Our sales potential based

on our committed sales orders and on the size and number of quotes and opportunities before us

has never been greater, even before the sale of the seven continents division. While we are not

satisfied with the recent operating results of the ongoing operations, we are excited about the

substantial opportunities now before us.

OUR CHALLENGE IN THE MARKETS

While normally we do not comment on Royal Laser’s share price, we do recognize that it has

declined during the past year. We believe that part of that may be from some investor

disappointment that we did not successfully acquire OSF Inc., and part of it may reflect the fact

that the Company needs to prove to shareholders that it can be successful as a company focused

on the automotive/industrial sector. Royal Laser certainly accepts this challenge and believes

that we can be very successful, and that this will be demonstrated over time and will be seen

in future results.

We also believe that we have suffered the same fate as many other non-technology or small

capitalization companies which have many good things to report to shareholders, solid balance

sheets and good prospects. In that sense, Royal Laser has been something of a market victim. Over

time, we believe success and patience are rewarded by the market, and a continued strong

financial performance will bring better results for our shareholders and investors.

ROYAL LASER TECH CORPORATION

We continue to express our appreciation to all members of the Royal Laser team, the many skilled

and motivated employees for their efforts in the past year. We also thank our customers and

shareholders for their ongoing support.

Bill IannaciPresident and CEO

Robert P. WildeboerChairman

A sampling of pulleys fabricatedby SCS.

A flat cutting laser at ourClaireville location.

A water jet cutter at ourClaireville location.


S U C C E S S F U L D E C I S I O N S

AND DIVESTITURESACQUISITIONS



7

A Major New Initiative HYDROFORM SOLUTIONSOur ability to identify technical or market based needs and to satisfy these needs with successful

acquisitions has become a core competency at Royal Laser. In the last three years we have acquired

certain niche technical skills with the acquisition of The Laser Machining Centre (December 1997),

Ellero Machining Centre Ltd. (April 1998) and Bantam Electric Ltd. (April 1998). While these

companies were small and the transactions not significant, all of these acquisitions have

successfully assisted us in our growth and in our learning processes. Successful acquisitions are not

easy, and the best teacher is experience.

During fiscal 2000, we announced the expansion of our business into hydroforming technology. We

purchased two 600 ton hydroform presses and related technology which arrived during the

spring/summer of 2000. We also purchased our new Brampton hydroform building in September

1999. This major new initiative into the hydroforming business will provide revenue growth in

future years.

At Royal Laser, internally

generated growth has

continued each year for the

last ten years. When this

internal growth is supported

by successful acquisitions,

an even more successful and

strategic company results.

Our first hydroform press at our Brampton facility.



8

New AcquisitionSCS INTERNATIONALDuring the spring of 2000 we negotiated the purchase of SCS International (Manufacturing) Inc.,

a company with metal stamping, seat assembly and pulley fabrication capabilities. SCS’s president,

Mr. Georg Schacht, was a senior executive with one of the world’s largest Tier I automotive

suppliers. He will continue in a key role with Royal Laser. SCS is capable of stamping a wide variety

of parts and has niche expertise in seat assemblies. Their substantial knowledge and credibility in

the automotive industry and their assembly capabilities will be major assets to Royal Laser in

coming years. We completed our final due diligence and closed this transaction on July 12, 2000.

The total purchase price was approximately $10 million.

SCS has booked profitable business in excess of $25 million annually for the next six years with

substantial opportunities to increase these sales quickly. SCS has two divisions; its largest division,

Stamp-A-Tron, is located in Markham and its smaller, Steelmatic division is located in Concord. We

have already commenced the operational integration of SCS with the announced closing of the

Concord plant and the movement of its assets and people to our larger and more efficient

Carlingview facility. The Carlingview plant will allow more growth of this business. The Markham

plant is a core asset of SCS and will be supported by Royal Laser in its growth.

seven continentsOSF TRANSACTIONIn April 1998, we completed our first significant acquisition, a $9 million purchase of sevencontinents Enterprises. seven continents is in the store fixture industry, selling fixtures and

forms, with a reputation as a producer of the finest quality forms in North America.

We combined that business with our own, and grew the combined store fixture business such that

after almost two years its month over month sales had doubled from the time we acquired

seven continents.

Paying Attention to

INDUSTRY TRENDS

In the fall of 1999 we identified store fixture industry trends of rapid growth and consolidation.

The quick increases in size of our most significant competitors in the United States caused us to

conclude that we needed to get bigger, quickly, to be able to provide competitive services to the

largest retailers who were also consolidating quickly. Accordingly, we commenced a takeover bid

for OSF Inc., North America’s largest store fixture manufacturer and a virtual neighbour to Royal

Laser in the northwest part of Toronto.

Quality inspection at our Markham(Stamp-A-Tron) division.



9

Maintaining an Equity Interest in a

PROFITABLE COMPANY

Our share for share exchange takeover bid for OSF, launched in the fall of 1999, initially received

support from OSF shareholders but when a competitive all cash bid arose it became less clear that

Royal Laser would be successful in the takeover bid. We concluded, after discussions with many of

our shareholders, that an increase in our offer would be too expensive for our shareholders and

that we should pursue other alternatives. Ultimately, Royal Laser’s competitive bidder offered

approximately $48 million in cash and equity in OSF Inc. and up to $20 million in contingent

consideration for the seven continents store fixture business. Royal Laser effectively joined the

competitive bidder in the successful acquisition of OSF Inc. Royal Laser’s interest in OSF Inc. (which

now includes seven continents) is 15% plus an option to acquire an additional 5% interest. We

also concluded that the new management team at OSF Inc. was capable of successfully leading OSF

Inc. This comfort level combined with our representation on the board assisted in the conclusion

that a 15% passive interest in the most significant store fixture company in North America was

better than a 100% interest in a smaller store fixture company that may have had trouble

competing in light of current competitive trends. The cash injection from this transaction was also

important to support our other growth initiatives.

Computer controlled water jetcutter at our Claireville location.

Our automated material transferlaser manufacturing cell in ourClaireville location.

One of our many multi-axis Trumpf laser cutting machines.

Our wide-body Trumpf 4030industrial laser machine.


A N D C A P A B I L I T I E S

TECHNOLOGIESEXPANDED



11

The resources gained from our recent acquisitions and the OSF transaction,

combined with our existing operations, position us to offer customers broader

capabilities using the latest equipment and technologies.

ENGINEERING

Royal Laser has a large engineering department with a broad range of skills to assist in the design

and engineering of new products. We have substantial experience ranging from single part design

and engineering to large multi-part modules.

With any type of technology, knowledge is the key to success. Royal Laser has mechanical and

design engineering capabilities. We also have the ability to design both tools and parts. We are

capable of working with various types of drawings. We are able to communicate electronically with

the customers’ engineering department to relay and receive data in a real time environment.

Through all of these capabilities we are able to provide our customers with a broad range of

engineering skills.

PROTOTYPING

Since its inception, Royal Laser has developed an outstanding reputation for its prototyping skills.

Whether it is in assisting a small tool and die shop in the development of tooling or working with

large automotive OEM’s in designing and creating prototype frames for automobiles, we have a

broad range of prototyping skills including our engineering, industrial laser technology and CNC

bending capabilities which are all necessary for quality prototype parts. This diversity of skill assists

in the creation of quality samples for products ranging from simple parts to more complex

assemblies. We have recently been working on a prototype frame assembly for an entire bus.

It is in this infant stage of product development that Royal Laser’s knowledge and expertise can

really be demonstrated. Our diverse range of processes allows the customer to work with us from

beginning to end in the design of new parts. We can also use specific processes to assist in areas

where the customer may lack the equipment. Either way we strive to blend our capabilities and

knowledge with our customers in a way that they can follow the job through the shop or have a

completed part delivered to their door. Our prototype capabilities extend to many industries.

During fiscal 2000 we

continued to expand

our technologies and

capabilities. We now

have the capability to

provide a full basket

of services for many

of our customers.



12

HYDROFORMING

Our most recent endeavor in new technology has resulted in two hydroform presses installed at

our Brampton facility. Hydroforming has some significant advantages over conventional stamping:

lower tooling costs and fewer parts that are lighter, stronger and with consistent metal wall

thickness. Royal Laser’s hydroform machines have the versatility to run a wide range of parts for

the automotive and industrial sectors. Royal Laser is committed to finding new applications for this

technology and has already begun working with our existing customers to find ways to incorporate

hydroforming technology into the fabrication of both existing and new parts. The amount of

hydroform components in the automotive sector has increased each year and projections are that

this use will continue to increase substantially. Royal Laser is also positioned to provide hydroform

services to other industries. For example, applications for hydroforming have been identified in the

appliance and store fixture industries.

LASER CUTTING

In 1990 Royal Laser invested in flat cutting laser technology and began to develop better ways to

use and to commercially exploit the technology. Royal Laser was leading edge in its use of flat

cutting lasers. A few years later it invested in multi-axis laser machines and again was a leader in

the development of practical uses for the equipment. We are now one of North America’s largest

users of laser technology and use lasers as part of a series of production processes and have

developed a truly value added array of services around laser cutting capabilities.

Our multi-axis lasers are used for both prototyping and higher volume production for automotive,

aerospace and industrial consumption. In addition to cutting flat metal, we provide trimming and

hole piercing services for multi-dimensional parts.

Our lasers have the versatility to cut a variety of metals. Our four kilowatt laser machines are able

to cut up to 1” thick mild steel. With over 10 years experience in this technology we have the

knowledge and ability to cut a range of parts from simple to intricate.

Royal Laser has always

been a leader in new

technology investment.

Our first ‘Anton-Bauer’ hydroformpress at our Brampton facility.

Our quality control CMM measuringmachine in our Brampton facility.

Inside the jaws of our hydroform press.



13

COMPLETE ASSEMBLY

Royal Laser has assembly capabilities in all of its plants, from large welded assemblies for the

transportation industry to smaller ones for the store fixture industry. Royal Laser uses its expertise

in this area to respond to our customers’ needs. Throughout the organization we have the know-

how to complete prototype jobs or high volume robotic assemblies. Through the use of Mig, Tig

and spot welding we are able to complete a variety of assembly work in aluminum, stainless steel

or mild steel. We have recently commenced a large production and assembly job for

environmentally friendly, attractive garbage recycling bins made of stainless steel.

In the transportation sector, we have recently completed a full bus frame assembly and we have

completed large complex part assemblies for the rail car industry. Our SCS International division

specializes in seat assemblies for the automotive industry. For many years we have assembled

various store fixture products with exacting attention to detail to the finished look.

STAMPING

Through our recently acquired SCS International division we have a full range of stamping

capabilities. SCS has been stamping parts for the automotive sector for many years but its

stamping capabilities extend to many industries. It has presses capable of handling almost any job.

It has automatic and transfer press capabilities.

The key to our core stamping capabilities is our value-added services that complement stamping.

We can complete almost any type of assembly. For example, a specialty of SCS is seat assemblies,

which incorporate stamping and tube bending capabilities. We are capable of adjusting to and

advising on all engineering changes made by our customer. Our Steelmatic-Carlingview location

has painting and plating lines. We also have groove forming equipment that is used for building

pulleys and similar parts. We have been fabricating pulleys for several years. SCS has many years

of stamping experience and a broad range of stamping equipment capable of handling a wide

variety of stamped parts.

Our core services and

capabilities are supported by

a wide variety of other

advanced equipment such as

water-jet cutting, machining,

CNC bending equipment and

plasma cutting capabilities.

Assembling a frame sub-assembly.


The management of Royal Laser believes that it is capable of growing Royal Laser

into a significant player in the North American automotive and industrial

marketplace. To ensure our success continues, the need to broaden our

management team in terms of experience and skill was important. In this section

we highlight the roles and experience of Royal Laser’s senior management team.

STRENGTHENEDMANAGEMENT TEAM



15

The Company believes that its strengthened management team will provide

the motivation and leadership to move the Company to become a significant

North American supplier.

Bill Iannaci was the majority founder of Royal Laser and has been and continues to be the driver

of the business. With his strong technical and engineering skills he has identified and driven the

investment in all of Royal Laser’s new technologies. He has strong relationships with many of our

large customers and has an outstanding sense of what their future needs will be. As the Company

grows Bill Iannaci has set up a strong entrepreneurial, operational and financial team around him

to allow him to continue to focus the Company and drive its growth.

Mike Farrugia joined Royal Laser in January 2000, initially as the head of our hydroform operations,

and now as Chief Operating Officer, with full responsibility for all day-to-day operating activities

of the Company. He was formerly a senior manufacturing and purchasing executive with a large

railcar manufacturer and, prior to that, a large aircraft manufacturer. Both of these companies had

annual sales in excess of $1 billion. He has outstanding knowledge of processes, operational

structures and strategies for growing companies, which will prove invaluable for Royal Laser.

Greg Van Staveren joined Royal Laser early in 1998. Previously, he was a partner with one of

Canada’s largest public accounting and consulting firms. He had been there for over 17 years.

He works closely with other senior management in all financial and business matters involving

the Company, and is also responsible for the Company’s information technology and human

resource departments.

Georg Schacht joined Royal Laser as a result of the acquisition of SCS International. SCS was

founded by Georg approximately 6 years ago and he acted as its president throughout this period.

Georg is a former senior executive of one of the world’s largest Tier I automotive suppliers. Georg

will provide Royal Laser with key senior experience in the automotive sector and assist strategically

in the growth of its technology base.

Gary Anderson was a founder of the Company with Bill Iannaci. Gary provides management

support for key customers and provides senior project management support on larger

prototype jobs.

Bill Iannaci, President and CEO

Mike Farrugia, Chief Operating Officer

Greg Van Staveren CA, CPA, CMA,

Chief Financial Officer

Georg Schacht, Automotive Division Sales

and Operations Strategy

Gary Anderson, Executive Vice President


The automotive industry is one of North America’s largest, with a market size

reaching into the hundreds of billions of dollars. Several developments in the

automotive industry are substantially altering the environment for independent

suppliers, including:

(i) the participation by suppliers in the design and engineering of

automotive components at an early stage of the design process;

(ii) the consolidation of the Original Equipment Manufacturers

(OEMs) supplier base;

(iii) increased outsourcing of components, assemblies and complete systems

from OEMs to sophisticated, independent suppliers; and

(iv) the expansion of foreign-owned OEMs and their increased emphasis on

North American-sourced content. In addition to increased supplier

dependency, OEMs are coming under substantial regulatory and

competitive pressure to reduce vehicle weight materials and improve

manufacturing processes including hydroforming and laser cutting.

INDUSTRYAUTOMOTIVE



17

BUILDING A STRONG REPUTATION

Royal Laser is establishing niche markets and a strong reputation to build on in this industry. Our

medium and long-term plans are to position Royal Laser as the supplier of a broad basket of

services supported by strong technical capabilities. We intend to position ourselves to accept and

deliver complete assemblies. Our broad range of capabilities will result in a more complete service

package and will spare the customer the inconvenience and the cost of multiple suppliers and the

necessity to coordinate their outputs. Our service package starts with concurrent engineering, and

proceeds through prototyping and solidification of the design, project management services,

fabrication of components and sub-assemblies, final assembly and shipment of the product to the

customer’s point-of-use.

Our existing services to the automotive sector are supplied through: Stamp-a-Tron Manufacturing

Ltd., our stamping division, which also produces seat assemblies; Steelmatic Manufacturing Inc.,

which produces pulleys; and Hydroform Solutions, which supplies hydroforming services and

5-axis laser cutting. Stamp-A-Tron and Steelmatic are part of SCS International which was

purchased subsequent to year end. Our automotive operations are housed in three very modern

facilities totaling 250,000 square feet. Two of these locations are QS 9000 certified and the third

one is establishing systems congruent with QS requirements.

EXPANDING SERVICES

Our services to the automotive sector are expanding. We supply stampings and assemblies for

engine, body, interior and suspension parts. We have hydroformed prototype rails and have laser

cut high volume automobile cross members and fuel rails. We stamp and assemble complete

production seat frames for various Tier 1 companies and we produce a myriad of pulleys for

production and service-market use.

We believe that our market opportunities in the automotive sector are substantial and that with

continued senior management support and a strong financial commitment we will successfully

exploit these opportunities.

In addition to increased

supplier dependency, OEMs

are coming under substantial

regulatory and competitive

pressure to reduce vehicle

weight and improve

manufacturing processes

including hydroforming

and laser cutting.

Our SCS International division specializes in seat assembliesfor the automotive industry.


FISCAL 2000

DISCUSSION & ANALYSISMANAGEMENT



19

OPERATIONS OVERVIEW

The financial statements for the year ended April 30, 2000 were materially impacted by the sale of

seven continents/acquisition of an interest in OSF Inc. The prior year and the current year results

have been restated to present the seven continents division as a discontinued operation.

Revenue for the fiscal year ended April 30, 2000 increased to $60 million (including $33.4 million

from the seven continents division). This represents an increase of approximately $14.9 million or

33% from fiscal 1999.

Gross profit as a percentage of sales in continuing automotive/industrial operations was 27%

compared to 41% in the prior fiscal year. This substantial decrease in margin was caused in part by

substantial costs relating to an outsource supplier relationship that was intended to be an

acquisition for the Company. The costs of handling and terminating the outsource relationship,

including reclaiming this work in house, were substantial. Margins were also impacted by two large

customers, where Royal Laser was unable to get pricing concessions on material cost increases

until after the fiscal year end. Certain idle capacity costs also arose in the last two months of the

year as a result of the seven continents sale.

Selling, administration and general costs were approximately $2.3 million or 8.7% of sales in the

current year compared to $1.9 million or 9.6% of sales in fiscal 1999. The Company does not

consider this to be a significant fluctuation given the substantial changes in the business during

the year.

Amortization of capital assets increased to approximately $3.0 million compared to approximately

$2.1 million in the prior fiscal year. Increases in amortization charges were expected as the

Company has incurred substantial capital expenditures in the last two fiscal years. With recent and

ongoing purchases of new laser technology and hydroform equipment, amortization of capital

assets should continue to increase in future years.

The increase in sales

to $26.9 million from

automotive/industrial

operations represents

a 37% increase from

fiscal 1999.

Engineering and Computer Aided Design.



20

Income taxes in the prior fiscal year were unusually low as a result of the acquisition of the Laser

Machining Centre (LMC) in fiscal 1998 and its available loss carry forwards. Income tax expense as

a percentage of earnings in fiscal 2000 was 39% which is approximately 3% higher than the

combined income tax rates arising if full manufacturing and processing tax deductions were

available. The difference was primarily caused by prior year tax reassessments.

Net earnings from continuing operations were approximately $1.2 million compared to

approximately $2.8 million in fiscal 1999. The decline in profitability was primarily caused by a

reduction in gross margin, by increased amortization expense and by a more normalized tax

provision in fiscal 2000. The Company expects that margins will continue to be poor in the first part

of fiscal 2001 but expects substantial improvement in the second half.

The net earnings for the year of approximately $20 million compared to approximately $5.6 million

in the prior year were primarily a result of the net earnings from discontinued operations of

approximately $18.9 million.

We believe that our 15% investment in OSF Inc. will be a successful one. In our financial statements

we have recorded this investment at cost, which means that we will only record our share of OSF

earnings when we receive a cash dividend or if we dispose of the investment. OSF is in a cyclical

business so its financial results are very dependent on its shipments in the pre-Christmas, October,

November period. Based on booked orders it appears that OSF will have a good fiscal year.

$2.00

1.80

1.60

1.40

1.20

1.00

.80

.60

.40

.20

0 1997 1998 1999 2000

$0.24

$0.49$0.58

$1.84*

E A R N I N G S P E R S H A R E* Includes gain on sale of

store fixture division

$6.00

5.40

4.80

4.20

3.60

3.00

2.40

1.80

1.20

0.60

0 1997 1998 1999 2000

$0.83

$2.23

$3.54

$5.38

S H A R E H O L D E R S E Q U I T YBook value per share

We have recently commencedproduction and assembly ofthese familiar recycling bins.



21

CAPITAL AND INVESTMENT SPENDING

Fiscal 2000 was a record year for Royal Laser in terms of capital spending. We incurred

approximately $25.9 million in new capital spending, compared to approximately $12.1 million in

the prior year. We purchased and completed the construction of the Brampton hydroform facility

for approximately $13 million. We have paid $5.4 million to date on hydroform equipment. We

have also continued to add to our laser technology through the purchase of $5.3 million in new

laser equipment. All of these capital expenditures have added to the capabilities of Royal Laser. In

fiscal 2001, we expect a substantial reduction in capital spending, as we have sufficient plant and

equipment in place to grow our business.

LIQUIDITY AND CAPITAL RESOURCES

During fiscal 2000 the Company did not raise new equity and, in fact, commenced a normal course

share buyback program. By August 2000, we had repurchased approximately 200,000 common

shares at an average price of approximately $4.25. Approximately $28 million in cash relating to

the seven continents transaction was received in fiscal 2000. By August 2000, much of this had

been spent on income taxes on the transaction, hydroform equipment, the purchase of SCS and

working capital investments. At April 30, Royal Laser had approximately $19.9 million of net

working capital compared to approximately $12.7 million at April 30, 1999. We had unused

operating and equipment borrowing capacity of approximately $14 million at April 30, 2000. While

this borrowing capacity is sufficient in the short term, more capital will be required if exponential

growth occurs.

$11

10

9

8

7

6

5

4

3

2

1

0 1995 1996 1997 1998 1999 2000

mill

ions

of

$

$0.8$1.4

$2.8

$6.5

$10.8

E B I T D A **Earnings before Interest, Taxes,

Depreciation and Amortization and sale of store fixture division

$10.8

Engineering and Computer Aided Design.



22

RISK AND UNCERTAINTIES

The Company is exposed to a number of risks and uncertainties that could impact future results.

The nature of the Company’s business, especially in the automotive sector, means that it is affected

by general economic conditions. While the Company is not dependent on any particular customer,

the loss of big accounts could also impact results. Based on the budget for fiscal 2001 no customer

should exceed 10% of sales.

People represent Royal Laser’s biggest cost and are key to service quality. The Company does not

have a union and has a history of excellent relations with its vital human resources and these

relations will continue to be important to future success. During fiscal 2000, the United

Steelmakers of America were successful in organizing a unionization vote at our Lakeshore

location. Ultimately, our employees voted overwhelmingly in favour of a non-union environment.

While metal represents an important cost component to Royal Laser, the ability to share the cost

with customers due to the custom nature of the business reduces this risk to some extent. During

much of fiscal 2000, metal price increases hurt Royal Laser with two of our customers, as we were

unable to pass price increases immediately to these customers. Price increases to these customers

were implemented in fiscal 2001. A small proportion of Royal Laser’s debt bears interest at variable

rates which reduces the impact of interest rates increases. In the next 12 months less than 30% of

revenues are expected to be in US dollars but this percentage is expected to increase in future years.

The Company does not have any foreign currency contracts outstanding.

The Company is in a capital intensive business and therefore needs to be financially able to

purchase new equipment and technology on a timely basis.

OUTLOOK

Fiscal 2000 was a year of financial and operational consolidation and of substantial capital

expenditures to lay the foundation for future growth. In fiscal 2001 and 2002, we expect to begin

to utilize our plant technologies and capacities more fully. We expect a substantial decline in capital

spending and, ultimately, a return to strong operational profitability. Our operations will be

constantly reviewed to improve efficiency and to take costs out of the system. No new acquisitions

are planned but our strengthened management team is always poised for market

based opportunities.

Royal Laser continues to seek newheavy industrial customers.

Growing markets such asaerospace provide manyopportunities for Royal Laser.


MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements for Royal Laser Tech Corporation are the

responsibility of management and have been prepared in accordance with generally accepted

accounting principles and, where appropriate, reflect estimates based on management’s

judgement. In addition, all other information contained in this annual report is also the

responsibility of management. The Company maintains systems of internal accounting and

administrative controls designed to provide reasonable assurance that the financial information

provided is accurate and complete and that all assets are properly safeguarded.

The Board of Directors is responsible for ensuring that management fulfills its responsibility for

financial reporting and is ultimately responsible for reviewing and approving the consolidated

financial statements. The Board appoints the Audit Committee comprised of a majority of non-

management directors that meets with management and KPMG LLP, the external auditors, at least

once a year to review among other things accounting policies, annual financial statements, the

results of the external audit examination and the Management Discussion and Analysis included in

this annual report. The Audit Committee reports its findings to the Board of Directors so that the

Board may properly approve the Financial Statements.

FINANCIALSFISCAL 2000



24

AUDITORS’ REPORT TO THE SHAREHOLDERS

We have audited the consolidated balance sheets of Royal Laser Tech Corporation as at April 30,

2000 and 1999 and the consolidated statements of earnings and retained earnings and cash flows

for the years then ended. These financial statements are the responsibility of the Company’s

management. Our responsibility is to express an opinion on these consolidated financial statements

based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards.

Those standards require that we plan and perform an audit to obtain reasonable assurance whether

the financial statements are free of material misstatement. An audit includes examining, on a test

basis, evidence supporting the amounts and disclosures in the financial statements. An audit also

includes assessing the accounting principles used and significant estimates made by management,

as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the

financial position of the Company as at April 30, 2000 and 1999 and the results of its operations

and its cash flows for the years then ended in accordance with Canadian generally accepted

accounting principles.

Chartered Accountants

Toronto, Canada

August 21, 2000



25

ConsolidatedBalance Sheets

April 30, 2000 and 1999 (thousands of dollars) 2000 1999

ASSETS

Current assets:Cash and cash equivalents $ 23,352 $ 260Marketable securities — 6,643Accounts receivable 9,674 9,364Inventories (note 3) 3,040 5,518Prepaid expenses 1,221 974

37,287 22,759

Loan receivable (note 4) 403 575Capital assets (note 5) 46,325 27,370Investment in OSF Inc., at cost 17,800 —Goodwill, net of accumulated amortization of $330 — 6,653

$ 101,815 $ 57,357

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:Bank indebtedness (note 6) $ — $ 4,991Accounts payable and accrued liabilities 7,738 3,594Income taxes payable 6,446 285Current portion of long-term debt (note 7) 3,246 1,273

17,430 10,143

Long-term debt (note 7) 24,287 8,311Deferred income taxes 2,633 1,008

Shareholders’ equity:Share capital (note 8) 26,260 26,452Retained earnings 31,205 11,443

57,465 37,895

$ 101,815 $ 57,357

See accompanying notes to consolidated financial statements.

On behalf of the Board:

Bill Iannaci Gary AndersonDirector Director



26

Consolidated Statements of Earnings and Retained Earnings

Years ended April 30, 2000 and 1999 (thousands of dollars, except per share amounts) 2000 1999[restated note 1(a)]

Sales – all operations $ 60,294 $ 45,386Sales – discontinued operations 33,407 25,803

Sales – continuing operations 26,887 19,583

Cost of sales 19,721 11,480

Gross profit 7,166 8,103

ExpensesSelling, administrative and general 2,329 1,888Amortization 3,001 2,148Interest on long-term debt 774 530Interest income (net) (128) (206)Gain on sale of marketable securities (827) —

5,149 4,360

Earnings from continuing operations before income taxes 2,017 3,743

Income taxes (note 9): 825 950

Net earnings from continuing operations 1,192 2,793

Discontinued operations (note 2) 18,570 2,789

Net earnings for the year 19,762 5,582

Retained earnings, beginning of year 11,443 5,861

Retained earnings, end of year $ 31,205 $ 11,443

EARNINGS PER SHARE

Basic– continuing operations $ 0.11 $ 0.29– discontinued operations 1.73 0.29

– total 1.84 0.58

Fully diluted– continuing operations 0.10 0.25– discontinued operations 1.64 0.25

– total 1.74 0.50

Weighted average number of common shares outstanding 10,713,050 9,528,299




27

Consolidated Statements of Cash Flows

Years ended April 30, 2000 and 1999 (thousands of dollars) 2000 1999[restated note 1(a)]

Cash provided by (used in):

OPERATIONSNet earnings from continuing operations $ 1,192 $ 2,793

Items not requiring cash:Amortization 4,112 2,791Deferred income taxes 1,625 1,137Net earnings from discontinued operations 2,615 2,789Loss on disposal of capital assets 17 12Gain on sale of marketable securities (827) —

8,734 9,522

Changes in non-cash working capital itemsAccounts receivable (4,002) (304)Accounts payable and accrued liabilities 2,663 (1,981)Income taxes payable (539) (366)Inventories (3,561) (2,313)Prepaid expenses (740) (481)

2,555 4,077

FINANCING ACTIVITIESIssue (repurchase) of share capital, net (192) 10,880Issuance of long-term debt 20,249 3,666Repayment of long-term debt (2,300) (3,234)Increase (decrease) in bank indebtedness (4,991) 4,819

12,766 16,131

INVESTING ACTIVITIESPurchase of capital assets (25,952) (12,193)Proceeds on disposal of capital assets 315 390Purchase of subsidiaries, including cash deficiencies assumed of nil — (927)Increase in marketable securities (824) (6,643)Loan receivable 172 (575)Proceeds on sale of marketable securities 8,294 —Proceeds on disposal of store fixture division, net of disposal costs of $2,084 25,766 —

$ 7,771 $ (19,948)

Increase in cash and cash equivalents 23,092 260

Cash and cash equivalents, beginning of year 260 —

Cash and cash equivalents, end of year $ 23,352 $ 260

SUPPLEMENTAL CASH FLOW INFORMATIONCash paid for interest $ 1,698 $ 755Cash paid for income taxes $ 1,839 $ 2,266




28

Notes to Consolidated Financial StatementsYears ended April 30, 2000 and 1999 (in thousands of dollars, unless otherwise indicated)

The Company was incorporated under the Ontario Business Corporations Act on February 10, 1987. It designs, engineers, manufacturesand sells custom metal products.

1. Summary of significant accounting policies:

(a) Presentation:The consolidated financial statements are prepared in accordance with generally accepted accounting principles in Canada.The consolidated financial statements include the accounts of the Company and those of its wholly owned subsidiaries.For the years presented, the consolidated statements of earnings and cash flows and the relevant accompanying notesreclassify the Company’s seven continents store fixture division as “discontinued operations” as discussed in note 2.

(b) Cash and cash equivalents:Cash and cash equivalents consistent of cash and short term money market instruments.

(c) Marketable securities:Marketable securities are presented at cost, which approximates market value.

(d) Inventories:Raw materials are valued at the lower of cost and replacement cost. Finished goods and work in progress are stated at thelower of cost and net realizable value.

(e) Capital assets:Capital assets are recorded at cost, including capitalized interest, net of investment tax credits received, less accumulatedamortization. Amortization is provided for over the estimated useful lives of the capital assets at the following ratesand bases:

Basis Rate

Building and improvements Declining balance 4%Manufacturing equipment Declining balance 15%Motor and delivery vehicles Declining balance 30%Office and computer equipment Declining balance 20%

(f) Goodwill:Goodwill is amortized on a straight-line basis over 20 years. Goodwill is regularly evaluated by reviewing the expectedfuture cash flows taking into account associated business risks. Any impairment of goodwill would be charged againstearnings in the year it occurs.



29


1. Summary of significant accounting policies, (cont’d):

(g) Revenue recognition:Revenue is recognized when goods are shipped or services provided.

(h) Income taxes:The Company follows the deferral method of tax allocation accounting, whereby deferred income taxes result from timingdifferences in the recognition of income and expenses for income tax and financial statement purposes.

(i) Translation of foreign currencies:Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates in effect at thebalance sheet date. Realized and unrealized gains and losses on translation are reflected in net earnings.

(j) Stock-based compensation plans:The Company has a stock-based compensation plan. Options are granted at the fair value of the Company’s common shareson the date of the grant of the options. No compensation expense is recognized for these plans when stock options areissued to employees. Any consideration paid by employees on exercise of stock options or purchase of stock is credited toshare capital.

(k) Use of estimates:The preparation of financial statements in conformity with generally accepted accounting principles requires managementto make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during theyear. Actual results could differ from these estimates.

2. Discontinued operations and business disposition:

On March 21, 2000 the Company sold its seven continents store fixture division to OSF Inc. for proceeds of $48,650 consistingof $31,150 cash and $17,500 in OSF Inc. common equity. In addition, $300 in acquisition costs relating to the OSF investmentwere capitalized. $3,000 of the cash is a holdback that is due September 21, 2000 and is included in accounts receivable. TheCompany can also earn up to an additional $20,000 in contingent payments if the revenues earned by seven continents andOSF over the next two years exceed certain negotiated amounts. These contingent payments have not been recorded in thesefinancial statements and will be recorded when the amounts are determinable. The investment in OSF Inc. representsapproximately 15% (20% including an equity option) of the outstanding share capital of OSF Inc. and will be accounted forusing the cost method. The Company recognized a net after-tax gain of $15,955 ($22,655 before tax). seven continentsoperating results for the periods presented are reflected as “discontinued operations.” The statements of earnings and cash flowsfor 1999 have been restated to classify the results of discontinued operations as separate components.

Period ended Year endedMarch 21, 2000 April 30, 1999

Sales $ 33,407 $ 25,803

Operating income $ 4,715 $ 3,738Income taxes (2,100) (949)

Net operating earnings from discontinued operations 2,615 2,789Net gain on disposition 15,955 –

Net operating earnings from discontinued operations $ 18,570 $ 2,789



30


2. Discontinued operations and business dispositions, (cont’d):

The Company’s balance sheet included the following net assets related to the seven continents division prior to the sale.

As at As atMarch 21, 2000 April 30, 1999

Working capital $ 11,521 $ 7,532Fixed assets 2,859 5,523Goodwill 6,347 6,653

$ 20,727 $ 19,708

3. Inventories:

2000 1999

Raw materials $ 1,206 $ 1,554Work in progress 948 1,454Finished goods 886 2,510

$ 3,040 $ 5,518

4. Loan receivable:

The loan receivable bears interest at 1% per month and is secured by a second mortgage on an industrial building.Principal payments are due in the year ended April 30, 2002.

5. Capital assets:

2000 1999

Accumulated Net book Net bookCost amortization value value

Land $ 6,708 $ – $ 6,708 $ 2,742Buildings and improvements 17,566 574 16,992 6,664Manufacturing equipment 26,124 5,363 20,761 15,468Motor and delivery vehicles 532 229 303 344Office and computer equipment 2,359 798 1,561 1,190Leasehold improvements — — — 962

$ 53,289 $ 6,964 $ 46,325 $ 27,370

6. Bank indebtedness:

Bank indebtedness is comprised of a bank-operating loan that bears interest at the Company’s bankers’ prime rate. Assecurity for the bank indebtedness and the building term loans (note 7), the Company has provided a general securityagreement over all assets of the Company, and is subject to certain financial and operating covenants.



31


7. Long-term debt:

2000 1999

Variable rate equipment loans with interestthereon payable monthly at a floating rate atprime and quarterly principal installments of $580 $ 10,943 —

Building term loan, secured by a first collateral mortgageon the Company’s Brampton property, with interestthereon payable at 7% per annum with monthly principalpayments of $108 to September 2004. 6,911 —

Building term loans, secured by first collateral mortgages onthe Company’s Etobicoke and Mississauga properties, withinterest thereon payable at 6.40% per annum with monthlyinstallments (principal and interest) of $51 to May, 2002. 5,512 $ 5,774

Fixed rate equipment loans with interest thereon payablemonthly with fixed rates ranging from 1.87% to 8.25% per annum,(with an average of 7%) payable in aggregate monthly installmentsof $84 (principal and interest) and maturing November 2001 to May 2004. 3,041 2,318

US dollar equipment loans with interest thereon payable monthly withfixed rates of 7.4% to 8% per annum, payable in aggregate monthlyinstallments of $26 US (principal and interest) and maturing from May 2001to January 2004. 1,126 1,492

27,533 9,584Less current portion 3,246 1,273

$ 24,287 $ 8,311

Principal payments required for subsequent years are as follows:

2001 $ 3,2462002 3,2182003 7,4242004 7,8852005 5,760

$ 27,533



32


8. Share Capital:

(i) Common Shares

Number Amount

Authorized – unlimited number of common sharesIssued and outstanding:Balance April 30, 1998 7,994,000 $ 9,168For acquisition of Ellero 62,000 407For exercise of employee options 37,800 80For exercise of underwriter options 100,000 200For exercise of Special Warrants 2,500,000 16,597

Balance April 30, 1999 10,693,800 $ 26,452

For exercise of employee options 38,500 23Repurchase of common shares (53,300) (215)

Balance April 30, 2000 10,679,000 $ 26,260

Pursuant to private placements in March 1998 and May 1998, the Company issued and sold 1,500,000 special warrants forgross proceeds of $6,450 and 1,000,000 special warrants for gross proceeds of $11,000 respectively. The special warrantswere exchanged in October 1998 in accordance with their terms and common shares were issued on a one for one basis.

(ii) Stock option planThe Company’s stock option plan allows the board of directors of the Company to grant options to employees to purchaseup to 1,100,000 common shares. Options granted under the stock option plan may have a term not exceeding ten years.All of the options granted are fully vested.

A summary of the Company’s stock option plan as of April 30, 2000 and 1999 and the changes during the years then endedis presented below:

2000 1999

Average AverageExercise Exercise

Shares Price Shares Price

Outstanding, beginning of year 752,700 $ 4.54 618,500 $ 2.60Granted 88,750 7.57 172,000 11.00Exercised (54,318) 2.14 (37,800) 2.10Cancelled (34,500) 7.35 —

Outstanding, end of year 752,632 $ 4.94 752,700 $ 4.54



33


The following is a summary of options issued and outstanding under the stock plan

Number outstanding atApril 30, 2000 Exercise Price Expiry Date Granted

216,382 $ 2.00 September 2001 and July 2002 September 1996202,500 2.75 July 2002 July 1997100,000 4.05 April 2003 January 199818,750 6.00 January 2010 January 200050,000 8.00 September 2009 September 1997

165,000 11.00 August 2003 August 1998

752,632

9. Income taxes:

Income tax expense, including both the current and deferred portions, varies from the amounts that would be computed byapplying the basic federal and provincial income tax rates aggregating 44.6% (1999 - 44.6%) to income before taxes, asshown in the following table.

2000 1999

Basic rate applied to earnings before income taxes $ 13,202 $ 3,338

Increase (decrease) in income taxes resulting from:Non-deductible expenses 54 24Manufacturing and processing profits deduction (2,846) (673)Benefit of research and development tax credits (50) (50)Non-taxable portion of gain on disposal of seven continents division (1,492) —Benefit of tax losses from acquisitions — (316)Other 757 (424)

Income tax expense $ 9,625 $ 1,899

Income taxes applicable to:Continuing operations 825 950Discontinued operations 8,800 949

$ 9,625 $ 1,899

Effective income tax rate 32.5% 25.4%



34


10. Financial instruments:

The carrying values of cash and cash equivalents, marketable securities, accounts receivable and accounts payable andaccrued liabilities, income taxes payable and bank indebtedness approximate their fair value due to the relatively shortperiods to maturity of these instruments.

The carrying value of the loan receivable and long-term debt approximates fair value as the terms and conditions ofborrowing arrangements are comparable to current market terms and conditions for similar items.

It is not practicable to estimate the fair value of the investment in OSF Inc. as it is not publicly traded.

11. Segmented information:

Management has determined that the company operates in one dominant industry segment which involves themanufacture and sale of custom metal products. All of the Company’s operations, assets and employees are locatedin Canada.

Revenues by geographic region are summarized as follows:

2000 1999

Continuing operations:Canada $ 25,122 $ 16,908Export sales to the United States 1,765 2,675

Discounted operations:Canada 3,362 5,658Export sales to the United States 30,045 20,145

$ 60,294 $ 45,386

12. Commitments:

(a) The Company leases office equipment and vehicles under long-term operating leases. The aggregate minimum annuallease payments are as follows:

2001 $ 1032002 1102003 562004 22

$ 291

(b) The Company has agreed to purchase additional equipment for approximately $5,480.



35


13. Subsequent event:

On July 12, 2000 the Company acquired all of the outstanding shares of a privately held company, SCS InternationalManufacturing Inc. (“SCS”). SCS, through its two operating subsidiaries, Steelmatic Manufacturing Inc. and Stamp-A-TronManufacturing Inc., manufactures and sells stamped metal parts and seat assemblies primarily to the automotive sector.This acquisition will be accounted for by the purchase method effective July 12, 2000. The fair market value of the assetsand liabilities acquired has been estimated based on information available. These estimates are subject to adjustments.

Non-cash current assets $ 6,144Bank indebtedness (902)Capital assets 3,957Long-term debt (2,096)Accounts payable and accrued liabilities (4,563)Deferred income taxes payable (288)Goodwill 7,848

Total consideration $ 10,100

Total consideration was paid as follows:Cash $ 5,000$5,000 in installments payable over 5 years 5,000Acquisition costs 100

$ 10,100



36

CORPORATE HEAD OFFICERoyal Laser Tech Corporation25 Claireville Drive, Etobicoke, Ontario, Canada, M9W 5Z7 T: 416.675.2737F: 416.675.9156E: [email protected] W: www.royal-laser.com

BOARD OF DIRECTORSRobert P. Wildeboer, Chairman (1) (2)

Partner, Wildeboer Rand Thomson Apps & Dellelce

William Iannaci, Vice-Chairman (1)

President and CEO, Royal Laser Tech Corporation

Gary Anderson (2)

Executive Vice-President, Royal Laser Tech Corporation

Ken AlbrightPresident, Seven Continents Inc.

Suleiman Rashid (1) (2)

Corporate Director, Toronto, Canada

(1) Member, Compensation Committee(2) Member, Audit Committee

CORPORATE OFFICERSWilliam Iannaci President and CEOGreg Van Staveren Vice-President of Finance and CFOMichael Farrugia Chief Operating Officer Gary Anderson Executive Vice-PresidentRobert Watson Vice-President of Operations Robert P. Wildeboer Chairman/Secretary

STOCK LISTINGThe Toronto Stock Exchange (TSE): RLT

Registrar and Transfer Agent Montreal Trust100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1 T: 416.263.9701F: 416.981.9800

Certificate Transfers and Address ChangesMontreal Trust100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1 T: 416.263.9701 F: 416.981.9800

Shareholder InquiresInvestor RelationsRoyal Laser Tech Corporation 340 Carlingview Drive, Etobicoke, Ontario, Canada, M9W 5G5T: 416.213.8877F: 416.213.1861E: [email protected]

All other inquires should be directed to: Greg Van Staveren, CFO, Royal Laser Tech Corporation 25 Claireville Drive, Etobicoke, Ontario, Canada, M9W 5Z7 T: 416.675.2737F: 416.675.9156E: [email protected]

AuditorsKPMGSuite 3300 Commerce Court WestP.O. Box 31 Stn. Commerce Court Toronto, Ontario, M5L 1B2 T: 416.777.8500F: 416.777.8818

Annual General MeetingNovember 2nd, 20004:00 p.m. (Toronto Time) Royal Laser Tech Corporation Hydroform Solutions Facility1995 Williams Parkway, Brampton, Ontario, L6S 6E5T: 905.799.2498F: 905.799.3490


Royal Laser Tech Corporation

Royal Laser

Royal Laser - Light Industrial

25 Claireville Drive

Etobicoke, Ontario M9W 5Z7

Royal Laser - Heavy Industrial

2457 Lakeshore Road West

Mississauga, Ontario L5J 1J9

Hydroform Solutions

1995 Williams Parkway

Brampton, Ontario L6S 6E5

SCS International

Stamp-A-Tron Manufacturing Ltd.

60 Travail Road

Markham, Ontario L3S 3J1

Steelmatic Manufacturing Ltd

340 Carlingview Drive

Etobicoke, Ontario M9W 5G5


royal laser tech corporation - morningstar, inc

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