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    • Husky Injection Molding Systems Ltd. issues fiscal 2005 second quarter results

      For release 2005-03-10


      Toronto, Ontario — Husky Injection Molding Systems Ltd. (TSX:HKY) today announced its results for the second quarter ended January 31, 2005. All figures in this press release are in US dollars unless otherwise stated.

      Management's Discussion and Analysis

      The following is a discussion of the second quarter fiscal 2005 consolidated financial condition and results of operations of Husky Injection Molding Systems Ltd. (the "Company"). This analysis is current as of March 3, 2005, and should be read in conjunction with the Company's unaudited interim consolidated financial statements for the three and six month periods ended January 31, 2005, and the Company's Annual Report 2004 - Financial Supplement for the year ended July 31, 2004. Additional information regarding the Company, including its Annual Information Form, can be found on SEDAR at www.sedar.com.

      The Company assesses its performance by reviewing the geographic mix of sales from its territories, and gross profit and profitability on a consolidated basis.

      Summarized Financial Results
      
      (in millions of US dollars, except per share data, unaudited)
      
                                 Three Months Ended       Six Months Ended
                                 January    January    January     January
                                31, 2005   31, 2004   31, 2005    31, 2004
      ---------------------------------------------------------------------
      Orders                       230.0      237.8      454.7       444.9
      ---------------------------------------------------------------------
      Sales                        204.0      177.9      366.3       311.4
      ---------------------------------------------------------------------
      Net Income (Loss)             (2.8)       3.7      (16.1)       (6.1)
      ---------------------------------------------------------------------
      Earnings (Loss) Per Share    (0.02)      0.03      (0.14)      (0.05)
      ---------------------------------------------------------------------
      
      

      Results of Operations

      For the three and six month periods ended January 31, 2005 compared to the same periods in the previous year.

      Sales

      Sales for the second quarter increased 15% to $204.0 million, due to a higher opening backlog level. In North America, sales increased 21% due to higher shipments in packaging and automotive markets. In Europe, sales decreased 20%, principally due to lower shipments in packaging and PET applications. These decreases were partly offset by growth in the automotive market and from favourable foreign exchange rates on the translation of Euro-denominated shipments. On a comparative basis, foreign exchange on Euro-denominated shipments increased sales by approximately $4.0 million. Sales in Latin America increased 51%, reflecting strong shipments in packaging, automotive and PET markets. Sales in Asia Pacific grew 64%, principally due to increased PET shipments in all regions.

      Sales for the first six months increased 18% to $366.3 million, as a result of higher opening backlog at the start of the year and strong order intake. The increase reflects higher shipments in all territories, except Europe which was consistent with the prior year.

      In North America, sales increased 20% due to higher shipments in all application markets, except technical and general which were marginally below last year. Sales in Europe were consistent with last year as increased shipments in automotive and technical markets were offset by lower shipments in packaging and PET applications. On a comparative basis sales increased by approximately $7.0 million over last year as a result of favourable foreign exchange on Euro-denominated shipments. In Latin America, sales increased 54% as a result of higher shipments in all regions and all markets, with particular strength in PET applications. In Asia, sales grew 28% principally due to increased PET shipments in all regions.

      Net Income (Loss)

      The net loss for the quarter was $2.8 million ($0.02 loss per share), compared to a net income of $3.7 million ($0.03 earnings per share) last year. For the year-to-date period the net loss of $16.1 million ($0.14 loss per share) compares to a net loss of $6.1 million ($0.05 loss per share) last year.

      President's Message

      Robert Schad, Husky's President and Chief Executive Officer commented, "Orders in the second quarter were marginally below record levels achieved in the same period last year. Sales increased 15% to $204 million due to higher opening backlog. Despite strong sales in the quarter, results reflect a small loss due to higher costs associated with people-related expenses, new product ramp-up, and the impact of a stronger Canadian dollar.

      PET orders in the quarter slowed due to soft market conditions in Eastern Europe and China. We are encouraged, however, by our success in penetrating smaller volume applications with our new HyPET systems. This will allow us to increase our share of the market. We also continue to invest in development to improve system productivity and in programs to improve the shelf life of bottles. The high output of our new HyPET machines is also opening new opportunities in the replacement machine business with customers looking to modernize their facilities.

      Combined orders in other markets increased in the quarter. Our Hylectric machines accounted for much of this growth, where orders were up more than 65% compared to last year. This confirms the growing acceptance of this product line. For example, we booked our first orders in the DVD case market, which benefits significantly from the Hylectric platform.

      On a year-to-date basis, the marginal decline in PET orders was more than offset by growth in combined orders in other markets. Much of the pick-up was attributable to the widespread success of our Quadloc, Tandem, and Hylectric machines, particularly in the automotive and packaging markets. Automotive orders are up significantly in all territories compared to last year.

      With the increase in backlog levels, we are in a position to grow sales in fiscal 2005. However, the benefit of aggressive cost reduction programs started in fiscal 2004 has been slower than expected. Many of these programs include engineering solutions which are taking longer to complete. Through these initiatives we expect to offset some of the unfavourable conditions due to currency, new product ramp-up costs, and steel price fluctuations.

      Since founding Husky, I have built the Company on innovation, customer intimacy, and entrepreneurial drive. While these elements will remain critical, it is also clear that additional competencies to succeed will be required to achieve our goal of profitable growth. In January 2005, we announced that John Galt, currently the Company's Vice President, Operations and Chief Operating Officer, will take over as my successor. Through John's 20 year career at the Company, he has shown a tremendous track record of leadership, professionalism, passion for operational excellence, and strong profit orientation:

      • As General Manager of the Company's North American machine business, he led the rollout of a new product line resulting in record sales and profit;
      • While based at the Company's European campus in Luxembourg, he led a major initiative to restructure the operations, put in place a new leadership team, and improved performance in the hot runner and machine businesses;
      • As Vice President and COO, he has led the Company's global manufacturing operations with a major program to implement company-wide quality systems and best practices as well as developing a global team of strong business leaders.

      John will be able to do an excellent job driving improvements throughout the organization and improve profits. He is a firm believer in our culture and values, and I am confident that he is the right person to lead the change that is necessary to take the Company to the next level."

      2005 Outlook

      Global market conditions remain difficult to predict, and the Company expects that this uncertainty will persist through calendar 2005. Third quarter sales for the current fiscal year are expected to be in line with levels reached last year, and earnings will be lower than the $15.2 million achieved for the comparative period. Last year's third quarter results included favourable tax rates due to the recognition of tax loss carryforwards, which will not recur this year.

      For the full fiscal year, the Company expects that sales will increase compared to 2004. Despite the projected increase in sales, the Company continues to face adverse conditions as a result of the strong Canadian dollar, lower margin product mix, and rising steel prices. The Company is aggressively pursuing initiatives which will offset some of the unfavourable impact of these factors. Initiatives include off-shore manufacturing, investments in automation, global sourcing, engineering programs, and pricing strategies.

      Gross Profit

      Despite increased sales, gross profit for the second quarter of $43.1 million was consistent with last year. As a result, margins were 21.1% of sales compared to 24.2%. Lower margin product mix and increased expenses, most of which was due to salary and people-related costs, reduced gross profit by approximately $6.0 million. Other contributing factors included unfavourable foreign exchange rates on expenses denominated in Canadian dollars and competitive pricing pressures. These factors offset the favourable impact of higher sales volume.

      For the first six months, gross profit increased to $66.1 million from $62.9 million, with margins of 18.1% of sales compared to 20.2% last year. The increase in gross profit was primarily due to higher sales volume, which was partly offset by lower margin product mix, unfavourable foreign exchange rates on Canadian dollar-denominated expenses, and competitive pricing pressures. These offsetting factors reduced gross profit by approximately $15.0 million. Other contributing factors included higher salary and people-related expenses.

      Other Income and Expenses

      Selling and administration expenses were $40.8 million, up from $37.9 million last year. For the first six months, selling and administration expenses increased to $81.1 million from $70.3 million last year. For the quarter and year-to-date periods, the increases reflected higher salary and people-related expenses, and unfavourable foreign exchange rates on Canadian dollar and Euro-denominated expenses. For the year-to-date period, the increase also reflects the Company's participation in a large triennial trade show in Germany.

      Interest expense for the second quarter, net of interest income, increased to $2.7 million from $2.4 million, due to higher average borrowing levels combined with higher average borrowing rates. For the first six months, interest expense, net of interest income, increased to $5.2 million from $4.8 million, due to reduced interest income and higher average borrowing levels.

      Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)1

      EBITDA in the quarter was $14.5 million compared to $16.6 million last year; the decrease was due to higher selling and administration expenses.

      For the first six months, EBITDA was $9.7 million compared to $15.4 million; the decrease was due to higher selling and administration expenses, partly offset by increased gross profit.

      Income Taxes

      In the quarter, the net loss included an income tax provision of $2.5 million. The quarterly income tax provision resulted from an increase in the Company's future income tax asset valuation allowance. The Company records its future income tax assets (net of its valuation reserve) only to the extent that it is more likely than not it will realize the assets in the foreseeable future. In fiscal 2004, the net profit for the quarter included an income tax recovery of $1.0 million. The 2004 quarterly income tax recovery was the result of income earned in a jurisdiction where the Company had unrecognized loss carryforwards.

      The quarterly tax provision was recorded in accordance with the Company's practice of evaluating its future tax assets, which is discussed in more detail on page 8 under the "Critical Accounting Estimates" section in the Company's Annual Report 2004 - Financial Supplement.

      Orders and Backlog

      Orders in the second quarter decreased 3% to $230.0 million. Stronger performance in North America and Latin America was more than offset by lower orders in other territories. PET orders were down in all territories except Latin America, which was consistent with last year. This was partly offset by an increase in non-PET orders, particularly in Hylectric machines.

      Orders in North America increased primarily as a result of strong growth in packaging applications. In Europe, orders decreased from the high level achieved last year. The decrease was principally due to reduced PET demand in Eastern Europe, and lower orders in technical and general markets. On a comparative basis, orders in Europe increased by approximately $8.0 million as a result of favourable foreign exchange rates on Euro-denominated orders. In Latin America orders increased over last year with strong growth in all regions except Mexico. Orders were higher in all applications, with particular strength in the packaging market. Asia Pacific orders decreased primarily due to weak PET demand in North Asia.

      For the first six months, orders increased to $454.7 million from $444.9 million last year. Higher orders in the Americas were partly offset by decreases in other territories. PET orders were down marginally as softness in Europe and Asia Pacific was partly offset by increases in the Americas, with particular strength in North America. Combined orders in other markets increased as a result of higher demand in automotive and packaging applications.

      Backlog at January 31, 2005 increased 8% to $359.7 million from $332.6 million last year.

      Segmented Information

      Sales and Orders

      Please refer to the discussion of sales and orders above.

      Gross Profit

      The Company evaluates gross profit on a consolidated basis. The change in gross profit margin of the Company's manufacturing operations during the quarter is attributable to the factors discussed previously under "Gross Profit". In general, gross profit earned by the Company's Service and Sales territories fluctuates primarily as a result of changes to internal pricing between business units, foreign exchange fluctuations, and competitive pricing pressures. In Asia Pacific and Latin America, for both the quarter and year-to-date periods, gross profit margins decreased as a result of competitive pricing pressures. The reader is reminded that internal changes in pricing between business units and foreign exchange fluctuations may affect comparative Service and Sales and manufacturing profit margins, and that such changes may give rise to segmented results which are not necessarily indicative of external business or market conditions.

      Liquidity and Capital Resources

      Cash Position

      Cash provided by operating activities for the second quarter decreased to $4.7 million from $22.3 million last year. The reduction was due to increased non-cash working capital levels and lower profitability. Non-cash working capital increased in the quarter as a result of higher inventory and accounts receivable. The increase in inventory was consistent with higher backlog levels. These increases were partly offset by higher accounts payables and accruals, which increased principally due to higher trade payables, and customer deposits.

      For the first six months, cash provided by operating activities totalled $0.6 million, compared to cash used in operating activities of $32.7 million last year. The improvement was primarily attributable to a comparative decline in the use of non-cash working capital. From the beginning of the fiscal year, non-cash working capital increased due to higher inventory levels, partly offset by increased customer deposits and decreased accounts receivable.

      Capital Additions

      Capital additions for the quarter totalled $13.1 million compared to $16.8 million. Additions related principally to equipment purchases.

      Capital Resources

      Debt at January 31, 2005 totalled $179.0 million, compared to $172.3 million at July 31, 2004. The increase was principally due to temporary borrowing on the Company's revolving credit facility. Net debt2 increased to $159.7 million from $132.4 million at July 31, 2004, primarily as a result of reduced cash and cash equivalents. Debt as a percentage of capital was 33% at January 31, 2005, compared to 31% at July 31, 2004. Net debt as a percentage of capital increased to 31% from 26% at July 31, 2004.

      At January 31, 2005 the Company had committed but unutilized credit facilities totalling $74.2 million.

      The Company expects to meet its operating cash requirements through fiscal 2005, including required working capital investments, capital expenditures, and currently scheduled repayments of debt, from cash on hand, cash flow from operations, and its committed borrowing capacity.

      Changes in Accounting Policies Including Initial Adoption

      Effective August 1, 2004, the Company adopted the Canadian Institute of Chartered Accountants Handbook Section 3110 "Asset Retirement Obligations". The Company estimated and accrued the present value of its obligations to restore certain leased premises at the end of the lease term. At lease inception, the present value of this obligation is recognized in other long-term liabilities with a corresponding amount recognized in capital assets. The capital asset amount is amortized over the period from lease inception to the time the Company expects to vacate the premises, resulting in depreciation expense in the consolidated statement of operations. Subsequently, the obligation is adjusted for the accretion of discount and any changes in the amount or timing of the underlying liability.

      The Company adopted the new recommendations retroactively and comparative figures have been restated. Adopting the new standard for the reported figures as of July 31, 2004 resulted in an increase in capital assets, future income tax assets and other long-term liabilities of $203,000, $85,000 and $453,000 respectively, and a decrease in retained earnings of $165,000. The impact of this accounting policy change on reported net income for the three and six month periods ended January 31, 2005 was a decrease of $74,000 and $106,000 respectively. The impact on reported net income for the three and six month periods ended January 31, 2004 was a decrease of $17,000 and $34,000 respectively.

      1 EBITDA: Is a non-GAAP measure, which means earnings before interest, taxes, depreciation and amortization. EBITDA does not have a standardized meaning prescribed by GAAP, and which may not be directly comparable to similar measures presented by other companies due to the nature of its calculation. The Company believes this measure may be relevant to stakeholders.

      2 Net debt: Is a non-GAAP measure, which means total debt, less cash and cash equivalents. Net debt does not have a standardized meaning prescribed by GAAP, and may not be directly comparable to similar measures presented by other companies due to the nature of its calculation. The Company believes this measure may be relevant to stakeholders.

      HUSKY INJECTION MOLDING SYSTEMS LTD.
      CONSOLIDATED BALANCE SHEETS
      
      (IN THOUSANDS OF US DOLLARS, UNAUDITED)
      
                                        January 31, 2005     July 31, 2004
                                                                 (restated)
      ---------------------------------------------------------------------
      
      ASSETS
      Current
      Cash and cash equivalents                   19,295            39,901
      Accounts receivable                        120,909           129,957
      Income taxes receivable                      5,953             6,541
      Inventories                                219,384           186,261
      Prepaid expenses and other assets           11,699            11,147
      Future income tax assets                    27,365            22,724
      ---------------------------------------------------------------------
      Total current assets                       404,605           396,531
      Cross currency swap receivable              36,270            34,091
      Future income tax assets                    11,804             9,856
      Capital assets, net                        375,230           379,614
      ---------------------------------------------------------------------
      Total assets                               827,909           820,092
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      
      LIABILITIES AND SHAREHOLDERS' EQUITY
      Current
      Accounts payable and accrued charges       168,415           174,373
      Customers' deposits                         76,684            54,668
      Current portion of long-term debt            9,252             3,910
      ---------------------------------------------------------------------
      Total current liabilities                  254,351           232,951
      Cross currency swap payable                 29,032            29,032
      Long-term debt                             169,771           168,378
      Employee future benefits                    13,513            12,410
      Future income tax liabilities                  691               888
      Other long-term liabilities                    547               453
      ---------------------------------------------------------------------
      Total liabilities                          467,905           444,112
      ---------------------------------------------------------------------
      
      Shareholders' equity
      Share capital                              133,651           133,510
      Retained earnings                          226,353           242,470
      ---------------------------------------------------------------------
      Total shareholders' equity                 360,004           375,980
      ---------------------------------------------------------------------
      Total liabilities and shareholders'
       equity                                    827,909           820,092
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      
      
      HUSKY INJECTION MOLDING SYSTEMS LTD.
      CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
      
      (IN THOUSANDS OF US DOLLARS, EXCEPT PER SHARE DATA, UNAUDITED)
      
                                Three Months Ended        Six Months Ended
                               January     January     January     January
                                    31,         31,         31,         31,
                                  2005        2004        2005        2004
                                         (restated)              (restated)
      
      ---------------------------------------------------------------------
      
      Sales                    204,043     177,880     366,292     311,438
      Cost of sales            160,894     134,835     300,153     248,567
      ---------------------------------------------------------------------
      Gross profit              43,149      43,045      66,139      62,871
      ---------------------------------------------------------------------
      
      Other expenses
      Sales and administration  40,757      37,923      81,122      70,312
      Interest - current, net      (92)       (159)       (205)       (463)
               - long-term       2,752       2,608       5,361       5,221
      ---------------------------------------------------------------------
      Total expenses            43,417      40,372      86,278      75,070
      ---------------------------------------------------------------------
      
      Income (loss) before
       income taxes               (268)      2,673     (20,139)    (12,199)
      Provision for (recovery of)
       income taxes
       Current                     647         530       1,298       1,312
       Future                    1,887      (1,565)     (5,320)     (7,403)
      ---------------------------------------------------------------------
                                 2,534      (1,035)     (4,022)     (6,091)
      ---------------------------------------------------------------------
      Net income (loss) for
       the period               (2,802)      3,708     (16,117)     (6,108)
      
      Retained earnings,
       beginning
       of period               229,155     214,022     242,635     223,821
      Adjustment due to
       change in accounting
       policy                        -        (106)       (165)        (89)
      ---------------------------------------------------------------------
      Retained earnings,
       end of period           226,353     217,624     226,353     217,624
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      
      Basic and diluted
       earnings (loss)
       per share                 (0.02)       0.03       (0.14)      (0.05)
      ---------------------------------------------------------------------
      Weighted average
       number of common
       shares outstanding  116,951,382 116,866,602 116,943,194 116,837,545
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      
      
      HUSKY INJECTION MOLDING SYSTEMS LTD.
      CONSOLIDATED STATEMENTS OF CASH FLOWS
      
      (IN THOUSANDS OF US DOLLARS, UNAUDITED)
      
                                Three Months Ended        Six Months Ended
                               January     January     January     January
                                    31,         31,         31,         31,
                                  2005        2004        2005        2004
                                         (restated)              (restated)
      ---------------------------------------------------------------------
      
      OPERATING ACTIVITIES
      Net income (loss) for the
       period                    (2,802)     3,708      (16,117)    (6,108)
      Add (deduct) items not
       affecting cash
       Depreciation              12,099     11,368       24,482     22,621
       Amortization                  29         64          190        225
       Loss (gain) on disposal
       of capital assets            609        121        1,004       (661)
       Employee future benefits     (77)       353        1,103      1,437
       Future income taxes        1,715     (2,919)      (6,786)    (9,219)
      ---------------------------------------------------------------------
                                 11,573     12,695        3,876      8,295
      Net decrease (increase)
       in non-cash working
       capital balances related
       to operations             (6,850)     9,596       (3,299)   (40,995)
      ---------------------------------------------------------------------
      Cash provided by (used in)
       operating activities       4,723      22,291         577    (32,700)
      ---------------------------------------------------------------------
      
      INVESTING ACTIVITIES
      Additions to capital
       assets                   (13,125)    (16,802)    (21,174)   (28,885)
      Net increase (decrease)
       in accounts payable and
       accrued charges related
       to capital asset additions  (825)       (335)     (3,298)       940
      ---------------------------------------------------------------------
      Cash used for capital
       asset additions          (13,950)    (17,137)    (24,472)   (27,945)
      Proceeds from sale of
       capital assets                63         302         148      2,567
      ---------------------------------------------------------------------
      Cash used in investing
       activities               (13,887)    (16,835)    (24,324)   (25,378)
      ---------------------------------------------------------------------
      
      FINANCING ACTIVITIES
      Additional long-term debt   5,000           -       5,000          -
      Repayment of long-term
       debt                      (1,130)       (923)     (2,000)    (1,743)
      Maturity of marketable
       securities                     -           -           -     49,966
      Issue of common shares         78          82         141        322
      ---------------------------------------------------------------------
      Cash provided by (used in)
       financing activities       3,948        (841)      3,141     48,545
      ---------------------------------------------------------------------
      
      Net increase (decrease)
       in cash and cash
       equivalents during the
       period                    (5,216)      4,615     (20,606)    (9,533)
      Cash and cash equivalents,
       beginning of period       24,511      58,582      39,901     72,730
      ---------------------------------------------------------------------
      Cash and cash equivalents,
       end of period             19,295      63,197      19,295     63,197
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      
      Supplementary cash flow
       information
      Cash income taxes paid, net    97       2,255         461      6,021
      ---------------------------------------------------------------------
      Cash interest paid, net       223          29       5,004      4,599
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      
      
                      HUSKY INJECTION MOLDING SYSTEMS LTD.
                            SEGMENTED INFORMATION
      
      (IN THOUSANDS OF US DOLLARS)
      
           Three Months Ended January 31, 2005 (unaudited)
      ---------------------------------------------------------------------
          Service and Sales territories
      ---------------------------------------------------------------------
                                               Manufact-  Elimina-
                 North   Latin           Asia  uring      tions
               America America  Europe Pacific operations &other(i)  Total
      ---------------------------------------------------------------------
      External
       sales    77,815  22,846  55,015  48,367         -        -  204,043
      
      Intersegment
       sales         -       -       -       -   173,686 (173,686)       -
      ---------------------------------------------------------------------
      Total
       sales    77,815  22,846  55,015  48,367   173,686 (173,686) 204,043
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Gross
       profit   12,414   3,137   7,039   7,793     5,319    7,447   43,149
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Depreciation
       and
       amorti-
       zation      855     199     623     434     8,907    1,110   12,128
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Capital
       asset
       additions 2,375      76     329     142     9,684      519   13,125
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Total
       assets  104,970  38,973 100,748  73,869   382,509  126,840  827,909
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      
      
      ---------------------------------------------------------------------
            Three Months Ended January 31, 2004 (unaudited, restated)
      ---------------------------------------------------------------------
          Service and Sales territories
      ---------------------------------------------------------------------
      
                                               Manufact-  Elimina-
                 North   Latin           Asia  uring      tions
               America America  Europe Pacific operations &other(i)  Total
      ---------------------------------------------------------------------
      
      External
       sales    64,241  15,123  68,951  29,565         -        -  177,880
      
      Intersegment
       sales         -       -       -       -   158,155 (158,155)       -
      ---------------------------------------------------------------------
      Total
       sales    64,241  15,123  68,951  29,565   158,155 (158,155) 177,880
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Gross
       profit   11,587   2,628   7,140   5,555    20,231   (4,096)  43,045
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Depreciation
       and
       amorti-
      zation       909     217     616     260     8,174    1,256   11,432
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Capital
       asset
       additions    81     181     264   4,778    11,238      260   16,802
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Total
       assets  101,430  30,647 133,697  65,641   358,643  115,092  805,150
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      
      
            Six Months Ended January 31, 2005 (unaudited)
      ---------------------------------------------------------------------
          Service and Sales territories
      ---------------------------------------------------------------------
                                               Manufact-  Elimina-
                 North   Latin           Asia  uring      tions
               America America  Europe Pacific operations &other(i)  Total
      ---------------------------------------------------------------------
      
      External
       sales   149,944  43,201 103,599  69,548         -         - 366,292
      Intersegment
       sales         -       -       -       -   316,527 (316,527)       -
      ---------------------------------------------------------------------
      Total
       sales   149,944  43,201 103,599  69,548   316,527 (316,527) 366,292
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Gross
       profit   25,821   6,247  13,064  10,980       553    9,474   66,139
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Depreciation
       and
       amorti-
       zation    1,713     402   1,247     835    18,048    2,427   24,672
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Capital
       asset
       additions 2,640     101     733     357    16,068    1,275   21,174
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Total
       assets  104,970  38,973 100,748  73,869   382,509  126,840  827,909
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      
      
            Six Months Ended January 31, 2004 (unaudited, restated)
      ---------------------------------------------------------------------
          Service and Sales territories
      ---------------------------------------------------------------------
                                               Manufact-  Elimina-
                 North   Latin           Asia  uring      tions
               America America  Europe Pacific operations &other(i)  Total
      ---------------------------------------------------------------------
      
      External
       sales   125,050  28,075 104,113  54,200         -        -  311,438
      
      Intersegment
       sales         -       -       -       -   270,521 (270,521)       -
      ---------------------------------------------------------------------
      Total
       sales   125,050  28,075 104,113  54,200   270,521 (270,521) 311,438
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Gross
       profit   23,428   5,155  12,364  10,336    16,828   (5,240)  62,871
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Depreciation
       and
       amorti-
       zation    1,802     318   1,218     505    16,381    2,622   22,846
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Capital
       asset
       additions   296     189     405   7,131    19,255    1,609   28,885
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      Total
       assets  101,430  30,647 133,697  65,641   358,643  115,092  805,150
      ---------------------------------------------------------------------
      ---------------------------------------------------------------------
      (i) Eliminations and other includes Corporate activities and assets
       not attributable to the operating segments.
      
      

      External sales to customers in Canada and the United States for the three months ended January 31, 2005 were $4,467 (2004 - $4,556) and $ 73,348 (2004- $59,685), respectively. External sales to customers in Canada and the United States for the six months ended January 31, 2004 were $14,051 (2004 - $7,129) and $135,893 (2004 - $117,921), respectively.

      Capital assets in Canada, the United States and Luxembourg as at January 31, 2005 were $134,226 (2004 - $134,372), $101,737 (2004 - $107,547) and $95,205 (2004 - $100,975), respectively.

      This press release contains certain forward-looking statements which reflect the Company's current view of future events, business outlook and anticipated financial performance. Such statements are subject to assumptions which may be incorrect, and to risks and uncertainties which are difficult to predict. Future events, outcomes and financial performance may differ materially from those predicted in these statements as a result of factors which may include, but are not limited to, those described on pages 10 and 11 under the "Risks and Uncertainties" section in the Company's Annual Report 2004 - Financial Supplement for the year ended July 31, 2004.

      Husky Injection Molding Systems Ltd. (www.husky.ca) is a leading supplier of injection molding equipment and services to the plastics industry. The Company designs and manufactures the industry's most comprehensive range of injection molding equipment, including machines, molds, hot runners and robots. In addition, Husky's value-added services include factory planning, customer training and systems integration. In fiscal 2004, sales were $774 million, with approximately 3,000 people employed worldwide.

      Customers use Husky's equipment and services to produce a wide range of plastic parts, including bottles and caps for water and soft drinks; containers, from yogurt cups to recycling bins; medical applications, such as syringes and vials; automotive components, from headlight housings to bumpers; and parts for electronic equipment, including personal digital assistants and mobile audio devices.

      Husky has more than 40 Service and Sales offices - including 19 Technical Centers - supporting customers in over 100 countries. Manufacturing facilities are located on campuses in Canada, the United States, Luxembourg, and China. Our core values - a passion for excellence, bold goals, proactive environmental responsibility, making a contribution and uncompromising honesty - are the foundation of our business practices worldwide. They are integral to everything we do and define who we are as a company.

      The Company's common shares are listed on the Toronto Stock Exchange (HKY) and are included in the S&P/TSX Composite Index.

      About Husky — Husky Injection Molding Systems (www.husky.ca) is a leading global supplier of injection molding equipment and services to the plastics industry. The company has more than 40 service and sales offices, supporting customers in over 100 countries. Husky's manufacturing facilities are located in Canada, the United States, Luxembourg and China. 

      For more information, please contact:
      Media Relations
      Husky Injection Molding Systems
      E-mail: media@husky.ca

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