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    • Husky Injection Molding Systems Ltd. issues fiscal 2005 fourth quarter and full year results

      For release 2005-09-22


      Toronto, Ontario


      Husky Injection Molding Systems Ltd. (TSX: HKY) today announced its results for the fourth quarter and year ended July 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 consolidated financial condition and results of operations of Husky Injection Molding Systems Ltd. (the "Company") for the quarter and the year ended July 31, 2005. This analysis is current as of September 22, 2005, and should be read in conjunction with the Company's Annual Report 2004 - Financial Supplement for the year ended July 31, 2004, together with the consolidated financial statements for the three month period ended July 31, 2005 and the consolidated financial statements for the twelve month period ended July 31, 2005. 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          Year Ended
                                      July 31,    July 31,    July 31,    July 31,
                                        2005        2004        2005        2004
                                 --------------------------------------------------
          Orders                         188.0       202.9       843.4       838.9
          -------------------------------------------------------------------------
          Sales                          253.6       227.9       860.0       773.7
          -------------------------------------------------------------------------
          Net income                       6.0         9.7         2.1        18.7
          -------------------------------------------------------------------------
          Earnings per Share              0.05        0.08        0.02        0.16
          -------------------------------------------------------------------------
      

      Results of Operations

      Fourth Quarter 2005 and Fiscal Year ended July 31, 2005

      Sales

      Sales for the fourth quarter increased 11% to $253.6 million due to a higher opening backlog level. In North America, sales increased 7% due to higher shipments in packaging applications, partly offset by reduced shipments in all other markets. Sales in Europe were up 6% as lower shipments in PET applications were more than offset by increases in packaging and automotive markets. Approximately 40% of the increase was due to favourable exchange rates on the translation of Euro-denominated sales. In Asia Pacific, increased sales in non-PET markets more than offset the reduced PET shipments. Sales in Latin America increased 29% as a result of higher shipments in automotive and packaging applications.

      Sales for the year ended July 31, 2005 were $860.0 million, up 11% from $773.7 million last year. The increase was primarily due to higher opening backlogs in all territories and strong order intake in the Americas. Increased shipments in the Americas and Asia Pacific were partly offset by weaker shipments in Europe.

      Sales in North America grew 22% as a result of higher opening backlog and strong order bookings in the first half of the year. Shipments were up in all market applications except technical and general. The increase in PET shipments reflected strong growth in isotonic drink and juice applications. Non-PET shipments increased in packaging and automotive applications, partly offset by lower shipments in technical and general.

      In Europe, sales decreased 9% as higher opening backlog levels were more than offset by lower orders booked in the first three quarters of the current fiscal year. PET shipments decreased as processors absorbed production capacity installed in the previous year. In non-PET markets, increased automotive, technical and general shipments were partly offset by decreases in packaging applications. The impact of year-over-year currency rate changes resulted in an increase of Euro-denominated sales by approximately $15.2 million.

      Sales in Asia Pacific were up 16% over last year due to growth in all regions and all application markets. The increase in sales was principally due to the higher opening backlog, which offset weakness in order booking during the year. In Latin America, sales increased 42% with growth in all regions and in all market applications. The increase in PET shipments was principally due to higher demand in Mexico, Brazil and Southern South America in carbonated soft drink applications. The increase in automotive sales was principally due to growth in Mexico.

      Net Income

      For the fourth quarter net income was $6.0 million ($0.05 earnings per share), compared to $9.7 million ($0.08 earnings per share) last year. Net income for the year was $2.1 million ($0.02 earnings per share), compared to $18.7 million ($0.16 earnings per share) last year.

      President's Message

      John Galt, the Company's President and Chief Executive Officer commented, "The new product platforms developed over the past years reinforce our position as a technology leader and have become the foundation for technologies and processes that differentiate us from our competitors. While these developments are encouraging, our fiscal 2005 orders grew only marginally from the record levels achieved last year. Excess manufacturing capacity, currency fluctuations and rapidly changing raw material prices continue to exert relentless pressure on our industry.

      Sales for the year increased 11% to $860 million, however, profits suffered primarily due to a lower margin product mix, a stronger Canadian dollar and an increased income tax rate. There is no question that we have to catch up and transform Husky into a leaner and more efficient company while continuing to invest in innovation, customer support and growth.

      In fiscal 2006, our initiatives to improve profitability will include a focus on higher margin products. In addition, we will continue to build a global supply chain, globalize manufacturing and drive efficiency in all our operations. Of course, none of this can happen without the passion, creativity and commitment of great people. In fact, I believe that developing people is the most critical element of all.

      Succeeding Robert Schad, our founder and CEO for over fifty years is a tremendous responsibility. I would like to thank Robert and the Board for their confidence and all the people at Husky for their support. I believe Husky is a great company with exciting prospects for the future."

      2006 Outlook

      Global orders for injection molding equipment remain well below peak levels reached in 2000. Given excess manufacturing capacity and challenging market conditions, the Company believes it prudent not to provide specific guidance for the fiscal year. Despite these uncertain market conditions, the Company remains cautiously optimistic about the growth prospects in its key markets and its ability to increase market share.

      In fiscal 2006, the Company faces a number of specific challenges including achieving improved margins through aggressive cost reduction targets, the impact of currency fluctuations, in particular, a continued weakening of the US dollar relative to the Euro and Canadian dollar, and rapidly changing raw material prices. As discussed in the President's message above, initiatives are already in process to improve profitability. In addition, the Company expects a favourable impact from the price increase introduced in the second half of fiscal 2005. The Company expects to invest approximately $35.0 million in capital additions, the majority of which is equipment aimed at supporting manufacturing in Asia Pacific, providing customers with better lead times and reducing costs.

      For the first quarter, despite lower opening backlog levels, the Company expects shipments to increase compared to last year. However, a loss of $0.09 to $0.12 per share is expected principally due to unfavourable foreign exchange rates on Canadian dollar-denominated expenses.

      Consistent with prior years, the Company expects that a significant portion of sales and net income will be generated in the last six months of the fiscal year.

      Gross Profit

      In the fourth quarter gross profit decreased to $45.8 million from $50.1 million last year. As a result, margins were 18.1% of sales compared to 22.0%. The decrease was principally due to lower margin product mix and higher depreciation expense. Depreciation expense in fiscal 2004 included the favourable impact of investment tax credits recognized on certain manufacturing equipment. Gross profit, in fiscal 2005, was also reduced by costs associated with hot runner manufacturing in Asia Pacific, which were reclassified from selling and administration expenses, and costs related to the closure and transfer of the Vermont Controls operation to Bolton, Ontario, planned for October 2005. These factors reduced gross profit by approximately $17.0 million, and were partly offset by the favourable impact of higher sales volumes and cost reduction initiatives.

      Gross profit for the year increased to $176.1 million (20.5% of sales) from $169.2 million (21.9% of sales) last year. Higher sales volumes, cost reduction initiatives and reduced compensation incentives increased gross profit by approximately $54.0 million. These factors were partly offset by lower margin product mix and lower investment tax credits. Other contributing factors included higher steel prices, unfavourable foreign exchange rates on Canadian dollar-denominated expenses, which were partly offset by favourable foreign exchange on the translation of Canadian and Euro-based balance sheets, and competitive pricing pressures. Gross profit was further reduced by approximately $1.5 million, due to the closure of the Vermont Controls operation and its transfer to the Bolton campus.

      Other Income and Expenses

      Selling and administration expenses for the fourth quarter were $30.9 million, down from $38.4 million last year. The decrease was principally due to lower compensation incentives, which were reduced as a result of lower profitability levels, reduced discretionary spending, and the reclassification of costs associated with hot runner manufacturing in Asia Pacific, which totalled $2.2 million.

      For the year, selling and administration expenses were $148.7 million up from $145.9 million last year. The increase was due to higher salary and people related expenses and unfavourable foreign exchange rates on the translation of Euro and Canadian dollar-denominated expenses. These factors were partly offset by lower compensation incentives and reduced discretionary spending.

      Interest expense for the fourth quarter, net of interest income, increased to $6.5 million from $2.6 million last year. The increase was principally due to a make-whole payment of $3.6 million associated with the early redemption of the Company's debentures, which were scheduled to mature in March 2006.

      Interest expense for the year, net of interest income, increased to $14.3 million from $9.7 million last year, primarily as a result of the make-whole payment described above. Other contributing factors included higher average borrowing rates, increased average borrowing levels and lower interest income earned on cash and cash equivalent balances.

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

      For the fourth quarter EBITDA increased to $29.4 million from $20.3 million last year as a result of lower selling and administration expenses, partly offset by lower gross profit. EBITDA for the year increased to $79.0 million from $66.5 million last year due to higher gross profit, partly offset by increased selling and administration expenses.

      Income Taxes

      Last year's fourth quarter results included favourable tax rates due to the recognition of tax loss carryforwards, which did not recur this year.

      The income tax provision for the year ended July 31, 2005 of $11.0 million compares to a recovery of income taxes of $5.2 million last year. The income tax provision includes a $4.6 million increase in the Company's future income tax asset valuation allowance. The Company records its future income tax assets (net of its valuation allowance) only to the extent that it is more likely than not it will realize the assets in the foreseeable future. In fiscal 2004, the income tax recovery was attributable to recognition of tax loss carryforwards.

      The 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 of the Company's Annual Report 2004 - Financial Supplement.

      Orders and Backlog

      Orders for the fourth quarter decreased to $188.0 million from $202.9 million. Lower orders in Asia Pacific and North America were partly offset by increases in Latin America and Europe. PET orders decreased 21% principally due to lower order activity in Asia Pacific, compared to the record levels achieved last year. Non-PET orders grew 6% as increases in packaging applications were partly offset by decreases in other markets.

      Orders in North America decreased as a result of lower demand in technical and general applications. Orders in other applications were consistent with last year. In Europe, orders increased primarily due to the impact of favourable foreign exchange rates on the translation of Euro- denominated orders, which accounted for approximately 60% of the increase. European orders, excluding the impact of foreign exchange, increased marginally as growth in non-PET applications was partly offset by lower PET orders. In Asia Pacific, orders decreased following a quarter of record orders last year. Decreased PET orders were partly offset by increased demand in packaging, technical and general applications. Orders in Latin America were up, primarily as a result of increased PET demand in all regions.

      Orders for the year ended July 31, 2005 increased marginally to $843.4 million from the record level of $838.9 million achieved last year. PET orders declined as challenging market conditions in Asia Pacific and Europe offset growth in the Americas. Non-PET orders grew as demand in packaging and automotive applications were partly offset by decreases in technical and general markets.

      Orders in North America increased due to strong growth in packaging and PET applications, partly offset by lower orders in technical and general markets. Packaging orders increased primarily due to continued growth in closures, and conversions to thinwall food packaging. PET demand improved as processors added capacity in isotonic drink and juice applications, following a year of weak order intake in fiscal 2004. Technical and general applications decreased as processors ramped up recently installed capacity, following strong growth achieved in orders last year.

      In Europe, orders decreased primarily as a result of weakness in the PET market in Eastern Europe as processors focused on utilizing installed capacity following a year of strong growth in fiscal 2004. Orders in non-PET applications increased as strong demand in automotive was partly offset by lower orders in packaging, technical and general markets. Orders in automotive were higher due to increased new vehicle launches, and the specialized technology offered by the Quadloc platform. The impact of year-over-year currency rate changes resulted in an increase of Euro-denominated orders of approximately $16.0 million.

      In Asia Pacific, orders decreased as a result of lower demand in North Asia, which was partly offset by growth in other regions. The decrease in North Asia was due to measures implemented by the Chinese government, which resulted in a tightening of credit and a deferral of capital purchases. As a result PET orders were down, partly offset by growth in non-PET applications. The increase in non-PET orders was principally due to growth in packaging applications. Other factors included higher hot runner orders, following the Company's investment strategy of local manufacturing in Shanghai. Orders in Latin America were higher in all regions except Mexico, and in all applications other than technical and general. Orders in Brazil increased significantly, primarily in PET and packaging, as a result of improved market conditions.

      Consolidated backlog at July 31, 2005 was $243.8 million compared to $265.1 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 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. 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 year ended July 31, 2005 totalled $34.0 million compared to cash used in operating activities of $35.1 million last year. The improvement was due to a comparative reduction in cash used by non-cash working capital and the change in future income taxes, partly offset by lower profitability.

      From the beginning of the current fiscal year, non-cash working capital balances increased principally due to lower accounts payable and accruals and higher inventory, partly offset by lower income taxes receivable. The reduction in accounts payable and accruals is primarily due to reduced compensation incentives and lower trade payables.

      Capital Additions

      Capital additions for the year totalled $55.5 million compared to $54.4 million last year. Capital investments related principally to equipment purchases for the Company's manufacturing operations.

      Capital Resources

      Debt at July 31, 2005 totalled $164.3 million, down from $172.3 million last year. The decrease was principally due to the redemption of the Company's series A, B and C debentures, partly offset by the placement of the series D and E debentures. Net debt(2) was $145.1 million compared with $132.4 million at July 31, 2004. Debt as a percentage of capital was 30%, compared to 31% last year. Net debt as a percentage of capital was 28% compared to 26% last year.

      The Company expects to meet its operating cash requirements through fiscal 2006, 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 facilities.

      Changes in Accounting Policies Including Initial Adoption

      Asset Retirement Obligations

      Effective August 1, 2004, the Company adopted the Canadian Institute of Chartered Accountants (CICA) Handbook Section 3110 "Asset Retirement Obligations". The Company estimated and accrued the present value of its obligation 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 statements 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 year ended July 31, 2005 was a decrease of $170,000. The impact on reported net income for the year ended July 31, 2004 was a decrease of $76,000.

      Revenue Recognition

      During the year, the Company adopted the CICA Emerging Issues Committee (EIC) Abstract No. 142, "Revenue Arrangements with Multiple Deliverables". Some of the Company's sales contracts include a portion of revenue which relates to equipment installation. Revenues from these installation services, where applicable, are accounted for as a separate revenue element where the service has value to the customer on a stand-alone basis. Revenues associated with installation services are recognized upon completion of installation. This standard was applied to contracts with separate revenue elements entered into during 2005. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

      Forward Looking Statements

      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.

      About Husky

      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 2005, sales were $860 million, with approximately 3,050 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).

      (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 that this measure may be relevant to stakeholders.

      (2) Net debt is a non-GAAP measure which does not have a standardized meaning prescribed by GAAP, and which may not be directly comparable to similar measures provided 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)
                                                            July 31,      July 31,
                                                              2005          2004
                                                                         (restated)
          -------------------------------------------------------------------------
          ASSETS
          Current
          Cash and cash equivalents                           19,149        39,901
          Accounts receivable                                133,183       129,957
          Income taxes receivable                              2,419         6,541
          Inventories                                        191,761       186,261
          Prepaid expenses and other assets                    9,523        11,147
          Future income tax assets                            16,749        22,724
          -------------------------------------------------------------------------
          Total current assets                               372,784       396,531
          Cross currency swap receivable, net                  2,040         5,059
          Future income tax assets                            10,973         9,856
          Capital assets, net                                376,596       379,614
          -------------------------------------------------------------------------
          Total assets                                       762,393       791,060
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
      
          LIABILITIES AND SHAREHOLDERS' EQUITY
          Current
          Accounts payable and accrued charges               149,274       174,373
          Customers' deposits                                 54,410        54,668
          Current portion of long-term debt                    3,904         3,910
          -------------------------------------------------------------------------
          Total current liabilities                          207,588       232,951
          Long-term debt                                     160,390       168,378
          Employee future benefits                            13,906        12,410
          Future income tax liabilities                        1,401           888
          Other long-term liabilities                            578           453
          -------------------------------------------------------------------------
          Total liabilities                                  383,863       415,080
          -------------------------------------------------------------------------
      
          Shareholders' equity
          Share capital                                      133,985       133,510
          Retained earnings                                  244,545       242,470
          -------------------------------------------------------------------------
          Total shareholders' equity                         378,530       375,980
          -------------------------------------------------------------------------
          Total liabilities and shareholders' equity         762,393       791,060
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
      
      
      
                          HUSKY INJECTION MOLDING SYSTEMS LTD.
               CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
      
          (IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA, UNAUDITED)
      
                                 Three Months Ended              Year Ended
                                July 31,      July 31,      July 31,      July 31,
                                  2005          2004          2005          2004
                                             (restated)                  (restated)
          -------------------------------------------------------------------------
          Sales                  253,616       227,884       860,030       773,699
          Cost of sales          207,789       177,769       683,967       604,452
          -------------------------------------------------------------------------
          Gross profit            45,827        50,115       176,063       169,247
          -------------------------------------------------------------------------
      
          Other expenses
          Sales and
           administration         30,937        38,411       148,703       145,945
          Interest - current,
                     net            (100)          (45)         (376)         (675)
                   - long-term     6,550         2,626        14,671        10,403
          -------------------------------------------------------------------------
          Total expenses          37,387        40,992       162,998       155,673
          -------------------------------------------------------------------------
      
          Income before
           income taxes            8,440         9,123        13,065        13,574
          Provision for
           (recovery of)
           income taxes
           Current                 2,537          (501)        8,573         2,032
           Future                    (78)          (52)        2,417        (7,196)
          -------------------------------------------------------------------------
                                   2,459          (553)       10,990        (5,164)
          -------------------------------------------------------------------------
          Net income for the
           period                  5,981         9,676         2,075        18,738
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
      
          Basic and diluted
          earnings per share        0.05          0.08          0.02          0.16
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
      
          Weighted average
          number of common
          shares
          outstanding        117,056,511   116,916,319   116,984,393   116,871,882
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
      
          Retained Earnings
          Opening balance, as
          reported               238,564       232,936       242,635       223,821
          Adjustment due to
          change in
          accounting policy            -          (142)         (165)          (89)
          -------------------------------------------------------------------------
          Opening balance as
          restated               238,564       232,794       242,470       223,732
          Net income               5,981         9,676         2,075        18,738
          -------------------------------------------------------------------------
          Retained earnings,
          end of period          244,545       242,470       244,545       242,470
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
      
      
      
                           HUSKY INJECTION MOLDING SYSTEMS LTD.
                          CONSOLIDATED STATEMENTS OF CASH FLOWS
      
          (IN THOUSANDS OF US DOLLARS, UNAUDITED)
      
                                 Three Months Ended              Year Ended
                                July 31,      July 31,      July 31,      July 31,
                                  2005          2004          2005          2004
                                             (restated)                  (restated)
          -------------------------------------------------------------------------
          OPERATING ACTIVITIES
          Net income for the
          period                   5,981         9,676         2,075        18,738
          Add (deduct) items
          not affecting cash
           Depreciation           14,343         8,511        51,281        42,861
           Amortization              186            65           408           356
           Loss (gain) on
            disposal of
            capital assets          (596)          778           477           262
           Employee future
            benefits                 363           876         1,496         2,402
           Future income
            taxes                  3,545       (11,417)        5,371       (20,925)
          -------------------------------------------------------------------------
                                  23,822         8,489        61,108        43,694
          Net decrease
          (increase) in
          non-cash working
          capital balances
          related to
          operations              (1,921)        5,332       (27,155)      (78,765)
          -------------------------------------------------------------------------
          Cash provided by
          (used in)
          operating
          activities              21,901        13,821        33,953       (35,071)
          -------------------------------------------------------------------------
      
          INVESTING ACTIVITIES
          Additions to capital
          assets                 (25,105)       (9,528)      (55,515)      (54,431)
          Net increase
          (decrease) in
          accounts payable and
          accrued charges
          related to capital
          asset additions          2,330         1,124        (1,285)        3,294
          -------------------------------------------------------------------------
          Cash used for capital
          asset additions        (22,775)       (8,404)      (56,800)      (51,137)
          Proceeds from sale of
          capital assets           6,346           352         6,849         3,064
          Maturity of
          marketable securities        -             -             -        49,966
          -------------------------------------------------------------------------
          Cash provided by (used
          in) investing
          activities             (16,429)       (8,052)      (49,951)        1,893
          -------------------------------------------------------------------------
      
          FINANCING ACTIVITIES
          Additional long-term
          debt                   132,897         3,291       137,897         3,291
          Repayment of
          long-term debt        (141,822)         (857)     (149,883)       (3,458)
          Proceeds on
          settlement of cross
          currency swap, net       6,757             -         6,757             -
          Issue of common
          shares                      68            76           475           516
          -------------------------------------------------------------------------
          Cash provided by
          (used in) financing
          activities              (2,100)        2,510        (4,754)          349
          -------------------------------------------------------------------------
      
          Net increase
          (decrease) in cash
          and cash equivalents
          during the period        3,372         8,279       (20,752)      (32,829)
          Cash and cash
          equivalents,
          beginning of period     15,777        31,622        39,901        72,730
          -------------------------------------------------------------------------
          Cash and cash
          equivalents, end of
          period                  19,149        39,901        19,149        39,901
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
      
          Supplementary cash
          flow information
          Cash income taxes
          paid, net                2,490         1,553         3,917         7,659
          -------------------------------------------------------------------------
          Cash interest paid,
          net                      6,355           130        16,425         9,368
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
      
      
      
                          HUSKY INJECTION MOLDING SYSTEMS LTD.
                                  SEGMENTED INFORMATION
      
          (IN THOUSANDS OF US DOLLARS, UNAUDITED)
      
                                    Three Months Ended July 31, 2005
                   ----------------------------------------------------------------
                     Service and Sales territories
                   ---------------------------------
                                                     Manufact-  Elimin-
                    North    Latin            Asia   uring      ations &
                   America  America  Europe  Pacific operations other (i)   Total
          -------------------------------------------------------------------------
      
          External
           sales     91,160  34,846   83,641   43,969        -          -   253,616
          Intersegment
           sales          -       -        -        -  212,071   (212,071)        -
          -------------------------------------------------------------------------
          Total
           sales     91,160  34,846   83,641   43,969  212,071   (212,071)  253,616
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Gross
           profit    16,785   5,084    9,265    7,566   11,257     (4,130)   45,827
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Depreciation
           and amort-
           ization      891     197      678      366   11,764        633    14,529
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Capital
           asset
           additions    184     201      361    1,958   14,341      8,060    25,105
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Total
           assets   114,031  34,246  100,432   73,729  357,403     82,552   762,393
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
      
      
                              Three Months Ended July 31, 2004 (restated)
                   ----------------------------------------------------------------
                     Service and Sales territories
                   ---------------------------------
                                                      Manufact-  Elimin-
                     North    Latin            Asia   uring      ations &
                    America  America  Europe  Pacific operations other (i)   Total
          -------------------------------------------------------------------------
      
          External
           sales     85,537  26,954   78,959   36,434        -          -   227,884
          Intersegment
           sales          -       -        -        -  190,426   (190,426)        -
          -------------------------------------------------------------------------
          Total
           sales     85,537  26,954   78,959   36,434  190,426   (190,426)  227,884
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Gross
           profit    14,471   3,029    9,690    4,914   17,559        452    50,115
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Depreciation
           and amort-
           ization      865     112      589      329    5,579      1,102     8,576
          -------------------------------------------------------------------------
          Capital
           asset
           additions    194      94      585    7,332      (79)     1,402     9,528
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Total
           assets   106,914  35,490  129,127   75,366  355,683     88,480   791,060
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
      
      
                                       Year Ended July 31, 2005
                   ----------------------------------------------------------------
                     Service and Sales territories
                   ---------------------------------
                                                      Manufact-  Elimin-
                     North    Latin            Asia   uring      ations &
                    America  America  Europe  Pacific operations other (i)   Total
          -------------------------------------------------------------------------
      
          External
           sales    344,945  96,900  266,817  151,368        -          -   860,030
          Intersegment
           sales          -       -        -        -  738,489   (738,489)        -
          -------------------------------------------------------------------------
          Total
           sales    344,945  96,900  266,817  151,368  738,489   (738,489)  860,030
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Gross
           profit    59,455  14,401   32,428   24,849   38,297      6,633   176,063
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Depreciation
           and amort-
           ization    3,475     802    2,542    1,597   38,982      4,291    51,689
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Capital
           asset
           additions  3,703     356    1,117    3,396   34,573     12,370    55,515
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Total
           assets   114,031  34,246  100,432   73,729  357,403     82,552   762,393
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
      
      
                                   Year ended July 31, 2004 (restated)
                   ----------------------------------------------------------------
                     Service and Sales territories
                   ---------------------------------
                                                      Manufact-  Elimin-
                     North    Latin            Asia   uring      ations &
      
                    America  America  Europe  Pacific operations other (i)   Total
          -------------------------------------------------------------------------
          External
           sales    282,947  68,209  292,039  130,504        -          -   773,699
          Intersegment
           sales          -       -        -        -  663,986   (663,986)        -
          -------------------------------------------------------------------------
          Total
           sales    282,947  68,209  292,039  130,504  663,986   (663,986)  773,699
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Gross
           profit    49,028  11,081   33,794   20,635   55,083       (374)  169,247
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Depreciation
           and amort-
           ization    3,532     617    2,425    1,085   30,438      5,120    43,217
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Capital
           asset
           additions    618     364    1,375   16,773   29,802      5,499    54,431
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          Total
           assets   106,914  35,490  129,127   75,366  355,683     88,480   791,060
          -------------------------------------------------------------------------
          -------------------------------------------------------------------------
          (i) Eliminations and other include 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 July 31, 2005 were $8,518 (2004 - $5,534) and $82,642 (2004 - $80,003), respectively. External sales to customers in Canada and the United States for the year ended July 31, 2005 were $29,961 (2004 - $15,383) and $314,984 (2004 - $267,564), respectively.

      Capital assets in Canada, the United States and Luxembourg as at July 31, 2005 were $132,774 (2004 - $135,865), $95,663 (2004 - $105,745), $102,123 (2004 - $94,073), respectively.

      For further information: Daniel Gagnon, Vice President, Finance & CFO, (905) 951-5000

      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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