Camco 2004

Camco Annual Report 2004
2 BRAND
4 NEW
6 YEAR
8 LETTER TO SHAREHOLDERS
13 MANAGEMENT DISCUSSION AND ANALYSIS
26 CORPORATE
GOVERNANCE 27 AUDITORS’ REPORT 28 CONSOLIDATED BALANCE SHEETS 29 CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS ( DEFICIT )
FINANCIAL STATEMENTS
30 CONSOLIDATED STATEMENTS OF CASH FLOWS
48 BOARD OF DIRECTORS & CORPORATE INFORMATION
31 NOTES TO THE CONSOLIDATED
This year, more than ever, new growth opportunities and the power of the
brand are at the heart of Camco’s strategy. Camco is focused on two growth
strategies: dryer manufacturing for the Americas in Montreal, and broad-based
Canadian distribution and service of brand-name appliances and related products.
Our people are our competitive differentiator, allowing us to quickly capitalize on
opportunities in an ever-changing environment.
1
BRAND
It is the era of the brand. Never before has the power of the brand had
such a significant impact on the perceptions, values and buying habits
of consumers. Instant access to information has created more informed,
brand-savvy and value-conscious consumers.
Camco is ideally positioned to capitalize on this brand culture. Through targeted
investment, we’re successfully establishing ourselves as a multi-line distribution
company with a broad portfolio of major home appliance brands that are
well-recognized for their performance, styling and reliability demanded by today’s
consumers. Innovative product introductions and complimentary product lines
enhance our compelling brand mix.
3
NEW
At Camco, we’re rising to meet new demands. In 2004, this commitment
yielded an outstanding opportunity: becoming the principal supplier of
dryers to GE to fulfill growing consumer demand.
Seizing the new opportunity took the form of a $13.9 million expansion of our
dryer manufacturing capacity at our Montreal facility. Our people demonstrated
dedication and determination to bring the new dryer capacity on line – on time and
on budget. By the fall of 2004, the plant expansion was already proving its worth,
running at record production levels and setting the stage for future success.
5
YEAR
The year was 1977 when the first appliances began rolling off the line at our
Hamilton plant. 2004 saw the closure of this facility, which holds an important
place in the Company’s history. Here, Camco pays tribute to the Hamilton
employees who demonstrated their professionalism and committment
throughout the closure.
The People Background Assembly: Alsius Ellis, Garth Tomlinson, Manley Powell, Bruce Liverance,
Ed Molczan, Mike Atlee, Doug Wheaton, Marilyn Wheaton, Bob Wells, John Dove, Ross MacDonald,
Terry Choscinski, Radmila Nikolic, Gord Waddell, Doug Darby, Al Hossack, Rob Hayward, Jim Coit,
Jarda Zapleta, Ron Bertrand, Brian Denholm, Michele Penfold, Pauline Smith, Bill Fuller, Dan Chan,
Pam Clark, Ken Legacy
7
TO OUR SHAREHOLDERS
Camco experienced profound changes in 2004, including significant new product
introductions, a major expansion of dryer manufacturing capacity in Montreal, new facilities
in Burlington and Brantford, and the shutdown of the Hamilton facility. All of these projects
were completed on schedule and within budget, and as a result Camco has become stronger
and better able to compete in our turbulent, global marketplace.
Financial Performance
Camco’s financial results in 2004 were dominated by restructuring charges resulting from
the Hamilton Plant shutdown. Total restructuring charges of $24.3 million resulted in a net
loss of $10.7 million. Looking beyond these restructuring charges, operating performance
improved significantly in 2004 versus the previous year. Total sales increased by 8% to
$643 million, and income from operations, before restructuring costs, almost doubled to
$9.9 million. This improved performance was driven by several factors. The market for major
home appliances was robust in both Canada and the US, growing by 7.7% and 8.3%
respectively. Camco experienced market share growth in a number of segments, most
importantly in sales of clothes dryers manufactured in Montreal for the US market. Camco’s
unit sales of dryers to the US increased by 36% in 2004, reflecting our increased share of
supply to GE as well as GE’s increased market share in the US. Unfortunately, this growth
in units was not fully reflected in total sales and income largely due to the appreciation of
the Canadian dollar through the year.
Sales in Canada were positively impacted by new product introductions as well as strong
growth at key retail customers. These factors built momentum in our Canadian business,
which continues into 2005. Material cost inflation and the appreciation of the Canadian dollar
generated significant headwind for our manufacturing business in 2004. Camco’s Montreal
manufacturing facility was largely covered by pre-determined price contracts, but we did
experience some surcharges and cost increases on steel components in both Montreal and in
Hamilton. Almost all of our export sales were negotiated in US dollars, which added further
pressure in 2004. Material cost inflation continues into 2005 and the Company is highly
focused on recovering these increased costs through price increases in both domestic and
export markets.
9
A key focus in 2004 was cash flow generation to fund our shutdown cost obligations in
Hamilton. Camco generated $7.9 million in cash in 2004 through operations and a keen
focus on working capital.
Brand
The one enduring truth of the home appliance business is that “Product Wins”. Consumers
quite rightly expect outstanding innovation and value when selecting their appliances,
and in today’s wired world they can compare all the relevant information with a few clicks
of a mouse. At Camco, working to exceed our consumers’ expectations is at the core of all
the changes that we’ve made to the GE and Profile brands in Canada. Our new line of
freestanding electric ranges sets a new standard for the Canadian market in cooking
performance, styling and reliability. This new line-up leverages the strengths of the GE
corporate family, with some models manufactured in GE’s US facility and others manufactured
by Mabe in Mexico – Mabe Mexico S. de R.L. de C.V. is the GE major appliances affiliate in
Latin America. We were also able to translate product leadership in specialty cooking products
into very significant sales growth in 2004 – these products include slide in ranges, wall ovens,
cook-tops and gas ranges. We announced a new dryer program in Montreal that will be
teamed with a leading edge GE washer design in 2005 to grow in the all important front load
segment. Finally, stainless steel tub dishwashers were a very high growth category for the
Profile brand in 2004.
In addition to these very significant achievements for the GE and Profile Brands, we grew
with Samsung branded appliances in 2004. Camco’s unparalleled distribution and service
reach in Canada are becoming increasingly popular for brands looking to make a significant
breakthrough in this country. In late 2004 we were very pleased to announce a new
distribution agreement with the BeefEater Corporation of Australia. BeefEater is the leading
manufacturer of premium barbeques in Australia, and Camco is now their exclusive
distribution partner for Canada. BeefEater products feature design and quality never before
offered in the Canadian market, and initial feedback from dealers and consumers has been
very positive. With this unique, leading edge product, Camco anticipates becoming a major
player in the premium barbeque segment.
10
With our current stable of brands, as well as prospective new additions, Camco is well on its
way to becoming a true multi-line distribution company in Canada. We continue to look for
complementary products and brands that will provide a good fit for the Company. As our
reputation grows as Canada’s premier distributor of major home products, we are in a position
to pick the best opportunities for Camco and our customers.
New
The past year has seen many fundamental changes in the Company. One of the most critical
achievements for Camco in 2004 was the expansion of our dryer manufacturing capacity
at the Montreal Plant. This $13.9 million project was announced in 2003 in order to seize the
opportunity to become GE’s principal supplier of clothes dryers. The Montreal team delivered
this project on budget and on schedule and, within months of completion, the Plant was
running beyond the design capacity in order to meet strong US demand for dryers.
The shutdown of the Hamilton Plant necessitated two important projects in 2004 – a new
distribution center in Brantford Ontario, and a new office in Burlington Ontario. The new
distribution center is purposely built to meet our needs as a growing, multi-product
distribution company. This new facility will result in significant improvements in productivity,
quality and security.
Our new corporate office in Burlington allowed us to combine staff that had previously
worked at our Hamilton and Mississauga offices. This co-location has been very positive for
the Company, improving communication across functions, and providing a new, professional
image for all of our business partners.
Year
A major milestone in 2004 was the shutdown of the Hamilton Plant. We are grateful to all of
the Hamilton employees who worked diligently right until the end of production. As a result of
their hard work, the Company was able to minimize obsolete inventories of parts and materials.
We were also able to transition to our new product sources in an orderly manner, with
minimum disruption to our retail and commercial customers. Camco was very pleased to close
the sale of the Hamilton site to McMaster University on January 21, 2005. This transaction
provided a fair value to Camco shareholders and we were excited by McMaster’s plan
to transform the site into a leading Canadian research facility – a wonderful legacy for the
generations of Westinghouse and Camco employees who were employed at Longwood Road.
11
We have always said that Camco’s real competitive advantage is the quality of our people.
This unique strength was demonstrated in many different ways in 2004, be it our sales success
in Canada, our ability to meet GE’s dryer requirements, or the high integrity shown by our
Hamilton employees. The commitment, creativity and intelligence of our employees are critical
to the Company as we look forward to success in 2005 and beyond.
In conclusion, we believe that we have the brands, infrastructure and people to succeed in
Canada. We also believe that Montreal is the optimal site to manufacture dryers for North
America. The appliance business will always be competitive, but with these strengths we feel
that Camco is better positioned to succeed than at any time during the past ten years. Thank
you for your continued support, and we look forward to updating you on the progress of Camco.
James R. Fleck
Charles H. Hantho
President and Chief Executive Officer
Chairman
12
Management Discussion and Analysis
Introduction
The following is the Management Discussion and Analysis (“MD&A”) for Camco Inc.’s (“Camco”
or “the Company”) results of operations and changes in cash flow for the year ended December 31,
2004, and of its financial position as at December 31, 2004. The MD&A includes a comparison to
the year ended December 31, 2003, and should be read in conjunction with the consolidated
financial statements for the years ended December 31, 2003 and 2002. The consolidated financial
statements are prepared in accordance with Canadian generally accepted accounting principles. All
dollar amounts referred to are in Canadian dollars unless otherwise noted. All dollar amounts are in
thousand of dollars, except per share amounts. The comments and analysis contained in the MD&A
are as of February 18, 2005.
Overall Performance
Results of Operations – Overview
Principally, as a result of the decision to close the Hamilton manufacturing and distribution facility,
Camco recorded a net loss of $10.7 million ($0.54 per share) on sales of $643 million for 2004
compared with a net loss of $52.5 million ($2.63 per share) on sales of $595 million in 2003. Income
from operations, before closure costs, rose by $4.6 million (pre-tax) in 2004 from $5.3 million in
2003 to $9.9 million in 2004. Excluding plant closure and write down of retail advances, increased
domestic and export sales coupled with increased cost control resulted in higher 2004 earnings. A
$24.1 million ($16.7 million net of tax) plant closure expense was recorded in 2004.
Canadian and US Market Overview
In 2004, the Canadian major core appliance market as reported by the Canadian Appliance
Manufacturer’s Association (CAMA), grew by 7.7% to 3.9 million units. This increase, which represents
the ninth consecutive year of growth, was principally the result of new home construction, resale home
activity and improved economic factors. New home construction increased 6.7% in 2004 (6.2% in
2003) as builders started 233,000 (217,800 in 2003) homes, townhouses, and condominiums during
the year. Housing starts in 2004 represented a 17-year high. December results, on an annualized,
seasonally adjusted basis, showed 234,400 starts leading industry experts to believe high level
of demand will continue into 2005 but will not match 2004 record levels. Resale housing activity in
major markets ended the year with a record level of 316,000 units being sold representing an increase
of 2.8% compared to the 307,500 units sold in 2003. Low mortgage rates, growing employment,
and increased incomes are factors that contributed to the new home sales and resale activity.
13
As reported by Stevenson & Co., the US major appliance market was also strong in 2004 with
growth of approximately 8.3% over the year to 46.4 million units. New home starts and re-sales
were up 4.3% and 8.2%, respectively (8.2% and 8.9% in 2003, respectively). Low mortgage rates,
improved disposable income for consumers as a result of Federal tax cuts and an improved economy
contributed to the increased sales.
Description of the Business
The Company’s strategic vision to maximize customer and shareholder value can be summarized in
the following four elements:
Manufacturing: Produce products for the North American market where manufacturing competitive
advantages exist and source non-manufactured products from the best global supplier. The
Company’s goal is to remain GE’s principal supplier of dryers in North America.
Domestic Distribution: Maintain position as a leading full line marketer of major appliances in
Canada. Camco is continually seeking opportunities to utilize the Company’s Canadian distribution
strengths and resources by selling distribution services, working with customers to define alternative
retail formats, and offering complimentary products.
Service: Expand the In-home Service Repair, Service Contract and Parts business by utilizing the
Company’s national infrastructure and support facilities.
Business Development: Grow and diversify the revenue base through prudent product acquisitions.
Manufacturing – Hamilton
In 2004, the focus for the Hamilton facility was managing and executing the decision to close the
facility as announced in October 2003. The process started with the successful negotiation of a
closure agreement with the CAW in January 2004. The closure agreement obtained a strong
ratification vote of 92% by the membership. This agreement formed the foundation that was a
fundamental element leading to a smooth and orderly operation and closure of the facility. The
facility ran at normal production rates on the CustomstyleTM refrigerator, the Handi-HiteTM refrigerator
and the electric range lines throughout the year until the final production day on November 18,
2004. As a result of the dedication and commitment of all the Hamilton plant employees, the facility
performed extremely well. The facility met or outperformed production and cost budgets throughout
the year, with quality results exceeding targeted levels.
Agreements were finalized in 2004 to secure replacement product for all product produced by the
Hamilton Plant as required to meet the domestic market needs. These new agreements will provide
Camco with world-class products from strong global suppliers with state of the art features, quality
and reduced product costs.
Also during 2004, an agreement was negotiated with General Electric Consumer & Industrial (GEC&I)
for the discontinuation of the CustomstyleTM refrigerator product. This agreement releases GEC&I and
Camco from all production and purchase obligations under the original supply contract.
14
The Company retained J.J. Barnicke and Maynards to manage, respectively, the sale of the Hamilton
facility and property and the liquidation of the plant equipment. These processes have been
managed effectively with the final disposition of the plant equipment conducted through a public
auction held in January 2005. As recently announced, the sale of the facility and property for
$13 million was finalized with McMaster University on January 21, 2005.
Manufacturing – Montreal
While continuing to advance significant quality, productivity and cost reduction programs, the Montreal
facility completed a significant capacity expansion in 2004. The $13.9 million capacity expansion
investment announced in 2003, was fully implemented on schedule beginning in September 2004.
This capacity expansion resulted in record export shipments for the year. In addition, the plant added
nearly 100 new employees to handle the additional demand for its products. As announced in May
2004, a further investment of $15.2 million was approved for a program focused on a new dryer
platform. This program is well underway with a product launch slated for mid 2005.
In January 2004, the efforts of the Montreal team were once again rewarded as the “Edison Dryer”
maintained the #1 rating in the US as determined by a leading consumer’s group agency. This strong
performance is expected to continue to build the GE brand laundry segment of the appliance market
both in Canada and the United States.
The year was not without challenges for the Montreal facility as escalating commodity price inflation,
primarily on steel and plastic, coupled with the strong Canadian dollar negatively impacted the
facility’s profitability, most significantly on the export business. As a result, Camco has implemented
price increases in non-contractual export sales.
Canadian Distribution
The Canadian retail industry experienced significant growth in 2004 (an increase of 10.1% over
2003), while the builder segment declined (down 4.0% over 2003) despite strong housing starts.
In the early part of 2004, appliance pricing continued to be impacted with sharper than normal
reductions. The majority of the price decline could be attributed to the strengthening of the
Canadian dollar relative to the U.S. dollar, and the improvement in the cost position of market
participants, especially importers. In late October 2004, the Company, followed by other key
appliance manufacturers, announced a price increase effective January 2, 2005 in response to
significant material cost pressures, specifically steel and plastic components, that manufacturers
experienced during the second half of 2004. The price increase affects the majority of the Company’s
products sold in the domestic market.
Competition among retailers continues to be strong as large national chains continued to make
inroads into secondary markets at the expense of smaller regional chains and independent dealers.
One major Western and Ontario based retailer entered in the Quebec market in 2004 opening a
number of outlets. Further consolidation of the Canadian market took place in early 2005 as a major
national account purchased a large Quebec based regional chain and a buying group that consisted
of numerous small independent dealers located across Canada.
15
Home delivery and ’value-added’ services continue to be part of the Company’s strategic initiatives
and significant investments were made to improve and automate these processes. The Company’s
Customer Centre in Moncton remains a critical component to these services as we continue to
expand our capabilities and coverage. With the closure of the Hamilton facility the Company
transferred its warehouse operation to a new “state of the art” 240,000 sq. ft warehouse located in
Brantford, Ontario effective February 2005. This warehouse was specifically designed for Camco and
features 35 ft. ceilings, rail and transport truck capabilities and radio frequency scanning equipment.
Camco continues to sell to all key segments of the Canadian appliance market, including national
retailers, regional chains, independent dealers, and builders. The Company also continues to increase
its business with independent dealers that have converted their stores to GE Appliance Centres, and
now exclusively offer Camco appliances.
The Company continues to market a full line of appliances by offering products from our own
manufacturing facilities, from GE and its affiliates, and from other companies around the world. With
continued manufacturing rationalization, finished goods purchased by the Company from third parties
continue to grow as a percentage of total Canadian sales. In late 2004, the Company completed its
transition in free standing electric ranges and bottom freezer refrigerators from units manufactured in
its Hamilton facility to models sourced from GE and its affiliates. As previously stated, the Company
expects significant long-term cost savings as a result of the closure of the Hamilton plant.
In 2005, the Company will complete a significant investment to manufacture a full sized frontloading dryer. The dryer will be matched with a full size front-loading washer that will be sourced.
The front-loading laundry segment continues to grow at impressive rates and the addition of this
new platform will strengthen the Company’s position in this market segment.
The Company’s platform known as GE Max, manufactured in our Montreal facility, continues to be
a major contributor to the Company’s overall strength in the dishwasher category. Stainless steel
interior units continue to be an increasing portion of the dishwasher segment. To augment the
current offering of models in this category, the Company will introduce a new line of stainless steel
interior dishwashers from an offshore source in early 2005.
In June 2004, the Company entered into an agreement with BeefEater BBQ’s of Australia to serve as
the exclusive Canadian distributor of BBQ’s and service parts. The Company continues to look for
complementary opportunities to leverage its service/repair operations, warehousing and transportation
network, sales teams serving all channels, customer relationships, Moncton Customer Centre, and
market expertise. The launch of BeefEater product line will take place in the spring of 2005.
16
Service and Parts Business
The Company’s in-home appliance service and parts business continues to be challenged by a market
that is declining due to improved product quality, and the growing bias of consumers to replace
rather than repair older appliances. Despite this industry trend, the Company’s service business
experienced strong operating margin growth in 2004. Prior investments in “on-board” computer
technology for our technicians, plus investments in Internet and back room IT applications have
helped improve process efficiencies and reduce costs in call centre, warehouse and field operations.
Six Sigma projects completed in 2004 focused on billing quality and the management of technician
truck inventories, resulting in improved customer service and reduced cash lockup in accounts
receivable and inventory. The parts stores in major urban centres have successfully evolved into
outlets for the Company’s end-of-line and B-class appliance products, and the business continues to
look for other growth opportunities in new product offerings.
Extended Warranty Business Joint Venture
The Company’s extended warranty business entered into a joint venture agreement with Comerco
Brokerage Plus Inc. on January 1, 2003. The joint venture, Comerco Services Incorporated (“CSI”), is
based in Laval, Quebec, and offers the capability of formulating, marketing and administering service
contract programs across Canada and the U.S.
In its second full year of operation, CSI volume grew primarily from increased penetration with new
customers added during 2003. This higher volume, along with improvements in product mix, claims
loss ratios and insurance program arrangements, delivered improved results in 2004.
Quality and Six Sigma
The Company’s deep-rooted Six Sigma culture ensured that Camco continued to provide high quality
products and services in a year of substantial change. Beyond applications on current products and
services, Six Sigma methods also proved effective in managing the large-scale changes to internal
infrastructure this year.
In its final year, the Hamilton facility used Six Sigma to maintain high quality production on schedule
throughout the year and to minimize obsolescence. The Head Office relocation to Burlington,
Ontario was successfully executed during the fourth quarter of 2004. The development of a new
distribution centre in Brantford, Ontario is a Six Sigma project proceeding on schedule for March
2005 operation. Six Sigma was also critical in substantially expanding the Company’s Home Delivery
capability in 2004, while improving service and productivity.
Camco’s product quality improvements are reflected in a 9% reduction of warranty costs over
prior year, improving customer satisfaction while reducing costs. As the Company looks forward,
the new front dryer platform, due for production mid-year 2005, was developed with extensive use
of “Design for Six Sigma” tools to deliver industry leading performance and reliability. The integration
of Six Sigma across Camco has clearly been a successful long-term strategy for improving
competitiveness and customer satisfaction.
17
Risks and Uncertainties
The Appliance Market
There are a number of risks inherent in the appliance market that the Company faces. Consumers
consistently require improvements in product features, quality and price that require continuous
investment in product development. With the reduction in trade barriers throughout the 1990’s and
the subsequent market globalization, industry overcapacity exists forcing manufactures to rationalize
operations. Although the Company’s domestic sales are not dependent on any single customer, its
export sales are primarily to GE Consumer & Industrial (GECI). The Company has two significant
supply agreements with GECI:
•
The current dryer supply agreement, reached in March 1999, originally effective through to
December 31, 2003, has been extended to December 31, 2006. This agreement provides for
the Company to supply certain models of dryers to GECI with purchase guarantees of a minimum
quantity of 2.4 million dryers.
•
The second agreement reached in 1996 intended to run until December 31, 2005, provided for
the Company to supply to GECI CustomStyleTM refrigerator products from its Hamilton facility.
An early termination agreement was negotiated in 2004 with GECI for the discontinuation the
CustomstyleTM refrigerator product, which releases GECI and Camco from all production and
purchase obligations of the contract.
The Company’s ability to maintain its relationship with GECI and to profitably sell products is
dependent on the Company being competitive in price, quality, features and delivery in the
North American market.
Asian Entrants
In recent years, a number of Asian manufacturers have entered the Canadian major appliance
market. The entrance of these new suppliers has intensified competitive pressures in a market that
has already undergone a number of structural changes as a result of North American rationalisation.
In addition to off-shore product landing in Canada many of these global size Asian companies have
set-up large scale operations in Mexico giving them improved access to North American markets
with NAFTA approved product.
Increased Steel and Commodity Prices
Recent increases in commodity prices, especially steel have had an adverse impact on manufacturing
costs in 2004 and the Company has announced price increases to the domestic market and to
non-contractual export customers that will take effect on January 2, 2005. The Company has predetermined price supply arrangements with its main steel supplier for 2005. Uncertainties still exist
with smaller third party parts processors, plastic components and freight costs.
18
Canadian International Trade Tribunal (CITT) Finding
On August 1, 2000, the Canadian International Trade Tribunal (CITT) found that the dumping of
certain top-mount refrigerators, electric household dishwashers, and gas and electric laundry dryers
made by or on behalf of Whirlpool and White Consolidated Industries, and exported from the United
States, had caused injury to Camco and issued an order to that effect. Two separate binational
panels under NAFTA reviewed and affirmed on January 16, 2002 and April 15, 2002, respectively,
the decisions of the CITT on injury and the final determination of dumping of the Commissioner
of the Canada Customs and Revenue Agency, now the Canada Border Services Agency (CBSA).
The CITT’s findings with respect to dishwashers and laundry dryers remained in effect throughout
2004 and are scheduled to expire on August 1, 2005, subject to review and possible renewal by
the CBSA and CITT. After careful consideration of several factors concerning the CBSA/CITT review
process, the Company has taken the decision not to participate in the review. If the CBSA determines
that the named exporters are not likely to resume or continue dumping, or if the CITT determines
that such dumping is unlikely to cause injury to Camco, the findings will expire on August 1, 2005.
The Company plans to monitor closely the pricing practices of all its competitors and will consider
new submissions in the future if necessary.
Patents and Trademarks
The Company entered into technology, trademark and patent licensing agreements with GE and
GE Canada dated January 1, 1977. During 1993, GE and GE Canada agreed with The Company to
extend the minimum term of the agreements from 1998 to January 1, 2006, and to provide that the
agreements may only be terminated with at least six years notice. Under the terms of the agreements,
the Company has been granted rights to Canadian patents and other technology and intellectual
property of GE and GE Canada relating to the design, manufacture, and production of major
appliances. The Company does not have any rights in GE patents or trademarks outside of Canada.
The Company is also the licensee of the GE and Hotpoint trademarks for use in connection with the
sale of major appliances in Canada. The Company owns the Moffat and McClary trademarks.
Labour Relations
The Company negotiated a closure agreement with the Canadian Auto Workers Union (CAW), which
represents the employees of the Hamilton Plant. The agreement was ratified in January 2004 with a
92% acceptance. The Company also successfully negotiated collective agreements with all of its unions
in 2004 with no work disruption. The new collective agreements will expire at various dates in 2007.
19
Selected Annual Information
Three-Year Data
2004
Ended December 31 ($ million, except for per share data)
Sales of Products and Services
Domestic
Export
Total Sales of Products and Services
Income from Continuing Operations (1)
Write-Downs
Income (Loss) from Operations
Net Income (Loss)
Return on Sales
Cash Flow from Operations
Capital Assets
Total Assets
Total Long Term Liabilities
Current Ratio (3)
Return on Shareholders’ Equity
Total Number of Employees
Per Share & Fully Diluted Share Data
Income from Continuing Operations per Share
Net Income (Loss) per Share
Dividends Paid Per Share
Book Value (4)
Closing Market Price
2003
2002
$
$
400.9
241.7
$
$
373.7
220.9
$
$
$
$
$
$
$
642.6
9.9
(24.3)
(14.4)
(10.7)
(1.7%)
24.8
33.3
228.4
86.6
0.67
(46.9%)
1,590
$
$
$
$
$
594.6
5.3
(81.0)
(75.6)
(52.5)
(8.8%)
6.4
33.5
181.2
85.3
0.72
(433%)
2,097
$
$
$
$
$
$
$
$
$
$
$
0.50
(0.54)
0
(1.15)
2.44
$
$
$
$
$
$
0.27
(2.63)
0
(0.61)
1.55
$
$
$
$
$
$
398.8
266.4
665.2
20.8
(1.4)(2)
19.4
11.1
1.7%
(13.9)
77.8
214.6
62.2
0.85 (3)
27.5%
2,087
1.04
0.56
0
2.02
2.65
(1)
Before discontinued operations and extraordinary items
(2)
In 2002, the Company recorded $1.4 million in severance, obsolescence, and asset write-down costs pertaining to its
discontinuing of the manufacture of 16 and 18 cubic foot refrigerators.
(3)
Current ratio is calculated by Current Assets divided by Current Liabilities
(4)
On January 1, 2000, the Company adopted, on a retroactive basis, Section 3461 of the CICA Handbook entitled
“Employee Future Benefits”. The adoption of this Section has resulted in a significant transitional obligation for
the Company’s entire pension and other post retirement benefit plans in the amount of $54.0 million. This amount,
which is net of tax, has been charged to opening retained earnings.
Results of Operations – Statement of Income
Sales
The Company’s revenues were $642.6 million in 2004 up 8.1% from $594.6 million in 2003. The
revenues were higher as a result of increased export and domestic sales. Export sales of $242 million
were up $21 million (9.5%) from 2003. In 2004 exports of dryer product manufactured in Montreal
to the US totalled approximately $198 million up 20% from 2003. Camco’s domestic sales in
20
appliances and consumer services increased from $374 million in 2003 to $401 million in 2004.
The domestic major appliance business demonstrated strength in the market with an increase of
7.3% in 2004 over the prior year, driven principally by improvements in refrigeration.
Operating Costs
Total operating costs of $632.7 million in 2004 were up $43.5 million from $589.2 million in 2003.
The increase in operating costs is attributable to higher variable costs as a result of higher volume.
Higher employee wages in 2004 (which increased approximately 3.0%) were offset by operational
productivity improvements.
Unusual Items
In 2004, two non operational items of note were recorded: (1) As a result of the decision to close
the Company’s Hamilton manufacturing and distribution facility, plant closure costs of $24.1 million
($16.7 million net of tax) were recorded, in addition to the plant closure costs of $77.6 million
($52.0 million net of tax) that were recorded in 2003. There are three primary elements to the costs
of closure: (i) employee severance, (ii) pension wind–up expense, and (iii) the write down of impaired
plant and equipment assets. A pension settlement cost will be funded over the next four years and
will be recorded upon final settlement of the plan obligations. As at December 31, 2004 this
settlement cost was actuarially estimated to be $19.8 million. The actual amount of the settlement
and the future funding requirements will be dependent upon future interest rates and plan asset
returns. (2) The Company increased its provision for losses anticipated on the disposal of retail
investments by $0.3 million to $3.7 million ($2.5 million net of tax).
Interest and Other Expenses
Primarily as a result of reduced borrowings to finance working capital and capital investments,
interest and other expenses decreased by $0.8 million in 2004 to $1.2 million.
Income Taxes
On the pre tax loss of $15.7 million, the Company recorded a tax recovery of $4.9 million,
(an effective rate of 31.4%). In 2003, with pre tax loss of $77.7 million, the Company recorded
a tax recovery of $25.1 million, (an effective rate of 32.4%). The decrease in the effective tax rate
is principally attributable to increased impact of Camco’s earnings derived from our new extended
warranty business joint venture.
Results of Operations – Cash Flows
Overview
The Company ended the year with cash and cash equivalents on hand of $17.2 million, which was up
$7.9 million from 2003. The principal activities affecting the Company’s cash position were as follows:
Cash Flows from Operating Activities
Total cash generated in operations amounted to $24.8 million in 2004 compared to cash generated
of $6.4 million in 2003. The improved working capital levels including a $22 million increase in
accounts payable, required to support higher inventory levels and the final payments owing to
Hamilton based vendors, contributed to the year over year improvement.
21
Cash Flows from Investing Activities
Total capital asset additions were $6.9 million in 2004 versus $3.2 million in 2003. The investing
activities are primarily related to capacity expansion in the Company’s Montreal facility. The Company’s
joint venture Comerco signed an agreement of surety bond with an insurance company and set up
a reserve fund, which represented an increase in long term investments of $7.9 million.
Cash Flows from Financing Activities
In 2004, the Company decreased its net borrowings by $3.0 million. The Company made quarterly
repayments on its long-term debt facility of $3.0 million, leaving $9.8 million outstanding under the
long-term debt facility at year-end.
The Company did not pay a dividend in 2004. In accordance with the Company’s dividend policy,
no dividend will be paid in 2005.
Summary of Quarterly Results
($ million except for per share data)
Income from
Income from
Continuing
Continuing
Operations Net Income
Sales Operations(1) Net Income per Share
per Share
March – 2003
June – 2003
September – 2003
December – 2003
125.2
158.2
148.4
162.8
(1.0)
2.8
1.9
1.7
(1.0)
1.2
0.6
(53.4)
(0.05)
0.14
0.09
0.08
(0.05)
0.06
0.03
(2.67)
Total 2003
594.6
5.3
(52.5)
0.27
(2.63)
March – 2004
June – 2004
September – 2004
December – 2004
123.0
166.9
167.7
185.0
0.6
4.2
4.8
0.3
(3.7)
(1.9)
(1.0)
(4.2)
0.03
0.21
0.24
0.01
(0.19)
(0.10)
(0.05)
(0.21)
Total 2004
642.6
9.9
(10.7)
0.50
(0.54)
(1)
Before discontinued operations and extraordinary items
Liquidity
Available Financial Resources
In addition to cash generated from operations, the Company currently has four sources of available
credit to finance its working capital and investment requirements. The first is a $40.0 million revolving
line of credit that is renewed on an annual basis. The existing agreement expires on July 9, 2005, and
the Company currently expects to renew the agreement. At December 31, 2004, $10.0 million of the
line of credit was drawn at the same level as at December 31, 2003. The second form of credit is a
$15 million term facility that the Company established in 2002. At December 31, 2004, $9.8 million
was drawn on this facility, down from $12.8 million the end of 2003. The third form of` financing are
two accounts receivable securitization facilities. In the first facility, the Company sells eligible trade
22
receivables on a revolving basis to a special purpose trust sponsored by a Canadian financial institution.
On both December 31, 2004 and 2003, $60 million in outstanding trade receivables were sold as part
of the program. This agreement extends through to September 2005. If this securitization facility was
terminated the Company would need to arrange new credit or securitization facility. The second
securitization program pertains to the sale of receivables for retailer floor plans. At 2004, $4.5 million
(2003: $3.7 million) of receivables were sold in this program. This agreement was renewed in January
2004 for a one year period and will be wound up by May 2005. The fourth form of financing
arrangement is for the investment in Montreal capacity expansion and new product development
which has two components: GE Canada has entered into two equipment operating leases with the
Company valued at $10 million each in connection with the programs and the remainder of the
financing will be funded through internal sources and through a grant from Investissement Quebec.
The Investissement Quebec grant, valued at up to $5.0 million, is conditional on the Company
maintaining certain employment levels through 2010 at our Montreal plant.
The Company has incurred and will incur severance and pension plan wind-up expenses in connection
with the closure of its Hamilton manufacturing facility. Payments related to the severance expenses
(approximately $17 million) were made in January 2005, following the closure of the Hamilton facility
in December 2004, while pension funding payments will be incurred until 2008/ 2009. In order to
fund the severance payments and certain other closure costs, the Company sold the Hamilton facility
in January 2005 for $13.0 million and arranged a further uncommitted line of credit of up to
$20.0 million for 2005, which may be used to the extent the monies from operations are insufficient.
The Company’s borrowing needs typically increase during the first half of the year due to the
payment of prior year volume rebates, the technology fee payment to GE Canada and an increase
in inventory to meet seasonal trends. The availability of financing under the accounts receivable
securitization program is also lower in the first quarter of the year due to the lower value of available
receivables due to the seasonality of sales.
Payments Due by Period
Total
Contractual Obligations
Long Term Debt
Capital Lease Obligations
Operating Leases
Unconditional Purchase Obligations
Other Long Term Obligations
Total Contractual Obligations
$
Less than
1 year
9.8
–
35.9
82.0
–
$
127.7
3.0
–
5.8
82.0
–
90.8
1-3 years
$
6.0
–
12.2
–
–
18.2
4-5 years
$
After
5 years
0.8
–
4.8
–
–
–
–
13.0
–
–
5.6
13.0
Exposure to Exchange Rate Fluctuations
The translation of US dollar sales billed into Canadian dollars (at stronger C$ exchange rates),
resulted in lower Canadian dollar reported revenue. The Company currently has very little net
currency exposure because sales billed in US dollars approximately equals, purchases of imported
products denominated in US dollars.
23
In 2005, the Company projects purchases will exceed sales to the US and the Company has utilized
hedging instruments to minimize currency exposure. The Company purchases foreign exchange
contracts to hedge exposure to fluctuations in foreign currency denominated anticipated purchases
and the related payable due to a related party in the United States. The Company’s policy is not to
utilize derivative financial instruments for trading or speculative purposes.
Capital Resources
Short and Long Term Financing Requirements
The Company’s future financing requirements will principally be dominated by two components.
The first is investment in facilities, product development, capital, tooling, and cost reduction programs
to ensure future quality, product feature, and cost competitiveness. The majority of the investment will
be in the Montreal facility. In 2005, the Company anticipates that it will spend $18.8 million in capital
expansion, product, and productivity programs compared with $14.5 million in 2004. The other major
financial requirement will be the funding of the Company’s pension plan deficiencies. Based on the
December 31, 2003 actuarial valuation of the plans, the Company has a solvency deficit of $63.5 million
on assets of $247.8 million and a going concern deficit of $53.7 million. As a result of the requirement
to fund solvency deficits over 4 years, the Company anticipates a $25.7 million pension-funding
requirement in 2005 versus $23.6 million paid in 2004.
To assist with closure related expenses, the Company arranged an additional credit facility of up to
$10.0 million with its banker available from April 1, 2004 – September 30, 2004 and up to $20 million
from January 1, 2005 – September 30, 2005. To date, the Company has not needed to draw upon
these funds. During the year, the Company met all of its cash and banking requirements.
Transactions With Related Parties
General Electric Canada Inc. (“GE Canada”), a subsidiary of the General Electric Company (“GE”),
owns 51% of the common shares of the Company. The Company has entered into agreements with
GE Canada and GE which grant the Company a license to use certain GE Canada and GE trademarks,
access to technical information of GE Canada and GE relating to the design, manufacture and
production of major appliances, as well as a non-exclusive license to use GE Canada and GE patents.
The compensation payable by the Company to GE Canada pursuant to these agreements is an annual
fee equal to one percent of the net sales billed less outbound transportation in each year during the
term of the agreements excluding sales of: (a) large capacity dryers, (b) CustomStyle™ refrigerator,
(c) service parts sold or otherwise disposed of by the Company, and (d) product types not manufactured
by GE and on which the Company pays royalties to some other person. During the fiscal year ended
December 31, 2004, the amount of $4.1 million was paid or payable to GE Canada by the Company
under these agreements. During the same period, the Company made sales to and purchases from
GE Canada and GE of products, components and services in the ordinary course of business.
The Board of Directors annually reviews a summary of the payments to and received from GE Canada
and GE for products, components and services purchased or rendered. In the aggregate, sales were
$221 million (2003: $203 million) and purchases were $138 million (2003: $111 million). In light of the
business relationships between the Company and its significant shareholder, GE, the Special Committee
24
of the Board of Directors fulfils an important role in reviewing certain transactions and formulating
policies and plans governing arrangements with GE Canada, its parent company GE and their
respective affiliates. In particular, the Special Committee reviews and instructs management with respect
to negotiations of multi-year agreements valued at greater than $5.0 million and provides guidance and
reviews summaries of other transactions with GE Canada, GE and their respective affiliates.
Critical Accounting Estimates
The notes to Camco’s December 31, 2004, financial statements outline the Company’s significant
accounting policies. The policies discussed below are considered particularly important, as they
require management to make significant judgements, some of which may relate to matters that
are inherently uncertain:
Allowances for Future Warranty Claims
A provision for potential warranty claims is provided for at the time of sale based on warranty terms
and prior claims experience.
Pension and Other Future Employee Benefits
The Company’s pension and other post retirement benefit expenses are calculated by actuaries based
on assumptions determined by management. These assumptions include the long-term rate of return
on pension assets, the rate of future compensation increases, discount rates for pension and other
future employee benefit obligations, and health care inflation trends. Additional information regarding
the accounting for pension and other post retirement benefit expenses is contained in note 15 of the
consolidated financial statements.
As a result of the Hamilton Plant Closure, the Company will wind-up the pension plan for the hourly
and salary Hamilton workforce. A pension settlement cost, which is equal to the unamortized actuarial
gains and losses plus costs of settling the plan, will be funded over the next four years and will be
recorded upon final settlement of the plan obligations. The amount of the settlement and the future
funding requirements will be dependent upon future interest rates and plan asset returns.
For both warranty and post retirement benefit expenses, if actual experience differs from
assumptions made, future expenses could increase or decrease.
Changes In Accounting Policies Including Initial Adoption
There have been no changes in accounting policies utilized by the Company during the year and
there have been no changes in accounting standards or new accounting standards issued that would
have given rise to a change in the accounting policies utilized by the Company.
Other
Additional Information
Additional information about Camco, including Camco’s Annual Information Form, is available on
SEDAR at www.sedar.com.
Outstanding Share Data
As at the date of this report, Camco had 20,000,000 common shares outstanding.
25
Corporate Governance
Corporate Governance
The elements of the Company’s vision have been developed in concurrence with the objectives of the
Board of Directors to realize maximum shareholder value. Detailed corporate governance disclosure,
as it relates to the Board of Directors, is incorporated into Camco’s 2004 Management Proxy Circular.
Some of the statements contained in this MD&A may be forward-looking statements, such as estimates and statements
that describe the corporation’s future plans, objectives or goals, including words to the effect that the corporation or
management expects a stated condition to exist or occur. Since forward-looking statements address future events and
conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ from
those currently anticipated in such statements by reason of factors such as, but not limited to, changes in general
economic and market conditions. Camco disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
26
Auditors’ Report
To the Shareholders of Camco Inc.
We have audited the consolidated balance sheets of Camco Inc. as at December 31, 2004 and 2003
and the consolidated statements of operations and deficit and of cash flows for the years then
ended. These consolidated financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these 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 December 31, 2004 and 2003 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
Mississauga, Ontario
February 18, 2005
27
Consolidated Balance Sheets
2004
As at December 31 (in thousands of dollars)
2003
Assets
Current Assets
Cash and cash equivalents
Accounts receivable – trade (Note 5)
Accounts receivable – other
Inventories (Note 6)
Future income taxes (Note 11)
Prepaid expenses and other assets
$ 17,200
7,231
5,005
52,901
19,164
8,889
Long-term Investments (Note 4)
Future Income Taxes (Note 11)
Property, Plant and Equipment (Notes 3 and 8)
Accrued Benefit Asset (Note 15)
Other Assets
$
9,301
2,431
805
49,442
9,058
7,050
110,390
78,087
7,915
26,730
33,258
37,535
12,578
–
31,127
33,507
29,837
8,661
$ 228,406
$ 181,219
$ 10,000
3,010
123,223
26,671
1,776
$ 10,000
3,016
82,234
11,740
1,079
164,680
108,069
–
6,750
3,493
56,388
19,974
6,177
9,760
5,187
54,536
9,626
251,285
193,355
37,442
(60,321)
37,442
(49,578)
Liabilities
Current Liabilities
Operating line of credit (Note 9)
Current portion of long-term debt (Note 9)
Accounts payable and accrued liabilities (Note 3)
Due to affiliates, net (Note 13)
Income taxes payable
Employee Severance (Note 3)
Long-term Debt (Note 9)
Accrued Benefit Liability (Note 15)
Post-retirement Benefit Obligation (Note 15)
Other Liabilities
Shareholders’ Deficiency
Common shares
Authorized – unlimited
Issued and outstanding – 20 million shares
Deficit
(22,879)
$ 228,406
Approved on Behalf of the Board
Director
Kenneth Harrigan
Director
James Fleck
The accompanying notes are an integral part of these consolidated financial statements.
28
(12,136)
$ 181,219
Consolidated Statements of Operations and Retained Earnings (Deficit)
2004
2003
$ 642,635
$ 594,570
150,096
482,615
141,445
447,802
632,711
589,247
9,924
297
24,067
5,323
3,395
77,627
Loss from Operations
Interest and Other Expenses, net
(14,440)
(1,220)
(75,699)
(1,972)
Loss Before Income Taxes
Income Taxes (Note 11)
(15,660)
4,917
(77,671)
25,143
Net Loss
$ (10,743)
$ (52,528)
Loss Per Share, Basic and Diluted (Note 12)
$
(0.54)
$
(2.63)
Retained Earnings (Deficit), Beginning of Year
Net Loss
$ (49,578)
(10,743)
$
2,950
(52,528)
Deficit, End of Year
$ (60,321)
$ (49,578)
Years ended December 31 (in thousands of dollars)
Sales of Products and Services
Operating Costs
Employee compensation including benefits
Material, supplies, services and other costs
Income from Operations Before Undernoted Items
Writedown of Retail Advances (Note 10)
Hamilton Plant Closure Costs (Note 3)
The accompanying notes are an integral part of these consolidated financial statements.
29
Consolidated Statements of Cash Flows
2004
Years ended December 31 (in thousands of dollars)
2003
Operating Activities
Net loss
Add items not affecting cash
Depreciation and amortization (Note 3)
Post employment benefits
Future income taxes
Writedown of retail advances
$ (10,743)
$ (52,528)
6,214
18,979
(5,709)
297
47,482
49,191
(25,856)
3,395
9,038
42,022
(6,177)
(26,519)
6,431
21,684
4,191
6,177
(26,651)
958
24,795
6,359
7,915
(6,949)
984
–
(3,196)
19
(13,880)
(3,177)
(6)
(3,010)
4,691
(2,296)
(3,016)
2,395
7,899
9,301
5,577
3,724
Net increase in working capital (Note 7)
Employee severance (Note 3)
Post employment benefits funding
Other non-current operating activities
Investing Activities
Acquisition of long-term investments
Property, plant and equipment additions
Property, plant and equipment disposals
Financing Activities
Increase (decrease) in borrowings
Repayment of long-term debt
Increase In Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
Cash and cash equivalents are represented by:
Cash
Short-term investments, at cost, which
approximates market value:
Commercial paper
$ 17,200
$
9,301
$ 10,212
$
6,799
$ 17,200
$
9,301
$
$
$
$
1,855
524
6,988
Cash flows include the following elements:
Interest paid
Income taxes paid
1,281
110
The accompanying notes are an integral part of these consolidated financial statements.
30
2,502
Notes to the Consolidated Financial Statements
December 31, 2004 and 2003 (in thousands of dollars)
1. Nature of Business and Future Operations
Camco Inc. (“the Company”) is incorporated under the laws of Canada. The Company’s majority
shareholder is General Electric Canada Inc. (“GE”) and its largest minority shareholder is GSW Inc.
The outstanding common shares of the Company are listed on the Toronto Stock Exchange. The
Company manufactures, distributes and services major household appliances in Canada and also
exports product primarily to the United States.
As a result of the Hamilton Plant Closure Costs recorded in 2004 and 2003 (Note 3), the Company
has a Shareholders’ Deficit as at December 31, 2004. The Company expects significant long-term
cost savings in its future operations as a result of the closure of the Hamilton plant. The Company
has entered into outsourcing arrangements with third parties to supply ranges and refrigerators
to the Canadian market. In addition, the Company reached an agreement with the GE Consumer
and Industrial (“GECI”) to extend the dryer supply agreement for the Montreal plant through
December 31, 2006. From a financing perspective, the Company has renewed its agreement with
its lender whereby additional $10,000 bulge facility was available in 2004, and $20,000 will be
made available in 2005.
2. Significant Accounting Policies
Basis of consolidation
These consolidated financial statements include the accounts of the Company and the Company’s
proportionate share of the assets, liabilities, revenues and expenses of its 45% interest in a joint
venture, Comerco Services Inc. (Note 4). The accounts of the Joint Venture have been included in these
statements from January 1, 2003 being the date the Company acquired its 45% participation interest.
All significant inter-company transactions and balances have been eliminated upon consolidation.
Sales of products and services
Sales of products and services to customers are reported when title to products passes to the customer
or when services are performed. Sales are net of customer volume rebates and cash discounts.
Cash and cash equivalents
Cash is represented by cash on hand. Cash equivalents are short term, highly liquid investments that
are readily convertible to known amounts of cash, have a maturity of less than 3 months, and are
subject to an insignificant risk of change in value.
Inventories
Raw materials and work in progress inventories are recorded at the lower of cost and replacement
cost. Finished goods inventories are recorded at the lower of cost and net realizable value. Cost is
determined using the first-in, first-out method and comprises the cost of material, direct labour and
applied manufacturing overhead.
31
Property, plant and equipment
Property, plant and equipment are stated at cost less related investment tax credits and
government incentives.
Property, plant and equipment are depreciated using a sum of the years’ digits method based
on the estimated useful lives of the assets as follows:
Buildings
Machinery and equipment
10 to 40 years
4 to 20 years
Tooling and software expenditures over $2.5 are capitalized and amortized over 5 years using the
straight-line method.
Maintenance and repair expenditures are expensed as incurred.
Impairment of long-lived assets
Effective January 1, 2003, the Company has prospectively adopted the new recommendations of the
CICA Handbook Section 3063 “Impairment of Long-lived Assets” with respect to the measurement
and disclosure of the impairment of long-lived assets. This standard requires the recognition of an
impairment loss for a long-lived asset to be held and used when changes in circumstances cause its
carrying value to exceed the total undiscounted cash flows expected from its use. An impairment
loss, if any, is determined as the excess of the carrying value of the assets over its fair value.
Deferred acquisition costs
Deferred acquisition costs comprise commissions paid to dealers and certain incremental selling costs
directly related to the acquisition of extended warranty contracts. These costs are amortized over the
term of the related contract and are included in other assets.
Income taxes
The Company follows the liability method of income tax allocation. Under this method, future tax
assets and liabilities are determined based on differences between the financial reporting and tax bases
of assets and liabilities, and measured using the substantively enacted tax rates and laws that will be in
effect when the differences are expected to reverse. The Company provides a valuation allowance to
reduce future tax assets when it appears more likely than not that the asset will not be realized.
Product warranty costs
A provision for potential warranty claims is provided for at the time of sale, based on warranty terms
and prior claims experience.
Foreign currency translation
Foreign currency monetary assets and liabilities are translated at the rate of exchange prevailing at
the balance sheet date. Foreign currency revenues and expenses are translated at the rates prevailing
at the transaction date. Gains and losses on current monetary assets and liabilities resulting from the
translation of foreign currencies are recognized in the statement of operations during the year in
which they arise.
32
The Company purchases foreign exchange contracts to hedge exposure to fluctuations in foreign
currency denominated anticipated purchases and the related payable due to a related party in the
United States. The Company’s policy is not to utilize derivative financial instruments for trading or
speculative purposes. Hedge effectiveness is assessed based on the degree to which the cash flows
on the foreign exchange contracts are expected to offset the cash flows of the underlying
transactions being hedged.
The Company also assesses, both at the hedge’s inception and on an ongoing basis, whether the
foreign exchange contracts that are used in hedging transactions are highly effective in offsetting
changes in fair values or cash flows of the hedged items.
For forward foreign exchange contracts used to hedge anticipated U.S. dollar denominated
purchases, the portion of the forward premium or discount on the contract relating to the period
prior to consummation of the purchase is recognized when the purchase is recorded in operating
costs in the statement of operations.
Unrealized gains or losses on foreign forward exchange contracts are deferred and recorded, when
realized, in income when the underlying anticipated U.S. dollar denominated purchase is recognized
in operating costs in the statement of operations. Gains and losses on foreign forward exchange
contracts not designated as hedging instrument shall be recognized in ”interest and other expenses,
net“ in the statement of operations.
Securitizations
Transfers of receivables are accounted for as sales when the Company is considered to have
surrendered control over the transferred accounts receivables and receives proceeds, other than a
beneficial interest in the assets sold. Losses on these transactions are recognized as other expenses
and are dependent in part on the previous carrying amount of the receivables transferred, which is
allocated between the receivables sold and the retained interest, based on their relative fair value at
the date of the transfer. The Company determines fair value based on the present value of future
expected cash flows using management’s best estimates of key assumptions such as discount rates,
weighted average life of accounts receivable, and credit loss ratios. The receivables are transferred
on a fully serviced basis. The Company recognizes a servicing liability on the date of the transfer and
amortizes this liability to income over the expected life of the transferred receivables.
Employee benefit plans
The Company accrues its obligations under employee benefit plans and the related costs,
net of plan assets. The Company has adopted the following policies:
The cost of pensions and other retirement benefits earned by employees is actuarially determined
using the projected benefit method pro rated on service and management’s best estimate of
expected plan investment performance, salary escalation, retirement ages of employees and expected
health care costs.
For the purpose of calculating the expected return on plan assets, those assets are valued at fair value.
33
Past service costs from plan amendments are amortized on a straight-line basis over the average
remaining service period of employees active at the date of amendment.
Net actuarial gains (losses) over 10% of the benefit obligation or the fair value of plan assets are
amortized to operations over the average remaining service period of active employees. The average
remaining service period of active employees covered by the Company’s benefit plans is 12 years.
Guarantees
In 2003, the Company adopted the new standard on financial statement presentation and the new
accounting guideline on disclosures of guarantees. The implementation of these standards did not
have a material effect on the Company’s results of operations, financial position or cash flows.
Stock-based compensation
All stock-based awards made to non-employees are measured and recognized using a fair value
based method. In addition, direct awards of stock, stock appreciation rights (“SARS”), and awards
to employees that call for settlement in cash or other assets are measured and recognized using a
fair value based method. Awards that a company has the ability to settle in stock are recorded as
equity, whereas awards that the entity is required to or has a practice of settling in cash are
recorded as liabilities.
Use of estimates
The preparation of financial statements in accordance with Canadian generally accepted accounting
principles requires management to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets and liabilities, disclosures of contingencies at the
date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from the estimates.
3. Hamilton Plant Closure Costs
As a result of the October 2003 decision to close the Hamilton manufacturing and distribution
facility, the Company recorded $24,067 in closure costs for the year ended December 31, 2004
(2003 – $77,627). The components of the recorded closure costs as at December 31, 2004 and 2003
are as follows:
2004
2003
–
2,933
18,692
2,442
$ 34,969
33,080
9,051
527
$ 24,067
$ 77,627
$
Writedown of plant and equipment
Pension plan curtailment
Employee severance
Other
The Company reduced the carrying value of the Hamilton plant and equipment to its fair value
(net of disposal costs) of $4,124 as at October 2003, resulting in an impairment charge of $34,969
in 2003. This reduced carrying value was depreciated through December 2004 to its estimated fair
value (net of disposal costs) as at the closure date.
34
The Company is in the process of winding up the pension plan for the hourly Hamilton workforce.
An additional charge of $2,933 was recorded to the pension expense as a result of the improvements
in pension and benefits in the closure contract agreement dated January 14, 2004. An actuarially
determined pension plan curtailment provision of $33,080 was recorded as at December 31, 2003.
An additional pension settlement cost, which is equal to the unamortized actuarial gains and losses
plus the costs of settling the plan, will be funded over the next four years and will be recorded upon
final settlement of the plan obligations. At December 31, 2004, this settlement cost was actuarially
estimated to be $19,800 (2003 – $11,506). The actual amount of the settlement and the future
funding requirements will be dependent upon future interest rates and plan asset returns. Included in
the $34,042 (2003 – $24,650) net accrued benefit asset on the consolidated balance sheet is
$1,219 (2003 – $3,027) relating to the hourly employees of the Hamilton plant.
The Company has incurred severance costs of $27,743 to be paid to the Hamilton plant employees
as a result of the closure. Severance costs of $2,874, which were contractually liable upon
announcement of the plant closure, were recorded in 2003. Additional severance costs of $24,869,
which were liable only if the related employee did not voluntarily leave the Company prior to the
closure date, were charged to income systematically through December 2004. As a result, $18,692
of these severance costs were charged to income in 2004 (2003 – $6,177). The majority of the
remaining severance costs are expected to be paid at the beginning of 2005.
The movement in the restructuring liability account for severance is as follows:
Severance liability, December 31, 2003
Cash payments in 2004
Additional amounts accrued in 2004
$
Ending accrual, December 31, 2004
$ 24,290
The ending severance accrual has been included in accounts payable and accrued liabilities.
35
8,455
(2,857)
18,692
4. Investment In Comerco Services Inc. (“Comerco”)
Effective January 1, 2003, the Company merged its extended contract business with Comerco
Brokerage Inc.’s service contract operation. The new joint venture, Comerco, is based in Quebec, and
offers the capability of formulating, implementing and servicing extended warranty programs across
Canada and the U.S.
The Company’s 45% joint venture interest in Comerco is summarized as follows:
2004
Current assets
Long-term assets
$
Current liabilities
Long-term liabilities
9,617
23,978
2003
$
7,873
8,717
$ 33,595
$ 16,590
$ 12,030
21,003
$
33,033
562
Retained earnings (deficit)
7,547
9,294
16,841
(251)
$ 33,595
$ 16,590
Revenues
Expenses
$
7,238
6,425
$
Net income (loss)
$
813
$
(251)
Cash flows provided by (used in):
Operating activities
Investing activities
Financing activities
1,621
1,872
$
6,116
(8,230)
(16)
$
4,030
(330)
26
$
2,130
$
3,726
In accordance with the terms of the shareholder agreement, each year, Comerco must distribute 80%
of that year’s “free cash flow”, as defined in the agreement, to its shareholders. The Company records
these distributions in other income, to the extent of the other venturers’ proportionate share of the
Company’s investment in Comerco. $696 (2003 – $738) was recorded in other income in 2004.
In addition, as a result of an agreement of surety bond between Comerco and an insurance
company, Comerco deposits in reserve funds a percentage of collected retail price on certain service
contracts to cover future repair costs and claims based on certain actuarial recommendations.
At December 31, 2004, these reserve funds comprise commercial paper, bonds and a guaranteed
investment certificate. The Company’s proportionate share of these reserve funds is $7,915 and
is recorded in long-term investments.
36
5. Securitizations
(a) Under an amended and restated agreement dated May 30, 2003, the Company may sell up to
$60 million of non-interest bearing trade receivables to a securitization trust on a revolving basis.
The Company retains an interest in the transferred receivables equal to the amount of the
required reserve amount. Pursuant to the agreement, the Company continues to service the pool
of receivables and its interest in collections is subordinated to the trust’s interest. The purchaser
will re-invest the funds from collections in the purchase of additional interests in the Company’s
receivables until the expiration of the agreement on September 27, 2005. As of December 31,
2004, the outstanding balance of the securitized receivables is $60,000. The servicing liability
outstanding with respect to the transfers is nominal as at December 31, 2004. For the year ended
December 31, 2004, the Company recognized a pre-tax loss of approximately $1,973 relating to
these transfers.
(b) Under an agreement dated September 22, 2000, the Company may sell receivables related to the
floor stock receivables for a specific customer to a third party. On January 22, 2004, the Company
sold $4,525 of such non-interest bearing trade receivables, all of which were outstanding on
December 31, 2004.
The Company estimates the fair value of its retained interest and computes the loss on sale using
a discounted cash flow model. The key assumptions underlying these models are:
Cost of funds
Weighted average life in days
Average credit loss ratio
Servicing fee liability
2.38% – 5.00%
37 – 365 days
0.5%
2%
The sensitivity of the current fair value of the retained interest or residual cash flows for each
agreement to an immediate 10 percent and 20 percent adverse change in each of the above
assumptions is not significant.
The table below shows certain cash flows received from and paid to the securitization trusts for the
year ended December 31, 2004:
Proceeds from new securitization
Proceeds from revolving reinvestment of collections
$
4,525
$ 660,885
At December 31, 2004, the Company has recorded the following amounts:
Accounts receivable – trade and due from affiliates
Less: securitized receivables
$ 72,565
58,629
$ 13,936
The $13,936 is recorded within accounts receivable-trade and due from affiliates and includes a
retained interest in the transferred receivables of approximately $5,572. The greater than 90 day
balance outstanding at December 31, 2004 was $3,584. Credit losses for the year were $361.
37
6. Inventories
Finished goods
Raw materials and work in progress
2004
2003
$ 46,382
6,519
$ 35,985
13,457
$ 52,901
$ 49,442
7. Change In Working Capital
Change in working capital includes changes in the following accounts:
2004
Accounts receivable – trade
Accounts receivable – other
(excluding writedown of retail advances)
Inventories
Prepaid expenses and other assets
Accounts payable and accrued liabilities
Income taxes payable
Due to affiliates, net
$
Net decrease (increase) in working capital
$ 42,022
(4,800)
2003
$
(4,497)
(3,459)
(1,839)
40,989
697
14,931
(1,547)
3,347
8,999
(2,700)
(3,700)
(198)
(10)
$
4,191
8. Property, Plant and Equipment
2004
Cost
Land
Buildings
Machinery and equipment
Software
Tooling
Construction in progress
$
3,577
38,171
133,174
9,909
31,459
3,852
$ 220,142
38
Accumulated
Depreciation and
Amortization
$
–
29,619
118,839
9,178
29,248
–
$ 186,884
Net Book
Value
$
3,577
8,552
14,335
731
2,211
3,852
$ 33,258
2003
Cost
Land
Buildings
Machinery and equipment
Software
Tooling
Construction in progress
$
3,577
36,087
135,454
9,909
30,350
869
$ 216,246
Accumulated
Depreciation and
Amortization
$
–
28,896
116,941
8,361
28,541
–
$ 182,739
Net Book
Value
$
3,577
7,191
18,513
1,548
1,809
869
$ 33,507
The estimated amount required to complete approved capital projects as at December 31, 2004
is $2,825 (2003 – $5,031). In addition, the Company has commitments of approximately $75
(2003 – $948) associated with these capital projects.
9. Financing Arrangements
At December 31, 2004, Company had credit facilities consisting of:
(a) Operating line of credit of up to $40,000 (2003 – $40,000), of which $10,000 was drawn at
December 31, 2004, in addition to letter of credits of $8,533 that were outstanding at December
31, 2004. The Company also had an uncommitted first bulge facility of $10,000, available from
August 25, 2004 through September 30, 2004 and an uncommitted second bulge facility of
$20,000, available from January 1, 2005 through September 30, 2005. At the option of the
Company, the operating line of credit and bulge facilities may be used by requesting prime rate
advances in Canadian dollars, bankers acceptances in Canadian dollars, base rate advances in U.S.
dollars, LIBOR advances in U.S. dollars, or Letters of Credit in either Canadian or U.S. dollars.
(b) A $15,000 term loan with a major Canadian chartered bank, of which $9,750 was drawn at
December 31, 2004. The Company is required to make equal quarterly repayments through
2008, commencing in 2003.
39
The interest rate on the operating line of credit for prime based loans is Canadian prime plus 0.5%.
The interest rate on the operating line of credit for bankers acceptances, base rate advances and
LIBOR advances is the applicable rate at the time of application, plus 2%. The interest rate on the
bulge facilities is prime plus 1.5%. The interest rate on the term loan is bankers acceptance plus 3%.
Long-term debt comprises:
$
Term loan
Other
2004
2003
9,750
10
$ 12,750
26
9,760
(3,010)
Less current portion
$
6,750
12,776
(3,016)
$
9,760
The Company has agreed to meet certain financial covenants and conditions with respect to their
operating line of credit and term loan, all of which have been satisfied at December 31, 2004. The
Company has pledged substantially all assets as collateral for the operating line of credit and term loan.
Interest expense on the above financing arrangements approximated $1,281 (2003 – $1,736).
Additional funding for investment in the Montreal capacity expansion has been made available
through an Investissement Quebec grant. Funds available from this grant are the lesser of $5,000
or 12.26% of eligible capital and tooling expenses and are conditional on maintaining certain
employment levels through 2010. The term of the grant is March 10, 2003 through March 9, 2006.
The amount received related to this grant as at December 31, 2004 is $1,099 (2003 – $ nil).
10. Writedown of Retail Advances
In order to reduce the carrying amount of advances to certain retail operations to an estimated net
realizable value, the Company recorded a write down of $3,395 in 2003. A further write down of
$297 was recorded upon closure of a retail store.
40
11. Income Taxes
The Company’s effective income tax rate is derived as follows:
2004
2003
Combined basic federal and provincial income tax rates
Manufacturing and processing allowance
Large corporation tax
Other items
33.8%
(0.9)%
(0.8)%
(0.7)%
35.3%
(2.6)%
(0.1)%
(0.2)%
Effective tax rate
31.4%
32.4%
Represented by:
Current income tax expense
Future income tax recovery
$
384
(5,301)
$
Income tax recovery
$
(4,917)
$ (25,143)
83
(25,226)
The composition of the Company’s net future income tax assets and liabilities is as follows:
2004
Current future income tax assets
Accrued charges not currently deductible for tax
Employee severance
Research and development investment tax credits
Non-capital losses
Other
$
2003
2,920
7,978
3,132
4,574
560
$
5,047
–
2,709
592
710
Net current future income tax assets
$ 19,164
$
9,058
Non-current future income tax assets
Property, plant and equipment
Employee severance
Post-retirement benefits
Other
$ 15,380
–
7,410
3,940
$ 15,978
2,847
9,865
2,437
Net non-current future income tax assets
$ 26,730
$ 31,127
The Company has tax losses of $72,273 which begin to expire in 2008. In addition, the Company
has unused investment tax credits of $4,458 which also begin to expire in 2008.
41
12. Loss Per Share
Loss per share has been calculated as follows:
Loss
(Numerator)
2004
2003
$ (10,743)
$ (52,528)
Weighted
Average Shares
(Denominator)
Per Share
Amount
20,000
20,000
(0.54)
(2.63)
The Company has no convertible instrument that would be included in calculating diluted EPS.
13. Related Party Transactions
The Company has entered into various supply agreements with the GECI. On April 15, 2003, the
Company reached an agreement with GECI to extend the dryer supply agreement. The agreement to
supply dryers to GECI has been renewed through to December 31, 2006. The agreement to supply
GECI with CustomStyle refrigerators was renegotiated to expire December 31, 2004 as a result of the
closure of the Hamilton plant.
GE Canada has agreed to provide an $10,000 equipment operating lease to help finance the
investment in the Montreal capacity expansion. The lease commenced in January 2005.
The term of the lease is 5 years.
The Company’s total annual volume of transactions with GE and its wholly-owned affiliates was
recorded at fair values as follows:
Purchase of finished goods, parts and services
Sale of products
Technology fees due to GE Canada
Amounts due to (from) GE and its affiliates at year-end were:
Purchase of finished goods, parts and services
Technology fees due to GE Canada
Equipment reimbursement due from GE Canada
2004
2003
$ 137,548
220,877
4,038
$ 110,561
202,604
4,004
$ 16,133
4,038
6,500
$ 10,156
4,004
(2,420)
$ 26,671
$ 11,740
14. Research and Development
The Company recorded $1,846 (2003 – $1,801) of research and development expenses on which
it earned federal and provincial investment tax credits of approximately $550 (2003 – $629).
42
15. Employee Benefit Plans
The Company has a number of defined benefit plans providing pension, other retirement and
post-employment benefits to most of its employees. The Camco retirement plans are defined benefit
plans funded by contributions from Camco and from plan members (under plan 9). Pension benefits
are based on length of service under all plans and earnings under plans 1,9, and the Supplemental
Executive Retirement Plan. Information about the Company’s defined benefit plans and post
employment plans, in aggregate, is as follows:
Pension
Benefit
Plans
2004
Accrued benefit obligation
Balance at beginning of year
Current service cost
Interest cost
Employee contributions
Plan amendments
Benefits paid
Increase in obligation due
to curtailment
Actuarial loss
$ 298,777
6,520
18,966
84
10,846
(18,627)
Other
Benefit
Plans
2004
$ 61,208
793
3,933
–
–
(2,923)
Pension
Benefit
Plans
2003
$ 251,917
5,159
16,928
125
485
(17,581)
–
16,562
–
4,026
29,853
11,891
Other
Benefit
Plans
2003
$ 60,322
1,131
4,083
–
–
(2,723)
(5,069)
3,464
Balance at end of year
333,128
67,037
298,777
61,208
Plan assets
Fair value at beginning of year
Actual return on plan assets
Employer contributions
Employee contributions
Benefits paid
253,796
21,745
23,596
78
(18,627)
–
–
2,923
–
(2,923)
211,820
35,498
23,934
125
(17,581)
–
–
2,723
–
(2,723)
Fair value at end of year
280,588
Funded status plan deficit
Unamortized net actuarial loss
Unamortized past service cost
Valuation allowance
(52,540)
74,483
12,099
–
Accrued benefit asset (liability)
net of valuation allowance
$ 34,042
43
–
(67,037)
10,649
–
–
$ (56,388)
253,796
(44,981)
63,819
5,812
–
$ 24,650
–
(61,208)
6,672
–
–
$ (54,536)
The significant actuarial assumptions adopted in measuring the Company’s accrued benefit
obligations are as follows:
Weighted-Average Assumptions
for Expense
Discount rate
Expected long-term rate
of return on plan assets
Rate of compensation increase
Pension
Benefit
Plans
2004
Other
Benefit
Plans
2004
Pension
Benefit
Plans
2003
Other
Benefit
Plans
2003
6.17%
6.50%
6.75%
6.25%
7.25%
3.50%
–
3.00%
7.75%
3.50%
–
3.00%
Weighted-Average Assumptions for Disclosure
Discount rate
Rate of compensation increase
5.71%
3.50%
6.17%
3.50%
The Company’s net benefit plan expense is as follows:
Pension
Benefit
Plans
2004
Current service cost
Interest cost
Actual return on plan assets
Amortization of net actuarial loss
Plan amendments
Curtailment loss
Valuation allowance
$
6,545
18,966
(21,766)
16,562
10,846
–
–
Other
Benefit
Plans
2004
$
Costs arising in the period
31,153
Differences between costs arising in the period
and costs recognized in the period in respect of:
3,161
Return on plan assets
(13,823)
Actuarial gain
Plan amendments
(6,287)
Net periodic pension costs
$ 14,204
792
3,933
–
50
–
–
–
Pension
Benefit
Plans
2003
$
4,775
4,775
$
32,045
–
–
–
$
5,164
16,928
(35,503)
11,891
485
33,080
–
Other
Benefit
Plans
2003
5,561
18,816
(7,623)
392
$ 43,630
1,131
4,083
–
347
–
–
–
–
–
–
$
5,561
The Company’s plans’ assets by asset category are as follows:
Equity securities
Debt securities
Other
Total
44
2004
2003
55.20%
34.40%
10.40%
63.70%
33.30%
3.00%
100.00%
100.00%
Employer contributions were made in accordance with the Report on the Actuarial Valuation for
Funding Purposes as at December 31, 2003 dated September 2004. The next actuarial valuation
for funding purposes for plans 1,7 and 9 must be as of a date no later than December 31, 2004.
The next actuarial valuation for plan 2 must be as of a date no later than December 31, 2006.
The measurement date used to measure the plan assets and the accrued benefit obligation was
December 31, 2004.
16. Stock-based Compensation
The Company provides SARs, the purposes of which are to provide incentives to retain high potential,
high value employees, to recognize and reward their significant contributions to the longterm success
of the Company and to align their interests more closely with the shareholders of the Company. SARs
are awarded to employees on a selective and annual basis with an exercise price equal to the market
rate of the Company’s stock on the day of issuance. The SARs expire 5 years after the grant date.
The Company measures compensation cost associated with its SARs based on the difference between
the quoted market value of the underlying shares of the Company’s stock and the exercise/strike price.
This amount is accrued over the vesting period of the related SAR.
17. Lease Commitments
The future minimum lease payments for each of the next five years and thereafter under operating
leases are as follows:
2005
2006
2007
2008
2009
2010 and thereafter
$
5,788
4,863
4,070
3,300
3,037
14,810
$ 35,868
18. Foreign Currency
The U.S. dollar denominated accounts receivable and accounts payable at December 31, 2004 and
2003 were as follows:
Due to affiliates, net
Accounts receivable – trade
Accounts payable
45
2004
2003
US $
US $
$ 13,351
$
3,023
$ 18,883
$
7,705
$
1,933
$ 13,552
19. Financial Instruments
Currency risk
In the normal course of business, the Company mitigates its foreign exchange risk on purchases
from U.S. vendors by purchasing forward foreign exchange contracts. As at December 31, 2004,
the Company has forward contracts designated as hedges, to purchase US$12,000 maturing
over the next four months at an exchange rate of 1.18. The fair value of these contracts on
December 31, 2004 is a gain of $273.
Fair value
Management believes its cash and cash equivalents, accounts receivables, accounts payable and
accrued liabilities and operating line of credit are indicative of fair values because of their short
maturity. Management also believes that long-term debt is indicative of fair value.
Credit risk
The Company’s financial assets that are exposed to credit risk consist primarily of cash and cash
equivalents and accounts receivable.
The Company, in the normal course of business, is exposed to credit risk from its customers.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes
in market interest rates.
The Company is not exposed to significant interest rate risk with respect to its monetary current
assets, current liabilities and long-term debt.
20. Segmented Information
The Company manages its business as a single operating segment – manufacturing, distributing and
servicing household appliances. Its manufacturing operations are all located in Canada, specifically,
in Hamilton, Ontario and Montreal, Quebec. In January 2005, production at the Hamilton facility
ceased. The Company sells primarily to the U.S. and Canadian markets. Export sales for 2004 totaled
$241,657 (2003 – $220,929).
21. Guarantees
The Company has granted irrevocable standby letters of credit issued by highly rated financial
institutions, to third parties to indemnify them in the event the Company does not perform its
contractual obligations. As at December 31, 2004, the maximum potential liability under these
guarantees was $8,500. As of December 31, 2004, the Company has not recorded a liability with
respect to these guarantees, as the Company does not expect to make any payments in excess of
what is recorded on the Company’s financial statements for the aforementioned items. The standby
letters of credit mature on December 12, 2005.
46
22. Comparative Figures
Certain of the comparative figures have been reclassified to conform with the current year’s presentation.
23. Subsequent Event
On January 17, 2005, the Company signed a purchase and sale agreement (the “Agreement”) with
McMaster University for the sale of its 36.7 acres of land on Longwood Road South in Hamilton.
Under the terms of the Agreement, the ownership of the property passed in its current condition to
McMaster University on January 21, 2005 for a purchase price of $13 million. The related gain on
the sale of $10.5 million will be recorded in 2005. Proceeds from the sale will be used to help fund
the closure costs of the facility.
47
Board of Directors and Corporate Information
Board of Directors
Officers
*
Charles H. Hantho, C.M.
** Chairman,
*** Camco Inc.
Anna Cvecich
Vice President – Human Resources
Elyse Allan
President and Chief Executive Officer,
General Electric Canada Inc.
M. James Evans
Senior Vice President – Business
Development
** Peter J. Dey
*** Partner, Osler, Hoskin & Harcourt
James R. Fleck
President and Chief Executive Officer
James R. Fleck
President and Chief Executive Officer,
Camco Inc.
*
Kenneth W. Harrigan
*** Past Chairman,
Ford Motor Company of Canada, Limited
*
Jerry Rose
Product General Manager,
GE Consumer & Industrial –
General Electric Company
Jay S. Hamilton
General Manager – Service
and Board Secretary
Allan R. Holden
Vice President – Information Technology
René Lecours
Vice President – Montreal Operations
*
Daniel F. Sullivan
*** Deputy Chairman,
Scotia Capital Inc.
**
Neil G. Gartshore
Vice President Finance
and Chief Financial Officer
Richard Martel
Vice President – Technology
Robert Taylor
General Manager, GE Lighting Canada
GE Consumer & Industrial
General Electric Company
Michael J. McCrea
Senior Vice President – Marketing
and Product Management
*
**
Member of Audit Committee
Member of Human Resources and
Corporate Governance Committee
*** Member of Special Committee
Robert I. Slessor
Treasurer
Corporate Information
Camco Inc.
5420 North Service Road
Suite 300 / P.O. Box 5345
Burlington, Ontario L7R 5B6
Major Facility Locations
Burlington, Montreal, Moncton
Annual Shareholders Meeting
May 18, 2005 at 11:00 a.m.
5420 North Service Road
Suite 300
Burlington, Ontario
Share Transfer Agent
CIBC Mellon Trust Company
Auditors
Deloitte & Touche LLP
48
Design: www.haughtonbrazeau.com Translation: Techni-Textes Inc., Saint-Hubert (Québec)
**
Jennifer Caldwell
Comptroller and Company Secretary