Husky Injection Molding Systems Ltd. For the year ending July 31, 2004

Husky Injection Molding Systems Ltd. For the year ending July 31, 2004 TSX/S&P Industry Class = 20 2004 Annual Revenue = Canadian $1,007.0 million (translated from U.S. dollars at US$1 = Cdn $1.3015) 2004 Year End Assets = Canadian $1,067.0 million (translated from U.S. dollars at US$1 = Cdn $1.3015) Web Page (October, 2005) = www.husky.ca 2005 Financial Reporting In Canada Survey Company Number 93

Management s Responsibility for the Consolidated Financial Statements The accompanying consolidated financial statements of Husky Injection Molding Systems Ltd. and all the information in this Annual Report are the responsibility of management and have been approved by the Board of Directors. The consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles. Estimates are necessary in the preparation of these consolidated financial statements and, based on careful judgements, have been properly reflected in the consolidated financial statements. Management has established systems of internal control which are designed to provide reasonable assurance that assets are safeguarded from loss and to produce reliable accounting records for the preparation of financial information. The Audit Committee of the Board of Directors has full and unrestricted access to all financial records. The Audit Committee meets periodically with management and the independent auditors to discuss the Company s financial reporting practices, its systems of internal accounting controls, the planned scope of examination by independent auditors and their findings and recommendations. The Company s independent auditors, Ernst & Young LLP, have full and unrestricted access to all financial records and to the Audit Committee. Their audit is conducted on behalf of the shareholders and is performed in accordance with Canadian generally accepted auditing standards in order to express their opinion on the consolidated financial statements of the Company. Robert Schad President and Chief Executive Officer Daniel Gagnon Vice President Finance and Chief Financial Officer 12

Auditors' Report To the Shareholders of Husky Injection Molding Systems Ltd. We have audited the consolidated balance sheets of Husky Injection Molding Systems Ltd. as at July 31, 2004 and 2003 and the consolidated statements of operations and retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these 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 July 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. Toronto, Canada August 27, 2004 Chartered Accountants 13

Consolidated Balance Sheets As at July 31 (in thousands of US dollars) Assets Current Cash and cash equivalents 39,901 72,730 Marketable securities 49,966 Accounts receivable 129,957 108,518 Income taxes receivable (note 10) 6,541 466 Inventories (note 3) 186,261 138,431 Prepaid expenses and other assets (note 4) 11,147 7,037 Future income tax assets (note 10) 22,724 16,492 Total current assets 396,531 393,640 Cross currency swap receivable (note 11) 34,091 32,028 Future income tax assets (note 10) 9,771 Capital assets, net (note 5) 379,411 371,459 819,804 797,127 Liabilities and Shareholders' Equity Current Accounts payable and accrued charges 174,373 192,719 Customers' deposits 54,668 33,731 Current portion of long-term debt (note 6) 3,910 3,195 Total current liabilities 232,951 229,645 Cross currency swap payable (note 11) 29,032 29,032 Long-term debt (note 6) 168,378 165,856 Employee future benefits (note 7) 12,410 10,008 Future income tax liabilities (note 10) 888 5,771 443,659 440,312 Commitments, contingencies and guarantees (note 8) Shareholders' equity Share capital (note 9) 133,510 132,994 Retained earnings 242,635 223,821 Total shareholders' equity 376,145 356,815 819,804 797,127 See accompanying notes On behalf of the Board: Lawrence Tapp, Director Richard Roswech, Director 14

Consolidated Statements of Operations and Retained Earnings Years ended July 31 (in thousands of US dollars, except share data) Sales 773,699 815,652 Cost of sales 604,452 597,832 Gross profit 169,247 217,820 Other expenses Sales and administration 145,866 143,296 Interest - current, net (675) (1,088) - long-term 10,367 10,577 155,558 152,785 Income before income taxes 13,689 65,035 Provision for (recovery of ) income taxes (note 10) Current 2,032 8,868 Future (7,157) 8,905 (5,125) 17,773 Net income for the year 18,814 47,262 Retained earnings, beginning of year 223,821 176,559 Retained earnings, end of year 242,635 223,821 Basic and diluted earnings per share 0.16 0.41 Weighted average number of common shares outstanding (millions) 116.9 116.7 See accompanying notes 15

Consolidated Statements of Cash Flows Years ended July 31 (in thousands of US dollars) Operating Activities Net income for the year 18,814 47,262 Add (deduct) items not affecting cash Depreciation 42,782 46,901 Amortization 356 548 Loss on disposal of capital assets 262 1,219 Employee future benefits 2,402 2,448 Future income taxes (20,886) 8,168 43,730 106,546 Net decrease (increase) in non-cash working capital balances related to operations (78,801) 9,295 Cash provided by (used in) operating activities (35,071) 115,841 Investing Activities Additions to capital assets (54,060) (47,651) Net increase (decrease) in accounts payable and accrued charges related to capital asset additions 2,923 (1,284) Cash used for capital asset additions (51,137) (48,935) Proceeds from sale of capital assets 3,064 814 Cash used in investing activities (48,073) (48,121) Financing Activities Increase in long-term debt 3,291 8,672 Repayment of long-term debt (3,458) (2,895) Maturity (purchase) of marketable securities 49,966 (49,966) Issuance of common shares 516 1,023 Cash provided by (used in) financing activities 50,315 (43,166) Net increase (decrease) in cash and cash equivalents during the year (32,829) 24,554 Cash and cash equivalents, beginning of year 72,730 48,176 Cash and cash equivalents, end of year 39,901 72,730 Supplementary cash flow information Cash income taxes paid, net 7,659 1,835 Cash interest paid, net 9,368 8,934 See accompanying notes 16

(in thousands of US dollars except per share figures and unless otherwise noted) 1. Summary of Significant Accounting Policies Basis of presentation The consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles and have been consistently applied. Principles of consolidation These consolidated financial statements include the accounts of Husky Injection Molding Systems Ltd. and its subsidiaries (collectively, the Company ), all of which are wholly-owned. required to settle all favourable contracts at year end. The fair value represents a point-in-time estimate that may not be relevant in predicting the Company s future income or cash flows. Derivative financial instruments are maintained with high-quality counterparties, and the Company does not anticipate that any counterparty will fail to meet its obligations. Cash and cash equivalents All liquid investments with original maturities of three months or less are classified as cash and cash equivalents. Revenue recognition Revenue is recognized when the price is fixed or determinable, collectibility is reasonably assured, and upon shipment or transfer of the risks of ownership to the customer. Marketable securities All liquid investments with original maturities greater than three months are classified as marketable securities. These investments are valued at the lower of cost plus accrued interest and market value. In cases where the Company sells equipment with recourse in connection with customer financing arrangements, or with a guaranteed repurchase option, the Company recognizes such revenue as a lessor on an operating lease basis over the term of the agreement. Derivative financial instruments The Company manages its operating exposure to currency fluctuations through the use of derivative financial instruments. Foreign exchange contracts and various other derivatives have been designated as hedges against future net foreign currency cash flows arising from operating activities. Gains and losses on these instruments are unrecognized until realized. The Company uses interest rate swap contracts to manage interest rate risks. Payments and receipts under interest rate swap contracts are recognized as adjustments to interest expense on an accrual basis. The Company does not engage in trading or other speculative activities with respect to derivative financial instruments. The fair value of derivative financial instruments reflects the estimated amount that the Company would have been required to pay if required to settle all unfavourable outstanding contracts or the amount that would be received if Inventories Inventories are valued at the lower of cost (calculated on a first-in, first-out basis) and net realizable value. Income taxes The Company follows the liability method of accounting for income taxes. Under the liability method of accounting for income taxes, future income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the substantively enacted tax rates and laws that will be in effect when the differences are expected to reverse. Foreign currency translation The Company's currency of measurement in its consolidated financial statements is the US dollar as the majority of its activities are transacted in US dollars. All foreign subsidiaries are considered integrated. Monetary assets and liabilities are translated at the exchange rates in effect at the consolidated balance sheet dates. Non-monetary assets and liabilities and related income statement charges are translated at historical rates. All other revenue and expense accounts are translated at the average rates for the year. Foreign exchange gains and losses are included in net income for the year. Capital assets Capital assets are recorded at historical cost and are depreciated principally on a straight-line basis over their estimated useful lives as follows: Land improvements Buildings Machinery and equipment Computer equipment and software 10-20 years 20-25 years 2-10 years 2-4 years Government assistance relating to capital asset additions is reflected as a reduction of the cost of the related assets provided there is reasonable assurance that the assistance will be received. 17

1. Summary of Significant Accounting Policies (continued) Warranty Estimated warranty costs for equipment are accrued at the time the equipment is sold to a customer. Estimates for warranty costs are made primarily by reference to historical warranty experience along with an evaluation of other potential and known warranty liabilities. Employee future benefits Costs associated with the provision of a defined benefit pension plan and other benefit plans are based on the projected benefit method pro-rated on service, using management's best estimates and actuarial determinations. Net actuarial gains or losses in excess of 10% of the accrued benefit obligation are amortized on a straight-line basis over the estimated average remaining service life. The average remaining service period of active employees covered by the retiree medical and dental plan is 20 years for 2004 and 2003. The average remaining service period of the President and Chief Executive Officer covered by the defined benefit pension and post-retirement medical benefits is 3 years for 2004 and 4 years for 2003. Past service costs for plan amendments are amortized on a straight-line basis over the average remaining service period of active employees at the date of measurement. Contributions made under the defined contribution pension plans are expensed as incurred. Financing costs Expenditures related to the issuance of long-term debt and establishment of bank credit facilities are amortized on a straight-line basis over the term of the related debt or credit facility. Use of estimates The preparation of the consolidated financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements. Actual results could differ from those estimates. Stock-based compensation plan The Company s Employee Share Purchase Plan is described in note 9. Basic and diluted earnings per share Basic earnings per share has been calculated using the weighted average number of common shares outstanding during the year. Diluted earnings per share is calculated using the treasury stock method. 2. Changes in Accounting Policies Hedging Relationships Effective August 1, 2003, the Company adopted the Canadian Institute of Chartered Accountants ( CICA ) Handbook Accounting Guideline 13, Hedging Relationships, which is effective for fiscal years beginning on or after July 1, 2003. The guideline applied to all existing and new hedging relationships and provides additional documentation and designation requirements for hedge accounting and requires regular and periodic assessment of effectiveness. The adoption of this standard had no effect on the Company s consolidated financial statements. Research and development Research and development costs are expensed in the year in which they are incurred, as no development costs meet the criteria for deferral. Investment tax credits relating to qualifying scientific research and experimental development expenses are included in net income on the same basis as the related expenditures are charged to operations, provided there is reasonable assurance that these credits will be realized. Impairment of Long-Lived Assets Effective August 1, 2003, the Company adopted CICA Handbook Section 3063, Impairment of Long-Lived Assets. Under these recommendations, impairment losses on long-lived assets are measured as the amount by which the asset s carrying value exceeds its fair value. Previously, impairment losses were measured as the amount by which the asset s carrying value exceeded the undiscounted future cash flow from the use of the asset. The adoption of this standard had no effect on the Company s consolidated financial statements. 3. Inventories Inventories consist of the following: Raw materials 44,290 33,496 Work in process 27,738 19,972 Finished goods (including test room and demonstration equipment intended for sale and spare parts) 114,233 84,963 186,261 138,431 18

4. Related Party Transactions The Company previously entered into loan agreements with key employees, generally to assist with relocation costs in conjunction with Company-initiated transfers. As at July 31, 2004, the total amount receivable by the Company under employee loan agreements was $98 (2003 $185). The Company has since discontinued the making of such employee loans. On July 17, 2000, the Company entered into a Support and Consulting Agreement (the Agreement ) with Niigon Technologies Ltd. ( Niigon ), a company owned by the Moose Deer Point First Nation and operator of an injection molding facility in Ontario. In return for providing support and consulting services to Niigon under the Agreement, the Company has negotiated access to Niigon s operations to demonstrate its equipment, as well as its operations management and factory planning expertise. The Company s President and Chief Executive Officer is a founder and director of, as well as a significant financial contributor to, Niigon. Mr. Robert Rae, a Company director, is also a director of Niigon. Neither the Company, the Company s President, nor Mr. Rae has any beneficial interest in Niigon. During the year ended July 31, 2004, the following transactions were entered into and/or continued under the Agreement: (i) The Company provided factory planning, machine parts, project management, and design services to Niigon totalling $15 (2003 $5). These transactions were performed under usual trade terms and are measured at their exchange amounts. The Company also made a donation of $648 (2003 nil) to the Moose Deer Point First Nation in support of Niigon. The donation was made under the Company s policy of accruing 5% of pretax profits for charitable purposes. In addition to these transactions, the Company provided $331 (2003 $26) in project management and consulting for facility upgrades along with financial accounting and management services. No ongoing contractual or other commitments were entered into during the provision of these services; and (ii) The Company has loaned certain equipment to Niigon for a period of ten years pursuant to an Equipment Agreement dated July 17, 2000, entered into between the Company and Niigon. Under the terms of the agreement, the Company may substitute previously-loaned equipment at Niigon with other equipment during the year. The net book value of the loaned equipment at July 31, 2004 was $474 (2003 $321), measured at cost less accumulated depreciation. All amounts were measured at their exchange amounts, and no ongoing contractual or other commitments were entered into as a result of the loan of this equipment. The Company s President and Chief Executive Officer is also the founder and a director of, and a significant financial contributor to, Earth Rangers. Earth Rangers is a private charitable organization established to promote environmental awareness. For the year ended July 31, 2004, the Company provided project management and design services totalling nil (2003 $31). The transactions were performed under usual trade terms and are measured at their exchange amounts. In addition to these transactions, the Company contributed $183 (2003 nil) in other services to Earth Rangers. The Company also made a donation of $1,176 (2003 nil) to Earth Rangers to be used for construction of a center for the preservation of wildlife and environmental education. The donation was made under the Company s policy of accruing 5% of pretax profits for charitable purposes. 5. Capital Assets Capital assets consist of the following: Accumulated Net book Accumulated Net book Cost depreciation value Cost depreciation value Land 17,826 17,826 18,853 18,853 Land improvements and leasehold interest (i) 27,175 13,382 13,793 26,960 11,118 15,842 Buildings 264,516 88,348 176,168 243,726 77,390 166,336 Machinery and equipment 303,340 148,377 154,963 296,017 144,696 151,321 Computer equipment and software 29,147 22,705 6,442 30,534 24,082 6,452 Construction in process and deposits placed on capital assets 10,219 10,219 12,655 12,655 652,223 272,812 379,411 628,745 257,286 371,459 (i) Leasehold interest in land represents $4.1 million paid in Shanghai, China for use of land for a period ending in 2052. The balance is being amortized over the term of the lease. At July 31, 2004 the net book value of leasehold interest amounted to $3.9 million (2003 $4.1 million). During fiscal 2004, the Company recognized government assistance of $2,237 (2003 $608) related to capital asset purchases. 19

6. Long-Term Debt Long-term debt consists of the following: Senior Series A unsecured debentures total $85.0 million bearing interest at 7.63% payable in semi-annual payments; Senior Series B unsecured debentures total $25.0 million and bear interest at a floating rate of 90-day LIBOR plus 1.90%, payable in semiannual payments; and Senior Series C unsecured debentures total C$45.0 million and bear interest at 7.46% payable in semi-annual payments. The debentures are redeemable at the option of the Company at amounts based on the present value of the remaining payments from the date of redemption to the original date of maturity at adjusted market rates of interest. The debentures mature on March 7, 2006. The Company has available a $75.0 million committed, unsecured, multi-currency revolving credit facility with a syndicate of three Canadian banks. The facility is available to the Company and its subsidiaries in the United States and Luxembourg and may be used for general corporate purposes. It matures in July 2005 and is extendable with the agreement of the lenders. As at July 31, 2004, there were $4.6 million in letters of credit issued on the facility. Committed, unsecured, multi-currency revolving credit facility, at varying rates depending on the underlying debt instrument, under which the Company may borrow up to Euro 10.0 million. The facility matures in March 2005. As at July 31, 2004, the facility was undrawn. Term loan of Euro 10.0 million was outstanding as at July 31, 2004 (2003 - Euro 11.7 million), bearing interest at 3.75%. The loan is repayable in quarterly installments of Euro 433.8 thousand, plus interest, maturing on March 31, 2010. The loan is secured as at July 31, 2004 by a collateral charge on real property and improvements. Term loan of $7.8 million was outstanding as at July 31, 2004 (2003 $8.3 million), bearing interest at a floating rate of one month LIBOR plus 2.25%. The loan is repayable in blended monthly installments of $59.8 thousand, plus a payment of $3.6 million on maturity. These amounts are adjusted annually based on the changes in LIBOR over the year. The loan matures on September 27, 2012 and is secured as at July 31, 2004 by a collateral charge on certain equipment. Committed, unsecured multi-currency revolving credit facility, under which the Company s Luxembourg subsidiary may borrow up to Euro 4.1 million at EURIBOR plus 1%. It includes an overdraft limit of Euro 0.1 million and a bank guarantee facility of Euro 4.0 million. The facility matures on April 13, 2005. As at July 31, 2004, there were Euro 2.3 million in bank guarantees outstanding under the facility. Term loan of Euro 2.7 million was outstanding as at July 31, 2004 (2003 nil), bearing interest at 3.25%. The loan is repayable in quarterly installments of Euro 136.0 thousand, plus interest, maturing on September 30, 2009. The loan is secured as at July 31, 2004 by a collateral charge on real property and improvements. Term loan of Euro 2.0 million was outstanding as at July 31, 2004 (2003 Euro 2.3 million), bearing interest at 3.75%. The loan is repayable in quarterly installments of Euro 77.5 thousand, plus interest, maturing on December 31, 2010. The loan is secured as at July 31, 2004 by a collateral charge on real property and improvements. Term loan of Euro 2.0 million was outstanding as at July 31, 2004 (2003 Euro 2.2 million), bearing interest at 3.75%. The loan is repayable in quarterly installments of Euro 59.3 thousand, plus interest, maturing on September 30, 2012. The loan is secured as at July 31, 2004 by a collateral charge on real property and improvements. Term loan of Euro 0.2 million was outstanding as at July 31, 2004 (2003 Euro 0.3 million), bearing interest at 3.75%. The loan is repayable in quarterly installments of Euro 40.3 thousand, plus interest, maturing on June 30, 2005. The loan is secured as at July 31, 2004 by a collateral charge on real property and improvements. 144,091 142,028 12,071 13,233 7,836 8,322 3,291 2,438 2,627 2,366 2,477 195 364 172,288 169,051 Less current portion 3,910 3,195 Long-term debt 168,378 165,856 20

6. Long-Term Debt (continued) The approximate principal repayments required on long-term debt are as follows: $ 2005 3,910 2006 147,986 2007 3,912 2008 3,928 2009 3,946 Thereafter 8,606 7. Employee Future Benefits The Company maintains an unfunded individual defined benefit pension plan, including post-retirement medical benefits, for the President and Chief Executive Officer. In addition, the Company provides various defined contribution pension plans for other employees. The Company also provides certain health and dental care benefits to eligible Canadian employees and their dependents who retire between the ages of 55 65 and have worked at least 20 years for the Company. These benefits, both for the retiree and their dependents, are discontinued at the earlier of age 65 or the death of the retiree. The Company uses a measurement date of July 31 for these benefits. Information about these plans for the year ended July 31, 2004 and 2003 is as follows: Pension Health and dental benefit plan benefit plans Change in employee future benefit obligation Obligation at beginning of year 10,905 5,492 1,587 1,247 Current service cost 219 178 115 93 Interest cost 701 605 113 93 Plan amendment 465 Actuarial losses (gains) (3,823) 3,398 60 62 Benefits paid (84) (75) Currency translation adjustments 540 767 114 167 Obligation at end of year and unfunded status 8,542 10,905 1,905 1,587 Unamortized past service costs (165) (311) Unamortized net actuarial gain (loss) 1,927 (2,426) 201 253 Accrued benefit liability 10,304 8,168 2,106 1,840 Pension Health and dental benefit plan benefit plans Defined benefit costs recognized in the year Current service cost 219 178 115 93 Interest cost 701 605 113 93 Plan amendment 421 Actuarial losses (gains) (3,823) 3,075 60 56 Elements of employee future benefit costs before adjustments to recognize the long-term nature of employee benefit costs (2,903) 4,279 288 242 Adjustments to recognize the long-term nature of employee future benefit costs: Difference between actuarial (gain) loss recognized for the year and actual (gain) loss on the accrued obligation for the year 4,273 (2,737) (65) (64) Difference between amortization of past service costs for the year and actual plan amendments for the year 156 (281) Defined benefit and other benefit expense 1,526 1,261 223 178 Defined contribution pension expense 4,456 3,833 Future employee benefits expense 5,982 5,094 223 178 21

7. Employee Future Benefits (continued) Significant Assumptions Pension Health and dental benefit plan benefit plans Determination of accrued benefit obligation as at July 31 Discount rate 6.0% 6.25% 6.5% 6.75% Weighted average initial health care trend rate 15.0% 15.0% 8.0% 9.0% Weighted average ultimate health care trend rate 6.0% 6.0% 5.0% 5.0% Years to reach ultimate trend rate 8 9 3 4 Determination of costs for the year ended July 31 Discount rate 6.75% 6.25% 7.0% 6.75% Weighted average initial health care trend rate 15.0% 15.0% 10.0% 9.0% Weighted average ultimate health care trend rate 6.0% 6.0% 5.0% 5.0% Years to reach ultimate trend rate 9 10 5 4 Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects for 2004: Defined benefit costs recognized in the year Increase Decrease Increase Decrease Total of service and interest cost 61 (50) 57 (44) Accrued benefit obligation 414 (345) 177 (282) 8. Commitments, Contingencies and Guarantees Commitments, contingencies and guarantees are comprised of the following: Future Capital Expenditures and Inventory Purchases Commitments related to future capital expenditure programs and inventory purchases as at July 31, 2004. Performance Guarantees As at July 31, 2004 the Company is contingently liable in respect of certain performance guarantees. The amount represents the estimated maximum potential liability. Vendor Financing Arrangements As at July 31, 2004 the Company is contingently liable for net losses incurred related to vendor financing arrangements. Terms of such guarantees range from six months to five years. The amount represents the estimated maximum potential liability. $ 32,207 2,402 5,084 Other Guarantees In the ordinary course of business, the Company has entered into agreements that include indemnifications in favour of third parties, related mainly to lending agreements (for example, tax and environmental indemnifications). Such agreements do not specifically quantify the Company s liability and, therefore, it is not possible to estimate the potential liability under these indemnities. Historically, the Company has not made any significant payments under indemnifications provided in the ordinary course of business. Future Minimum Lease Payments Future minimum annual lease payments under operating leases are as follows: $ 2005 6,862 2006 5,151 2007 4,050 2008 2,353 2009 781 Thereafter 1,070 Total 20,267 22

9. Share Capital Authorized Unlimited number of preference shares issuable in series. None issued at July 31, 2004. Unlimited number of common shares without nominal or par value. Issued and outstanding Common shares Shares $ Shares $ Balance, beginning of year 116,800,182 132,994 116,515,765 131,971 Issued for cash during the year 129,709 516 284,417 1,023 Balance, end of year 116,929,891 133,510 116,800,182 132,994 Stock option As part of his previous compensation agreement, the President and Chief Executive Officer was awarded a one-time option to purchase 5,770,000 common shares. The option expires on August 1, 2008. The exercise price of the option is C$10.50 per share. The President and Chief Executive Officer has committed to donate any potential proceeds from the exercise of stock options to charitable organizations. Employee Share Purchase Plan The Company has a share purchase plan ( Share Plan ) for full-time and permanent part-time employees, officers, directors and consultants of the Company and its affiliates. The Share Plan allows the issuance from treasury of up to 4,500,000 common shares, and also permits the purchase in the secondary market of an unlimited number of common shares. Shares issuable under the Share Plan are issued at prices determined in accordance with the Share Plan, as approved by the Toronto Stock Exchange. On January 1, 2000, the Company implemented a corporate contribution component to the Share Plan, whereby employee contributions to the Share Plan, up to 10% of base salary will result in a contribution by the Company of up to: (i) 10% of the employee s original contribution made between January 1, 2000 and December 31, 2002; and, (ii) 20% of the employee s original contribution made on or after January 1, 2003, provided, in both cases, the employee holds the shares for three years. The Company accrues for this liability in line with employee contributions. 10. Income Taxes Significant components of the provision for (recovery of ) income taxes are as follows: Current income tax provision 2,032 8,868 Future income tax provision (recovery) relating to origination and reversal of temporary differences (6,661) 8,440 Increase (decrease) in future income taxes resulting from a statutory rate change (496) 465 Income tax provision (recovery) (5,125) 17,773 The income tax provision (recovery) included in the consolidated financial statements differs from amounts which would be obtained by applying the combined Canadian federal and provincial income tax rates to income before income taxes. The differences are reconciled as follows: Income before income taxes 13,689 65,035 Canadian income tax rates 36.33% 37.46% Income tax provision 4,973 24,362 Adjustments to income tax provision due to: Manufacturing and processing (profits) losses 274 (970) Foreign tax rate differentials (1,676) (1,367) Benefit of income tax losses in foreign operations not recognized 502 Utilization of prior year's tax losses in foreign operations (7,795) (195) Increase (decrease) in future income taxes resulting from a statutory tax rate change (496) 465 Other (i) (405) (5,024) Income tax provision (recovery) (5,125) 17,773 (i) Other includes permanent income tax differences and translational foreign exchange gains and losses. 23

10. Income Taxes (continued) At July 31, 2004, the Company has net loss carryforwards of approximately $17,230 that expire between 2009 and 2014 (2003 $532 expiring in 2023), as well as net loss carryforwards of approximately $39,775 (2003 $41,536) that have no expiry date. For financial reporting purposes, a future income tax asset of $7,255 (2003 $4,231) has been recognized in respect of these carryforwards. At July 31, 2004, the Company has investment tax credits carryforwards of $12,424 that expire between 2008 and 2019 (2003 $8,779 expiring between 2008 and 2013). For financial reporting purposes, a future income tax asset of $12,424 (2003 $841) has been recognized in respect of these carryforwards. Future income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes. Significant components of the Company s future income tax assets and liabilities as of July 31, 2004 and 2003 are as follows: Future income tax assets Loss carryforwards 14,186 11,227 Non-deductible provisions 18,746 16,612 Investment tax credits 12,424 7,447 Other net 5,834 1,919 51,190 37,205 Valuation allowance (6,931) (14,439) 44,259 22,766 Future income tax liabilities Tax depreciation in excess of book depreciation 12,652 12,045 Net future income tax assets 31,607 10,721 Future income taxes are comprised of: Future income tax assets current 22,724 16,492 Future income tax assets long term 9,771 Future income tax liabilities long-term (888) (5,771) Net future income tax assets 31,607 10,721 11. Financial Instruments and Risk Management The Company enters into foreign exchange forward contracts to manage its net exposure to currency fluctuations against the US dollar on a global basis. As at July 31, 2004, the Company is committed to buy C$234.3 million (2003 C$171.7 million) at an average rate of C$1.36 per US$1.00 (2003 C$1.45 per US$1.00); to sell YEN 150.0 million (2003 YEN 150.0 million) at an average rate of YEN 108.9 per US$1.00 (2003 YEN 117.4 per US$1.00); and to buy CHF 638.6 thousand (2003 nil) at an average rate of CHF 1.28 per US$1.00. All forward contracts mature over the next fiscal year. The fair value of financial instruments approximates their carrying value, except as shown in the table below. The fair values of the financial instruments in the table below have been estimated by management using available market information and do not necessarily represent amounts that the Company could potentially realize in a current market exchange transaction. Carrying Fair Carrying Fair value value value value Long-term debt (including current portion) 172,288 177,483 169,051 173,849 Derivative financial instruments, net asset (liability) position: Foreign exchange forward contracts - 3,972-2,909 Cross currency contracts 5,059 5,145 2,996 2,607 Option contracts - - - (830) In conjunction with the issuance of the Canadian dollar denominated Senior Series C debentures, the Company entered into a five-year cross currency swap agreement under which it will receive semi-annual fixed Canadian dollar payments at a rate of 7.46% on C$45.0 million, and will make semi-annual fixed US dollar payments at a rate of 7.43% on US$29.0 million. The agreement provides for an exchange of the notional amounts at maturity. 24

11. Financial Instruments and Risk Management (continued) The concentration of credit risks in accounts receivable is limited due to the Company's large customer base, geographic dispersion of its customers, deposits received from customers and use of letters of credit where the Company deems appropriate. Gross profit figures are net of losses resulting from foreign exchange of $6,051 (2003-$7,093) as at July 31, 2004. 12. Segmented Information The Company operates in one business segment, plastic injection molding equipment, which includes the development, manufacture, sale, installation, servicing and support of plastic injection molding equipment. The operations of the Company reflect a matrix form of organization whereby the manufacturing operations in Canada, the United States and Luxembourg, sell to the Service and Sales territories below. The Company assesses its performance by reviewing the geographic mix of sales from its territories, gross profit from manufacturing operations and consolidated profitability. North America includes Canada and the United States; Latin America includes Mexico, Central and South America; Europe includes the Middle East, Africa and the Commonwealth of Independent States; and Asia Pacific includes Australia, New Zealand and India. July 31, 2004 Service and Sales territories Manufacturing Eliminations North America Latin America Europe Asia 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 amortization 3,521 617 2,425 1,018 30,437 5,120 43,138 Capital asset additions 550 364 1,352 16,500 29,795 5,499 54,060 Total assets 106,884 35,490 129,104 75,221 355,678 117,427 819,804 July 31, 2003 Service and Sales territories Manufacturing Eliminations North America Latin America Europe Asia Pacific operations & other (i) Total External sales 339,021 83,375 238,146 155,110 815,652 Intersegment sales 671,222 (671,222) Total sales 339,021 83,375 238,146 155,110 671,222 (671,222) 815,652 Gross profit 57,744 12,107 25,071 26,682 90,739 5,477 217,820 Depreciation and amortization 4,769 1,052 2,586 716 33,177 5,149 47,449 Capital asset additions 563 365 1,795 8,506 26,008 10,414 47,651 Total assets 106,932 28,329 107,737 49,101 325,211 179,817 797,127 (i) Eliminations and other includes Corporate activities and assets not attributable to the operating segments. External sales to customers in Canada and the United States for the year ended July 31, 2004 were $15,383 (2003 $22,347) and $267,564 (2003 $316,674), respectively. Net capital assets in Canada, the United States and Luxembourg as at July 31, 2004 were $135,865 (2003 $138,570), $105,715 (2003 $105,197) and $94,050 (2003 $100,781), respectively. 25