Reko International Group Inc.
TSX : REK

Reko International Group Inc.

June 07, 2007 15:58 ET

Reko Announces Third Quarter Results for Fiscal 2007

WINDSOR, ONTARIO--(Marketwire - June 7, 2007) - Reko International Group Inc. (TSX:REK) today announced results for its third quarter ended April 30, 2007.



Financial Highlights (complete statements follow):

Period Ended April 30, Continuing Operations
(in $,000 except per share amounts)

Three Months Nine Months
(unaudited) (unaudited)
----------------------------------------
Fiscal Fiscal Fiscal Fiscal
2007 2006 2007 2006
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Sales $14,760 $22,045 $38,759 $55,422
Net (loss) income (491) 644 (1,096) 2,332
EPS (basic) (0.07) 0.09 (0.15) 0.31
Working capital 20,801 18,359
Shareholders' equity 48,660 50,023
Shareholders' Equity per Share 6.76 6.69


Sales from continuing operations for the three months ended April 30, 2007 were $14.8 million compared to $22.0 million last year. Lower sales for moulds and fixtures accounted for the reduced sales year-over-year. Although quoting activity for the year has been in line with our budget, deferrals of the release of mould programs by the automotive companies reduced sales volumes for the third quarter. Automation revenue, and large machining revenue, has been strong and the outlook for the fourth quarter remains positive.

The gross margin for the three months ended April 30, 2007 was $2.0 million, or 13.2% of sales, compared to $3.3 million, or 14.7% of sales, for the same period last year. Due to the lower sales volumes, expense levels continue to be reviewed and cost reductions implemented. However, operating margins are penalized by the lower sales volumes, which cause fixed costs to be amortized over a lower revenue base.

Selling and administrative expenses increased to $2.0 million, or 13.7% of sales, compared to $1.9 million, or 8.7% of the sales for last year. Although the expense level only increased slightly the depressed revenue level caused a dramatic increase in expenses relative to sales.

The net loss from continuing operations for the quarter was $491,000, or $0.07 per share, compared to net income of $644,000, or $0.09 per share last year.

Discontinued operations incurred a loss of $728,000, or $0.10 per share for the quarter, compared to a net loss of $885,000, or $0.12 per share, last year. During the quarter, the sale of the equipment at Proto-Techniques, Inc. resulted in a loss of $267,000. Since Proto-Techniques, Inc. can no longer be classified as a self-sustaining entity; exchange gains or losses on the translation of net assets into Canadian dollars are reflected in the income statement. For the quarter ended April 30, 2007, the exchange rate of United States to Canadian dollar decreased from $1.18 to $1.11 resulting in an exchange loss from discontinued operations of $314,000.

"The North American automotive industry continues to face many challenges caused, in part, by excess capacity within an extremely competitive market," stated Steve Reko, President and CEO. "The recent announcement of the sale of Chrysler to a private equity concern is a poignant example of the restructuring that is occurring throughout the industry and causing delays in program releases. To offset the effects of these delays, the company has implemented ongoing cost cutting initiatives and is continuing to restructure its manufacturing operations to adapt to reduced program releases. At the same time, the company is increasing its sales and marketing focus to capture a larger proportion of available programs. I am confident that Reko International will emerge from the current industry restructuring as a strong and vital competitor."

Founded in 1976, Reko International Group (TSX:REK) is a highly integrated, technology driven engineering and manufacturing firm providing engineered solutions for the plastics segment of the automotive, aerospace and consumer product markets. In its ten production facilities in Ontario, Reko designs and manufactures precision moulds and other related industrial tooling, in addition to its own proprietary line of CNC machining centres.



REKO INTERNATIONAL GROUP INC. Third Quarter Report

INTERIM CONSOLIDATED BALANCE SHEETS
As at April 30, 2007 with comparative figures for July 31, 2006 (in 000's)
---------------------------------------------------------------------------
April 30, July 31,
(unaudited) (unaudited)
2007 2006
---------------------------------------------------------------------------
ASSETS

Current
Accounts receivable - trade $ 19,556 $ 19,124
- sundry 1,042 1,269
Work-in-progress 19,631 21,531
Prepaid expenses and deposits 747 735
Future income taxes 333 -
Discontinued operations (Note 3) 506 5,238
-----------------------------
41,815 47,897
-----------------------------

Capital assets 41,035 40,276
Discontinued operations (Note 3) 2,462 3,510
-----------------------------
43,497 43,786

Future income taxes 80 -
-----------------------------

-----------------------------
$ 85,392 $ 91,683
-----------------------------
-----------------------------
LIABILITIES

Current
Bank indebtedness $ 12,168 $ 8,225
Accounts payable and accrued liabilities 6,718 5,824
Income taxes payable 69 235
Future income taxes - 442
Current portion of long-term debt 1,553 2,708
Discontinued operations (Note 3) 181 5,084
-----------------------------
20,689 22,518
-----------------------------

Long-term debt 16,034 15,056
Discontinued operations (Note 3) 9 2,536
-----------------------------
16,043 17,592
-----------------------------

Future income taxes - 587
-----------------------------

SHAREHOLDERS' EQUITY

Share capital (Note 4) 21,037 21,859
Contributed surplus (Note 2) 396 649
Retained earnings 28,510 29,993
Cumulative translation adjustment (1,283) (1,515)
-----------------------------
48,660 50,986
-----------------------------
$ 85,392 $ 91,683
-----------------------------
-----------------------------




REKO INTERNATIONAL GROUP INC. Third Quarter Report

INTERIM CONSOLIDATED STATEMENTS OF LOSS AND RETAINED EARNINGS
Three months and nine months ended April 30, 2007 with comparative figures
for 2006 (in 000's except per share data)
---------------------------------------------------------------------------
For the three months For the nine months
ended April 30, ended April 30,
(unaudited) (unaudited)
2007 2006 2007 2006
---------------------------------------------------------------------------
Sales $ 14,760 $ 22,045 $ 38,759 $ 55,422
Costs and expenses
Cost of sales 11,748 17,743 30,178 41,773
Selling and administrative 2,019 1,921 5,734 5,899
Depreciation and amortization 1,060 1,052 3,101 3,151
-------------------------------------------
14,827 20,716 39,013 50,823
-------------------------------------------
(Loss) income from
continuing operations
before the following (67) 1,329 (254) 4,599
-------------------------------------------

Loss (gain) on disposal
of capital assets 68 (12) (53) (146)

Interest
Long-term debt 259 191 784 677
Other - net 201 200 576 561
-------------------------------------------
528 379 1,307 1,092
-------------------------------------------
(Loss) income before
income taxes (595) 950 (1,561) 3,507
-------------------------------------------
Income taxes
Current (372) 270 146 1,029
Future (recovered) 268 36 (611) 146
-------------------------------------------
(104) 306 (465) 1,175
-------------------------------------------
Net (loss) income from
continuing operations (491) 644 (1,096) 2,332
Net (loss) from discontinued
operations net of tax (Note 3) (728) (885) (387) (2,295)
-------------------------------------------
Net (loss) income for the period (1,219) (241) (1,483) 37

Retained earnings, beginning
of period 29,729 29,343 29,993 29,065
-------------------------------------------
Retained earnings, end of
period $ 28,510 $ 29,102 $ 28,510 $ 29,102
-------------------------------------------
-------------------------------------------

(Loss) income per common
share from continuing
operations

Basic $ (0.07) $ 0.09 $ (0.15) $ 0.31
-------------------------------------------
-------------------------------------------

Fully diluted $ (0.07) $ 0.09 $ (0.15) $ 0.31
-------------------------------------------
-------------------------------------------

(Loss) per common share
from discontinued
operations

Basic $ (0.10) $ (0.12) $ (0.05) $ (0.31)
-------------------------------------------
-------------------------------------------

Fully diluted $ (0.10) $ (0.12) $ (0.05) $ (0.31)
-------------------------------------------
-------------------------------------------



REKO INTERNATIONAL GROUP INC. Third Quarter Report

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months and nine months ended April 30, 2007 with comparative figures
for 2006 (in 000's except per share data)
---------------------------------------------------------------------------
For the three months For the nine months
ended April 30, ended April 30,
(unaudited) (unaudited)
2007 2006 2007 2006
---------------------------------------------------------------------------
OPERATING ACTIVITIES

Net (loss) income from
continuing operations
for the period $ (491) $ 644 $ (1,096) $ 2,332
Add (deduct) non-cash items:
Depreciation and amortization 1,060 1,052 3,101 3,151
Future income taxes 268 36 (611) 146
Loss (gain) on disposal
of capital assets 68 (12) (53) (146)
Stock option expense 20 15 54 47
-------------------------------------------
925 1,735 1,395 5,530
Net change in non-cash
working capital 2,285 287 3,644 878
-------------------------------------------
Cash provided - continuing
operating activities 3,210 2,022 5,039 6,408
-------------------------------------------

FINANCING ACTIVITIES

Net proceeds on bank
indebtedness 440 1,949 611 73
Net proceeds (payments)
on long-term debt 403 (3,833) (176) (5,302)
Cost of re-purchase of shares (524) - (1,191) (491)
-------------------------------------------

Cash provided (used)
- continuing financing
activities 319 (1,884) (756) (5,720)
-------------------------------------------

INVESTING ACTIVITIES

Investment in capital assets (2,904) (76) (4,196) (733)
Proceeds on disposal
of capital assets 39 106 160 470
-------------------------------------------

Cash (used) provided
- continuing investing
activities (2,865) 30 (4,036) (263)
-------------------------------------------
Effect of foreign exchange
rate changes on cash
and cash equivalents (664) (168) (247) (425)
-------------------------------------------

Net change in cash and cash
equivalents during the
period from continuing
operations - - - -

Net change in cash and
cash equivalents during the
period from discontinued
operations - - - -

Cash and cash equivalents,
beginning of period - -
-------------------------------------------
Cash and cash equivalents,
end of period $ - $ - $ - $ -
-------------------------------------------
-------------------------------------------



REKO INTERNATIONAL GROUP INC. Third Quarter Report

Notes to Interim Consolidated Financial Statements for April 30, 2007
(in 000's)
(Unaudited)


1. Significant accounting policies

Management prepared these interim consolidated financial statements in accordance with Canadian generally accepted accounting principles using the historical cost basis of accounting and approximation and estimates based on professional judgments. These interim consolidated financial statements contain all adjustments that management believes are necessary for a fair presentation of the Company's financial position, results of operations and changes in cash flows. These statements should be used in conjunction with the Company's most recent annual consolidated financial statements. The accounting policies used in preparing these interim consolidated financial statements are consistent with those used in preparing the annual consolidated financial statements except for the accounting treatment of translation of foreign operations as Proto-Techniques is now viewed as an integrated operation effective in the month of January 2007.

2. Stock-based compensation (in thousands of dollars, except per share figures)

The fair value of the stock options granted since August 1, 2002 was determined using the Black-Scholes option-pricing model based on the following underlying assumptions:



- 5 year risk free interest rate of 4.11%;
- Average expected life of 5 years;
- Average expected volatility of 31.45%.


During the period, no options were granted and, as at April 30, 2007, $20 was recorded as the compensation cost for the quarter.

3. Discontinued operations

During the period, the Company continued discussions to dispose of its operations in Proto-Techniques, Inc. During the period, the sale of equipment was finalized and the remaining assets consisting of land and building are expected to be sold above book value. The results of Proto-Techniques, Inc. have been included with the other discontinued operations, which include Superior Plastics, Inc., Novi Laser, Inc., Excel Decorating and Finishing, Inc. and The Mold Company, and these results have been classified separately in these interim consolidated financial statements.

The balance sheets on April 30, 2007 and July 31, 2006 include the following assets and liabilities related to the discontinued activities:



April 30, July 31,
(unaudited) (audited)
2007 2006
----------- ---------
Cash $ 337 $ -
Accounts Receivable - trade - 1,241
- sundry 122 1,089
Work-in-progress - 2,706
Prepaid expense and deposits 47 202
-------- -------
506 5,238

Capital assets 2,462 3,510

Bank indebtedness - 3,762
Accounts payable and accrued liabilities 73 995
Current portion of long-term debt 108 327
-------- -------
181 5,084

Long-term debt 9 2,536


The sales related to discontinued activities for the period amounted to $15 (2006: $4,078). In addition, an amortization value of nil (2006: $464) is included in the operating expenses related to discontinued operations. The Company has recognized a future tax benefit of $217 (2006: $357), netted against the loss from discontinued operations.



For the three months For the nine months
ended April 30, ended April 30,
(unaudited) (unaudited)
2007 2006 2007 2006
------------------- ---------------------

Sales for the period $14,774 $26,123 $42,064 $72,978
Sales from continuing operations 14,760 22,045 38,759 55,422
Sales from discontinued operations 14 4,078 3,305 17,556

Operating expenses related to
discontinued operations 742 4,963 3,692 19,851

Net income (loss) from
discontinued operations (728) (885) (387) (2,295)

The cash flow restatement for
discontinued operations
as follows:

Net cash (used) provided by
operating activities (1,599) 802 2,276 149

Net cash provided (used) by
financing activities 614 (3,195) (2,878) (2,502)

Net cash provided by investing
activities 514 1,013 570 958

Effect of foreign exchange
rate changes on cash and cash
equivalents 664 1,380 409 1,395
----------- --------- ---------- ---------
Net cash and cash equivalents
provided by discontinued
operations $ 193 $ - $ 377 $ -
----------- --------- ---------- ---------
----------- --------- ---------- ---------


Long-term debt as related to discontinued operations is as follows:


April 30, July 31,
(unaudited) (audited)
2007 2006
------------ ------------
Industrial Revenue Bonds - principal
repayments commenced December 2003,
interest paid monthly, repaid in full
January 2007 $ - $ 2,665

Loan payable - 4.85% repayable $12 monthly
including interest, due in full in
May 2008, secured by equipment 117 198
------------ ------------
117 2,863

Deduct principal portion included
in current liabilities from
discontinued operations 108 327
------------ ------------
Long-term portion $ 9 $ 2,536
------------ ------------
------------ ------------


The estimate of the loss from discontinued operations is based on management's best estimates and assumptions with respect to a variety of items. There is a risk that the assumptions and resulting estimates may change with the passage of time and the availability of additional information and facts. Changes to the estimate of the loss on disposal will be recognized as a gain or loss on discontinued operations during the period that such changes are determinable.

4. Share capital

In July 2006, the Company announced its intention to make a normal course issuer bid to re-purchase, at market prices, for cancellation up to 373,775 common shares representing approximately 5% of the outstanding common shares as at July 31, 2006. During the period, the Company re-purchased 146,700 shares and 42,000 options were exercised.



Shares Amount
---------- ------------
Balance July 31, 2006 7,475,492 $ 21,859
Re-purchase in respect to
normal course issuer bid:
First Quarter - -
Second Quarter (175,000) (512)
Third Quarter (146,700) (429)
Options Exercised 42,000 119
---------- ------------
7,195,792 $ 21,037
---------- ------------
---------- ------------


The share re-purchases were recorded at stated capital value of $2.92 per share with the difference between the amount recorded and the amount paid charged to contributed surplus.

5. Comparative figures

Certain comparative figures have been reclassified to conform to the current period presentation.

Management's Discussion and Analysis

The following is management's interim discussion and analysis of operations and financial position and should be read in conjunction with the consolidated financial statements and Management's Discussion and Analysis in the Company's 2006 Annual Report.

This MD&A has been prepared by reference to the new MD&A disclosure requirements established under National Instrument 51-102 "Continuous Disclosure Obligations" ("NI 51-102") of the Canadian Securities Administrators. Additional information regarding, including copies of its continuous disclosure materials such as its annual information form, is available on its website at www.rekointl.com or through the SEDAR website at www.sedar.com.

In this MD&A, reference is made to gross margin, which is not a measure of financial performance under Canadian generally accepted principles ("GAAP"). The Company calculates gross margin as sales less cost of sales. The Company included information concerning this measure because it is used by management as a measure of performance, and management believes it is used by certain investors and analysts as a measure of the Company's financial performance. This measure is not necessarily comparable to similarly titled measures used by other companies.

This MD&A is current to May 31, 2007.

Operating Results

The financial results for the third quarter ended April 30, 2007 have been isolated to reflect the classification of The Mold Company, Superior Plastics, Inc., Excel Decorating and Finishing, Inc., Novi Laser, Inc. and Proto-Techniques, Inc. as "Discontinued Operations."

Sales

Sales from continuing operations for the three months ended April 30, 2007 were $14.8 million compared to $22.0 million for the same period last year. Similarly to our first two quarters, mould release programs were delayed due to customer engineering changes or changes in tooling capacity requirements. We further anticipate that the recent sale of Chrysler to a private equity firm may result in the deferral of certain model releases pending the completion of the sale.

Revenues from continuing operations for the nine months ended April 30, 2007 were $38.8 million compared to $55.4 million for the same period last year. Mould sales year-to-date have been extremely weak, and the year over year decline is accentuated by the previous year's strong mould sales.

Gross Margin

The gross profit for the third quarter was $2.0 million, or 13.2% of sales, compared to $3.3 million, or 14.7% of sales, for the same period last year. Due to the lower revenue level from mould programs, fixed costs are spread over fewer units thus producing not only a lower gross profit in total dollars but also a lower gross margin in percentage terms. In order to offset this reduction in margins, the company's focus has been on cost reductions and containment at all levels, as well as the implementation of improvements to its manufacturing efficiency through more streamlined operations.

The gross margin for the nine months ended April 30, 2007 was $5.5 million, or 14.1% of sales, compared to $10.5 million, or 18.9% of sales for last year. Again the absolute level of gross profits declined, and the gross margin relative to sales suffered from fixed costs being amortized over a low revenue base.

Selling and Administration

Selling and administration expenses were $2.0 million, or 13.7% of sales for the three months ended April 30, 2007, compared to $1.9 million, or 8.7% of sales for the same period last year. Although the increase in total expenses was relatively modest, lower sales volumes during the quarter resulted in a higher percentage of sales year-over-year.

Selling and administration expenses for the nine months ended April 30, 2007 were $5.7 million, of 14.8% of sales, compared to $5.9 million, or 10.6% of sales for last year.

Earnings Overview

The loss from continuing operations for the quarter was $491,000, or $0.07 per share, compared to a net income of $644,000, or $0.09 per share last year. The net loss from continuing operations for the nine months ended April 30 2007 was $1.1 million, or $0.15 per share, compared to a net income of $2.3 million, or $0.31 per share last year.

Discontinued Operations

Net losses from discontinued operations for the quarter were $728,000, or $0.10 per share, compared to a net loss of $885,000, or $0.12 per share, last year. During the quarter, the sale of equipment at Proto-Techniques, Inc. was finalized resulting in a net loss of $267,000. Also, effective January 31, 2007, Proto-Techniques, Inc. could no longer be classified as a self-sustaining entity. Therefore, the currency exchange gain or loss on the United States dollar investment in Proto-Techniques, Inc. is being recorded on a monthly basis. Since the exchange rate of the United States dollar decreased from $1.18 Canadian to $1.11 Canadian versus the U.S. dollar during the quarter, an exchange loss of $314,000 was recorded for the quarter.

Net losses from discontinued operations for the nine months ended April 30, 2007 was $387,000, or $0.05 per share, compared to a net loss of $2.3 million, or $0.31 per share, for the same period last year.

Liquidity and Capital Resources

Cash flow before working capital adjustments was $925,000 for the quarter compared to $1.7 million for the same period last year. During the quarter, two capital leases on machining centres were renewed, for a total of $1.5 million. The interest rate is 6.05% with a term to maturity and amortization period of five years.

Also, financing was finalized for the two high-speed machining centres. The proceeds of $732,000 carried an interest rate of 5.90%, with a five-year term and amortization period. The building expansion is progressing on schedule with $1.6 million expended to April 30, 2007. Final completion is set for June 2007. We have received a financing proposal for $1.65 million, or 70% of value for a four-year term and fourteen-year amortization. These terms are similar to the existing mortgage on the property. The rate will be set based on Government of Canada five-year bond rate plus an interest rate spread.

We have commenced construction of a large C.N.C. machining centre, which is scheduled for completion by October 2007. We are presently reviewing offers for financing for this equipment.



---------------------------------------------------------------------------
Payments Due by Period
------------------------------------------------------
Contractual Less than After
Obligations ($000) Total 1 year 1-3 years 4-5 years 5 years
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Long-term debt $13,329 $ 699 $ 1,533 $11,097 $ -
---------------------------------------------------------------------------
Capital lease
obligations 4,258 854 2,757 647 -
---------------------------------------------------------------------------
Operating leases - - - - -
---------------------------------------------------------------------------
Purchase obligations - - - - -
---------------------------------------------------------------------------
Other long-term
obligations - - - - -
---------------------------------------------------------------------------
Total contractual
obligations $ 17,587 $ 1,553 $ 4,290 $ 11,744 $ -
---------------------------------------------------------------------------


Quarterly Results

The following table sets out certain financial information for each of the
eight fiscal quarters up to and including the third quarter of fiscal 2007
ended April 30, 2007.


($ thousands except per share amounts)
---------------------------------------------------------------------------
July/05 Oct/05 Jan/06 Apr/06
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Sales $15,400 $16,298 $17,079 $22,045
---------------------------------------------------------------------------
Net (loss) income from continuing
operations 258 613 1,075 644
---------------------------------------------------------------------------
(Loss) earnings per share from
continuing operations:
Basic 0.03 0.08 0.14 0.09
Diluted 0.03 0.08 0.14 0.09
---------------------------------------------------------------------------
Net (loss) income (3,505) 196 82 (241)
---------------------------------------------------------------------------
(Loss) earnings per share:
Basic (0.46) 0.03 0.01 (0.03)
Diluted (0.46) 0.03 0.01 (0.03)
---------------------------------------------------------------------------


Quarterly Results, continued
---------------------------------------------------------------------------
July/06 Oct/06 Jan/07 Apr/07
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Sales $12,367 $13,281 $10,718 $14,760
---------------------------------------------------------------------------
Net income (loss) from continuing
operations 899 (303) (302) (491)
---------------------------------------------------------------------------
Earnings (loss) per share from
continuing operations:
Basic 0.12 (0.04) (0.04) (0.07)
Diluted 0.12 (0.04) (0.04) (0.07)
---------------------------------------------------------------------------
Net (loss) income 891 (35) (2.29) (1,219)
---------------------------------------------------------------------------
(Loss) earnings per share:
Basic 0.12 (0.00) (0.03) (0.17)
Diluted 0.12 (0.00) (0.03) (0.17)
---------------------------------------------------------------------------


Normal Course Issuer Bid

Under the Company's current normal course issuer bid 146,700 shares were purchased for cancellation at an average cost of $3.96. Subsequent to the quarter end, the Company purchased an additional 3,300 shares for cancellation at an average cost of $4.00. Year-to-date, 325,000 shares have been purchased for cancellation at an average cost of $3.88.

The Company's directors believe that, from time-to-time, such purchases constitute an appropriate use of corporate funds.

Outlook

The North American automotive companies continue their restructuring efforts through cost reductions and downsizing. Higher prices for gasoline are placing additional pressure on these companies for more fuel-efficient vehicles. Excess capacity for automotive production is necessitating plant closures with job eliminations and employee buyouts. Because of these constraints on our customers, we have experienced reduced mould program releases and deferrals for the first nine months of fiscal 2007.

At Reko we continue to seek ways to improve our operating efficiency and reduce our cost base. As well on the marketing side we are differentiating ourselves from competitors by emphasizing our ability to offer a broader array of products and services through the "Reko Tool Box." Those efforts enable Reko International to maintain market share in a very competitive environment without resorting to bidding for business at unsustainable prices.

This news release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. We use words such as "anticipate", "plan", "may", "will", "should", expect", "believe", "estimate" and similar expressions to identify forward-looking information and statements. Such forward-looking information and statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe to be relevant and appropriate in the circumstances. Readers are cautioned not to place undue reliance on forward-looking information and statements, as there can be no assurance that the assumptions, plans, intentions or expectations upon which such statements are based will occur. Forward-looking information and statements are subject to known and unknown risks, uncertainties, assumptions and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed, implied or anticipated by such information and statements. These risks, uncertainties and assumptions include, among other things: industry cyclicality; global economic conditions, causing decreases in automobile production volumes and demand for capital goods; changing demand for specific models or products; price reduction pressures; pressure to absorb certain fixed costs; dependence on major customers and changes in such customers' financial capabilities; technological changes; compliance with various laws; obtaining necessary permits and consents; fluctuations in currency exchange and interest rates; employee work stoppages; dependence on key employees; the competitive nature of the automotive and capital goods industries, including competition with suppliers operating in low cost countries; product supply and demand; the conduct of business in foreign countries; and other risks, uncertainties and assumptions as described in the Company's Management's Discussion and Analysis included in our 2006 Annual Report, in our 2006 Annual Information Form and, from time to time, in other reports and filings made by the Company with securities regulatory.

While the Company believes that the expectations expressed by such forward-looking information and statements are reasonable, there can be no assurance that such expectations and assumptions will prove to be correct. In evaluating forward-looking information and statements, readers should carefully consider the various factors, which could cause actual results or events to differ materially from those, indicated in the forward-looking information and statements. Readers are cautioned that the foregoing list of important factors is not exhaustive. Furthermore, the Company disclaims any obligations to update publicly or otherwise revise any such factors of any of the forward-looking information or statements contained herein to reflect subsequent information, events or developments, changes in risk factors or otherwise.



REKO INTERNATIONAL GROUP INC.
5390 Brendan Lane
Oldcastle, Ontario
N0R 1L0
www.rekointl.com

SUBSIDIARIES:

Canada:
-------
- Reko Tool & Mould (1987) Inc.
Divisions -
- Reko Automation and Machine Tool
- Concorde Machine Tool

United States:
--------------
- Reko International Sales Inc.
- Reko International Holdings Inc.

Contact Information

  • Reko International Group Inc.
    Michael Dunn
    Vice President Finance
    (519) 737-6974
    Website: www.rekointl.com