CFM Corporation

CFM Corporation

March 10, 2005 12:03 ET

CFM Corporation Announces Verdict in Dimplex Law Suit


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: CFM CORPORATION

TSX SYMBOL: CFM

MARCH 10, 2005 - 12:03 ET

CFM Corporation Announces Verdict in Dimplex Law Suit

MISSISSAUGA, ONTARIO--(CCNMatthews - March 10, 2005) - CFM Corporation
(TSX:CFM) announced today the conclusion of the jury-phase of a court
trial before the U.S. District Court, Northern District of Illinois,
with respect to certain patent rights related to electric fireplace
technology held by Dimplex North America Ltd. The jury determined that
patent rights held by Dimplex in the United States were valid and that
CFM had willfully infringed such patent rights. The jury returned a
verdict for damages in an amount of approximately US$8.3 million. As the
jury determined the infringement to be willful, the judge presiding over
the matter may, in his discretion, increase the damages award by a
multiple of not more than three times. A decision on whether a multiple
will be applied to the damages award is expected within the next 30 days.

CFM is disappointed by the verdict and intends to immediately file
post-trial motions, and then, if necessary, appeal the verdict in the
most efficient manner possible. The Court currently has under
consideration a motion to have the patent held unenforceable, which, if
granted, would likewise negate the verdict. An appeal would be on a
number of bases, including that (1) the position taken by the Court on
interpretations of the patent claim language were erroneous and, as
such, the jury was provided with an incorrect claim construction, and
(2) the jury incorrectly found the Dimplex patent to be valid in the
face of what CFM believes was unrefuted evidence to the contrary. In the
event that CFM is successful with respect to interpretation of the
patent claims, the matter may be subject to a new trial or the decision
may be reversed in favour of CFM. In the event that the jury's finding
of validity is found to be incorrect, the decision may be reversed in
favour of CFM. Prior to commencing its appeal, CFM will be required to
post a bond with the court in the amount of the damages award.

Dimplex has also commenced an action against CFM in Canada for
infringement of its Canadian patent rights related to electric fireplace
technology. The trial is expected to commence in September 2005.

As previously announced, CFM entered into an agreement on February 22,
2005 for the acquisition of all of the common shares of CFM by Teachers'
Private Capital, the private equity arm of Ontario Teachers' Pension
Plan. CFM has informed Teachers' Private Capital of the jury verdict.
Completion of the acquisition is conditional upon, among other things,
receiving the required shareholder approval and the Company not being
subject to an event, occurrence or change having a material adverse
effect on the Company.

The Company released its unaudited results for the year ended October 2,
2004 on March 4, 2005. The verdict from the trial will be reflected as a
subsequent event and the damage award accrued as a liability and expense
in the audited financial statements for the year ended October 2, 2004,
when filed. The accrual of the damages award will result in an
additional loss per share of $0.21, which will increase the loss per
share before restructuring costs, goodwill impairment and deferred tax
valuation allowance(i) from a loss of $0.27 to a loss of $0.41.

(i)Net income(loss) before restructuring costs, goodwill impairment and
deferred tax valuation allowance has been determined by taking net
income for the applicable period, adding to it the restructuring costs,
goodwill impairment and deferred tax valuation allowance, deducting
provision for income taxes applicable to the restructuring charge and
goodwill impairment to arrive at net income before restructuring costs,
goodwill impairment and deferred tax valuation allowance for the
applicable period. Earnings(loss) per share before restructuring costs,
goodwill impairment and deferred tax valuation allowance has been
determined by dividing net income(loss) before restructuring costs,
goodwill impairment and deferred tax valuation allowance by the average
number of shares outstanding during such period. Net income(loss) before
restructuring costs, goodwill impairment and deferred tax valuation
allowance and earnings(loss) per share before restructuring costs,
goodwill impairment and deferred tax valuation allowance, are presented
as a measure of the normal operating performance of the Company.

This press release contains forward looking statements that involve
certain risks and uncertainties which could cause actual results to
differ materially from future results expressed or implied by such
forward looking statements. Important factors that could affect these
statements include, without limitation, general economic conditions,
consumer confidence, the level of housing starts and demographics, CFM's
ability to develop new products, patent protection, weather and related
customer buying patterns and manufacturing issues, industry capacity,
product liability, availability of gas and gas prices, mass merchant
consolidation, credit and collections, supply and cost of raw materials,
steel availability and pricing, purchased parts and personnel, costs of
certain employee benefits, the inability to increase selling prices as
costs increase, competition, foreign currency fluctuations and
government regulation. These factors and other risks and uncertainties
are discussed in detail in CFM's Annual Information Form dated February
9, 2004 and in the reports and disclosure documents filed by CFM with
Canadian and U.S. securities regulatory authorities and commissions.
Statements made in this press release are made as of March 10, 2005 and
CFM disclaims any intention or obligation to update or revise any
statements made herein, whether as a result of new information, future
events or otherwise.

CFM is a leading integrated manufacturer of home products and related
accessories in North America and the United Kingdom. CFM designs,
develops, manufactures and distributes a line of hearth and space
heating products, barbecue and outdoor products and water and air
purification products. CFM maintains an ongoing program of research and
development aimed at continually improving the quality, design, features
and efficiency of its products.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    CFM Corporation
    Colin M. Adamson
    Chairman and Chief Executive Officer
    (905) 670-7777 ext. 2419
    or
    CFM Corporation
    J. David Wood
    Vice President and Chief Financial Officer
    (905) 670-7777 ext. 2419