Empire Industries Ltd. restates financial results for fiscal 2007 and interim 2008



    WINNIPEG, April 29 /CNW/ - Empire Industries Ltd. ("EIL" or "the
Company") today announced it has restated its consolidated financial results
for the fiscal year ended December 31, 2007 (Appendix A) as well as the
unaudited quarters ended March 31, 2008 (Appendix B), June 30, 2008 (Appendix
C) and September 30, 2008 (Appendix D), as set out below. In addition, EIL
restated its consolidated statement of changes in cash flows (Appendix E) for
fiscal 2007 for changes in the definition of cash and cash equivalents and the
effect of acquisitions undertaken during fiscal 2007. With the exception of
one adjustment which increased net earnings in fiscal 2007 by $232,021, the
adjustments do not impact on EIL's consolidated shareholders' equity for each
of the respective periods.

    
    In general, the restatements of the consolidated statement of operations
and consolidated balance sheets comprise four categories:

    -   An overstatement of the future tax liability at December 31, 2007,
        associated with two acquisitions during fiscal 2007, resulted in a
        reduction in the future tax liability and an offsetting reduction in
        property, plant and equipment of $466,084 without any impact on net
        earnings, comprehensive income or shareholders' equity for the fiscal
        year then ended;

    -   An understatement of net earnings, comprehensive income, retained
        earnings and shareholders' equity of $232,021 for the year ended
        December 31, 2007 as a result of an understatement of a non-cash
        unrealized foreign exchange gain for the fiscal year ended December
        31, 2007 of $232,021 (net of future income tax provision of 104,241);
        and

    -   A reallocation of a loss of $511,906 in the first three quarters of
        fiscal 2008 and income of $574,106 in fiscal 2007 from other
        comprehensive income ("OCI") to net earnings, with no net impact on
        comprehensive income and shareholders' equity, based on:

        -  A determination that certain foreign exchange hedge contracts
           previously designated as cash flow hedges, with changes in the
           value of the contracts recorded in OCI, should have been
           classified as fair value hedges under generally accepted
           accounting principles ("GAAP"), with the change in the value of
           the contracts recorded in net earnings as a non-cash unrealized
           foreign exchange contract gain or loss. As a result, a $569,105
           loss (net of future income tax recoveries of $261,706) for the
           first three quarters of fiscal 2008 and a gain of $573,825 (net of
           future income taxes of $263,876) was restated from OCI to net
           earnings.

        -  A determination that a subsidiary previously designated as a
           self-sustaining foreign operation, with a $57,199 gain (2007 -
           $281 gain) from a change in value on currency translation recorded
           in OCI, should have been designated as a foreign integrated
           operation under GAAP, with the change in value on currency
           translation recorded in net earnings; and

        -  A determination that the value of stock options cancelled or
           forfeited of $20,554 during the nine months ended September 30,
           2008 and recorded as a direct increase in retained earnings,
           should have first been reflected as a non-cash reduction in
           operating, general and administrative expenses and a corresponding
           increase in net earnings, without any resulting impact on retained
           earnings and shareholders' equity.
    

    Accordingly, basic and fully diluted earnings per share for the year
ended December 31, 2007 increased from $0.05 per share, as previously
reported, to $0.06 per share on a restated basis. Basic and fully diluted
earnings per share for the three and nine months ended September 30, 2008
decreased from $0.01 per share, as previously reported, to $nil per share on a
restated basis.
    The Company will release the complete restated financial statements for
the fiscal year ended December 31, 2007, on a comparative basis, at the time
it releases its results for the year ended December 31, 2008, expected to be
April 30, 2009.
    The Company will release the restated financial statements for the
quarters ended March 31, 2008, June 30, 2008 and September 30, 2008, on a
comparative basis with its results for the quarter ended March 31, 2009, and
the quarters ending June 30, 2009 and September 30, 2009, respectively.

    About Empire Industries Ltd.

    Empire Industries Ltd. adds value to steel through its leading, Western
Canadian engineered products manufacturing and steel fabrication groups and
its Fort McMurray-based strategic partnership in the maintenance services
sector. The Company's business operations are focused on the infrastructure,
commercial and industrial construction marketplace of Western Canada and
select niche markets internationally. Empire's common shares are listed on the
TSX Venture Exchange under the symbol EIL.

    Forward-looking statements

    This press release contains forward-looking statements, within the
meaning of applicable securities legislation, concerning Empire's business and
affairs. In certain cases, forward-looking statements can be identified by the
use of words such as ''plans'', ''expects'' or ''does not expect'',
''budget'', ''scheduled'', ''estimates'', "forecasts'', ''intends'',
''anticipates'' or variations of such words and phrases or state that certain
actions, events or results ''may'', ''could'', ''would'', ''might'' or ''will
be taken'', ''occur'' or ''be achieved''. These forward looking statements are
based on current expectations, and are naturally subject to uncertainty and
changes in circumstances that may cause actual results to differ materially.
Readers are cautioned not to place undue reliance on such forward-looking
statements. Forward-looking information is provided as of the date of this
press release, and Empire assumes no obligation to update or revise them to
reflect new events or circumstances, except as may be required under
applicable securities laws.

    
    Neither TSX Venture Exchange nor its Regulation Services Provider (as
    that term is defined in the policies of the TSX Venture Exchange) accepts
    responsibility for the adequacy or accuracy of this release.



    Appendix A - December 31, 2007

    -------------------------------------------------------------------------
                                  December         December          Ref.
                                  31, 2007         31, 2007
                               As previously     As restated
                                  Reported
    -------------------------------------------------------------------------

    Property, plant &
     equipment                 $  29,642,296   $  29,512,474   (iii) (iv)
    Future income tax
     liabilities, net              3,249,157       2,887,314   (iii) (iv)
    Retained earnings              4,009,894       4,816,021   (i) (ii) (iv)
    Accumulated other
     comprehensive income            574,106               -   (i) (ii)
    Shareholders' equity          40,400,355      40,632,376   (iv)
    -------------------------------------------------------------------------

    Sales                        117,747,987     117,748,268   (ii)
    Gross profit                  21,131,064      21,131,345   (ii)
    Unrealized foreign exchange
     hedge contract gain                   -       1,173,962   (i) (iv)
    Net earnings before income
     taxes                         4,844,132       6,018,375   (i) (ii) (iv)
    Future income tax provision     (555,694)       (923,810)  (i) (iv)

    Net earnings                   3,148,397       3,954,524   (i) (ii) (iv)
    Other comprehensive income       574,106               -   (i) (ii)
    -------------------------------------------------------------------------

    Comprehensive income           3,722,503       3,954,524   (iv)
    -------------------------------------------------------------------------

    Earnings per share - basic
     and diluted               $        0.05   $        0.06
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (i)    Commencing April 17, 2007, the Company had been recording
           unrealized gains or losses on foreign exchange derivatives,
           determined to be cash flow hedges for reporting purposes, in OCI.
           It has been determined that at the date of inception of the
           hedges, the Company did not have sufficient evidence to support
           the treatment of these foreign exchange hedge contracts as being
           effective (as defined by GAAP) and accordingly, the transactions
           should have been reported as fair value hedges for financial
           reporting purposes. As a result, the 2007 figures have been re-
           stated such that the unrealized gains of $573,825 (net of future
           taxes of $263,875) previously included in OCI have now been
           included in net earnings.

    (ii)   Commencing with the acquisition of Tornado Technologies Inc.
           ("Tornado Canada") on November 30, 2007, the Company had been
           treating Tornado Canada's wholly owned U.S. subsidiary, Tornado
           Technologies, Inc. ("Tornado USA") as a self-sustaining foreign
           operation with changes in values on currency translation being
           reported in OCI. On the basis that management and financing of
           Tornado USA are handled principally by Tornado Canada, it has been
           determined that Tornado USA is in fact an integrated foreign
           operation for financial reporting purposes. As a result, the 2007
           figures have been re-stated such that the foreign currency
           translation gains of $281 previously included in OCI have now been
           included in net earnings.

    (iii)  It has been determined that the value ascribed to future income
           tax liabilities in the original purchase price allocation for two
           acquisitions undertaken during the year ended December 31, 2007
           was overstated by $466,084 with a consequential overstatement of
           the value ascribed to non-current assets. As a result, the 2007
           figures have been re-stated to reflect a reduction in the future
           income tax liability at December 31, 2007 with a corresponding
           reduction in the value of property, plant and equipment.

    (iv)   It has been determined that the value of a foreign exchange
           contract acquired during the year ended December 31, 2007 was
           inadvertently netted with the value of property, plant and
           equipment acquired with the result that the unrealized gain on
           foreign exchange hedge contracts for the year ended December 31,
           2007 reported in OCI was understated. As a result, the 2007
           figures have been re-stated such that the unrealized gain on
           foreign exchange hedge contracts noted in (i) above was further
           increased by $232,021 (net of income taxes of $104,241) with
           corresponding increases in the value of property, plant and
           equipment of $336,262 and future income tax liabilities of
           $104,241 at December 31, 2007.



    Appendix B - March 31, 2008

    -------------------------------------------------------------------------
                                Quarter ended   Quarter ended        Ref.
                               March 31, 2008  March 31, 2008
                               (As previously   (As restated)
                                  Reported)
    -------------------------------------------------------------------------

    Property, plant &
     equipment                 $  29,535,254   $  29,405,432   (i)
    Future income tax
     liabilities, net              2,782,814       2,420,971   (i)
    Retained earnings              4,358,564       4,832,340   (i) (ii) (iii)
    Accumulated other
     comprehensive income            241,755               -   (i) (ii) (iii)
    Shareholders' equity          40,562,551      40,794,572   (i)
    -------------------------------------------------------------------------

    Sales                         38,683,299      38,693,436   (iii)
    Gross profit                   6,283,641       6,293,778   (iii)
    Operating, general and
     administrative expenses      (4,245,396)     (4,240,879)  (iv)
    Unrealized foreign exchange
     hedge contract loss                   -        (499,983)  (ii)
    Net earnings before income
     taxes                           540,738          55,409   (ii)(iii)(iv)
    Future income tax recovery       308,849         466,344   (ii)

    Net earnings                     344,153          16,319   (ii)(iii)(iv)
    Other comprehensive income      (332,351)              -   (ii) (iii)
    -------------------------------------------------------------------------

    Comprehensive income              11,802          16,319   (iv)
    -------------------------------------------------------------------------

    Earnings per share - basic
     and diluted               $           -   $           -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (i)    The cumulative impact of the restated results for the year ended
           December 31, 2007 included a reduction in Property, Plant and
           Equipment of $129,822, a reduction in net future income tax
           liabilities of $361,843, a $806,127 increase in retained earnings
           and a $574,106 reduction in accumulated other comprehensive
           income, resulting in a net increase in shareholders' equity of
           $232,021.

    (ii)   Commencing April 17, 2007, the Company had been recording
           unrealized gains or losses on foreign exchange derivatives,
           determined to be cash flow hedges for reporting purposes, in OCI.
           It has been determined that at the date of inception of the
           hedges, the Company did not have sufficient evidence to support
           the treatment of these foreign exchange hedge contracts as being
           effective (as defined by GAAP) and accordingly, the transactions
           should have been reported as fair value hedges for financial
           reporting purposes. As a result, the 2008 figures for the first
           quarter ended March 31, 2008 have been re-stated such that the
           unrealized losses of $342,488 (net of future income tax recovery
           of $157,495) previously included in OCI have now been included in
           net earnings.

    (iii)  Commencing with the acquisition of Tornado Technologies Inc.
           ("Tornado Canada") on November 30, 2007, the Company had been
           treating Tornado Canada's wholly owned U.S. subsidiary, Tornado
           Technologies, Inc. ("Tornado USA") as a self-sustaining foreign
           operation with changes in values on currency translation being
           reported in OCI. On the basis that management and financing of
           Tornado USA are handled principally by Tornado Canada, it has been
           determined that Tornado USA is in fact an integrated foreign
           operation for financial reporting purposes. As a result, the 2008
           figures for the first quarter ended March 31, 2008 have been re-
           stated such that the foreign currency translation gains of $10,137
           previously included in OCI have now been included in net earnings.

    (iv)   The Company had been treating the forfeiture and cancellation of
           outstanding stock options as a direct increase to retained
           earnings. It has been subsequently determined that the company
           should have been recording this recovery as a reduction in stock
           compensation expense included in operating, general and
           administrative expenses. As a result, the 2008 figures have been
           re-stated such that the recovery of stock options forfeited of
           $4,517 during the quarter is first applied to reduce operating,
           general and administrative expenses with no resulting change in
           retained earnings and shareholders' equity.



    Appendix C - June 30, 2008

    -------------------------------------------------------------------------
                               Quarter ended    Quarter ended        Ref.
                               June 30, 2008    June 30, 2008
                              (As previously    (As restated)
                                  Reported)
    -------------------------------------------------------------------------

    Property, plant &
     equipment                 $  29,612,694   $  29,482,872   (i)
    Future income tax
     liabilities, net              3,242,630       2,880,787   (i)
    Retained earnings              3,974,577       4,519,468   (i) (ii) (iii)
    Accumulated other
     comprehensive income            312,870               -   (i) (ii) (iii)
    Shareholders' equity          40,355,036      40,587,057   (i)
    -------------------------------------------------------------------------

    Sales                         43,650,087      43,715,384   (iii)
    Gross profit                   7,001,611       7,066,908   (iii)
    Operating, general and
     administrative expenses      (6,208,721)     (6,208,721)
    Unrealized foreign exchange
     hedge contract gain                   -           8,493   (ii)
    Net loss before income
     taxes                          (603,568)       (529,778)  (ii) (iii)
    Future income tax recovery
     (provision)                       2,057            (618)  (ii)

    Net earnings                    (383,987)       (312,872)  (ii) (iii)
    Other comprehensive income        71,115               -   (ii) (iii)
    -------------------------------------------------------------------------

    Comprehensive income            (312,872)       (312,872)
    -------------------------------------------------------------------------

    Earnings per share - basic
     and diluted               $           -   $           -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (i)    The cumulative impact of the restated results for the year ended
           December 31, 2007 and the three months ended March 31, 2008
           included a reduction in Property, Plant and Equipment of $129,822,
           a reduction in net future income tax liabilities of $361,843, a
           $473,776 increase in retained earnings and a $241,755 reduction in
           accumulated other comprehensive income, resulting in a net
           increase in shareholders' equity of $232,021.

    (ii)   Commencing April 17, 2007, the Company had been recording
           unrealized gains or losses on foreign exchange derivatives,
           determined to be cash flow hedges for reporting purposes, in OCI.
           It has been determined that at the date of inception of the
           hedges, the Company did not have sufficient evidence to support
           the treatment of these foreign exchange hedge contracts as being
           effective (as defined by GAAP) and accordingly, the transactions
           should have been reported as fair value hedges for financial
           reporting purposes. As a result, the 2008 figures for the second
           quarter ended June 30, 2008 have been re-stated such that the
           unrealized gains of $5,818 (net of future tax provision of $2,675)
           previously included in OCI have now been included in net earnings.

    (iii)  Commencing with the acquisition of Tornado Technologies Inc.
           ("Tornado Canada") on November 30, 2007, the Company had been
           treating Tornado Canada's wholly owned U.S. subsidiary, Tornado
           Technologies, Inc. ("Tornado USA") as a self-sustaining foreign
           operation with changes in values on currency translation being
           reported in OCI. On the basis that management and financing of
           Tornado USA are handled principally by Tornado Canada, it has been
           determined that Tornado USA is in fact an integrated foreign
           operation for financial reporting purposes. As a result, the 2008
           figures for the second quarter ended June 30, 2008 have been re-
           stated such that the foreign currency translation gains of $65,297
           previously included in OCI have now been included in net earnings.



    Appendix D - September 30, 2008

    -------------------------------------------------------------------------
                               Quarter ended    Quarter ended        Ref.
                                 September        September
                                  30, 2008         30, 2008
                              (As previously    (As restated)
                                  Reported)
    -------------------------------------------------------------------------

    Property, plant &
     equipment                 $  29,454,860   $  29,325,038   (i)
    Future income tax
     liabilities, net              4,873,532       4,511,689   (i)
    Retained earnings              4,515,682       4,809,903   (i) (ii) (iii)
    Accumulated other
     comprehensive income             62,200               -   (i) (ii) (iii)
    Shareholders' equity          40,715,143      40,947,164   (i)
    -------------------------------------------------------------------------

    Sales                         57,409,168      57,390,933   (iii)
    Gross profit                   8,101,812       8,083,577   (iii)
    Operating, general and
     administrative expenses      (5,874,891)     (5,858,854)  (iv)
    Unrealized foreign exchange
     hedge contract loss                   -        (339,321)  (ii)
    Net earnings before income
     taxes                           713,064         371,545   (ii)(iii)(iv)
    Future income tax provision     (150,906)        (44,020)  (ii)

    Net earnings                     525,068         290,435   (ii)(iii)(iv)
    Other comprehensive income
     (loss)                         (250,670)              -   (ii) (iii)
    -------------------------------------------------------------------------

    Comprehensive income             274,398          290,435  (iv)
    -------------------------------------------------------------------------

    Earnings per share - basic
     and diluted               $        0.01   $            -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (i)    The cumulative impact of the restated results for the year ended
           December 31, 2007 and the six months ended June 30, 2008 included
           a reduction in Property, Plant and Equipment of $129,822, a
           reduction in net future income tax liabilities of $361,843, a
           $544,891 increase in retained earnings and a $312,870 reduction in
           accumulated other comprehensive income, resulting in a net
           increase in shareholders' equity of $232,021.

    (ii)   Commencing April 17, 2007, the Company had been recording
           unrealized gains or losses on foreign exchange derivatives,
           determined to be cash flow hedges for reporting purposes, in OCI.
           It has been determined that at the date of inception of the
           hedges, the Company did not have sufficient evidence to support
           the treatment of these foreign exchange hedge contracts as being
           effective (as defined by GAAP) and accordingly, the transactions
           should have been reported as fair value hedges for financial
           reporting purposes. As a result, the 2008 figures for the third
           quarter ended September 30, 2008 have been re-stated such that the
           unrealized losses of $232,435 (net of future income tax recovery
           of $106,886) previously included in OCI have now been included in
           net earnings.

    (iii)  Commencing with the acquisition of Tornado Technologies Inc.
           ("Tornado Canada") on November 30, 2007, the Company had been
           treating Tornado Canada's wholly owned U.S. subsidiary, Tornado
           Technologies, Inc. ("Tornado USA") as a self-sustaining foreign
           operation with changes in values on currency translation being
           reported in OCI. On the basis that management and financing of
           Tornado USA are handled principally by Tornado Canada, it has been
           determined that Tornado USA is in fact an integrated foreign
           operation for financial reporting purposes. As a result, the 2008
           for the third quarter ended September 30, 2008 figures have been
           re-stated such that the foreign currency translation losses of
           $18,235 previously included in OCI have now been included in net
           earnings.

    (iv)   The Company had been treating the forfeiture and cancellation of
           outstanding stock options as a direct increase to retained
           earnings. It has been subsequently determined that the company
           should have been recording this recovery as a reduction in stock
           compensation expense included in operating, general and
           administrative expenses. As a result, the 2008 figures have been
           re-stated such that the recovery of stock options forfeited of
           $16,037 during the quarter is first applied to reduce operating,
           general and administrative expenses with no resulting change in
           retained earnings and shareholders' equity.



    Appendix E - December 31, 2007 Statement of Changes in Cash Flows

    -------------------------------------------------------------------------
                                     December 31, 2007     December 31, 2007
                                 (As previously reported)    (As restated)
    -------------------------------------------------------------------------

    Cash flow provided by (used in):
    Operating activities
    Cash flow provided by operations      $    6,007,432      $    5,831,449
    Changes in non-cash working capital      (16,511,258)         (5,841,730)
    Investing activities                     (38,870,821)        (14,165,044)
    Financing activities - excluding
     bank operating lines                     35,580,019             380,697
    -------------------------------------------------------------------------
                                             (13,794,628)        (13,794,628)
    Financing activities - bank operating
     lines assumed                                     -           8,330,430
    Financing activities - change in bank
     operating lines                                   -           4,536,248
    -------------------------------------------------------------------------

    Change in cash                        $  (13,794,628)     $     (927,950)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (i)    The Company had previously disclosed its business acquisitions in
           the statement of cash flows as investing activities rather
           properly reflecting changes in non-cash working capital items,
           actual proceeds from common shares issued and the use of cash
           related to business acquisitions. As a result, the 2007 figures
           have been re-stated to reflect the re-allocation of these items on
           the statement of changes in cash flows.

    (ii)   The Company had previously included its bank operating loans as a
           component of cash and cash equivalents on the statement of cash
           flows. The Company has subsequently determined that its bank
           operating loans would be more appropriately included on the
           statement of cash flows as a financing activity. As a result, the
           2007 figures have been re-stated to reflect this change.
    




For further information:

For further information: please visit our web-site at: www.empind.com;
or contact: David Carefoot, CA, CBV, Chief Financial Officer, Empire
Industries Ltd., Phone: (204) 589-9305, Email: dcarefoot@empind.com; Trevor
Heisler, Investor Relations, The Equicom Group Inc., Phone: (416) 815-0700 x
270, Email: invest@empind.com

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