US Devcon’s materials division reported an operating loss of US$6.9m for 2005 versus a loss of US$3.6m in 2004. During 2005, we recorded a US$2.8m impairment charge with respect to long-lived assets at our Puerto Rico and Sint Maarten/St. Martin operations. In addition, during 2005 we continued to experience shortages of cement supply which resulted in operational inefficiencies, as well as declining sales. Mr. Ruzika stated, "We have arranged for an alternative supply of cement and, so far in 2006, we have not experienced any shortages."
In March 2006 we sold our Antigua operations for US$5.1m in cash and we recently reached a verbal agreement to sell our Puerto Rico operations for US$0.7m in cash. We expect to close this transaction within a few weeks. We continue to raise prices for our products in Sint Maarten/St. Martin on the Island of St. Marten and accompanied by tightly managing expenses, we currently expect significant improvement in the results of operations of this division during 2006. Ruzika added that "the Company will continue to pursue the objective of maximizing the value of this division by pursuing an orderly disposition of some or all of the division’s operations during 2006."
The Materials Division produces and distributes crushed stone, ready-mix concrete and concrete block in the eastern Caribbean with principal operations on Sint Maarten in the Netherlands Antilles, on St. Martin in the French West Indies, and on Puerto Rico.