##### 



Exhibit
4
 STANTEC INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS
  CONSOLIDATED FINANCIAL STATEMENTS




---



##### 



STANTEC INC.
Table of Contents
 MANAGEMENTS DISCUSSION AND ANALYSIS
    
    PageCaution Regarding Forward-Looking Statements
    
    M-3Vision, Core Business, and Strategy
    
    M-4Key Performance Drivers and Capabilities
    
    M-6Results
    
    M-8Overall performance
    
    M-8Acquisitions
    
    M-10Selected annual information
    
    M-10Results of operations
    
    M-11Quarterly trends and fourth quarter results
    
    M-17Liquidity and capital resources
    
    M-18Other
    
    M-22Outlook
    
    M-23Critical Accounting Estimates, Developments, and Measures
    
    M-25Risk Factors
    
    M-29Corporate Governance
    
    M-38CONSOLIDATED FINANCIAL STATEMENTSManagement Report
    
    F-1Auditors Report
    
    F-2Consolidated Balance Sheets
    
    F-3Consolidated Statements of Income and Retained Earnings
    
    F-4Consolidated Statements of Cash Flows
    
    F-5Notes to the Consolidated Financial Statements
    
    F-6




---



##### 



Management Report
     -s- TONY FRANCESCHINI P.ENG.
    
    -s- DON WILSON CATony Franceschini P.Eng.
    
    Don Wilson CAPresident & CEO
    
    Vice President & CFOFebruary 10, 2006
    
    February 10, 2006
 F-1




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##### 



Auditors Report
 Stantec Inc.
 Stantec Inc.
   Chartered Accountants
 F-2




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##### 



Stantec Inc.
Consolidated Balance Sheets
 As at December 312005
    
    2004$
    
    $(In thousands of Canadiandollars)ASSETS [note 8]CurrentCash and cash equivalents
    
    
    28,143
    
    
    
    37,890Restricted cash [note 12]
    
    
    21,312
    
    
    
    Accounts receivable, net of allowance for
doubtful accounts of $16,053 in 2005 ($21,095  2004)
    
    
    137,928
    
    
    
    112,476Costs and estimated earnings in excess of billings
    
    
    66,172
    
    
    
    40,861Prepaid expenses
    
    
    5,420
    
    
    
    4,165Future income tax assets [note 14]
    
    
    14,827
    
    
    
    8,532Other assets [note 6]
    
    
    6,569
    
    
    
    4,831Total current assets
    
    
    280,371
    
    
    
    208,755Property and equipment [note 3]
    
    
    58,519
    
    
    
    48,262Goodwill [note 14]
    
    
    242,674
    
    
    
    84,694Intangible assets [note 5]
    
    
    27,304
    
    
    
    6,278Future income tax assets [note 14]
    
    
    6,814
    
    
    
    6,357Other assets [note 6]
    
    
    13,097
    
    
    
    7,754Total assets
    
    
    628,779
    
    
    
    362,100LIABILITIES AND SHAREHOLDERS EQUITYCurrentAccounts payable and accrued liabilities [note 7]
    
    
    106,757
    
    
    
    78,718Billings in excess of costs and estimated earnings
    
    
    24,251
    
    
    
    18,832Income taxes payable
    
    
    4,441
    
    
    
    5,732Current portion of long-term debt [note 8]
    
    
    4,813
    
    
    
    12,820Future income tax liabilities [note 14]
    
    
    17,552
    
    
    
    10,653Total current liabilities
    
    
    157,814
    
    
    
    126,755Long-term debt [note 8]
    
    
    81,886
    
    
    
    21,155Other liabilities [note 9]
    
    
    24,764
    
    
    
    16,818Future income tax liabilities [note 14]
    
    
    16,262
    
    
    
    8,316Total liabilities
    
    
    280,726
    
    
    
    173,044Commitments and contingencies[notes 2, 8, 10, and 11]Shareholders equityShare capital [note 12]
    
    
    210,604
    
    
    
    87,656Contributed surplus [note 12]
    
    
    5,522
    
    
    
    2,544Cumulative translation account [note 3]
    
    
    (25,575
    )
    
    
    (19,018
    )Deferred stock compensation
    
    
    (833
    )
    
    
    Retained earnings
    
    
    158,335
    
    
    
    117,874Total shareholders equity
    
    
    348,053
    
    
    
    189,056Total liabilities and shareholders equity
    
    
    628,779
    
    
    
    362,100
 See accompanying notes
  -s- ILLEGIBLE
    
    -s- TONY FRANCESCHINI P.ENGDirector
    
    Director
 F-3




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##### 



Stantec Inc.
Consolidated Statements of Income and Retained Earnings
 Years Ended December 312005
    
    2004
    
    2003$
    
    $
    
    $(In thousands of Canadian dollars,except per share amounts)IncomeGross revenue
    
    
    618,020
    
    
    
    520,879
    
    
    
    459,942Less subconsultant and other direct expenses
    
    
    93,468
    
    
    
    71,728
    
    
    
    68,546Net revenue
    
    
    524,552
    
    
    
    449,151
    
    
    
    391,396Direct payroll costs
    
    
    234,553
    
    
    
    205,513
    
    
    
    183,471Gross margin
    
    
    289,999
    
    
    
    243,638
    
    
    
    207,925Administrative and marketing expenses
    
    
    212,633
    
    
    
    183,739
    
    
    
    154,788Depreciation of property and equipment
    
    
    12,389
    
    
    
    11,986
    
    
    
    9,912Amortization of intangible assets
    
    
    2,542
    
    
    
    927
    
    
    
    925Net interest expense [note 8]
    
    
    571
    
    
    
    2,805
    
    
    
    2,637Share of income from associated companies
    
    
    (187
    )
    
    
    (385
    )
    
    
    (580
    )Foreign exchange (gains) losses
    
    
    (449
    )
    
    
    (94
    )
    
    
    615Income before income taxes
    
    
    62,500
    
    
    
    44,660
    
    
    
    39,628Income taxes[note 14]Current
    
    
    21,735
    
    
    
    18,065
    
    
    
    10,050Future
    
    
    143
    
    
    
    (3,595
    )
    
    
    4,508Total income taxes
    
    
    21,878
    
    
    
    14,470
    
    
    
    14,558Net income for the year
    
    
    40,622
    
    
    
    30,190
    
    
    
    25,070Retained earnings, beginning of the year
    
    
    117,874
    
    
    
    88,266
    
    
    
    64,240Shares repurchased [note 12]
    
    
    (161
    )
    
    
    (582
    )
    
    
    (1,044
    )Retained earnings, end of the year
    
    
    158,335
    
    
    
    117,874
    
    
    
    88,266Earnings per share[note 15]Basic
    
    
    2.04
    
    
    
    1.63
    
    
    
    1.37Diluted
    
    
    1.98
    
    
    
    1.59
    
    
    
    1.31
 See accompanying notes
 F-4




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##### 



Stantec Inc.
Consolidated Statements of Cash Flows
 Years Ended December 312005
    
    2004
    
    2003$
    
    $
    
    $(In thousands of Canadian dollars)CASH FLOWS FROM (USED IN) OPERATING ACTIVITIESCash receipts from clients
    
    
    637,391
    
    
    
    568,897
    
    
    
    465,114Cash paid to suppliers
    
    
    (200,445
    )
    
    
    (169,573
    )
    
    
    (156,460
    )Cash paid to employees
    
    
    (355,621
    )
    
    
    (313,321
    )
    
    
    (274,444
    )Dividends from equity investments
    
    
    550
    
    
    
    300
    
    
    
    Interest received
    
    
    6,531
    
    
    
    6,426
    
    
    
    2,710Interest paid
    
    
    (6,551
    )
    
    
    (8,639
    )
    
    
    (4,462
    )Income taxes paid
    
    
    (28,882
    )
    
    
    (10,530
    )
    
    
    (18,142
    )Income taxes recovered
    
    
    4,341
    
    
    
    3,791
    
    
    
    2,577Cash flows from operating activities[note 16]
    
    
    57,314
    
    
    
    77,351
    
    
    
    16,893CASH FLOWS FROM (USED IN) INVESTING ACTIVITIESBusiness acquisitions, including cash acquired and
bank indebtedness assumed [note 2]
    
    
    (100,383
    )
    
    
    (18,845
    )
    
    
    (6,046
    )Cash of joint venture held for sale
    
    
    
    
    
    
    
    
    
    
    (369
    )Restricted cash used for acquisitions [note 2]
    
    
    9,000
    
    
    
    
    
    
    
    Increase in investments held for self-insured liabilities
    
    
    (7,295
    )
    
    
    (9,562
    )
    
    
    Proceeds on disposition of investments
    
    
    522
    
    
    
    55
    
    
    
    195Collection of notes receivable from disposition of Technology
and Design Build segments
    
    
    406
    
    
    
    1,014
    
    
    
    Purchase of property and equipment
    
    
    (17,005
    )
    
    
    (17,488
    )
    
    
    (28,713
    )Proceeds on disposition of property and equipment
    
    
    155
    
    
    
    34,672
    
    
    
    1,444Cash flows used in investing activities
    
    
    (114,600
    )
    
    
    (10,154
    )
    
    
    (33,489
    )CASH FLOWS FROM (USED IN) FINANCING ACTIVITIESRepayment of long-term debt
    
    
    (46,875
    )
    
    
    (35,546
    )
    
    
    (20,592
    )Proceeds from long-term borrowings
    
    
    95,929
    
    
    
    13,960
    
    
    
    Net change in bank indebtedness financing
    
    
    
    
    
    
    (17,151
    )
    
    
    17,151Repurchase of shares for cancellation [note 12]
    
    
    (195
    )
    
    
    (720
    )
    
    
    (1,392
    )Share issue costs [note 12]
    
    
    (1,969
    )
    
    
    
    
    
    
    Proceeds from issue of share capital [note 12]
    
    
    961
    
    
    
    3,490
    
    
    
    651Cash flows from (used in) financing activities
    
    
    47,851
    
    
    
    (35,967
    )
    
    
    (4,182
    )Foreign exchange loss on cash held in foreign currency
    
    
    (312
    )
    
    
    (683
    )
    
    
    (1,081
    )Net increase (decrease) in cash and cash equivalents
    
    
    (9,747
    )
    
    
    30,547
    
    
    
    (21,859
    )Cash and cash equivalents, beginning of the year
    
    
    37,890
    
    
    
    7,343
    
    
    
    29,202Cash and cash equivalents, end of the year
    
    
    28,143
    
    
    
    37,890
    
    
    
    7,343
 See accompanying notes
 F-5




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##### 



Stantec Inc.
Notes to the Consolidated Financial Statements
 1. Summary of Significant Accounting Policies
  Generally accepted accounting principles
    Use of estimates
   F-6




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##### 



Principles of consolidation
 
  Cash and cash equivalents
  Investments
   Property and equipment
  Engineering equipment
    
    
    2030
    %
    
    declining balanceBusiness information systems
    
    
    
    
    
    straight-line over 35 yearsOffice equipment
    
    
    2030
    %
    
    declining balanceAutomotive equipment
    
    
    30
    %
    
    declining balanceLeasehold improvements
    
    
    
    
    
    straight-line over term of lease plus one
renewal period to a maximum of 15 years
or the improvements economic lifeBuildings
    
    
    45
    %
    
    declining balance
 Leases
   F-7




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##### 



Goodwill and intangible assets
  Long-lived assets
  Accrual and investments held for self-insured liabilities
   Forward contracts
  Non-interest-bearing debt
  Fair value of financial instruments
  F-8




---



##### 



Credit risk
  Interest rate risk
  Revenue recognition
   Employee benefit plans
  Foreign currency translation
   F-9




---



##### 



Stock-based compensation and other stock-based payments
  Investment tax credits
  Income taxes
  Earnings per share
  Allowance for doubtful accounts
  Recent accounting pronouncements
  F-10




---



##### 



2. Business Acquisitions
  Acquisitions in fiscal 2005
   F-11




---



##### 



Acquisitions in fiscal 2004
   F-12




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##### 



Aggregate
consideration paid
 Keith
    
    
    Other
    
    
    Total
    
    
    Total2005
    
    
    2005
    
    
    2005
    
    
    2004$000s
    
    
    $000s
    
    
    $000s
    
    
    $000sCash consideration
    
    
    107,062
    
    
    
    11,200
    
    
    
    118,262
    
    
    
    12,432Share consideration
    
    
    125,540
    
    
    
    
    
    
    
    125,540
    
    
    
    Promissory notes
    
    
    
    
    
    
    2,753
    
    
    
    2,753
    
    
    
    1,487Purchase price
    
    
    232,602
    
    
    
    13,953
    
    
    
    246,555
    
    
    
    13,919Assets and liabilities acquired at fair valuesCash acquired (bank indebtedness assumed)
    
    
    22,075
    
    
    
    (4,196
    )
    
    
    17,879
    
    
    
    (6,413
    )Restricted cash acquired
    
    
    30,882
    
    
    
    
    
    
    
    30,882
    
    
    
    Non-cash working capital
    
    
    9,747
    
    
    
    3,929
    
    
    
    13,676
    
    
    
    6,057Property and equipment
    
    
    5,751
    
    
    
    991
    
    
    
    6,742
    
    
    
    3,211Investments
    
    
    32
    
    
    
    
    
    
    
    32
    
    
    
    87Goodwill
    
    
    149,844
    
    
    
    12,218
    
    
    
    162,062
    
    
    
    18,425Other long-term assets
    
    
    554
    
    
    
    
    
    
    
    554
    
    
    
    Intangible assetsClient relationships
    
    
    17,476
    
    
    
    947
    
    
    
    18,423
    
    
    
    1,357Contract backlog
    
    
    3,995
    
    
    
    1,053
    
    
    
    5,048
    
    
    
    301Other
    
    
    669
    
    
    
    (139
    )
    
    
    530
    
    
    
    500Other long-term liabilities
    
    
    (1,380
    )
    
    
    243
    
    
    
    (1,137
    )
    
    
    (1,642
    )Long-term debt
    
    
    
    
    
    
    (745
    )
    
    
    (745
    )
    
    
    (8,414
    )Future income taxes
    
    
    (8,226
    )
    
    
    (348
    )
    
    
    (8,574
    )
    
    
    450Deferred stock compensation
    
    
    1,183
    
    
    
    
    
    
    
    1,183
    
    
    
    Net assets acquired
    
    
    232,602
    
    
    
    13,953
    
    
    
    246,555
    
    
    
    13,919
   Pro forma data
  F-13




---



##### 



2005
    
    2004$000s
    
    $000s(Unaudited)Pro forma gross revenue
    
    
    753,291
    
    
    
    726,827Pro forma net revenue
    
    
    646,614
    
    
    
    628,844Pro forma net income
    
    
    49,098
    
    
    
    39,563Basic pro forma earnings per share
    
    
    2.20
    
    
    
    1.81Diluted pro forma earnings per share
    
    
    2.15
    
    
    
    1.77
 3. Property and Equipment
 2005
    
    
    2004Accumulated
    
    
    
    
    
    
    AccumulatedCost
    
    
    Depreciation
    
    
    Cost
    
    
    Depreciation$000s
    
    
    $000s
    
    
    $000s
    
    
    $000sEngineering equipment
    
    
    42,560
    
    
    
    22,736
    
    
    
    33,622
    
    
    
    19,058Business information systems
    
    
    11,475
    
    
    
    4,237
    
    
    
    9,681
    
    
    
    1,796Office equipment
    
    
    23,030
    
    
    
    10,071
    
    
    
    19,953
    
    
    
    7,519Automotive equipment
    
    
    5,263
    
    
    
    2,867
    
    
    
    4,254
    
    
    
    2,578Leasehold improvements
    
    
    14,226
    
    
    
    2,053
    
    
    
    11,994
    
    
    
    2,031Buildings
    
    
    4,204
    
    
    
    704
    
    
    
    1,901
    
    
    
    594Land
    
    
    429
    
    
    
    
    
    
    
    433
    
    
    
    101,187
    
    
    
    42,668
    
    
    
    81,838
    
    
    
    33,576Net book value
    
    
    
    58,519
    
    
    
    
    
    
    
    
    48,262
   4. Goodwill
 2005
    
    
    2004$000s
    
    
    $000sGoodwill, beginning of the year
    
    
    84,694
    
    
    
    69,696Current year acquisitions
    
    
    160,840
    
    
    
    18,006Additional purchase price payments
    
    
    700
    
    
    
    Other purchase price adjustments
    
    
    522
    
    
    
    419Impact of foreign exchange
    
    
    (4,082
    )
    
    
    (3,427
    )Goodwill, end of the year
    
    
    242,674
    
    
    
    84,694
 F-14




---



##### 



5. Intangible Assets
 2005
    
    
    2004Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization$000s
    
    
    $000s
    
    
    $000s
    
    
    $000sClient relationships
    
    
    24,914
    
    
    
    2,232
    
    
    
    6,859
    
    
    
    1,195Contract backlog
    
    
    4,900
    
    
    
    1,219
    
    
    
    339
    
    
    
    290Other
    
    
    1,218
    
    
    
    277
    
    
    
    750
    
    
    
    18531,032
    
    
    
    3,728
    
    
    
    7,948
    
    
    
    1,670Carrying amount
    
    
    
    
    27,304
    
    
    
    
    
    
    
    6,278
  $000s2006
    
    
    5,7622007
    
    
    3,1542008
    
    
    2,6092009
    
    
    2,5412010
    
    
    2,403Thereafter
    
    
    10,83527,304
 6. Other Assets
 2005
    
    
    2004$000s
    
    
    $000sInvestments held for self-insured liabilities
    
    
    16,857
    
    
    
    9,562Investments in associated companies
    
    
    1,545
    
    
    
    1,909Investments  other
    
    
    710
    
    
    
    1,114Other
    
    
    554
    
    
    
    19,666
    
    
    
    12,585Less current portion of investments held for self-insured liabilities
    
    
    6,569
    
    
    
    4,83113,097
    
    
    
    7,754
  F-15




---



##### 



7. Accounts Payable and Accrued Liabilities
 2005
    
    
    2004$000s
    
    
    $000sTrade accounts payable
    
    
    26,784
    
    
    
    21,651Employee and payroll liabilities
    
    
    52,314
    
    
    
    37,188Accrued liabilities
    
    
    27,659
    
    
    
    19,879106,757
    
    
    
    78,718
 8. Long-Term Debt
 2005
    
    
    2004$000s
    
    
    $000sNon-interest-bearing note payable
    
    
    122
    
    
    
    111Other non-interest-bearing notes payable
    
    
    5,643
    
    
    
    7,862Bank loan
    
    
    79,035
    
    
    
    23,997Mortgages payable
    
    
    1,706
    
    
    
    1,765Other
    
    
    193
    
    
    
    24086,699
    
    
    
    33,975Less current portion
    
    
    4,813
    
    
    
    12,82081,886
    
    
    
    21,155
    F-16




---



##### 



$000s2006
    
    
    4,8132007
    
    
    1,6612008
    
    
    80,1032009
    
    
    2010
    
    
    Thereafter
    
    
    12286,699
  9. Other Liabilities
 2005
    
    
    2004$000s
    
    
    $000sProvision for self-insured liabilities
    
    
    12,866
    
    
    
    5,236Deferred gain on
sale leaseback
    
    
    6,624
    
    
    
    7,073Lease inducement benefits
    
    
    7,997
    
    
    
    4,742Liabilities on lease exit activities
    
    
    2,251
    
    
    
    2,817Other
    
    
    1,021
    
    
    
    30,759
    
    
    
    19,868Less current portion included in accrued liabilities
    
    
    5,995
    
    
    
    3,05024,764
    
    
    
    16,818
 Provision for self-insured liabilities
 F-17




---



##### 



2005
    
    
    2004$000s
    
    
    $000sProvision, beginning of the year
    
    
    5,236
    
    
    
    2,410Current year provision
    
    
    9,764
    
    
    
    2,826Payment for claims settlement
    
    
    (2,134
    )
    
    
    Provision, end of the year
    
    
    12,866
    
    
    
    5,236
  Liabilities on lease exit activities
 2005
    
    
    2004$000s
    
    
    $000sLiability, beginning of the year
    
    
    2,817
    
    
    
    Current year provision:Established for existing operations
    
    
    609
    
    
    
    936Resulting from acquisitions
    
    
    276
    
    
    
    3,465Payment or reductions:Impacting net income
    
    
    (1,103
    )
    
    
    (1,375
    )Impacting the purchase price allocation
    
    
    (325
    )
    
    
    Impact of foreign exchange
    
    
    (23
    )
    
    
    (209
    )Liability, end of the year
    
    
    2,251
    
    
    
    2,817
 10. Commitments
 $000s2006
    
    
    34,7942007
    
    
    31,2482008
    
    
    25,2402009
    
    
    21,9362010
    
    
    18,910Thereafter
    
    
    79,585211,713
  F-18




---



##### 



11. Contingencies
 12. Share Capital
 AuthorizedUnlimited
    
    Common shares, with no par valueUnlimited
    
    Preferred shares issuable in series with attributes designated by the Board of Directors
 Common shares issued and outstanding
 Capital Stock
    
    
    Contributed Surplus2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Shares
    
    
    
    
    
    
    Shares
    
    
    
    
    
    
    Shares#
    
    
    $000s
    
    
    #
    
    
    $000s
    
    
    #
    
    
    $000s
    
    
    $000s
    
    
    $000s
    
    
    $000sBalance, beginning
of the year
    
    
    18,871,085
    
    
    
    87,656
    
    
    
    18,327,284
    
    
    
    84,281
    
    
    
    18,282,720
    
    
    
    83,973
    
    
    
    2,544
    
    
    
    1,842
    
    
    
    1,247Share options
exercised for cash
    
    
    120,070
    
    
    
    961
    
    
    
    573,101
    
    
    
    3,490
    
    
    
    119,264
    
    
    
    651Stock-based
compensation
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    963
    
    
    
    725
    
    
    
    600Shares repurchased
under normal
course issuer bid
    
    
    (6,800
    )
    
    
    (33
    )
    
    
    (29,300
    )
    
    
    (134
    )
    
    
    (74,700
    )
    
    
    (343
    )
    
    
    (1
    )
    
    
    (4
    )
    
    
    (5
    )Reclassification of
fair value of stock
options previously
expensed
    
    
    
    
    
    
    159
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    (159
    )
    
    
    (19
    )
    
    
    Shares issued on
acquisition
    
    
    3,328,776
    
    
    
    123,365
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted shares
issued on
acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,175
    
    
    
    
    
    
    
    Share issue costs
    
    
    
    
    
    
    (1,504
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, end of
the year
    
    
    22,313,131
    
    
    
    210,604
    
    
    
    18,871,085
    
    
    
    87,656
    
    
    
    18,327,284
    
    
    
    84,281
    
    
    
    5,522
    
    
    
    2,544
    
    
    
    1,842
  F-19




---



##### 



Share options
  2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    Price#
    
    
    $
    
    
    #
    
    
    $
    
    
    #
    
    
    $Share options,
beginning of the year
    
    
    1,071,333
    
    
    
    13.34
    
    
    
    1,479,100
    
    
    
    9.28
    
    
    
    1,296,200
    
    
    
    6.09Granted
    
    
    
    
    
    
    
    
    
    
    167,000
    
    
    
    24.50
    
    
    
    307,500
    
    
    
    21.29Exercised
    
    
    (120,070
    )
    
    
    8.00
    
    
    
    (573,101
    )
    
    
    6.09
    
    
    
    (119,264
    )
    
    
    5.46Cancelled
    
    
    (12,999
    )
    
    
    23.69
    
    
    
    (1,666
    )
    
    
    18.40
    
    
    
    (5,336
    )
    
    
    12.62Share options, end of
the year
    
    
    938,264
    
    
    
    13.88
    
    
    
    1,071,333
    
    
    
    13.34
    
    
    
    1,479,100
    
    
    
    9.28
 F-20




---



##### 



Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    Weighted
    
    
    
    
    
    
    WeightedRange of
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Remaining
    
    
    Exercise
    
    
    Shares
    
    
    ExercisePrices
    
    
    Outstanding
    
    
    Contractual
    
    
    Price
    
    
    Exercisable
    
    
    Price$
    
    
    #
    
    
    Life in Years
    
    
    $
    
    
    #
    
    
    $3.50  3.60
    
    
    
    347,500
    
    
    
    0.8
    
    
    
    3.56
    
    
    
    347,500
    
    
    
    3.565.20  7.00
    
    
    
    40,550
    
    
    
    0.8
    
    
    
    6.05
    
    
    
    40,550
    
    
    
    6.0514.50  18.85
    
    
    
    159,400
    
    
    
    4.1
    
    
    
    15.62
    
    
    
    159,400
    
    
    
    15.6221.00  27.10
    
    
    
    390,814
    
    
    
    5.8
    
    
    
    23.17
    
    
    
    148,654
    
    
    
    22.223.50  27.10
    
    
    
    938,264
    
    
    
    3.4
    
    
    
    13.88
    
    
    
    696,104
    
    
    
    10.45
   2004
    
    2003Granted
    
    Granted
    
    Granted inat Market
    
    at Market
    
    Excess of MarketRisk-free interest rate (%)
    
    
    4.07
    
    
    
    4.48
    
    
    
    5.04Expected hold period to exercise (years)
    
    
    6.0
    
    
    
    6.2
    
    
    
    9.1Volatility in the price of the Companys shares (%)
    
    
    26.1
    
    
    
    27.4
    
    
    
    28.5Weighted average fair value per option ($)
    
    
    8.46
    
    
    
    7.40
    
    
    
    6.04
 13. Cumulative Translation Account
 F-21




---



##### 



2005
    
    2004
    
    2003$000s
    
    $000s
    
    $000sCumulative translation account, beginning of the year
    
    
    (19,018
    )
    
    
    (13,861
    )
    
    
    1,966Current year deferred translation adjustment
    
    
    (6,557
    )
    
    
    (5,157
    )
    
    
    (15,827
    )Cumulative translation account, end of the year
    
    
    (25,575
    )
    
    
    (19,018
    )
    
    
    (13,861
    )
 14. Income Taxes
  2005
    
    2004
    
    2003%
    
    %
    
    %Income tax expense at statutory Canadian rates
    
    
    34.8
    
    
    
    34.7
    
    
    
    36.8Increase (decrease) resulting from:Income from associated companies
    
    
    (0.1
    )
    
    
    (0.3
    )
    
    
    (0.6
    )Rate differential on foreign income
    
    
    0.7
    
    
    
    (2.0
    )
    
    
    0.6Non-deductible expenses:Meals and entertainment
    
    
    1.1
    
    
    
    1.4
    
    
    
    1.4Stock compensation
    
    
    0.5
    
    
    
    0.6
    
    
    
    0.6Non-taxable foreign income net of non-creditable
withholding taxes
    
    
    (1.6
    )
    
    
    (1.3
    )
    
    
    (1.6
    )Other
    
    
    (0.4
    )
    
    
    (0.7
    )
    
    
    (0.5
    )35.0
    
    
    
    32.4
    
    
    
    36.7
  2005
    
    2004
    
    2003$000s
    
    $000s
    
    $000sDomestic
    
    
    61,323
    
    
    
    48,111
    
    
    
    36,583Foreign
    
    
    1,177
    
    
    
    (3,451
    )
    
    
    3,045Total income before income taxes
    
    
    62,500
    
    
    
    44,660
    
    
    
    39,628
  2005
    
    2004
    
    2003$000s
    
    $000s
    
    $000sCurrent: Domestic
    
    
    21,172
    
    
    
    17,724
    
    
    
    9,474Foreign
    
    
    563
    
    
    
    341
    
    
    
    576Total current expense
    
    
    21,735
    
    
    
    18,065
    
    
    
    10,050Future: Domestic
    
    
    5
    
    
    
    (566
    )
    
    
    3,532Foreign
    
    
    138
    
    
    
    (3,029
    )
    
    
    976Total future expense
    
    
    143
    
    
    
    (3,595
    )
    
    
    4,508Total: Domestic
    
    
    21,177
    
    
    
    17,158
    
    
    
    13,006Foreign
    
    
    701
    
    
    
    (2,688
    )
    
    
    1,552Total income tax expense
    
    
    21,878
    
    
    
    14,470
    
    
    
    14,558
 F-22




---



##### 



2005
    
    2004$000s
    
    $000sFuture income tax assetsDifferences in timing of deductibility of expenses
    
    
    13,470
    
    
    
    9,434Loss carryforwards
    
    
    4,670
    
    
    
    2,316Share issue and other financing costs
    
    
    519
    
    
    
    237Tax cost of property and equipment in excess of carrying value
    
    
    357
    
    
    
    684Deferred gain on sale of building
    
    
    1,513
    
    
    
    1,518Other
    
    
    1,112
    
    
    
    70021,641
    
    
    
    14,889Less current portion
    
    
    14,827
    
    
    
    8,5326,814
    
    
    
    6,357
 2005
    
    2004$000s
    
    $000sFuture income tax liabilitiesCash to accrual adjustments on acquisitions of US subsidiaries
    
    
    
    
    
    
    2,091Differences in timing of taxability of revenues
    
    
    15,287
    
    
    
    7,702Carrying value of property and equipment in excess of tax
cost
    
    
    7,304
    
    
    
    5,025Carrying value of intangible assets in excess of tax cost
    
    
    10,625
    
    
    
    2,016Other
    
    
    598
    
    
    
    2,13533,814
    
    
    
    18,969Less current portion
    
    
    17,552
    
    
    
    10,65316,262
    
    
    
    8,316
  $000s2007
    
    
    1942008
    
    
    1,4542009
    
    
    662010
    
    
    9782014
    
    
    6642015
    
    
    183,374
   F-23




---



##### 



15.
Earnings Per Share
 2005
    
    2004
    
    2003#
    
    #
    
    #Basic shares outstanding
    
    
    19,920,117
    
    
    
    18,499,598
    
    
    
    18,329,960Share options (dilutive effect of 938,264 options;
2004  1,041,333; 2003  1,419,100)
    
    
    533,792
    
    
    
    507,691
    
    
    
    788,056Restricted shares (dilutive effect of 58,696 restricted shares)
    
    
    17,207
    
    
    
    
    
    
    
    Diluted shares outstanding
    
    
    20,471,116
    
    
    
    19,007,289
    
    
    
    19,118,016
 16.
Cash Flows From (Used In) Operating Activities
 2005
    
    2004
    
    2003$000s
    
    $000s
    
    $000sCASH FLOWS FROM OPERATING ACTIVITIESNet income for the year
    
    
    40,622
    
    
    
    30,190
    
    
    
    25,070Add (deduct) items not affecting cash:Depreciation of property and equipment
    
    
    12,389
    
    
    
    11,986
    
    
    
    9,912Amortization of intangible assets
    
    
    2,542
    
    
    
    927
    
    
    
    925Future income tax
    
    
    143
    
    
    
    (3,595
    )
    
    
    4,508Loss (gain) on dispositions of investments
and property and equipment
    
    
    562
    
    
    
    (504
    )
    
    
    57Stock-based compensation expense
    
    
    1,814
    
    
    
    894
    
    
    
    706Provision for self-insured liability
    
    
    9,764
    
    
    
    2,826
    
    
    
    Other non-cash items
    
    
    (1,332
    )
    
    
    (1,065
    )
    
    
    Share of income from equity investments
    
    
    (187
    )
    
    
    (385
    )
    
    
    (580
    )Dividends from equity investments
    
    
    550
    
    
    
    300
    
    
    
    66,867
    
    
    
    41,574
    
    
    
    40,598Change in non-cash working capital accounts:Accounts receivable
    
    
    15,748
    
    
    
    (1,542
    )
    
    
    (1,252
    )Costs and estimated earnings in excess of billings
    
    
    (19,572
    )
    
    
    30,218
    
    
    
    (35,239
    )Prepaid expenses
    
    
    487
    
    
    
    496
    
    
    
    113Accounts payable and accrued liabilities
    
    
    (2,697
    )
    
    
    (6,350
    )
    
    
    13,944Billings in excess of costs and estimated earnings
    
    
    1,664
    
    
    
    1,600
    
    
    
    4,951Income taxes payable/recoverable
    
    
    (5,183
    )
    
    
    11,355
    
    
    
    (6,222
    )(9,553
    )
    
    
    35,777
    
    
    
    (23,705
    )Cash flows from operating activities
    
    
    57,314
    
    
    
    77,351
    
    
    
    16,893
 F-24




---



##### 



17.
Joint Ventures
 Percentage Owned2005
    
    
    2004
    
    
    2003%
    
    
    %
    
    
    %yyC.T. Joint Venture
    
    
    20
    
    
    
    20
    
    
    
    20Stantec
 S&L Partnership
    
    
    50
    
    
    
    50
    
    
    
    50Colt Stantec Joint Venture
    
    
    n/a
    
    
    
    50
    
    
    
    50Edmonton International Airports Joint Venture
    
    
    33
    
    
    
    33
    
    
    
    33Pine Creek Consultants Joint Venture
    
    
    33
    
    
    
    33
    
    
    
    33Dunlop Joint Ventures
    
    
    3380
    
    
    
    3380
    
    
    
    n/aStantec Architecture Ltd./J.L. Richards & Associates Joint Venture
    
    
    50
    
    
    
    n/a
    
    
    
    n/a
   2005
    
    
    2004
    
    
    2003$000s
    
    
    $000s
    
    
    $000sStatement of incomeGross revenue
    
    
    5,941
    
    
    
    1,186
    
    
    
    11,949Subconsultant and other direct expenses
    
    
    5,072
    
    
    
    894
    
    
    
    9,611Administrative and marketing expenses
    
    
    147
    
    
    
    217
    
    
    
    776Net income for the year
    
    
    722
    
    
    
    75
    
    
    
    1,562Balance sheetsCurrent assets
    
    
    3,743
    
    
    
    3,445
    
    
    
    1,547Current liabilities
    
    
    2,842
    
    
    
    2,822
    
    
    
    1,583Statement of cash flowsCash flows used in operating activities
    
    
    (488
    )
    
    
    (274
    )
    
    
    (86
    )
 18. Segmented Information
   F-25




---



##### 



Geographic information
 Property and Equipment,Goodwill, Intangible Assets2005
    
    
    2004$000s
    
    
    $000sCanada
    
    
    104,463
    
    
    
    86,731United States
    
    
    223,593
    
    
    
    52,032International
    
    
    441
    
    
    
    471328,497
    
    
    
    139,234
 Geographic information
 Gross Revenue2005
    
    
    2004
    
    
    2003$000s
    
    
    $000s
    
    
    $000sCanada
    
    
    380,471
    
    
    
    325,844
    
    
    
    290,413United States
    
    
    233,428
    
    
    
    190,362
    
    
    
    161,655International
    
    
    4,121
    
    
    
    4,673
    
    
    
    7,874618,020
    
    
    
    520,879
    
    
    
    459,942
  Practice area information
 Gross Revenue2005
    
    
    2004
    
    
    2003$000s
    
    
    $000s
    
    
    $000sConsulting ServicesEnvironment
    
    
    104,437
    
    
    
    105,471
    
    
    
    91,758Buildings
    
    
    159,233
    
    
    
    107,465
    
    
    
    89,943Transportation
    
    
    92,146
    
    
    
    92,631
    
    
    
    80,519Urban Land
    
    
    208,903
    
    
    
    168,876
    
    
    
    159,941Industrial
    
    
    53,301
    
    
    
    45,371
    
    
    
    33,304618,020
    
    
    
    519,814
    
    
    
    455,465Other
    
    
    
    
    
    
    1,065
    
    
    
    4,477618,020
    
    
    
    520,879
    
    
    
    459,942
 F-26




---



##### 



Customers
  19. Forward Contracts
  20. United States Generally Accepted Accounting Principles
  a) Net income and comprehensive income
     F-27




---



##### 



Statement of Comprehensive Income
 2005
    
    
    2004
    
    
    2003$000s
    
    
    $000s
    
    
    $000sNet income under Canadian and US GAAP
    
    
    40,622
    
    
    
    30,190
    
    
    
    25,070Other comprehensive income, net of tax:Unrealized foreign exchange loss on translation
of self-sustaining foreign operations
    
    
    (6,557
    )
    
    
    (5,157
    )
    
    
    (15,827
    )Comprehensive Income
    
    
    34,065
    
    
    
    25,033
    
    
    
    9,243Accumulated other comprehensive income,
beginning of year
    
    
    (19,018
    )
    
    
    (13,861
    )
    
    
    1,966Unrealized foreign exchange loss on translation
of self-sustaining foreign operations
    
    
    (6,557
    )
    
    
    (5,157
    )
    
    
    (15,827
    )Accumulated other comprehensive income, end of the year
    
    
    (25,575
    )
    
    
    (19,018
    )
    
    
    (13,861
    )
 b) Other disclosure requirements
 i) Allowance for doubtful accounts
 2005
    
    2004
    
    2003$000s
    
    $000s
    
    $000sBalance, beginning of the year
    
    
    21,095
    
    
    
    16,952
    
    
    
    17,316Acquired balances
    
    
    7,298
    
    
    
    5,294
    
    
    
    651Provision for doubtful accounts
    
    
    73
    
    
    
    6,632
    
    
    
    4,544Deductions
    
    
    (12,164
    )
    
    
    (7,152
    )
    
    
    (4,221
    )Impact on foreign exchange
    
    
    (249
    )
    
    
    (631
    )
    
    
    (1,338
    )Balance, end of the year
    
    
    16,053
    
    
    
    21,095
    
    
    
    16,952
 ii) Long-term contracts
  21. Comparative Figures
  F-28