SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of April, 2005
Commission File Number 1-10928
INTERTAPE POLMER GROUP INC.
110E Montee de Liesse, St. Laurent, Quebec, Canada, H4T 1N4
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F Form 40-F X
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): __________
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): __________
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-______
The Information contained in this Report is incorporated by reference into
Registration Statement No. 333-109944
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERTAPE POLYMER GROUP INC.
Date: April 29, 2005 By: /s/Andrew M. Archibald
Andrew M. Archibald, C.A.,
Chief Financial Officer & Secretary
2005 FIRST QUARTERLY REPORT
INTERTAPE POLYMER GROUP (TM)
(LOGO)(TM)
April 29, 2005
This Management's Discussion and Analysis ("MD&A") supplements the
consolidated financial statements and related notes for the three
months ended March 31, 2005. Except where otherwise indicated, all
financial information reflected herein is prepared in accordance
with Canadian generally accepted accounting principles ("GAAP") and
is expressed in US dollars.
OVERVIEW
Intertape Polymer Group Inc. (the "Company" or "IPG") experienced a 15.8%
increase in sales for the three months ended March 31, 2005 as compared to
the corresponding period in 2004. Earnings for the three months ended
March 31, 2005 were $0.15 per share, both basic and diluted, as compared
to earnings of $0.06 per share, both basic and diluted, for the same period
in 2004. Excluding the manufacturing facility closure costs and related
tax benefits, earnings for the three months ended March 31, 2005 were $0.16
per share, both basic and diluted.
The increase in net earnings for 2005 compared to 2004 was due to several
factors, including increased sales volumes, sales price increases, lower
manufacturing costs due in part to the manufacturing facility closures
announced in the fourth quarter of 2004 and lower financing expenses as a
result of the debt refinancing completed in August 2004.
An explosion occurred the night of March 30, 2005 in an external steam
generation unit at the Company's manufacturing facility in Columbia, South
Carolina. Regrettably, one of the Company's employees was killed in the
explosion. The plant remained closed in whole or in part for five days
during which the accident investigation commenced, electrical power was
restored, the damage to the facility was repaired and employees were provided
counseling. The results of the investigation, being performed by several
government agencies, are not known at this date. In assessing the financial
impact of the accident, the Company's preliminary assessment is that no loss
provision is required, and the Company should incur only applicable
insurance policy deductibles.
Except as discussed under the captions "Sales" and "Gross Profit and Gross
Margin" below, economic and industrial factors during the first quarter of
2005 were substantially unchanged from December 31, 2004.
RESULTS OF OPERATIONS
SALES
Sales for the first quarter of 2005 were $187.7 million, an increase of
15.8% over the first quarter of 2004 sales of $162.1 million. The increase
includes approximately 4.0% of volume growth and the balance is due to
sales price increases.
The Company and the industry as a whole are experiencing a shortage of
synthetic rubber, an essential ingredient in the formulation of some of the
Company's tape adhesives. The shortage is expected to continue through the
summer and possibly into next year, until additional capacity becomes
available. As a result, the Company is unable to supply selected tapes at
levels that meet all of its customers' demand. Fortunately, the Company is
uniquely positioned with its broad assortment of products to satisfy some of
its customers' demand with alternative products not currently experiencing
raw material shortages. The cost of synthetic rubber has also increased
substantially during the first quarter of 2005, but to date, the Company
has been able to recover the higher cost through sales price increases.
Despite the raw material shortage, the Company believes that it can achieve
sales for 2005 in the range of $775 million to $790 million due to its
broad range of products and the sales price increases it has implemented in
recent months.
GROSS PROFIT AND GROSS MARGIN
Gross profit for the first quarter of 2005 totaled $39.0 million at a
gross margin of 20.8%, as compared to gross profit of $32.1 million for the
first quarter of 2004 at a gross margin of 19.8%. The margin improvement
in the first quarter of 2005 as compared to the first quarter of 2004 was
due to higher selling prices in 2005, lower manufacturing costs in the first
quarter of 2005, in part as a result of the closure of two manufacturing
facilities in the fourth quarter of 2004, and an absence of some of the
production difficulties encountered in the first quarter of 2004.
SELLING, GENERAL AND ADMINSTRATIVE EXPENSES
Selling, general and administrative expenses were $23.9 million for the
first quarter of 2005 (12.7% of sales), compared to $22.3 million for the
first quarter of 2004 (13.8% of sales).
STOCK-BASED COMPENSATION EXPENSE
Stock-based compensation expense for the first quarter of 2005 was $0.5
million compared to $0.1 million in the first quarter of 2004. The increase
in stock-based compensation expense is attributable to the increasing number
of stock option grants being expensed in accordance with the fair value
method of accounting adopted by the Company in 2003.
OPERATING PROFIT
Operating profit is not a financial measure under GAAP in Canada or the
United States. The Company's Management uses operating profit to measure
and evaluate the profit contributions of the Company's product offerings
as well as the contribution by channel of distribution.
Because "operating profit" is a non-GAAP financial measure, companies may
present similar titled items determined with differing adjustments.
Presented below is a table reconciling this non-GAAP financial measure with
the most comparable GAAP measurement. The reader is encouraged to review
this reconciliation. Operating profit is defined by the Company as gross
profit less selling, general and administrative expenses and stock-based
compensation expense.
Operating Profit Reconciliation
(in millions of US dollars)
For the three months ended March 31, 2005 2004
___________________________________________ ____________ ____________
$ $
Gross Profit 39.0 32.1
Less: SG&A Expense 23.9 22.3
Less: Stock-Based Compensation 0.5 0.1
____________ ____________
Operating Profit 14.6 9.7
____________ ____________
____________ ____________
Operating profit was $14.6 million for the first quarter of 2005, compared
to $9.7 million for the first quarter of 2004. The 50.7% increase in the
first quarter of 2005 over the corresponding amount in 2004 was the result
of increased sales and improved gross margin.
FINANCIAL EXPENSES
Financial expenses for the first quarter of 2005 were $5.6 million compared
to $6.8 million in the first quarter of 2004, a 16.5% reduction. The
decrease in financial expenses is the result of refinancing virtually all
of the Company's indebtedness in August 2004. The refinancing resulted
in lower interest costs (at current interest rate levels) despite increasing
the Company's indebtedness. The Company increased its indebtedness in part
to pay the costs of the refinancing and in part to provide cash for general
corporate purposes.
FACILITY RATIONALIZATIONS
In the fourth quarter of 2004, as part of the Company's on-going review of
the efficiency and effectiveness of its production and distribution
network, the Company announced and substantially completed the closure of
two of its manufacturing facilities located in Cumming, Georgia and
Montreal, Quebec, as well as its distribution center located in Cumming,
Georgia. The total estimated cost for these closures is $8.7 million,
of which $7.4 million was recorded in the fourth quarter of 2004. The
Company estimates total one-time charges for facility closures to
approximate $1.3 million during 2005, of which $0.6 million was incurred
during the three months ended March 31, 2005.
EBITDA
A reconciliation of the Company's EBITDA and adjusted EBITDA, non-GAAP
financial measures, to GAAP net earnings is set out in the EBITDA
reconciliation table below. EBITDA should not be construed as earnings before
income taxes, net earnings or cash from operating activities as determined
by GAAP. The Company defines EBITDA as net income before (i) income taxes;
(ii) financial expenses, net of amortization; (iii) amortization of other
intangibles and capitalized software costs; and (iv) depreciation. Adjusted
EBITDA is defined as EBITDA before manufacturing facility closure costs.
Other companies in our industry may calculate EBITDA and Adjusted EBITDA
differently than we do. EBITDA and Adjusted EBITDA are not measurements of
financial performance under GAAP and should not be considered as
alternatives to cash flow from operating activities or as alternatives to
net income as indicators of our operating performance or any other measures
of performance derived in accordance with GAAP. The Company has included
these non-GAAP financial measures because it believes that it permits
investors to make a more meaningful comparison of IPG's performance between
periods presented. In addition, the Company's covenants contained in the
loan agreement with its lenders require certain debt to Adjusted EBITDA
ratios be maintained, thus EBITDA and Adjusted EBITDA are used by Management
and the Company's lenders in evaluating the Company's performance.
EBITDA Reconciliation to Net Earnings
(in millions of US dollars)
For the three months ended March 31, 2005 2004
______________ _____________
$ $
Net earnings - As Reported 6.0 2.3
Add back (deduct):
Financial expenses, net of amortization 5.3 6.3
Income taxes 1.3 (0.3)
Depreciation and amortization 7.9 7.1
______________ _____________
EBITDA 20.5 15.4
Manufacturing facility closure costs 0.6 -
______________ _____________
Adjusted EBITDA 21.1 15.4
______________ _____________
______________ _____________
INCOME TAXES
The Company is subject to income taxation in multiple tax jurisdictions
around the world. As a result, the Company's effective income tax rate
fluctuates depending upon the geographic source of its earnings. The
Company's effective income tax rate is also impacted by tax planning
strategies that the Company implements. The Company estimates its annual
effective income tax rate and utilizes that rate in its quarterly financial
statements. For the three months ended March 31, 2005, the Company has an
estimated effective income tax rate of approximately 18.2% compared to an
estimated effective income tax rate of approximately (14.1)% for the three
months ended March 31, 2004.
NET EARNINGS
Net earnings for the first quarter of 2005 were $6.0 million or $0.15 per
share, both basic and diluted, compared to net earnings of $2.3 million or
$0.06 per share, both basic and diluted for the first quarter of 2004.
Excluding manufacturing facility closure costs and related tax benefits,
adjusted net earnings for the three months ended were $6.4 million or $0.16
per share, both basic and diluted. A reconciliation of the Company's
adjusted net earnings is set out in the table below:
Reconciliation of Net Earnings to Adjusted Net Earnings
(in millions of US dollars)
For the three months ended March 31, 2005 2004
______________ _____________
$ $
Net earnings - As reported 6.0 2.3
Add back:
Manufacturing facility closure costs
(after-tax) 0.4 -
______________ _____________
Adjusted net earnings 6.4 2.3
______________ _____________
______________ _____________
FINANCIAL POSITION
Trade receivables increased $11.7 million between December 31, 2004 and
March 31, 2005. The increase is primarily due to the higher level of sales
as well as higher selling prices for the month of March 2005 compared to the
month of December 2004. Aside from the trade receivables, other current
assets were substantially unchanged between December 31, 2004 and March 31,
2005. Current liabilities increased by $3.3 million between December 31,
2004 and March 31, 2005 due to $5.0 million in borrowings under the Company's
revolving credit facilities.
Property, plant and equipment, net of accumulated depreciation and
amortization, decreased by $3.7 million in the first quarter of 2005 due to
depreciation and amortization in excess of capital expenditures for the
period.
OFF-BALANCE SHEET ARRANGEMENTS AND RELATED PARTY TRANSACTIONS
The Company maintains no off-balance sheet arrangements and is not a party
to any related party transactions.
LIQUIDITY AND CAPITAL RESOURCES
Cash from operations before changes in non-cash working capital items was
$15.6 million for the first quarter of 2005 compared to $8.6 million for
the first quarter of 2004. Changes in non-cash working capital items required
$17.5 million in cash flows for the three months ended March 31, 2005
compared to using $2.3 million in cash during the same three month period
in 2004 before changes in non-cash items.
The improved cash flow from operating activities before changes in non-cash
working capital items in the first quarter of 2005 compared to the first
quarter of 2004 is the result of improved profitability.
Cash flows used in investing activities was $6.2 million in the first three
months of 2005 compared to using $11.9 million in cash in the first three
months of 2004. The decrease was due to the $5.5 million used to acquire
the duct and masking tape operations of tesa tape, inc. during the first
quarter of 2004.
The Company increased total indebtedness during the three months ended March
31, 2005 by $4.5 million to finance investing activities in excess of cash
flows from operations. Total indebtedness increased during the three months
ended March 31, 2004 by $5.7 million for the same reason.
The Company's cash liquidity is influenced by several factors, the most
significant of which is the Company's level of inventory investment. The
Company periodically increases its inventory levels when business
conditions suggest that it is in the Company's best interest to do so, such
as buying opportunities to mitigate the impact of rising new material
costs. The Company does not expect these higher inventory investments to
continue indefinitely, but until the circumstances reverse themselves, the
Company believes it has adequate cash and credit available to support these
strategies. Further, the Company believes that it has the ability to
generate sufficient working capital, both long and short term, to meet the
requirements of its day-to-day operations, given its operating margins and
projected budgets.
BANK INDEBTEDNESS AND CREDIT FACILITIES
The Company maintains a US$65.0 million five-year revolving credit facility
available in US dollars and a US$10.0 million five-year revolving credit
facility available in Canadian dollars. At March 31, 2005, the Company had
borrowed $9.4 million under its US$65.0 million revolving credit facility,
including $4.4 million in letters of credit. No amounts were borrowed
under the revolving credit facilities at December 31, 2004 except for $3.8
million in letters of credit. When added with the cash on-hand, cash
equivalents and temporary investments, the Company's cash and credit
availability, subject to covenant restrictions, totaled $84.2 million at
March 31, 2005 compared to $93.6 million at December 31, 2004.
CONTRACTUAL OBLIGATIONS
At March 31, 2005, there were no material changes in the contractual
obligations set forth in the Company's 2004 Annual Report that were
outside the ordinary course of the Company's business.
CAPITAL STOCK
As at March 31, 2005 there were 41,237,711 common shares of the Company
outstanding.
During the first quarter of 2005, employees exercised 750 stock options
worth $2,925. During the first quarter of 2004, employees exercised
115,125 stock options worth $970,000.
During November 2004, the Company announced that it had registered a
Normal Course Issuer Bid in Canada, under which the Company is authorized
to repurchase for cancellation up to 5.0% of its outstanding common
shares. In the first quarter of 2005, there were no shares purchased for
cancellation.
CURRENCY RISK
The Company is subject to currency risks through its Canadian and European
operations. Changes in the exchange rates may result in decreases or
increases in the foreign exchange gains or losses. The Company does not
use derivative instruments to reduce its exposure to foreign currency risk,
as historically these risks have not been significant.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with Canadian GAAP
requires management to make estimates and assumptions that affect the
recorded amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the
recorded amounts of revenues and expenses during the reporting period. On
an on-going basis, management reviews its estimates, including those
relating to the allowance for doubtful accounts, reserve for slow moving
and unmarketable inventories and income taxes based on currently available
information. Actual results may differ from those estimates.
The discussion on the methodology and assumptions underlying these critical
accounting estimates, their effect on the Company's results of operations
and financial position for the year ended December 31, 2004 can be found
in the Company's 2004 Annual Report and have not materially changed since
that date.
SUMMARY OF QUARTERLY RESULTS
A table of Consolidated Quarterly Statements of Earnings for the eight most
recent quarters can be found at the end of this MD&A.
DISCLOSURE REQUIRED BY THE NEW YORK STOCK EXCHANGE
A summary of the significant ways that the governance of the Company differs
from that of a US listed company is available on the Company's website at
www.intertapepolymer.com under "Investor Relations."
ADDITIONAL INFORMATION
Additional information relating to IPG, including its Annual Information
Form is filed on SEDAR at www.sedar.com in Canada and on EDGAR at
www.sec.gov in the U.S.
FORWARD-LOOKING STATEMENTS
Certain statements and information set forth in this Quarterly Report,
including statements regarding the business and anticipated financial
performance of the Company, constitute "forward-looking statements" within
the meaning of the Federal Private Securities Litigation Reform Act of
1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from
any future results, performance or achievements expressed or implied in
such forward-looking statements. Forward-looking statements include, but are
not limited to, statements regarding the Company's cost savings from its
consolidation efforts, projected sales and earnings, the success of new
products, the Company's product mix, and future financing plans. Forward-
looking statements can be identified in some cases by terms such as "may",
"should", "could", "intends", "anticipates", "potential", and similar
expressions intended to identify forward-looking statements. These
statements, which reflect our current views regarding future events, are
based on assumptions and subject to risks and uncertainties.
Among the factors that could cause actual results to differ from the
forward-looking statements include, but are not limited to, inflation and
general economic conditions, changes in the level of demand for the Company's
products, competitive pricing pressures, general market trends, failure to
achieve planned cost savings associated with consolidation, restrictions and
limitations placed on the Company by its debt instruments, international
risks including exchange rate fluctuations, trade disruptions, and political
instability of foreign markets that we produce in or purchase materials
from, and the availability and price of raw materials.
This Quarterly Report contains certain non-GAAP financial measures as
defined under SEC rules, including operating profit, EBITDA, and adjusted
EBITDA. The Company believes such non-GAAP financials measures improve the
transparency of the Company's disclosure, provide a meaningful presentation
of the Company's results from its core business operations, excluding the
impact of items not related to the Company's ongoing core business
operations, and improve the period-to-period comparability of the Company's
results from its core business operations. As required by SEC rules, the
Company has provided reconciliations of those measures to the most directly
comparable GAAP measures.
Additional discussion of factors that could cause actual results to differ
materially from management's projections, estimates and expectations is
contained in the Company's SEC filings. These and other factors should be
considered carefully and undue reliance should not be placed on forward-
looking statements. The Company undertakes no duty to update its forward-
looking statements, including its sales and earnings outlook, other than as
required under applicable law.
This Quarterly Report contains certain non-GAAP financial measures,
including operating profit and EBITDA. The Company has included these
non-GAAP financial measures because it believes they provide investors
with a more meaningful period-to-period comparison of the Company's
performance. Further, EBITDA is used by IPG's Management, lenders and
noteholders to evaluate the Company's performance. IPG has included in this
Quarterly Report reconciliations of non-GAAP financial measures to the
most directly comparable GAAP measures as required by the Securities and
Exchange Commission.
INTERTAPE POLYMER GROUP INC.
CONSOLIDATED QUARTERLY STATEMENTS OF EARNINGS
Three months ended
(in thousands of US dollars, except per share amounts)
(Unaudited)
__________________________________________________________________________________
March 31, December 31, September 30, June 30,
2005 2004 2004 2004
__________ ______________ _______________ ___________
$ $ $ $
Sales 187,697 180,744 177,671 171,934
Cost of sales 148,649 144,689 140,480 134,097
__________ ______________ _______________ ___________
Gross Profit 39,048 36,055 37,191 37,837
Selling, general and
administrative expenses 23,917 25,799 23,327 22,793
Stock-based compensation
expense 455 355 270 351
Research and development 1,011 997 1,121 1,153
Financial expenses 5,649 4,302 5,948 7,235
Refinancing expense 30,444
Manufacturing facility
closure costs 644 7,386
__________ ______________ _______________ ___________
31,676 38,839 61,110 31,532
Earnings(loss)before
income taxes 7,372 (2,784) (23,919) 6,305
Income taxes (recovery) 1,339 (20,455) (9,664) 654
__________ ______________ _______________ ___________
Net earnings (loss) 6,033 17,671 (14,255) 5,651
__________ ______________ _______________ ___________
Earnings(loss)per share
Cdn GAAP - Basic - US $ 0.15 0.43 (0.35) 0.14
Cdn GAAP - Diluted - US $ 0.15 0.43 (0.35) 0.14
US GAAP - Basic - US $ 0.15 0.43 (0.35) 0.14
US GAAP - Diluted - US $ 0.15 0.43 (0.35) 0.14
Weighted average number of
shares outstanding
Cdn GAAP - Basic 41,237,461 41,273,840 41,285,161 41,215,111
Cdn GAAP - Diluted 41,444,870 41,468,992 41,285,161 41,396,403
US GAAP -Basic 41,237,461 41,273,840 41,285,161 41,215,111
US GAAP - Diluted 41,444,870 41,468,992 41,285,161 41,396,403
__________________________________________________________________________________
March 31, December 31, September 30, June 30,
2004 2003 2003 2003
__________ ______________ _______________ ___________
$ $ $ $
Sales 162,100 157,682 159,798 150,249
Cost of sales 129,986 122,975 123,489 116,166
__________ ______________ _______________ ___________
Gross Profit 32,114 34,707 36,309 34,083
Selling, general and
administrative expenses 22,307 24,843 22,264 20,830
Stock-based compensation
expense 70 130
Research and development 962 212 1,080 1,086
Financial expenses 6,768 5,587 7,409 7,825
Refinancing expense
Manufacturing facility
closure costs 3,005
__________ ______________ _______________ ___________
30,107 33,777 30,753 29,741
Earnings(loss)before
income taxes 2,007 930 5,556 4,342
Income taxes (recovery) (284) (4,244) (643) 439
__________ ______________ _______________ ___________
Net earnings (loss) 2,291 5,174 6,199 3,903
__________ ______________ _______________ ___________
Earnings(loss)per share
Cdn GAAP - Basic - US $ 0.06 0.13 0.18 0.12
Cdn GAAP - Diluted - US $ 0.06 0.13 0.18 0.12
US GAAP - Basic - US $ 0.06 0.13 0.18 0.12
US GAAP - Diluted - US $ 0.06 0.13 0.18 0.12
Weighted average number of
shares outstanding
Cdn GAAP - Basic 40,971,739 40,870,426 35,302,174 33,832,527
Cdn GAAP - Diluted 41,528,581 41,225,776 35,397,800 33,912,232
US GAAP -Basic 40,971,739 40,870,426 35,302,174 33,832,527
US GAAP - Diluted 41,528,581 41,225,776 35,397,800 33,912,232
Intertape Polymer Group Inc.
Consolidated Earnings
Three month ended
(In thousands of US dollars, except per share amounts)
---------------------------------------------------------------------
March 31,
---------------------------------------------------------------------
2005 2004
---------------------------------------------------------------------
$ $
Sales 187,697 162,100
Cost of sales 148,649 129,986
---------------------------------------------------------------------
Gross profit 39,048 32,114
---------------------------------------------------------------------
Selling, general and administrative expenses 23,917 22,307
Stock-based compensation expense 455 70
Research and development 1,011 962
Financial expenses 5,649 6,768
Manufacturing facility closure costs 644
--------------------------------------------------------------------
31,676 30,107
---------------------------------------------------------------------
Earnings before income taxes 7,372 2,007
Income taxes (recovery) 1,339 (284)
---------------------------------------------------------------------
Net earnings 6,033 2,291
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings per share
Basic 0.15 0.06
---------------------------------------------------------------------
---------------------------------------------------------------------
Diluted 0.15 0.06
---------------------------------------------------------------------
---------------------------------------------------------------------
Consolidated Retained Earnings
Three months ended
(In thousands of US dollars)
---------------------------------------------------------------------
March 31,
---------------------------------------------------------------------
2005 2004
---------------------------------------------------------------------
$ $
Balance, beginning of year 79,609 68,291
Net earnings 6,033 2,291
---------------------------------------------------------------------
Balance, end of period 85,642 70,582
---------------------------------------------------------------------
---------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial
statements.
Intertape Polymer Group Inc.
Consolidated Balance Sheets
As at
(In thousands of US dollars)
March 31, March 31, December 31,
2005 2004 2004
(Unaudited) (Unaudited) (Audited)
---------------------------------------------------------------------
$ $ $
ASSETS
Current assets
Cash and cash equivalents 18,083 21,882
Temporary investment 493 497
Trade receivables,
net of allowance for
doubtful accounts of $4,139
($4,102 in March 2004,
$4,065 in December 2004) 113,283 99,320 101,628
Other receivables 13,384 11,364 13,381
Inventories 93,589 70,383 90,677
Parts and supplies 13,908 13,344 13,618
Prepaid expenses 8,100 6,820 7,788
Future income tax assets 1,509 2,682 1,509
---------------------------------------------------------------------
262,349 203,913 250,980
Property, plant and equipment 348,955 362,066 352,610
Other assets 16,983 12,928 16,474
Future income taxes 35,220 4,700 36,689
Goodwill 180,004 176,953 179,958
---------------------------------------------------------------------
843,511 760,560 836,711
---------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank indebtedness 5,000 18,922
Accounts payable and
accrued liabilities 96,197 102,072 97,849
Instalments on long-term debt 2,995 34,036 3,032
---------------------------------------------------------------------
104,192 155,030 100,881
Long-term debt 330,541 225,936 331,095
Other liabilities 435 530 435
---------------------------------------------------------------------
435,168 381,496 432,411
---------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital stock 289,183 287,811 289,180
Contributed surplus 4,781 3,220 4,326
Retained earnings 85,642 70,582 79,609
Accumulated currency
translation adjustments 28,737 17,451 31,185
---------------------------------------------------------------------
408,343 379,064 404,300
---------------------------------------------------------------------
843,511 760,560 836,711
---------------------------------------------------------------------
---------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial
statements.
Intertape Polymer Group Inc.
Consolidated Cash Flows
Three months ended
(In thousands of US dollars)
(Unaudited)
March 31, 2005 March 31, 2004
---------------------------------------------------------------------
$ $
OPERATING ACTIVITIES
Net earnings 6,033 2,291
Non-cash items
Depreciation and amortization 7,908 7,123
Other non-cash charges in connection
with facility closures 46
Future income taxes 1,169 (896)
Stock-based compensation expense 455 70
---------------------------------------------------------------------
Cash flows from operations
before changes in non-cash
working capital items 15,611 8,588
---------------------------------------------------------------------
Changes in non-cash working capital items
Trade receivables (11,901) (10,085)
Other receivables (65) 487
Inventories (3,197) (512)
Parts and supplies (313) (191)
Prepaid expenses (317) 1,101
Accounts payable and accrued liabilities (1,669) 6,938
---------------------------------------------------------------------
(17,462) (2,262)
---------------------------------------------------------------------
Cash flows from operating activities (1,851) 6,326
---------------------------------------------------------------------
INVESTING ACTIVITIES
Property, plant and equipment (4,989) (5,820)
Business acquisition (5,500)
Other assets (921) (563)
Goodwill (300)
---------------------------------------------------------------------
Cash flows from investing activities (6,210) (11,883)
---------------------------------------------------------------------
FINANCING ACTIVITIES
Net change in bank indebtedness 5,000 4,933
Issue of long-term debt 787
Repayment of long-term debt (539)
Issue of common shares 3 970
---------------------------------------------------------------------
Cash flows from financing activities 4,464 6,690
---------------------------------------------------------------------
Net increase (decrease) in cash position (3,597) 1,133
Effect of currency translation adjustments (202) (1,133)
Cash, beginning of period 21,882 -
---------------------------------------------------------------------
Cash, end of period 18,083 -
---------------------------------------------------------------------
---------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial
statements.
NOTE 1.
Basis of Presentation
In the opinion of management, the accompanying unaudited interim
consolidated financial statements, prepared in accordance with Canadian
generally accepted accounting principles, contain all adjustments necessary
to present fairly Intertape Polymer Group Inc.'s ("IPG" or the "Company")
financial position as at March 31, 2005 and 2004, as well as its results
of operations and its cash flows for the three months ended March 31, 2005
and 2004.
These unaudited interim consolidated financial statements and notes should
be read in conjunction with IPG's annual consolidated financial statements.
These unaudited interim consolidated financial statements and notes follow
the same accounting policies as the most recent annual consolidated
financial statements.
NOTE 2.
Earnings per Share
The following table provides a reconciliation between basic and diluted
earnings per share:
In thousands of US dollars
(Except per share amounts)
March 31,
For the three months ended 2005 2004
_______________________________________ _______________ _______________
$ $
Net earnings applicable to common shares 6,033 2,291
Weighted average number of common shares
outstanding (000's) 41,237 40,972
Effect of dilutive stock options (000's)(a) 207 557
_______________________________________ _______________ _______________
Weighted average number of diluted
common shares outstanding (000's) 41,444 41,529
_______________ _______________
_______________ _______________
Basic earnings per share 0.15 0.06
Diluted earnings per share 0.15 0.06
(a) Diluted earnings per share is calculated by adjusting outstanding
shares, assuming any dilutive effects of stock options.
NOTE 3.
Accounting for Compensation Programs
As at March 31, 2005 the Company had a stock-based compensation plan, which
is described in the 2004 Annual Report. Under the transitional provisions
prescribed by the Canadian Institute of Chartered Accountants ("CICA"), the
Company is prospectively applying the recognition provisions to stock
options issued in 2003 and thereafter. The transitional provisions of the
CICA are similar to those of the US Financial Accounting Standards Board
("FASB"). To determine the compensation cost, the fair value of stock
options is recognized on a straight-line basis over the vesting periods.
For stock options granted during the year ended December 31, 2002, the
Company is required to make pro forma disclosures of net earnings and basic
and diluted earnings per share as if the fair value based method of
accounting had been applied.
Accordingly, the Company's net earnings and basic and diluted earnings per
share for the periods ended March 31, 2005 and 2004 would have decreased
to the pro forma amounts indicated in the following table:
In thousands of US dollars
(Except per share amounts)
March 31,
For the three months ended 2005 2004
_______________________________________ _______________ _______________
$ $
Net earnings as reported 6,033 2,291
Add: Stock-based employee compensation
expense included in reported net earnings 455 70
Deduct: Total stock-based employee
compensation expense determined under fair
value based method (755) (457)
______________ _______________
Pro forma net earnings 5,733 1,904
______________ _______________
______________ _______________
Earnings per share:
Basic - as reported 0.15 0.06
Basic - pro forma 0.14 0.05
Diluted - as reported 0.15 0.06
Diluted -pro forma 0.14 0.05
NOTE 4.
Pension and Post-Retirement Benefit Plans
In thousands of US dollars
March 31,
For the three months ended 2005 2004
_______________________________________ _______________ _______________
$ $
Net periodic benefit cost for defined
benefit pension plans 471 453
______________ _______________
______________ _______________
NOTE 5.
Information Included in the Interim Consolidated Statements of Earnings
In thousands of US dollars
March 31,
For the three months ended 2005 2004
_______________________________________ _______________ _______________
$ $
Depreciation of property, plant and
equipment 7,549 6,612
Amortization of other deferred charges 7
Amortization of debt issue expenses
included in financial expenses below 352 511
Financial expenses
Interest on long-term debt 5,196 5,911
Interest on credit facilities 30 371
Other 573 636
Interest capitalized to property, plant
& equipment (150) (150)
_______________ _______________
5,649 6,768
_______________ _______________
_______________ _______________
Foreign exchange loss 119 50
Investment tax credits recorded as a
reduction of research and development
expenses 20 154
NOTE 6.
Manufacturing Facility Closure Costs
The Company incurred one-time costs associated with facility closures of
$0.6 million during the three months ended March 31, 2005. There were no
costs associated with facility closures during the three months ended
March 31, 2004.
NOTE 7.
Capital Stock
During the three months ended March 31, 2005, 750 shares at a value of
$2,925 were issued to employees who exercised stock options.
During the three months ended March 31, 2004, 115,125 common shares at
a value of $970,000 were issued to employees who exercised stock
options.
The Company's shares outstanding as at March 31, 2005, December 31,
2004 and March 31, 2004 were 41,237,711, 41,236,961 and 41,060,001
respectively.
Weighted average number of common shares outstanding:
CDN GAAP - Basic 41,237,461 40,971,739
CDN GAAP - Diluted 41,444,870 41,528,581
U.S. GAAP -Basic 41,237,461 40,971,739
U.S. GAAP - Diluted 41,444,870 41,528,581
The Company did not declare or pay dividends during the three months
ended March 31, 2005 or the three months ended March 31, 2004.
NOTE 8.
Business Acquisition
In February 2004, the Company purchased for a cash consideration of
$5.5 million plus contingent consideration (dependent on business
retention), assets relating to the masking and duct tape operations of
tesa tape, inc. ("tesa tape"). At the same time, the Company finalized
its three-year agreement to supply duct tape and masking tape to tesa
tape.
The purchase was accounted for as a business combination and,
accordingly, the purchase method of accounting was used. The purchase
price was allocated to the assets purchased based on their estimated
fair values as at the date of acquisition and included $0.9 million
of equipment and $4.6 million of goodwill. The goodwill is deductible
over 15 years for income tax purposes. Any contingent consideration
paid will be recorded as an increase in goodwill. During the three
months ended March 31, 2005, the Company recorded $0.3 million of
contingent consideration.
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Please Fax a copy of this page to:
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Intertape Polymer Group Inc.
Fax: 941-727-3798
110E Montee de Liesse
Montreal Quebec
Canada, H4T 1N4
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www.intertapepolymer.com
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Form 52-109FT2 - Certification of Interim Filings during Transition Period
I, Melbourne F. Yull, Chairman of the Board and Chief Executive Officer of
INTERTAPE POLYMER GROUP INC./LE GROUPE INTERTAPE POLYMER INC. certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings) of INTERTAPE POLYMER GROUP INC./LE GROUPE
INTERTAPE POLYMER INC., (the "issuer") for the interim period ending
March 31, 2005;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading
in light of the circumstances under which it was made, with respect to
the period covered by the interim filings; and
3. Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of
operations and cash flows of the issuer, as of the date and for the
periods presented in the interim filings.
Date: April 29, 2005
/s/Melbourne F. Yull
Melbourne F. Yull
Chairman of the Board and Chief Executive Officer
Form 52-109FT2 - Certification of Interim Filings during Transition Period
I, Andrew M. Archibald, Chief Financial Officer and Secretary of INTERTAPE
POLYMER GROUP INC./LE GROUPE INTERTAPE POLYMER INC. certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings) of INTERTAPE POLYMER GROUP INC./LE GROUPE
INTERTAPE POLYMER INC., (the "issuer") for the interim period ending
March 31, 2005;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading
in light of the circumstances under which it was made, with respect
to the period covered by the interim filings; and
3. Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of
operations and cash flows of the Issuer, as of the date and for the
periods presented in the interim filings.
Date: April 29, 2005
/s/Andrew M. Archibald
Andrew M. Archibald, C.A.
Chief Financial Officer and Secretary