Edgar Filing: INTERTAPE POLYMER GROUP INC

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Interim Condensed Consolidated Financial Statements

UNITED STATES

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 May, 2014

Commission File Number 1-10928

INTERTAPE POLYMER GROUP INC.

9999 Cavendish Blvd., Suite 200, Ville St. Laurent, Quebec, Canada, H4M 2X5

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 x Form 40-F ¨

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): ¨

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.

Interim Condensed Consolidated Financial Statements

March 31, 2014


Unaudited Interim Condensed Consolidated Financial Statements

Consolidated Earnings (Loss)			2

Consolidated Comprehensive Income (Loss)			3

Consolidated Changes in Shareholders’ Equity			4 to 5

Consolidated Cash Flows			6

Consolidated Balance Sheets			7

Notes to Interim Condensed Consolidated Financial Statements			8 to 15

Intertape Polymer Group Inc.

Consolidated Earnings (Loss)

Periods ended March 31,

(In thousands of US dollars, except per share amounts)

(Unaudited)


	Three months ended
	March 31,
	2014		2013
	$		$
Revenue		199,948		196,695
Cost of sales		157,250		158,389

Gross profit		42,698		38,306

Selling, general and administrative expenses		18,980		22,959
Research expenses		2,074		1,602

		21,054		24,561

Operating profit before manufacturing facility closures, restructuring and other related charges		21,644		13,745
Manufacturing facility closures, restructuring and other related charges (Note 4)		1,384		27,201

Operating profit (loss)		20,260		(13,456	)
Finance costs (Note 3)
Interest		831		1,753
Other expense		352		160

		1,183		1,913
Earnings (loss) before income tax expense (benefit)		19,077		(15,369	)
Income tax expense (benefit) (Note 7)
Current		457		751
Deferred		6,986		(312	)

		7,443		439

Net earnings (loss)		11,634		(15,808	)

Earnings (loss) per share (Note 10)
Basic		0.19		(0.26	)
Diluted		0.19		(0.26	)

The accompanying notes are an integral part of the interim condensed consolidated financial statements. Note 3 presents additional information on consolidated earnings (loss).

Intertape Polymer Group Inc.

Consolidated Comprehensive Income (Loss)

Periods ended March 31,

(In thousands of US dollars)

(Unaudited)


	Three months ended
	March 31,
	2014			2013
	$			$
Net earnings (loss)		11,634			(15,808	)

Other comprehensive loss
Change in cumulative translation adjustments		(2,666	)		(1,994	)

Items that will be reclassified subsequently to net earnings (loss)		(2,666	)		(1,994	)

Other comprehensive loss		(2,666	)		(1,994	)

Comprehensive income (loss) for the period		8,968			(17,802	)

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

Intertape Polymer Group Inc.

Consolidated Changes in Shareholders’ Equity

Three months ended March 31, 2013

(In thousands of US dollars, except for number of common shares)

(Unaudited)


								Accumulated
								other
								comprehensive
	Capital stock							income
								Cumulative
								translation						Total
					Contributed			adjustment						shareholders’
	Number		Amount		surplus			account			Deficit			equity
			$		$			$			$			$
Balance as of December 31, 2012		59,625,039		351,702		16,386			3,208			(217,462	)		153,834

Transactions with owners
Exercise of stock options (Note 10)		358,145		1,325											1,325
Excess tax benefit on exercised stock options				551											551
Stock-based compensation expense (Note 10)						65									65
Stock-based compensation expense credited to capital on options exercised (Note 10)				796		(796	)								—
Dividends on common stock (Note 10)												(4,799	)		(4,799	)

		358,145		2,672		(731	)					(4,799	)		(2,858	)

Net loss												(15,808	)		(15,808	)
Other comprehensive loss
Changes to cumulative translation adjustments									(1,994	)					(1,994	)

Comprehensive loss for the period									(1,994	)		(15,808	)		(17,802	)

Balance as of March 31, 2013		59,983,184		354,374		15,655			1,214			(238,069	)		133,174

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

Intertape Polymer Group Inc.

Consolidated Changes in Shareholders’ Equity

Three months ended March 31, 2014

(In thousands of US dollars, except for number of common shares)

(Unaudited)


								Accumulated
								other
								comprehensive
	Capital stock							loss
								Cumulative
								translation						Total
					Contributed			adjustment						shareholders’
	Number		Amount		surplus			account			Deficit			equity
			$		$			$			$			$
Balance as of December 31, 2013		60,776,649		359,201		20,497			(770	)		(148,500	)		230,428

Transactions with owners
Excess tax benefit on outstanding stock options						(805	)								(805	)
Stock-based compensation expense (Note 10)						272									272
Dividends on common stock (Note 10)												(4,844	)		(4,844	)

						(533	)					(4,844	)		(5,377	)

Net earnings												11,634			11,634
Other comprehensive loss
Changes to cumulative translation adjustments									(2,666	)					(2,666	)

Comprehensive income for the period									(2,666	)		11,634			8,968

Balance as of March 31, 2014		60,776,649		359,201		19,964			(3,436	)		(141,710	)		234,019

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

Intertape Polymer Group Inc.

Consolidated Cash Flows

Periods ended March 31,

(In thousands of US dollars)

(Unaudited)


	Three months ended
	March 31,
	2014			2013
	$			$
OPERATING ACTIVITIES
Net earnings (loss)		11,634			(15,808	)
Adjustments to net earnings (loss)
Depreciation and amortization		6,019			7,093
Income tax expense		7,443			439
Interest expense		831			1,753
Charges in connection with manufacturing facility closures, restructuring and other related charges		263			23,295
Stock-based compensation expense (benefit)		(1,013	)		1,840
Pension and other post-retirement benefits expense		720			761
(Gain) loss on foreign exchange		46			(100	)
Other adjustments for non cash items		149			(114	)
Income taxes (paid) refunded, net		(62	)		474
Contributions to defined benefit plans		(479	)		(574	)

Cash flows from operating activities before changes in working capital items		25,551			19,059

Changes in working capital items
Trade receivables		(14,115	)		(11,986	)
Inventories		(10,720	)		(2,703	)
Parts and supplies		(72	)		(149	)
Other current assets		(780	)		3,068
Accounts payable and accrued liabilities		4,593			(3,791	)
Provisions		410			3,626

		(20,684	)		(11,935	)

Cash flows from operating activities		4,867			7,124

INVESTING ACTIVITIES
Purchases of property, plant and equipment		(14,368	)		(5,825	)
Proceeds from disposals of property, plant and equipment		54			1,645
Other assets		1			64
Purchases of intangible assets		(150	)		—

Cash flows from investing activities		(14,463	)		(4,116	)

FINANCING ACTIVITIES
Proceeds from long-term debt		39,433			11,087
Repayment of long-term debt		(20,711	)		(12,831	)
Payments of debt issue costs		—			(14	)
Interest paid		(956	)		(2,533	)
Proceeds from exercise of stock options		—			1,285
Dividends paid		(4,875	)		—

Cash flows from financing activities		12,891			(3,006	)

Net increase in cash		3,295			2
Effect of foreign exchange differences on cash		(28	)		(97	)
Cash, beginning of period		2,500			5,891

Cash, end of period		5,767			5,796

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

Intertape Polymer Group Inc.

Consolidated Balance Sheets

As of

(In thousands of US dollars)


	March 31,			December 31,
	2014			2013
	(Unaudited)			(Audited)
	$			$
ASSETS
Current assets
Cash		5,767			2,500
Trade receivables		92,261			78,543
Inventories (Note 5)		104,242			94,319
Parts and supplies		13,494			13,574
Other current assets		13,722			13,085

		229,486			202,021
Property, plant and equipment (Note 6)		187,837			181,612
Intangible assets		1,554			1,597
Deferred tax assets		67,440			76,319
Other assets		3,561			3,650

Total assets		489,878			465,199

LIABILITIES
Current liabilities
Accounts payable and accrued liabilities		77,960			76,417
Provisions (Note 9)		1,224			1,865
Installments on long-term debt (Note 8)		8,156			8,703

		87,340			86,985
Long-term debt (Note 8)		140,963			121,111
Pension and other post-retirement benefits		21,663			21,545
Other liabilities		1,237			1,250
Provisions (Note 9)		4,656			3,880

		255,859			234,771

SHAREHOLDERS’ EQUITY
Capital stock (Note 10)		359,201			359,201
Contributed surplus (Note 10)		19,964			20,497
Deficit		(141,710	)		(148,500	)
Accumulated other comprehensive loss		(3,436	)		(770	)

		234,019			230,428

Total liabilities and shareholders’ equity		489,878			465,199

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

Intertape Polymer Group Inc.

Notes to Interim Condensed Consolidated Financial Statements

March 31, 2014

(In US dollars, tabular amounts in thousands, except as otherwise noted)

(Unaudited)

1 - GENERAL BUSINESS DESCRIPTION

Intertape Polymer Group Inc. (the “Parent Company”), incorporated under the Canada Business Corporations Act, has its principal administrative offices in Montreal, Quebec, Canada and in Sarasota, Florida, U.S.A. The address of the Parent Company’s registered office is 800 Place Victoria, Suite 3700, Montreal, Québec H4Z 1E9, c/o Fasken Martineau. The Parent Company’s common shares are listed on the Toronto Stock Exchange (“TSX”) in Canada.

The Parent Company and its subsidiaries (together referred to as the “Company”), develops, manufactures and sells a variety of paper and film based pressure sensitive and water activated tapes, polyethylene and specialized polyolefin films, woven coated fabrics and complementary packaging systems for industrial and retail use.

Intertape Polymer Group Inc. is the Company’s ultimate parent.

2 - ACCOUNTING POLICIES

Basis of Presentation and Statement of Compliance

The unaudited interim condensed consolidated financial statements (“financial statements”) present the Company’s consolidated balance sheets as of March 31, 2014 and December 31, 2013, as well as its consolidated earnings (loss), comprehensive income (loss), changes in shareholders’ equity and cash flows for the three months ended March 31, 2014 and 2013. These financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 – Interim Financial Reporting and are expressed in United States (“US”) dollars. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), have been omitted or condensed.

These financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These adjustments are of a normal recurring nature.

These financial statements were authorized for issuance by the Company’s Board of Directors on May 7, 2014.

Critical Accounting Judgments, Estimates and Assumptions

The preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Significant changes in the underlying assumptions could result in significant changes to these estimates. Consequently, management reviews these estimates on a regular basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. The judgments, estimates and assumptions applied in the financial statements, were the same as those applied in the Company’s most recent annual audited consolidated financial statements. The only exceptions are the estimate of the provision for income taxes which is determined in the financial statements using the estimated weighted average annual effective income tax rate applied to the pre-tax income of the interim period and the remeasurement of the defined benefit liability which is required at year-end. These financial statements and notes should be read in conjunction with the Company’s most recent annual audited consolidated financial statements.

Change in Disclosure Requirement

Effective January 1, 2014, IAS 36 – Impairment of Assets: Requires disclosure of the recoverable amount of an asset (including goodwill) or a cash generating unit (“CGU”) when an impairment loss has been recognized or reversed in the period. When the recoverable amount is based on fair value less costs to sell, the valuation techniques and key assumptions must also be disclosed. The new requirements apply prospectively. The application of this new disclosure does not have a significant impact on the financial statements of the Company.

New Standards and Interpretations Issued But Not Yet Effective

Certain new standards, amendments and interpretations, and improvements to existing standards have been published by the IASB but are not yet effective, and have not been adopted early by the Company. Management anticipates that all of the relevant pronouncements will be adopted in the first reporting period following the date of application. Information on new standards, amendments and interpretations, and improvements to existing standards, which could potentially impact the Company’s consolidated financial statements, are detailed as follows:

IFRS 9 – Financial Instruments: The IASB aims to replace IAS 39 – Financial Instruments: Recognition and Measurement in its entirety with IFRS 9, the replacement standard. To date, the chapters dealing with recognition, classification, measurement and derecognition of financial assets and financial liabilities as well as the chapter dealing with hedge accounting have been published. The chapter dealing with impairment methodology is still being developed. In November 2011, the IASB decided to consider making limited modifications to IFRS 9’s financial asset classification model to address application issues. In addition, in November 2013, the IASB decided to defer the implementation of IFRS 9 to a date to be announced. Management has yet to assess the impact of this new standard on the Company’s consolidated financial statements and does not expect to implement IFRS 9 until it has been completed and its overall impact can be assessed.

Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company’s financial statements.

3 - INFORMATION INCLUDED IN CONSOLIDATED EARNINGS (LOSS)


	Three months ended
	March 31,
	2014			2013
	$			$
Employee benefit expense
Wages, salaries and other short-term benefits		35,438			35,571
Stock-based compensation expense (benefit)		(1,013	)		1,840
Pensions and other post-retirement benefits – defined benefit plans		746			789
Pensions and other post-retirement benefits – defined contribution plans		948			927

		36,119			39,127


	Three months ended
	March 31,
	2014			2013
	$			$
Finance costs - Interest
Interest on long-term debt		979			1,622
Amortization of debt issue costs on long-term debt		153			237
Interest capitalized to property, plant and equipment		(301	)		(106	)

		831			1,753

Finance costs - Other expense
Foreign exchange (gain) loss		48			(99	)
Other finance costs, net		304			259

		352			160

Additional information
Depreciation of property, plant and equipment		5,841			6,918
Amortization of intangible assets		178			175
Amortization of other charges		—			5
Impairment of long-term assets		99			21,924
Loss on disposal of property, plant and equipment		9			30

4 - MANUFACTURING FACILITY CLOSURES, RESTRUCTURING AND OTHER RELATED CHARGES

The following table describes the charges incurred by the Company in connection with its restructuring efforts, which are included in the Company’s consolidated earnings (loss) for the three months ended March 31, 2014 and 2013 under the caption manufacturing facility closures, restructuring and other related charges:


	Three months ended
	March 31, 2014
	South Carolina project		Other projects		Total
	$		$		$
Impairment of property, plant and equipment		3		96		99
Impairment of parts and supplies		—		77		77
Equipment relocation		57		316		373
Write-down of inventories to net realizable value		5		23		28
Severance and other labor related costs		440		150		590
Idle facility costs		—		172		172
Other costs		41		4		45

		546		838		1,384


	Three months ended
	March 31, 2013
	South Carolina project		Other projects			Total
	$		$			$
Impairment (reversal) of property, plant and equipment		22,189		(265	)		21,924
Impairment of parts and supplies		1,312		—			1,312
Equipment relocation		—		1,074			1,074
Reversal of write-down of inventories to net realizable value		—		(30	)		(30	)
Severance and other labor related costs		—		41			41
Environmental costs		2,522		—			2,522
Idle facility costs		—		333			333
Other costs		4		21			25

		26,027		1,174			27,201

On February 26, 2013, the Company announced its intention to relocate its Columbia, South Carolina manufacturing facility within the region in order to modernize facility operations and acquire state-of-the-art manufacturing equipment. The charges incurred are included in the tables above under South Carolina project.

In 2014 and 2013, the other charges incurred in the table above are the incremental costs of the ongoing Richmond, Kentucky manufacturing facility closure, consolidation of the shrink film production from Truro, Nova Scotia to Tremonton, Utah, other small restructuring initiatives and the Brantford, Ontario facility closure and are included in the tables above under other projects.

5 - INVENTORIES


	March 31,		December 31,
	2014		2013
	$		$
Raw materials		29,257		29,389
Work in process		22,063		18,206
Finished goods		52,922		46,724

		104,242		94,319

The amount of inventories recognized as an expense during the period is included in the statement of consolidated earnings (loss) under the caption cost of sales.

6 - PROPERTY, PLANT AND EQUIPMENT

During the three months ended March 31, 2014 and 2013, acquisitions of property, plant and equipment amounted to $14.4 million and $5.8 million, respectively. During the three months ended March 31, 2014 and 2013, the net book value of property, plant and equipment disposals amounted to less than $0.1 million for both periods, and the loss on those disposals amounted to less than $0.1 million for both periods.

As of March 31, 2014 and December 31, 2013, the Company had commitments to purchase machines and equipment totalling $12.5 million and $12.9 million, respectively.

There were no impairment losses or reversals of impairment losses during the current and comparative reporting periods, other than those discussed in Note 4 and included in the statement of consolidated earnings (loss) under the caption manufacturing facility closures, restructuring and other related charges.

7 - INCOME TAXES

Income tax expense (benefit) is recognized in each interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year. Amounts accrued for income tax expense (benefit) in one interim period may have to be adjusted in a subsequent interim period of the financial year if the estimate of the annual income tax rate changes. The effective tax rate for the three months ended March 31, 2014 and 2013 was 39.0% and negative 2.9%, respectively. The increase in the effective tax rate is primarily due to (i) the fact that the US deferred tax assets were previously derecognized until the fourth quarter of 2013 and (ii) the impact of tax expense recorded in the first quarter of 2013 on losses before income taxes for stock options exercised and state income taxes.

8 - LONG-TERM DEBT


	March 31,		December 31,
	2014		2013
	$		$
Asset-based loan facility (“ABL facility”) ⁽¹⁾		96,456		78,159
Real estate secured term loan (“Real Estate Loan”) ⁽¹⁾		13,905		14,278
Finance lease liabilities		29,378		26,468
Mortgage and other loans ⁽¹⁾		9,380		9,602
Equipment finance agreement advance fundings		—		1,307

		149,119		129,814
Less: Installments on long-term debt		8,156		8,703

		140,963		121,111

⁽¹⁾	The ABL facility, Real Estate Loan and mortgage and other loans are presented net of unamortized related debt issue costs totalling $1.8 million ($1.9 million as of December 31, 2013).

As of March 31, 2014 and December 31, 2013, the effective interest rate on borrowings under the ABL facility was 3.10% and 2.89%, respectively.

The Company’s unused availability under the ABL facility as of March 31, 2014 and December 31, 2013 was $51.1 million and $47.8 million, respectively.

The ABL facility has one financial covenant, a fixed charge ratio of greater than or equal to 1.0 to 1.0. The financial covenant becomes effective only when unused availability drops below $25.0 million. A default under the ABL facility would be deemed a default under the Real Estate Loan, Equipment Financing Agreement and the mortgage loan entered into in connection with the Company’s real estate purchase in Blythewood, South Carolina.

On August 14, 2012, the Company entered into a secured debt equipment finance agreement (the “Equipment Finance Agreement”) in the amount of up to $24.0 million for qualifying US capital expenditures during the period May 2012 through March 31, 2014. The amount available under the facility was increased to $25.7 million as of March 26, 2014. The terms of the arrangement include multiple individual finance leases, each of which have a term of 60 months and a fixed interest rate of 2.74%, 2.90%, and 2.95%, respectively, for leases scheduled prior to January 1, 2013, January 1, 2014, and March 31, 2014, respectively. The Company entered into the final schedule on March 26, 2014 for $3.5 million, with an annualized payment of $0.7 million.

As of March 31, 2014 and December 31, 2013, advance fundings under the Equipment Finance Agreement, which are amounts funded and borrowed but not yet scheduled, were nil and $1.3 million, respectively. Advance fundings accrued interest at the 30-day LIBOR rate plus 200 basis points.

The Real Estate Loan contains two financial covenants, both of which are determined at the end of each fiscal month. The Company has been in compliance with these covenants since entering into the Real Estate Loan.

9 - PROVISIONS AND CONTINGENT LIABILITIES


	Environmental		Restoration			Severance and other provisions			Total
	$		$			$			$
Balance, December 31, 2013		2,518		1,674			1,553			5,745
Additional provisions		—		292			1,042			1,334
Amounts used		—		(303	)		(329	)		(632	)
Amounts reversed		—		(507	)		—			(507	)
Net foreign exchange differences		—		(42	)		(18	)		(60	)

Balance, March 31, 2014		2,518		1,114			2,248			5,880

Amount presented as current		—		339			885			1,224
Amount presented as non-current		2,518		775			1,363			4,656

Balance, March 31, 2014		2,518		1,114			2,248			5,880

In 2013, the Company began the process to relocate the Langley, British Columbia manufacturing facility to a new nearby location due to the expiration of the non-renewable lease in April 2014. As a result, in 2014, the Company recorded an additional restoration provision for the new location where the Company is obligated to restore the leased property to the same condition that existed at the time of the lease commencement date. In addition, the Company reversed a portion of the outstanding restoration provision of the existing facility based on actual costs as of March 31, 2014 and remaining costs expected to be incurred. The reversal is included in the statement of consolidated earnings (loss) under the caption cost of sales and reduced depreciation and amortization. The carrying amount of these obligations are based on management’s best estimate of the costs of the permanent removal of the Company’s manufacturing equipment used in these facilities.

Approximately $0.4 million of the additional provision recorded in severance and other provisions is for an estimated amount relating to the prior Chief Financial Officer based on the employment letter agreements entered into on October 30, 2009 and November 17, 2009. The remainder of the additional provision recorded in severance and other provisions primarily relates to the Columbia, South Carolina manufacturing facility closure. Refer to Note 4 for more information.

The Company is engaged in various legal proceedings and claims that have arisen in the ordinary course of business. The outcome of all of the proceedings and claims against the Company is subject to future resolution, including the uncertainties of litigation. Based on information currently known to the Company and after consultation with outside legal counsel, management believes that the probable ultimate resolution of any such proceedings and claims, individually or in the aggregate, will not have a material adverse effect on the financial condition of the Company, taken as a whole, and accordingly, no amounts have been recorded as of March 31, 2014.

10 - CAPITAL STOCK AND EARNINGS PER SHARE

Common Shares

The Company’s common shares outstanding as of March 31, 2014 and December 31, 2013 were 60,776,649.

The weighted average number of common shares outstanding for the three months ended March 31, 2014 and 2013, are as follows:


	Three months ended
	March 31,
	2014		2013
Basic		60,776,649		59,692,751
Effect of stock options		1,243,195		—

Diluted		62,019,844		59,692,751

For the three months ended March 31, 2014 and 2013, the number of stock options that were anti-dilutive and not included in diluted earnings per share calculations were 32,500 and 2,298,892, respectively.

In accordance with its quarterly dividend policy, on February 6, 2014, the Company declared a cash dividend of $0.08 per common share paid on March 31, 2014 to shareholders of record at the close of business on March 19, 2014. The aggregate amount of this dividend payment was $4.9 million based on 60,776,649 shares of the Company’s common shares issued and outstanding as of March 19, 2014.

Stock Appreciation Rights

As of March 31, 2014, 1,045,905 Stock Appreciation Rights (“SARs”) were outstanding. The fair value per SAR outstanding was estimated as $4.55 using the Black-Scholes option pricing model, taking into account the following weighted average assumptions:


Expected life		4.2 years
Expected volatility		37%
Risk-free interest rate		1.47%
Expected dividends		2.85%
Stock price at grant date		CDN$7.56
Exercise price of awards		CDN$7.56
Stock price		CDN$12.44
Foreign exchange rate US to CDN		1.1064

Expected volatility was calculated by applying a weighted average of the daily closing price change on the TSX for a term commensurate with the expected life of each grant, with more weight placed on the more recent time periods.

During the three months ended March 31, 2014 and 2013, $1.3 million of income and $1.8 million of expense is included under the caption selling, general and administrative expenses, respectively. The corresponding liability is recorded on the Company’s consolidated balance sheets respectively under the caption accounts payable and accrued liabilities for amounts vested and expected to vest in the next 12 months, and other liabilities for amounts expected to vest in greater than 12 months.

During the three months ended March 31, 2014 and 2013, there were no SARs exercised.

During the three months ended March 31, 2014 and 2013, 123,750 and nil SARs were forfeited, respectively.

Stock Options

During the three months ended March 31, 2014, 450,000 stock options were granted at an exercise price of CDN$12.55 and a weighted average fair value of $3.14.

During the three months ended March 31, 2014, the fair value of stock options granted was estimated using the Black-Scholes option pricing model, taking into account the following weighted average assumptions:


Expected life		5.7 years
Expected volatility		38%
Risk-free interest rate		1.76%
Expected dividends		2.83%
Stock price at grant date		CDN$12.55
Exercise price of awards		CDN$12.55
Foreign exchange rate US to CDN		1.1087

During the three months ended March 31, 2013, there were no stock options granted.

During the three months ended March 31, 2014, there were no stock options exercised.

During the three months ended March 31, 2013, 358,145 stock options were exercised at a weighted average exercise price of CDN$3.61, resulting in cash proceeds to the Company of $1.3 million.

During the three months ended March 31, 2014 and 2013, 140,000 and nil stock options expired or were forfeited, respectively.

As of March 31, 2014, 2,574,177 stock options were outstanding. The weighted average exercise price and fair value at grant date per stock option outstanding as of March 31, 2014 was CDN$6.59 and $2.11, respectively.

Contributed Surplus

During the three months ended March 31, 2014 and 2013, the contributed surplus account increased $0.3 million and $0.1 million, respectively, representing the stock-based compensation expense recorded for the period associated with stock options. During the three months ended March 31, 2014 and 2013, the contributed surplus account decreased nil and $0.8 million, respectively, representing the stock-based compensation expense credited to capital on stock options exercised.

11 - POST REPORTING EVENTS

Adjusting Events

No adjusting events have occurred between the reporting date of these financial statements and the date of authorization.

Non-Adjusting Events

On May 7, 2014, the Company declared a cash dividend of $0.08 per common share payable June 30, 2014 to shareholders of record at the close of business on June 17, 2014. The estimated amount of this dividend payment is $4.9 million based on 60,776,649 shares of the Company’s common shares issued and outstanding as of May 7, 2014.

No other significant non-adjusting events have occurred between the reporting date of these consolidated financial statements and the date of authorization.

INTERTAPE POLYMER GROUP INC.

Date: May 8, 2014

/s/ Gregory A.C. Yull

Gregory A.C. Yull, President and Chief Executive Officer