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 August, 2004
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: August 5, 2004 By: /s/Andrew M. Archibald
Andrew M. Archibald, C.A., CFO,
Secretary, Vice President
Administration
NYSE SYMBOL: ITP
TSX SYMBOL: ITP
Intertape Polymer Group Inc. Announces Strong
Second Quarter Sales and Earnings Growth
- Sales up 14.4% year-over-year
- Earnings up 44.8% year-over-year
- Completed major debt refinancing
Montreal, Quebec and Bradenton, Florida - August 12, 2004 - Intertape
Polymer Group Inc. (NYSE, TSX: ITP) today released results for the
second quarter ended June 30, 2004. "Sales for the second quarter were
up over 14% from last year and 6% sequentially," said Intertape Polymer
Group Inc. (IPG) Chairman and Chief Executive Officer, Melbourne F. Yull.
"This sales increase combined with the Company's ability to recoup first
quarter raw material cost increases through increased selling prices and
operational improvements resulted in a 45% increase in profits over the
prior year." Mr. Yull also commented: "Just following the end of the
quarter, we completed the restructuring of our balance sheet resulting in
lower interest costs, improved covenants and new financial capacity for
growth. The Company is now positioned for the future including
expansion in both the European and Asian markets.
Second Quarter 2004
Second quarter net income was $5.7 million, or $0.14 per share (basic
and diluted), compared to $3.9 million or $0.12 per share (basic and
diluted) for the second quarter of 2003, primarily due to higher sales.
Second quarter net income was also up compared to first quarter net income
of $2.3 million, or $0.06 per share (basic and diluted), because of higher
sales and an improved gross margin.
Sales for the second quarter were $171.9 million, up 14.4% compared to the
corresponding quarter last year. The increase included revenues associated
with the February 2004 acquisition of certain operations of tesa tape, inc.
and the incremental sales associated with acquiring the remaining 50%
interest in the Company's Portuguese joint venture ("Fibope") in late June
2003. Selling prices in the second quarter of 2004 were also higher than
the second quarter of 2003. Sales were also up by 6.1% compared to first
quarter 2004.
Gross margin for the second quarter was 22.0%. Although sales price
increases for the second quarter of 2004 exceeded new raw material cost
increases for the second quarter, the sales price increases only partially
offset earlier raw material cost increases. Consequently, the gross margin
for the second quarter of 2004 was higher than the 19.8% experienced
in the first quarter of 2004, but lower than the 22.7% gross margin
experienced in the second quarter of 2003. The second quarter gross margin
was also aided by improvements in the integration of the tesa tape, inc.
operations.
Selling, general and administrative expenses were $22.8 million in the
second quarter of 2004, compared to $20.8 million for the second quarter
of 2003. The increase in expense reflects the effects of the Fibope and
tesa tape acquisitions. "SG&A was up primarily because of acquisitions,
however, these cost increases were partially offset by cost reductions in
other areas," noted IPG's Chief Financial Officer, Andrew M. Archibald,
C.A. "This is more evident when we look at SG&A expenses as a percent of
sales, which was 13.3% this past quarter compared to 13.9% for the same
quarter last year."
Financial expenses in the second quarter were $7.2 million, compared to
$7.8 million for the second quarter last year. The lower financial
expenses reflect primarily the impact of debt reduction since the end
of the second quarter of 2003 and a reduction in the Company's Facility
A interest rate of 100 basis points obtained late last year. Financial
expenses were up compared to the first quarter of 2004 due to increased
borrowings and foreign exchange losses during the quarter of $0.4 million
primarily related to a US dollar denominated loan in Canada. This loan
was repaid as part of the refinancing.
For the second quarter the Company recorded income tax expense of $0.7
million, for an effective tax rate of 10.4%, compared to income tax
expense of $0.4 million and effective tax rate of 10.1% in the second
quarter of 2003.
Cash used in operating activities was $0.6 million for the second
quarter 2004, compared to cash generated by operating activities of
$10.9 million for the second quarter 2003, mainly as a result of changes
in working capital, partly offset by improved earnings. A substantial
portion of the cash flow generated in the second quarter of 2004 was
used to pay down payables to vendors, which had grown substantially in
the first quarter of 2004. Trade receivables also had a negative impact
as they increased because of higher sales.
Cash used for investing activities was $4.6 million for the second
quarter 2004, compared to $1.3 million for the second quarter 2003,
the difference being attributable primarily to increased capital spending.
Cash used in operating and investing activities totaled $5.2 million in
the quarter. This cash requirement was funded by the combination of a
net increase in debt of $13.4 million and $1.4 million of equity during
the quarter. At the end of the quarter the Company had $9.5 million of
cash on its balance sheet.
First Half 2004
Net income for the first six months of the year was $7.9 million, or
$0.19 per share (basic and diluted), compared to $6.8 million or $0.20
per share (basic and diluted) for the six months of 2003, primarily
due to increased sales.
Sales for the first six months were $334.0 million, up 9.9% compared
to the corresponding period last year. Gross margin for the first
six months decreased to 20.9% from 22.3% in the corresponding period
last year. The margin decline in the first half of 2004 as compared
to the first half of 2003 was due to several factors including raw
material cost increases in both the first and second quarters of 2004,
and in the first quarter of 2004 production interruptions at the
Truro, Nova Scotia manufacturing facility, unanticipated integration
costs at the Columbia facility related to the acquired duct and masking
tape operations of tesa tape, inc., and changes in product mix.
Selling, general and administrative expenses were $45.1 million, or
13.5% of sales, in the first six months of 2004, compared to $42.8
million, or 14.1% of sales, for the first six months of 2003.
Financial expenses in the first six months were $14.0 million, compared
to $15.5 million for the first six months last year. The lower
financial expenses reflect primarily the impact of debt reduction and
a lower interest rate.
For the first six months the Company recorded income tax expense of
$0.4 million, for an effective tax rate of 4.4%, compared to income
tax expense of $0.8 million and effective tax rate of 10.1% in the
first six months of 2003. In the first quarter of 2004, the Company
booked a net tax recovery of $0.3 million.
Cash flows from operating activities were $5.8 million for the first
six months of 2004, compared to $11.1 million for the first six months
of 2003, due primarily to changes in working capital.
Cash used for investing activities was $16.5 million for the first
six months of 2004, compared to $5.7 million for the first six months
of 2003, the difference being attributable primarily to the acquisition
of assets from, and finalization of the supply agreements with, tesa
tape, inc. and higher capital spending.
Cash used in investing activities exceeded cash from operating
activities by $10.7 million in the first six months. This cash
requirement was funded by the combination of a net increase in debt
of $19.2 million and $2.4 million of equity during the period.
Balance Sheet
Just following the end of the second quarter, the Company undertook
a complete refinancing of the debt portion of its capital structure.
Virtually all of its previously existing debt has been replaced with
a combination of $125.0 million in senior subordinated notes due 2014
and a $200.0 million 7 year term loan. Following the repayment of
the previously existing debt, associated premiums, accrued interest
and transaction fees, there was approximately $20.0 million in cash
remaining. At the same time, the Company has entered into an agreement
for a 5 year $75.0 million revolving credit facility.
"There are a number of benefits to the Company as a result of these
financing arrangements," commented Mr. Archibald. "For one, the
Company expects to realize substantial interest cost savings. Based
on current interest rates and the existing level of debt at the end
of the second quarter, the expected savings would be about $9.0 million
a year. However, given that the outstanding debt has been increased
since then, in part to pay the transaction costs, the net savings will
likely be closer to $7.0 million per year. In addition, due to new
repayment terms, the Company's repayment obligations over the next
eighteen months have been significantly reduced from $84.0 million to
$2.0 million plus a pre-defined partial cash sweep, freeing up
additional cash resources in the near term. The new financing
arrangements also represent an important source of funds. With the
cash remaining following the debt repayments and the revolving credit
facility, which has not yet been drawn, we will have about $95.0
million of available liquidity to support future growth. The Company
will also have increased flexibility because of improved covenants."
Mr. Archibald also added: "With these changes to our debt capital and
the equity issue we completed in the third quarter last year, we feel
our balance sheet is sound and positioned for growth."
In the third quarter of 2004, the Company will record a one-time
pretax charge of approximately $31.0 million associated with the
refinancing transactions.
Outlook
In connection with ongoing cost reduction efforts, the Company is
reviewing the effectiveness of its manufacturing facilities and
expects to announce a plant consolidation during the second half of
the year. Should the consolidation occur, it is anticipated that the
Company would record a related one-time pretax charge not to exceed
$4.0 million.
"Our sales growth year-to-date is 9.9%, which is well in line with
our full year target of 10%," said Mr. Yull. "Looking forward to
the remainder of the year, we still feel confident about our sales
objective. However, the uncertainty surrounding the direction of raw
material costs and the ability of our markets to absorb further price
increases causes us to be more cautious about our expectations for
the trajectory of our bottom line growth. We have already experienced
further cost increases since the end of the second quarter for key
raw materials such a polypropylene and polyethylene, and have announced
sales price increases for the third quarter that will hopefully
recover these cost increases."
(All figures in U.S. dollars, unless otherwise stated; June 30, 2004,
exchange rate: Cdn $1.3460 =U.S.$1.00)
Conference Call
A conference call to discuss IPG's second quarter results will be held
Friday, August 13, 2004 at 10:00 A.M. Eastern Standard Time.
Participants may dial 1-888-428-4478 (U.S. and Canada) and 1-651-291-5254
(International). The conference call will also be simultaneously webcast
on the Company's website at http://www.intertapepolymer.com.
You may access a replay of the call by dialing 1-800-475-6701 (U.S. and
Canada); 1-320-365-3844 (International) and entering the passcode 41743.
The recording will be available from Friday, August 13, 2004 at 5:00 P.M.
until Friday, August 20, 2004 at 11:59 P.M, Eastern Standard Time.
About Intertape Polymer Group Inc.
Intertape Polymer Group is a recognized leader in the development and
manufacture of specialized polyolefin plastic and paper based
packaging products and complementary packaging systems for industrial
and retail use. Headquartered in Montreal, Quebec and
Sarasota/Bradenton, Florida, the Company employs approximately 2600
employees with operations in 16 locations, including 12 manufacturing
facilities in North America and one in Europe.
Safe Harbor Statement
Certain statements and information included in this release costitute
"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. 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. The Company
undertakes no duty to update its forward-looking statements, including
its earnings outlook.
Selected Financial Information
Intertape Polymer Group Inc.
Consolidated Earnings
Period ended June 30,
(In thousands of US dollars, except per share amounts)
(Unaudited)
-------------------------------------------------------
Three months Six months
------------ ----------- ------------- -----------
2004 2003 2004 2003
------------ ----------- ------------- -----------
$ $ $ $
Sales 171,934 150,249 334,034 303,841
Cost of sales 134,097 116,166 264,083 235,959
------------ ----------- ------------- -----------
Gross profit 37,837 34,083 69,951 67,882
------------ ----------- ------------- -----------
Selling, general and
administrative expenses 22,793 20,830 45,100 42,812
Stock-based compensation expense 351 421
Research and development 1,153 1,086 2,115 1,980
Financial expenses 7,235 7,825 14,003 15,525
------------ ----------- ------------- -----------
31,532 29,741 61,639 60,317
------------ ----------- ------------- -----------
Earnings before income taxes 6,305 4,342 8,312 7,565
Income taxes 654 439 370 761
------------ ----------- ------------- -----------
Net earnings 5,651 3,903 7,942 6,804
------------ ----------- ------------- -----------
------------ ----------- ------------- -----------
Earnings per share
Basic 0.14 0.12 0.19 0.20
------------ ----------- ------------- -----------
------------ ----------- ------------- -----------
Diluted 0.14 0.12 0.19 0.20
------------ ----------- ------------- -----------
------------ ----------- ------------- -----------
Consolidated Retained Earnings
Periods ended June 30,
(In thousands of US dollars)
(Unaudited)
-------------------------------------------------------
Three months Six months
------------------------- ------------- -----------
2004 2003 2004 2003
------------ ----------- ------------- -----------
$ $ $ $
Balance, beginning of period 70,582 53,015 68,291 50,114
Net earnings 5,651 3,903 7,942 6,804
------------ ----------- ------------- -----------
Balance, end of period 76,233 56,918 76,233 56,918
------------ ----------- ------------- -----------
------------ ----------- ------------- -----------
Common shares
Average number of shares
outstanding
CDN GAAP - Basic 41,215,111 33,832,527 41,092,785 33,826,800
CDN GAAP - Diluted 41,396,403 33,912,232 41,429,232 33,885,377
U.S. GAAP - Basic 41,215,111 33,832,527 41,092,785 33,826,800
U.S. GAAP - Diluted 41,396,403 33,912,232 41,429,232 33,885,377
Intertape Polymer Group Inc.
Consolidated Balance Sheets
As at
(In thousands of US dollars)
June 30, June 30, December 31,
2004 2003 2003
(Unaudited) (Unaudited) (Audited)
________ _________ ________
$ $ $
ASSETS
Current assets
Cash 9,488
Trade receivables,
net of allowance for
doubtful accounts of $4,037
($3,640 in June 2003,
$3,911 in December 2003) 101,201 91,514 89,297
Other receivables 11,353 10,357 11,852
Inventories 73,213 71,896 69,956
Parts and supplies 13,301 12,837 13,153
Prepaid expenses 5,761 6,139 7,924
Future income tax assets 2,682 2,397 2,682
________ _________ ________
216,999 195,140 194,864
Property, plant and equipment 357,227 357,447 354,627
Other assets 13,181 14,014 12,886
Future income taxes 4,457 3,812
Goodwill 176,231 165,633 173,056
________ _________ ________
768,095 732,234 739,245
________ _________ ________
________ _________ ________
LIABILITIES
Current liabilities
Bank indebtedness 25,391 13,944
Accounts payable and
accrued liabilities 91,834 83,799 95,270
Instalments on long-term debt 1,958 20,300 16,925
________ _________ ________
93,792 129,490 126,139
Long-term debt 290,240 274,152 235,066
Other liabilities 530 3,530 530
Future income taxes 5,164
________ _________ ________
384,562 412,336 361,735
_________ ________ _______
SHAREHOLDERS' EQUITY
Capital stock and share
purchase warrants 289,219 246,362 286,841
Contributed surplus 3,701 3,150
Retained earnings 76,233 56,918 68,291
Accumulated currency
translation adjustments 14,380 16,618 19,228
________ _________ ________
383,533 319,898 377,510
________ _________ ________
768,095 732,234 739,245
________ _________ ________
________ _________ ________
Intertape Polymer Group Inc.
Consolidated Cash Flows
Periods ended June 30,
(In thousands of US dollars)
(Unaudited)
-------------------------------------------------------
Three months Six months
------------------------- ------------- -----------
2004 2003 2004 2003
------------ ----------- ------------- -----------
$ $ $ $
OPERATING ACTIVITIES
Net earnings 5,651 3,903 7,942 6,804
Non-cash items
Depreciation and amortization 7,514 6,724 14,637 13,363
Stock-based compensation expense 351 421
Future income taxes 310 439 (586) 760
------------ ----------- ------------- -----------
Cash flows from operations
before changes in non-cash
working capital items 13,826 11,066 22,414 20,927
------------ ----------- ------------- -----------
Changes in non-cash working
capital items
Trade receivables (2,163) 3,649 (12,248) (2,722)
Other receivables 334 487 116
Inventories (3,366) (4,300) (3,878) (8,147)
Parts and supplies 43 (224) (148) (124)
Prepaid expenses 1,039 698 2,140 1,845
Accounts payable and accrued
liabilities (9,935) (286) (2,997) (808)
------------ ----------- ------------- -----------
(14,382) (129) (16,644) (9,840)
------------ ----------- ------------- -----------
Cash flows from operating
activities (556) 10,937 5,770 11,087
------------ ----------- ------------- -----------
INVESTING ACTIVITIES
Property, plant and equipment (4,055) (2,629) (9,875) (5,080)
Business acquisition (5,500)
Goodwill (58) (58)
Other assets (501) 1,345 (1,064) (608)
------------ ----------- ------------- -----------
Cash flows from investing
activities (4,614) (1,284) (16,497) (5,688)
------------ ----------- ------------- -----------
FINANCING ACTIVITIES
Net change in bank indebtedness 15,907 6,343 20,840 15,175
Issue of long-term debt 787
Repayment of long-term debt (2,477) (15,852) (2,477) (21,117)
Issue of common shares 1,408 2,378
------------ ----------- ------------- -----------
Cash flows from financing
activities 14,838 (9,509) 21,528 (5,942)
------------ ----------- ------------- -----------
Net increase (decrease)
in cash position 9,668 144 10,801 (543)
Effect of currency translation
adjustments (180) (144) (1,313) 543
Cash position, beginning of period
------------ ----------- ------------- -----------
Cash position, end of period 9,488 9,488
------------ ----------- ------------- -----------
------------ ----------- ------------- -----------
FOR INFORMATION CONTACT: Melbourne F. Yull
Chairman and Chief Executive Officer
Intertape Polymer Group Inc.
Tel.: 866-202-4713
E-mail: itp$info@intertapeipg.com
Web: www.intertapepolymer.com