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 October, 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: October 29, 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 Continued
Sales Growth in Third Quarter
- Third quarter sales were up 11.2% over last year
- Excluding refinancing charges, earnings before taxes
up 17.4% over last year
- Major debt refinancing completed
- Further cost reductions announced
Montreal, Quebec and Bradenton, Florida - October 29, 2004 - Intertape
Polymer Group Inc. (NYSE, TSX: ITP) today released results for the
third quarter ended September 30, 2004. "This is our third consecutive
quarter of sales growth," said Intertape Polymer Group Inc. (IPG)
Chairman and Chief Executive Officer, Melbourne F. Yull. "We also
completed a major refinancing of the debt portion of our capital
structure, which will have significant future benefits for the Company.
Excluding the one-time costs we incurred as part of the refinancing,
our earnings before taxes were up 17.4% compared to the same period
last year despite increased raw material costs. We were able to
implement a number of price increases during the quarter and this
process is ongoing. At the same time, we are focused on reducing
operating costs and optimizing asset usage to improve profitability.
As part of this ongoing program to evaluate our operations, we
announced, following the end of the quarter, the closing of our
Cumming, Georgia facility that should result in about $2.0 million of
annualized operating cost savings for the Company."
Third Quarter 2004
Sales for the third quarter were $177.7 million, up 11.2% compared to
the corresponding quarter last year. The increase was due to revenues
associated with the February 2004 acquisition of certain operations
of tesa tape, inc., a 3.5% increase in average selling prices in the
third quarter of 2004 compared to the third quarter of 2003, and
volume growth. Sales were also up by 3.3% compared to the second
quarter of 2004 due to selling price increases and volume growth.
Gross margin for the third quarter was 20.9% compared to 22.7% for the
same quarter last year. Sales price increases for the third quarter
of 2004 slightly exceeded new raw material cost increases for the
third quarter, resulting in a relatively small incremental contribution
to gross margin. Gross profit, nonetheless, increased by 2.4%
compared to the same period in 2003.
Selling, general and administrative ("SG&A") expenses were $23.3
million in the third quarter of 2004, compared to $22.3 million for
the third quarter of 2003. The increase in expense reflects the
increase in selling expenses attributable to the accounts acquired in
the tesa tape acquisition. As a percent of sales, SG&A expenses were
13.1% this past quarter compared to 13.9% for the same quarter last
year.
Financial expenses in the third quarter were $5.9 million excluding
the cost of the refinancing, compared to $7.4 million for the third
quarter last year. The lower financial expenses reflect primarily the
impact of the equity issue and resulting debt reduction at the end of
the third quarter of 2003, and lower interest rates due to the debt
refinancing that was completed in early August of 2004. The third
quarter financial expenses were also down $1.3 million compared to the
second quarter of 2004. The decrease was principally the result of
interest rate savings attributable to the recently completed
refinancing, which were in place about mid-quarter. The cost of the
refinancing totaled $30.4 million, which covered make-whole premiums
and the write-off of deferred financing costs. "With the cost savings
that we will derive from this refinancing, the payback on the premium
costs is expected to be about three years," said IPG's Chief Financial
Officer, Andrew M. Archibald, C.A.
Earnings before taxes, excluding refinancing charges, were $6.5
million for the quarter, up 17.4% compared to the same quarter last
year.
For the third quarter, the Company recorded an income tax recovery of
$9.7 million, mainly as a result of the $10.6 million tax benefit
arising from the $30.4 million of refinancing expenses. Excluding the
impact of the refinancing expenses, the Company recorded income taxes
of $0.9 million, for an effective tax rate of 14.1%. For the same
period last year, the Company recorded income tax recovery of $0.6
million.
For the third quarter of 2004, the Company recorded a net loss of
$14.3 million, or $0.35 per share (basic and diluted), compared to
net earnings of $6.2 million or $0.18 per share (basic and diluted)
for the third quarter of 2003. The third quarter 2004 earnings included
a $19.9 million after-tax expense relating to the refinancing of the
Company's debt that was undertaken in July 2004. Excluding this
amount, earnings for the third quarter of 2004 would have been $0.14
per share (basic and diluted), as compared to earnings of $0.18 per
share (basic and diluted) for the same period in 2003 and $0.14 per
share (basic and diluted) for the second quarter 2004. Earnings per
share were also impacted by the increase in the number of common
shares outstanding as a result of the equity issue completed at the
end of September 2003.
Cash used in operating activities before changes in non-cash working
capital items was $4.9 million for the third quarter 2004, compared
to cash generated in the third quarter 2003 of $12.5 million.
Included in the 2004 cash flows from operations before changes in
non-cash working capital items was the payment of a $21.9 million
make-whole payment to the holders of the notes that were refinanced
in the third quarter. Excluding the make-whole payment and related
current tax benefit of approximately $3.9 million, cash flows from
operations before changes in non-cash working capital items for the
quarter would have been $13.1 million.
Cash used for investing activities was $14.4 million for the third
quarter 2004, compared to $10.9 million for the third quarter 2003,
the difference being attributable primarily to debt issuance costs
associated with the third quarter refinancing. Cash used in operating
and investing activities totaled $25.9 million in the quarter.
Nine months of 2004
Sales for the first nine months were $511.7 million, up 10.4% compared
to the corresponding period last year. The increase was attributable
to the tesa tape acquisition, the incremental sales associated with
acquiring the remaining 50% interest in the Company's Portuguese
joint venture in late June 2003, as well as higher overall selling
prices and sales volumes in 2004 compared to 2003.
Gross margin for the first nine months decreased to 20.9% from 22.5%
in the corresponding period last year. The margin decline in the first
nine months of 2004 as compared to the first nine months of 2003 was
due to several factors including timing differences in passing along
raw material cost increases throughout the first three quarters of
2004, first quarter of 2004 production interruptions at the Truro,
Nova Scotia manufacturing facility and unanticipated integration costs
at the Columbia facility related to the acquired duct and masking tape
operations of tesa tape.
Selling, general and administrative expenses were $68.4 million, or
13.4% of sales, in the first nine months of 2004, compared to $65.1
million, or 14.0% of sales, for the first nine months of 2003.
Financial expenses in the first nine months were $20.0 million,
excluding the cost of refinancing, compared to $22.9 million for the
first nine months last year. The lower financial expenses are
primarily the result of substantial debt repayments in the second and
third quarters of 2003 as well as the interest savings attributable
to the refinancing. The common stock issuance in late September 2003
allowed the Company to repay $40.8 million in debt at the end of the
third quarter of 2003.
Earnings before taxes, excluding refinancing charges, were $14.8 million
for the nine months of 2004, up 13.1% compared to the same period last
year.
For the first nine months the Company recorded income tax recovery of
$9.3 million, compared to income tax expense of $0.1 million for the
first nine months of 2003. Excluding the impact of the refinancing
expenses, the Company recorded income taxes of $1.3 million, for an
effective tax rate of 8.7%.
For the first nine months of the year, the Company recorded a net loss
of $6.3 million, or $0.15 per share (basic and diluted), compared to
net income of $13.0 million, or $0.38 per share (basic and diluted),
for the nine months of 2003. Excluding the after-tax refinancing
expense amount of $19.9 million, net earnings for the nine months would
have been $13.6 million, or $0.33 per share (basic and diluted).
Cash flows from operating activities before changes in non-cash working
capital items were $17.5 million for the first nine months of 2004,
compared to $33.4 million for the first nine months of 2003. Excluding
the make-whole payment of $21.9 million and related current tax
benefit of approximately $3.9 million, cash flows from operations
before changes in working capital items for the first nine months would
have been $35.5 million.
Cash used for investing activities was $30.9 million for the first nine
months of 2004, compared to $16.6 million for the first nine months of
2003, the difference being attributable primarily to increased capital
spending, the debt issuance costs associated with the third quarter
refinancing and the $5.5 million used to acquire the duct and masking
tape operations of tesa tape.
Balance Sheet
As part of the refinancing that took place early in the third quarter,
virtually all of the previously existing debt was replaced with a
combination of $125.0 million in senior subordinated notes due 2014
and a $200.0 million 7 year term loan. The Company also arranged for
a $75.0 million revolving credit facility, which was undrawn as of
September 30, 2004. This, along with the $27.9 million cash balance of
September 30, 2004, gives the Company approximately $100.0 million of
liquidity for future requirements. As well as a new source of funds,
these new financing arrangements provide for substantial interest cost
savings, a significant reduction in near-term repayment obligations
freeing up additional cash resources in the near term, and increased
flexibility because of improved covenants.
Outlook
"Our annual sales growth objective has been 10%, and we expect to meet
it," said Mr. Yull. "For the first nine months of the year, sales
growth was 10.4%. We also expect to see improved profitability with
the cost savings from our debt refinancing and recently-announced plant
closure, as well as over time, the price increases will help restore
our margins as they become effective.
(All figures in U.S. dollars, unless otherwise stated; September 30,
2004, exchange rate: Cdn $1.2725 =U.S.$1.00)
Conference Call
A conference call to discuss IPG's third quarter results will be held
Monday, November 1, 2004 at 10:00 A.M. Eastern Standard Time.
Participants may dial 1-800-762-4717 (U.S. and Canada) and 1-480-629-9024
(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 751034.
The recording will be available from Monday, November 1, 2004 at 1:30 P.M.
until Monday, November 8, 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.
FOR INFORMATION CONTACT: Melbourne F. Yull
Chairman and Chief Executive Officer
Intertape Polymer Group Inc.
Tel.: 866-202-4713
E-mail: itp$info@itertapeipg.com
Web: www.intertapepolymer.com
Selected Financial Information
Intertape Polymer Group Inc.
Consolidated Earnings
Periods ended September 30,
(In thousands of US dollars, except per share amounts)
(Unaudited)
-------------------------------------------------------
Three months Nine months
------------ ----------- ------------- -----------
2004 2003 2004 2003
------------ ----------- ------------- -----------
$ $ $ $
Sales 177,671 159,798 511,705 463,639
Cost of sales 140,480 123,489 404,563 359,448
------------ ----------- ------------- -----------
Gross profit 37,191 36,309 107,142 104,191
------------ ----------- ------------- -----------
Selling, general and
administrative expenses 23,327 22,264 68,427 65,076
Stock-based compensation expense 270 691
Research and development 1,121 1,080 3,236 3,060
Financial expenses 5,948 7,409 19,951 22,934
Refinancing expense 30,444 30,444
------------ ----------- ------------- -----------
61,110 30,753 122,749 91,070
------------ ----------- ------------- -----------
Earnings (loss) before
income taxes (23,919) 5,556 (15,607) 13,121
Income taxes (recovery) (9,664) (643) (9,294) 118
------------ ----------- ------------- -----------
Net earnings (loss) (14,255) 6,199 (6,313) 13,003
------------ ----------- ------------- -----------
------------ ----------- ------------- -----------
Earnings (loss) per share
Basic (0.35) 0.18 (0.15) 0.38
------------ ----------- ------------- -----------
------------ ----------- ------------- -----------
Diluted (0.35) 0.18 (0.15) 0.38
------------ ----------- ------------- -----------
------------ ----------- ------------- -----------
Consolidated Retained Earnings
Periods ended September 30,
(In thousands of US dollars)
(Unaudited)
-------------------------------------------------------
Three months Nine months
------------------------- ------------- -----------
2004 2003 2004 2003
------------ ----------- ------------- -----------
$ $ $ $
Balance, beginning of period 76,233 56,918 68,291 50,114
Net earnings (loss) (14,255) 6,199 (6,313) 13,003
------------ ----------- ------------- -----------
Balance, end of period 61,978 63,117 61,978 63,117
------------ ----------- ------------- -----------
------------ ----------- ------------- -----------
_________________________________________________________
_________________________________________________________
Common Shares
Average number of shares outstanding
CDN GAAP - Basic 41,285,161 35,302,174 41,156,911 34,318,592
CDN GAAP - Diluted 41,285,161 35,397,800 41,156,911 34,409,403
U.S. GAAP - Basic 41,285,161 35,302,174 41,156,911 34,318,592
U.S. GAAP - Diluted 41,285,161 35,397,800 41,156,911 34,409,403
Intertape Polymer Group Inc.
Consolidated Balance Sheets
As at
(In thousands of US dollars)
September 30, September 30, December 31,
2004 2003 2003
(Unaudited) (Unaudited) (Audited)
________ _________ ________
$ $ $
ASSETS
Current assets
Cash 27,868
Trade receivables,
net of allowance for
doubtful accounts of $3,959
($3,274 in September 2003,
$3,911 in December 2003) 106,436 97,034 89,297
Other receivables 12,764 10,155 11,852
Inventories 78,451 67,128 69,956
Parts and supplies 13,641 13,046 13,153
Prepaid expenses 4,013 5,917 7,924
Future income tax 2,682 2,397 2,682
________ _________ ________
245,855 195,677 194,864
Property, plant and equipment 356,680 355,297 354,627
Other assets 15,341 12,137 12,886
Future income taxes 11,593 3,812
Goodwill 177,780 172,007 173,056
________ _________ ________
807,249 735,118 739,245
________ _________ ________
________ _________ ________
LIABILITIES
Current liabilities
Bank indebtedness 179 18,376 13,944
Accounts payable and
accrued liabilities 94,591 92,739 95,270
Instalments on long-term debt 2,700 16,886 16,925
________ _________ ________
97,470 128,001 126,139
Long-term debt 332,539 234,353 235,066
Other liabilities 530 3,530 530
Future income taxes 2,623
________ _________ ________
430,539 368,507 361,735
_________ ________ _______
SHAREHOLDERS' EQUITY
Capital stock and share
purchase warrants 289,538 289,367 286,841
Contributed surplus 3,971 3,150
Retained earnings 61,978 63,117 68,291
Accumulated currency
translation adjustments 21,223 14,127 19,228
________ _________ ________
376,710 366,611 377,510
________ _________ ________
807,249 735,118 739,245
________ _________ ________
________ _________ ________
____________________________________________________________________
____________________________________________________________________
Intertape Polymer Group Inc.
Consolidated Cash Flows
Periods ended September 30,
(In thousands of US dollars)
(Unaudited)
-------------------------------------------------------
Three months Nine months
------------------------- ------------- -----------
2004 2003 2004 2003
------------ ----------- ------------- -----------
$ $ $ $
OPERATING ACTIVITIES
Net earnings (loss) (14,255) 6,199 (6,313) 13,003
Non-cash items
Depreciation and amortization 7,482 8,226 22,119 21,589
Write-off of deferred debt
issue expenses 8,482 8,482
Stock-based compensation expense 270 691
Future income taxes (6,879) (1,926) (7,465) (1,166)
------------ ----------- ------------- -----------
Cash flow from operations
before changes in non-cash
working capital items (4,900) 12,499 17,514 33,426
------------ ----------- ------------- -----------
Changes in non-cash working
capital items
Trade receivables (4,599) (6,635) (16,847) (9,357)
Other receivables (1,351) (70) (864) 46
Inventories (4,125) 5,029 (8,003) (3,118)
Parts and supplies (340) (545) (488) (669)
Prepaid expenses 1,772 212 3,912 2,057
Accounts payable and accrued
liabilities 2,007 9,667 (990) 8,859
------------ ----------- ------------- -----------
(6,636) 7,658 (23,280) (2,182)
------------ ----------- ------------- -----------
Cash flows from operating
activities (11,536) 20,157 (5,766) 31,244
------------ ----------- ------------- -----------
INVESTING ACTIVITIES
Property, plant and equipment (3,664) (4,620) (13,539) (9,700)
Business acquisition (5,500)
Goodwill 58 (6,217) - (6,217)
Other assets (10,786) (75) (11,850) (683)
------------ ----------- ------------- -----------
Cash flows from investing
activities (14,392) (10,912) (30,889) (16,600)
------------ ----------- ------------- -----------
FINANCING ACTIVITIES
Net change in bank indebtedness (34,509) (5,762) (13,669) 9,413
Issue of long-term debt 325,000 325,787
Repayment of long-term debt (248,051) (43,212) (250,528) (64,329)
Issue of common shares 319 42,457 2,697 42,457
------------ ----------- ------------- -----------
Cash flows from financing
activities 42,759 (6,517) 64,287 (12,459)
------------ ----------- ------------- -----------
Net increase in cash position 16,831 2,728 27,632 2,185
Effect of currency translation
adjustments 1,549 (2,728) 236 (2,185)
Cash position,
beginning of period 9,488
------------ ----------- ------------- -----------
Cash position, end of period 27,868 27,868
------------ ----------- ------------- -----------
------------ ----------- ------------- -----------