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 March, 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: March 11, 2005 By: /s/Andrew M. Archibald
Chief Financial Officer,
Secretary, Vice President
Administration
NYSE SYMBOL: ITP
TSX SYMBOL: ITP
Intertape Polymer Group Inc. Announces Fourth Quarter and Annual Results
for 2004
- Fourth quarter sales were up 14.6% over last year
- Adjusted pretax earnings were up 16.9% over last year
Montreal, Quebec and Bradenton, Florida - March 11, 2005 - Intertape
Polymer Group Inc. (NYSE, TSX: ITP) today released results for the fourth
quarter and year ended December 31, 2004. "Our sales growth for the fourth
quarter was particularly strong, and we exceeded our revenue growth target
of 10% for the year," said Intertape Polymer Group Inc. (IPG) Chairman and
Chief Executive Officer, Melbourne F. Yull. "We made progress in recovering
raw material cost increases through price increases to our customers.
Additionally, during the fourth quarter we announced the closure of two
facilities, which should have a positive effect on our cost structure going
forward. Improvements in our financial and selling, general and
administrative cost structures also helped to offset the pressure of raw
material cost increases, resulting in a 16.9% increase in our adjusted pretax
earnings compared to the same period last year. Net income was up even more
significantly, mainly driven by an adjustment for income taxes recoverable
in future periods."
Operating Results
Sales for the fourth quarter were $180.7 million, up 14.6% compared to the
corresponding quarter last year. The increase was due to unit growth, price
increases, and acquisition-related revenues. Sales for the year were $692.4
million, up 11.4% compared to 2003.
Gross margin for the fourth quarter was 19.9% compared to 22.0% for the same
quarter last year. The Company was successful in achieving sales price
increases during the fourth quarter of 2004. Raw material cost increases
contributed to the decline in the gross margin. Nonetheless, gross profit
increased by 3.9% compared to the same period in 2003. Gross margin for the
year decreased to 20.7% from 22.4% in the prior year.
Selling, general and administrative ("SG&A") expenses were $25.8 million in
the fourth quarter of 2004, compared to $24.8 million for the fourth quarter
of 2003. The increase relates to higher sales within the retail distribution
channel, which carries a more expensive selling structure than other sales
channels. "While SG&A expenses increased slightly compared to the same period
last year, as a percent of sales, they were down from 15.8% in 2003 to 14.3%
in 2004," said IPG's Chief Financial Officer, Andrew M. Archibald, C.A. SG&A
expenses were $94.2 million, or 13.6% of sales, for the year, compared to
$89.9 million, or 14.5% of sales, for 2003.
Financial expenses in the fourth quarter were $4.3 million, a 23.0% decrease
compared to $5.6 million for the fourth quarter last year. "The reduction in
financial expenses is the result of the various debt restructuring activities
over the past year," commented Mr. Archibald. "Assuming interest rates and
our outstanding debt remain constant, we would expect financial expenses for
2005 to be in the range of $17.0 million to $18.0 million." Financial
expenses for the year were $24.3 million, excluding the $30.4 million cost
of refinancing, compared to $28.5 million for last year. The lower financial
expenses for the year were also partly the result of a substantial debt
repayment at the end of the third quarter of 2003, which was accomplished
with the proceeds of the $40.8 million common stock issuance in late September
2003.
The Company is including adjusted pretax earnings, a non-GAAP financial
measure, in this discussion of results because it believes the measure
permits more meaningful comparisons of its performance between the periods
presented. See the table below for a reconciliation of adjusted pretax
earnings to net earnings. Adjusted pretax earnings were $4.6 million for
the quarter, up 16.9% from $3.9 million for the same quarter last year.
Adjusted pretax earnings were $19.4 million for the year, compared to
adjusted pretax earnings of $17.1 million for the previous year.
Reconciliation of Net Earnings to Adjusted Pretax Earnings
Periods ended December 31,
(in millions of US dollars)
Three months Twelve months
__________________ __________________
2004 2003 2004 2003
________ _______ _______ _______
$ $ $ $
Net earnings - As reported 17.7 5.2 11.4 18.2
Add back:
Income taxes (recovery) (20.5) (4.3) (29.7) (4.1)
________ _______ _______ _______
Pretax earnings (2.8) 0.9 (18.4) 14.1
Add back:
Refinancing expense - - 30.4 -
Manufacturing facility
closure costs 7.4 3.0 7.4 3.0
________ _______ _______ _______
Adjusted pretax earnings 4.6 3.9 19.4 17.1
________ _______ _______ _______
For the fourth quarter, the Company recorded an income tax recovery of
$20.5 million, of which $19.0 million was due to a reduction in the Company's
valuation allowance for future income tax benefits. This adjustment was a
result of the Company's periodic assessment of its ability to realize future
income tax assets. For the same period in 2003, the Company booked an income
tax recovery of $4.2 million. For the year, the Company recorded an income
tax recovery of $29.7 million, compared to an income tax recovery of $4.1
million for the year 2003, reflecting primarily the impact of the valuation
allowance adjustment in the fourth quarter of 2004 and the tax effect of
the $30.4 million of refinancing expenses incurred in the third quarter of
2004. For 2005, the Company expects its effective tax rate to be in the range
of 20.0% to 23.0% and cash taxes to be less than $2.0 million for the year.
Net earnings for the fourth quarter of 2004 were $17.7 million, or $0.43 per
share (basic and diluted), compared to net earnings of $5.2 million or $0.13
per share (basic and diluted) for the fourth quarter of 2003. Net earnings
were $11.4 million for the year, or $0.27 per share (diluted), compared to
net income of $18.2 million, or $0.50 per share (diluted), for the year 2003.
The Company is including earnings before interest, taxes, depreciation and
amortization ("EBITDA") and Adjusted EBITDA, non-GAAP financial measures,
in this discussion of results because it believes these measures permit more
meaningful comparisons of its performance between the 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. A reconciliation of the Company's
EBITDA and Adjusted EBITDA, non-GAAP financial measures, to GAAP net earnings
(loss) is set out in the EBITDA and Adjusted EBITDA reconciliation table
below. The Company's EBITDA for the fourth quarter of 2004 was $9.1 million
compared to $13.9 million for the fourth quarter of 2003. The adjusted EBITDA
was $16.5 million in the fourth quarter of 2004 as compared to $16.9 million
in the fourth quarter of 2003. EBITDA was $65.0 million for 2004 compared to
$70.2 million for 2003. The adjusted EBITDA was $72.4 million for 2004
compared to $73.2 million in 2003.
EBITDA and Adjusted EBITDA Reconciliation to Net Earnings
Periods ended December 31,
(in millions of US dollars)
Three months Twelve months
__________________ __________________
2004 2003 2004 2003
________ _______ _______ _______
$ $ $ $
Net earnings - As reported 17.7 5.2 11.4 18.2
Add back:
Financial expenses, net
of amortization 4.1 5.1 23.0 26.7
Refinancing expense - - 30.4 -
Income taxes (20.5) (4.2) (29.7) (4.1)
Depreciation and
amortization 7.8 7.8 29.9 29.4
________ _______ ______ ______
EBITDA 9.1 13.9 65.0 70.2
Add back:
Manufacturing facility
closure costs 7.4 3.0 7.4 3.0
________ _______ ______ ______
Adjusted EBITDA 16.5 16.9 72.4 73.2
Cash Flows
Cash flows from operating activities were a net $1.7 million for the fourth
quarter of 2004, compared to $9.2 million for the fourth quarter 2003.
While cash from operating activities before non-cash working capital items
was up significantly in 2004, non-cash working capital items used more cash
in 2004 because of higher raw material costs included in inventories and the
planned build-up of inventories to facilitate the closing of the Montreal,
Quebec and Cumming, Georgia plants at year-end. Cash flows used by operating
activities in 2004 were $4.1 million compared to cash flows from operating
activities for 2003 of $40.4 million. The decline in cash flow on an annual
basis was also partly attributable to the make-whole payment of $21.9
million made in the third quarter of 2004.
Cash used in operating and investing activities totaled $5.0 million in the
fourth quarter of 2004 and was funded by cash on hand at the beginning of
the period. Cash used in operating and investing activities for the year
totaled $41.6 million and was funded by a net increase in debt.
Balance Sheet
While total debt, net of cash, was increased by 17.4% over the course of
2004, the Company expects the benefits of the debt restructuring undertaken
in the third quarter of 2004 to be reflected in lower annual financial
expenses in future years and an improved repayment schedule which should
provide greater financial flexibility to the Company over the next few years.
As of December 31, 2004, the Company had cash and a temporary investment of
$22.4 million, as well as a committed revolving credit facility of $75.0
million that remained undrawn. Mr. Archibald also noted that the Company
recently completed a registered exchange offer for its senior subordinated
notes.
Outlook
"We continue to target 10% sales growth for 2005 and are pleased with our
sales so far this year," said Mr. Yull. "Our ability to make significant
bottom line improvement is dependent on our ability to improve our gross
margin. This should occur if we are able to achieve product price increases,
as well as planned cost reductions."
Capital expenditures are expected to be between $23.0 million and $27.0
million for 2005 as the Company continues to invest in equipment to improve
its productivity and expand certain operations vertically, which at the
same time will create new product capabilities.
(All figures in U.S. dollars, unless otherwise stated; December 31, 2004,
exchange rate: Cdn $1.2062 = U.S.$1.00)
Conference Call
A conference call to discuss IPG's fourth quarter results will be held
Monday, March 14, 2005 at 10:00 A.M. Eastern Standard Time. Participants
may dial 1-877-209-0397 (U.S. and Canada) and 1-612-332-1025 (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), or 1-320-365-3844 (International), and entering the passcode
771687. The recording will be available from Monday, March 14, 2005 at
5:00 P.M. until Monday, March 21, 2005 at 11:59 P.M, Eastern Standard
Time.
About Intertape Polymer Group
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 2,600 employees with operations in 15
locations, including 10 manufacturing facilities in North America and
one in Europe.
Safe Harbor Statement
Certain statements and information included in this release 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.
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.
This release contains certain non-GAAP financial measures as defined under
SEC rules, including adjusted net earnings, EBITDA, and adjusted EBITDA.
The Company believes such non-GAAP financial 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.
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
Selected Financial Information
Intertape Polymer Group Inc.
Consolidated Earnings
Periods ended December 31,
(In thousands of US dollars, except per share amounts)
--------------------------------------------------------------------
Three months Twelve months
--------------------------------------------------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
$ $ $ $
Sales 180,744 157,682 692,449 621,321
Cost of sales 144,689 122,975 549,252 482,423
--------------------------------------------------------------------
Gross profit 36,055 34,707 143,197 138,898
--------------------------------------------------------------------
Selling, general and
administrative expenses 25,799 24,841 94,226 89,917
Stock-based compensation 355 130 1,046 130
Research and development 997 212 4,233 3,272
Financial expenses 4,302 5,587 24,253 28,521
Refinancing expense 30,444
Manufacturing facility
closure costs 7,386 3,005 7,386 3,005
--------------------------------------------------------------------
38,839 33,775 161,588 124,845
--------------------------------------------------------------------
Earnings (loss) before
income taxes (2,874) 932 (18,391) 14,053
Income taxes (recovery) (20,455) (4,243) (29,749) (4,125)
--------------------------------------------------------------------
Net earnings 17,671 5,175 11,358 18,178
--------------------------------------------------------------------
--------------------------------------------------------------------
Earnings per share
Basic 0.43 0.13 0.28 0.51
--------------------------------------------------------------------
--------------------------------------------------------------------
Diluted 0.43 0.13 0.27 0.50
--------------------------------------------------------------------
--------------------------------------------------------------------
Consolidated Retained Earnings
Periods ended December 31,
(In thousands of US dollars)
--------------------------------------------------------------------
Three months Twelve months
--------------------------------------------------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
$ $ $ $
Balance, beginning of period 61,978 63,116 68,291 50,113
Net earnings 17,671 5,175 11,358 18,178
--------------------------------------------------------------------
79,649 68,291 79,649 68,291
Premium on purchase for
cancellation of common
shares 40 40
--------------------------------------------------------------------
Balance, end of period 79,609 68,291 79,609 68,291
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Common shares
Average number of shares outstanding
CDN GAAP - Basic 41,273,840 40,870,426 41,186,143 35,956,550
CDN GAAP - Diluted 41,468,992 41,225,776 41,445,864 36,052,320
U.S. GAAP - Basic 41,273,840 40,870,426 41,186,143 35,956,550
U.S. GAAP - Diluted 41,468,992 41,225,776 41,455,864 36,052,320
Intertape Polymer Group Inc.
Consolidated Balance Sheets
As at December 31,
(In thousands of US dollars)
--------------------------------------------------------------------
2004 2003
--------------------------------------------------------------------
$ $
ASSETS
Current assets
Cash and cash equivalents 21,882
Temporary Investment 497
Trade receivables (net of
allowance for doubtful
accounts of $4,065;
$3,911 in 2003) 101,628 89,297
Other receivables 13,381 11,852
Inventories 90,677 69,956
Parts and supplies 13,618 13,153
Prepaid expenses 7,788 7,924
Future income tax 1,509 2,682
--------------------------------------------------------------------
250,980 194,864
Property, plant and equipment 352,610 354,627
Other assets 16,474 12,886
Future income taxes 36,689 3,812
Goodwill 179,958 173,056
--------------------------------------------------------------------
836,711 739,245
--------------------------------------------------------------------
--------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank indebtedness 13,944
Accounts payable and accrued
liabilities 97,849 95,270
Instalments on long-term debt 3,032 16,925
--------------------------------------------------------------------
100,881 126,139
Long-term debt 331,095 235,066
Other liabilities 435 530
--------------------------------------------------------------------
432,411 361,735
--------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital stock 289,180 286,841
Contributed surplus 4,326 3,150
Retained earnings 79,609 68,291
Accumulated currency translation
adjustments 31,185 19,228
--------------------------------------------------------------------
404,300 377,510
--------------------------------------------------------------------
836,711 739,245
--------------------------------------------------------------------
--------------------------------------------------------------------
Intertape Polymer Group Inc.
Consolidated Cash Flows
Periods ended December 31,
(In thousands of US dollars)
--------------------------------------------------------------------
Three months Twelve months
--------------------------------------------------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
Net earnings 17,671 5,175 11,358 18,178
Non-cash items
Depreciation and
amortization 7,770 7,786 29,889 29,375
Property, plant and
equipment impairment
and other non-cash charges
in connection with
facility closures 5,848 732 5,848 73
Future income taxes (21,341) (5,982) (28,806) (7,148)
Write-off of debt issue
expenses 8,482
Stock-based compensation
expense 355 1,046
Other non-cash items (95) (3,000) (95) (3,000)
--------------------------------------------------------------------
Cash flows from operations
before changes in
non-cash working capital
items 10,208 4,711 27,722 38,137
---------------------------------------------------------------------
Changes in non-cash
working capital items
Trade receivables 5,502 8,616 (11,345) (741)
Other receivables (444) (1,693) (1,308) (1,647)
Inventories (12,112) (2,021) (20,115) (5,139)
Parts and supplies 222 (107) (266) (776)
Prepaid expenses (3,710) (1,957) 202 100
Accounts payable and
accrued liabilities 2,041 1,606 1,051 10,465
---------------------------------------------------------------------
(8,501) 4,444 (31,781) 2,262
---------------------------------------------------------------------
Cash flows from operating
activities 1,707 9,155 (4,059) 40,399
---------------------------------------------------------------------
INVESTING ACTIVITIES
Temporary investment (497) (497)
Property, plant
and equipment (4,869) (3,280) (18,408) (12,980)
Business acquisition (5,500)
Goodwill (6,217)
Other assets (1,328) (752) (13,178) (1,435)
---------------------------------------------------------------------
Cash flows from investing
activities (6,694) (4,032) (37,583) (20,632)
---------------------------------------------------------------------
FINANCING ACTIVITIES
Net change in bank
indebtedness (298) (4,503) (13,967) 4,910
Issue of long-term debt 325,787
Repayment of long-term debt (408) (250,936) (64,329)
Issue of common shares 20 552 2,717 43,009
Common shares purchased for
cancellation (418) (418)
---------------------------------------------------------------------
Cash flows from
financing activities (1,104) (3,951) 63,183 (16,410)
---------------------------------------------------------------------
Net increase (decrease)
in cash and cash equivalents (6,091) 1,172 21,541 3,357
Effect of foreign currency
translation adjustments 105 (1,172) 341 (3,357)
Cash, beginning of period 27,868
---------------------------------------------------------------------
Cash and cash equivalents,
end of period 21,882 21,882
---------------------------------------------------------------------
---------------------------------------------------------------------
Supplementary Financial Information
Intertape Polymer Group Inc.
(in thousands of US dollars)
---------------------------------------------------------------------
1. Other receivables
2004 2003
__________ __________
$ $
Income and other taxes 8,914 7,009
Rebates receivable 1,193 861
Sales taxes 1,316 863
Other 1,958 3,119
__________ ___________
13,381 11,852
__________ ___________
2. Inventories
2004 2003
___________ ____________
$ $
Raw materials 30,908 18,910
Work in process 14,255 12,583
Finished goods 45,514 38,463
___________ ____________
90,677 69,956
__________ ___________
3. Other assets
2004 2003
___________ ____________
$ $
Debt issue expenses and other
deferred charges, at amortized
cost 14,446 10,460
Loans without interest, various
repayment terms 914 877
Other receivables 301 271
Other, at cost 813 1,278
___________ ____________
16,474 12,886
__________ ___________
4. Long-term debt
Long-term debt consists of the following:
2004 2003
___________ ____________
$ $
a) US$125,000,000 Senior
Subordinated Notes 125,000
b) US$200,000,000 Term Loan 199,500
c) US$137,000,000 Series A and B
Senior Notes 123,804
d) US$137,000,000 Senior Notes 123,330
e) Obligation under capital lease 7,166
f) Other debt 2,461 4,857
___________ ____________
334,127 251,991
Less: current portion of
long-term debt 3,032 16,925
___________ ____________
331,095 235,066
__________ ___________
5. Income taxes
The provision for income taxes consists of the following:
2004 2003
___________ ____________
$ $
Current (943) 3,023
Future (28,806) (7,148)
___________ ____________
(29,749) (4,125)
__________ ___________
The net future income tax assets are detailed as follows:
2004 2003
___________ ____________
$ $
Future income tax assets
Trade and other receivables 1,112 1,104
Accounts payable and accrued
liabilities 765
Tax credits and loss carry-forwards 104,350 94,719
Other 14,658 5,901
Valuation allowance (16,508) (31,145)
___________ ____________
103,612 71,344
Future income tax liabilities
Inventories 214 311
Property, plant and equipment 64,134 64,539
Accounts payable and accrued
liabilities 1,066
___________ ____________
65,414 64,850
___________ ____________
Net future income tax assets 38,198 6,494
___________ ____________
Net current future income tax assets 1,509 2,682
Net long-term future income tax assets 36,689 3,812
Total net future income tax assets 38,198 6,494
As at December 31, 2004, the Company has $55.7 million of Canadian
operating loss carry-forwards expiring 2007 through 2014 and $175.5
million of US federal and state operating losses expiring 2010 through
2024.
In assessing the realizability of future income tax assets, management
considers whether it is more likely than not that some portion or all
of the future income tax assets will not be realized. Management
considers the scheduled reversal of future income tax liabilities,
projected future taxable income, and tax planning strategies in making
this assessment. The Company expects the future income tax assets, net
of the valuation allowance, as at December 31, 2004, to be realized as
a result of the reversal of existing taxable temporary differences.
As part of the above analysis, the valuation allowance was decreased by
$14.6 million for the twelve months ended December 31, 2004 and increased
$4.5 million for the twelve months ended December 31, 2003. For the three
months ended December 31, 2004, the valuation allowance was decreased by
$19.0 million and for the three months ended December 31, 2003, it was
increased by $1.4 million. The remaining valuation allowance as of
December 31, 2004 was $16.5 million.