FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the month of October, 2002
Intertape Polymer 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 whether the registrant by
furnishing the information contained in this Form 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-______]
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 28, 2002 By: /s/Andrew M. Archibald
CFO, Vice President
Administration, & Secretary
October 28, 2002 NYSE SYMBOL: ITP
TSE SYMBOL: ITP
INTERTAPE POLYMER GROUP INC. ANNOUNCES SEPTEMBER 2002 THIRD QUARTER
AND NINE MONTH EARNINGS RESULTS
* Sales flat despite current difficult economy
* Year to date pre-tax earnings increase to $9.6 million from $7.2
million before non-recurring charges
* Continued debt reduction; stronger balance sheet
* Bank term debt facility repaid in full, one year earlier than anticipated
Montreal, Quebec, Canada - October 28, 2002 - Intertape Polymer Group Inc.
(NYSE, TSX: ITP) today announced operating results for the third quarter
and nine months ended September 30, 2002. Please note that all figures
are stated in U.S. dollars. The exchange rate at September 30, 2002 was
Cdn $1.5777 = U.S. $1.00.
Sales for the third quarter were $149.9 million compared to $148.6 million
a year ago. For the nine months ended September 30, 2002 sales totaled
$450.3 million compared to $448.7 million for the nine months in 2001. Sales
for the second quarter ended June 30, 2002 were $153.6 million. The Company
had stated in a September 30, 2002 press release that it expected third
quarter sales should be approximately the same as the second quarter.
Non-recurring third quarter charges:
The Company had expected to record a one time pre-tax charge of $2.5 million
in the third quarter related to the Flexible Intermediate Bulk Container
("FIBC") division's consolidation program. In fact, the amount was $2.7
million. An additional $1.1 million relating to the disposal of certain
manufacturing equipment not related to the above FIBC closures was recorded.
As such, the Company recorded a one-time pretax charge of $3.8 million in
the period. Operations in Rayne, Louisiana as well as at the Edmundston,
New Brunswick, Canada manufacturing plant are being closed. Operations are
consolidated at IPG's Piedras Negras, Mexico facility as it has sufficient
capacity to integrate these functions and operate at a lower cost. These
changes are expected to be fully implemented by late November 2002.
In addition, a loss of approximately $1.0 million was recorded due to a
product replacement during the third quarter of 2002. The product was
withdrawn from the market during the period and replaced with a proven
product. No additional related losses are anticipated.
The non-recurring charges including product replacement have been recorded
as follows:
(in millions of U.S. dollars)
2002 2001
Third Quarter Year to date Third Quarter Year to date
$ $ $ $
Cost of goods sold 3.5 3.5 3.7 6.7
SG&A 1.3 1.3 8.0 10.0
Financial 6.7 6.7
4.8 4.8 18.4 23.4
Gross profit and gross margin:
Before the above non-recurring charges and product replacement gross profit
and gross margins for the third quarters ended September 30, 2002 and 2001
would have been $31.9 million and 21.3% and $29.8 million and 20.1% million
respectively. For the nine month periods, gross profits and gross margins
would have been $99.2 million and 22.0% this year and $98.2 million and 21.9%
in 2001.
Operating profits:
Taking into account the above non-recurring charges and product replacement,
operating profits (defined as gross profit less SG&A) for the third quarter
were $10.9 million or 7.3% of sales compared to $10.0 million or 6.7% of sales
last year. For the nine months, operating profits were $37.4 million or 8.3%
of sales compared to $38.4 million or 8.6% of sales a year ago.
Financial expenses:
Financial expenses in the third quarter of 2002 were $8.3 million versus an
adjusted $6.5 million in the same period last year. Similarly, on a year to
date basis, financial expenses increased from $22.7 million in 2001 to $25.2
million in 2002. The increase in financial expenses is due to an overall
increase in interest rates of 225 basis points related to the December 2001
renegotiated debt facilities, partially offset by lower outstanding debt
levels resulting from the $47.3 million proceeds from the March 2002 common
share issue as well as significantly lower capital asset spending, which has
declined by over $12.0 million year to date.
Early repayment of bank term debt facility:
During the first quarter of 2002, the Company reduced long-term debt by
approximately $47.3 million and further reduced one of its bank term loans
by $3.5 million during the third quarter. Subsequent to the third quarter,
the remaining portion of one of its bank term debt facilities was reduced
by an additional $8.6 million and this facility has been cancelled entirely.
This final repayment was made more than one year earlier than anticipated.
Adjusted pre-tax earnings:
Pre-tax earnings adjusted for non-recurring and product replacement for
the third quarter were $1.7 million compared to earnings of $0.8 million
last year. For the nine months adjusted pre-tax earnings were $9.6 million
compared to $7.2 million a year ago.
Earnings per share (EPS):
Basic and diluted EPS for the current quarter were ($0.08) compared to
($0.45) last year and for the nine months were $0.13 compared to ($0.40)
a year ago.
Commentary:
IPG Chairman and CEO, Melbourne F. Yull, said that ongoing strategies to
increase sales volumes have had the desired effect during the first half of
the year. "We have attracted new customers and entered new markets. While the
volatile economy affected July and early August, we remain confident that
these initiatives combined with new products will have a positive effect on
volumes going forward."
Mr. Yull added that recently a number of the Company's raw material costs
have started to increase. "At the end of the second quarter we stated that
we should be able to maintain many of our value-added percentages. The
Company initiated price increases that should positively impact sales for
the remainder of the year. However, during the third quarter the continuing
sluggish economy hampered the ability to pass on these increases and
value-added decreased by approximately 2%."
Cost reduction benefits:
Management intends to further lower selling, general and administrative
(SG&A) costs over the next five quarters as part of the recently announced
reduction in costs. Based on current volumes, the FIBC consolidation is
expected to result in cost reductions of approximately $3.0 million pre-tax
annually. The Company is also reducing headcount levels in its SG&A,
reductions that are expected to decrease SG&A expenses by approximately
$2.5 million pre-tax annually.
Management has identified further cost savings opportunities which it
currently plans to implement over the next twelve months. When completed,
these changes are estimated to reduce operating expenses by up to $12.0
million pretax annually. No additional charges or provisions are currently
foreseen for these changes.
Combined, the cost reduction programs are expected to result in pre-tax
annual savings of $17.5 million.
Conference Call:
A conference call to discuss the Company's third quarter results will
be held tomorrow, October 29 at 10:30 A.M. EST Daylight Savings Time.
Participants may dial 1-800-611-1147 in the U.S. and Canada and
1-612-332-0107 international.
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 2,800 employees with operations in 21
locations, including 15 manufacturing facilities in North America and one
in Europe.
Safe Harbor Statement:
The reader should note that the Company's forward-looking statements speak
only as of the date of this media release or when made and the Company
undertakes no duty or obligation to update or revise its forward-looking
statements. Although management believes that the expectations, plans,
intentions and projections reflected in its forward-looking statements are
reasonable, such statements are subject to known and unknown risks,
uncertainties and other factors that may cause the Company's actual results,
performance or achievements to be materially different from any future
results,performance or achievements expressed or implied by the forward-
looking statements.
The risks, uncertainties and other factors that the Company's stockholders
and prospective investors should consider include, but are not limited to,
the following: risks associated with pricing, volume and continued strength
of markets where the Company's products are sold; delays and disruptions
associated with terrorist attacks and reprisals, political instability,
heightened security and war in countries of the world that affect the
Company's business; the effect of competition on the Company's ability to
maintain margins on existing or acquired operations; and other risk factors
listed from time to time in the Company's reports (including its Annual
Report on Form 40-F) filed with the U.S. Securities and Exchange Commission.
FOR FURTHER 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
Intertape Polymer Group Inc.
Consolidated Earnings
Periods ended September 30,
(In thousands of US dollars, except per share amounts)
THREE MONTHS NINE MONTHS
2002 2001 2002 2001
$ $ $ $
Sales 149,920 148,602 450,314 448,730
Cost of sales 121,532 122,544 354,566 357,183
Gross profit 28,388 26,058 95,748 91,547
Selling, general and
administrative expenses 22,309 27,837 63,062 69,785
Amortization of goodwill 1,757 5,297
Research and development 926 884 2,689 3,250
Financial expenses 8,297 13,212 25,152 29,384
31,532 43,690 90,903 107,716
Earnings (loss) before
income taxes (3,144) (17,632) 4,845 (16,169)
Income taxes (recovery) (357) (4,937) 525 (4,937)
Net earnings (loss) (2,787) (12,695) 4,320 (11,232)
Earnings per share (loss)
Basic (0.08) (0.45) 0.13 (0.40)
Diluted (0.08) (0.45) 0.13 (0.40)
Consolidated Retained Earnings
Periods ended September 30,
(In thousands of US dollars)
THREE MONTHS NINE MONTHS
2002 2001 2002 2001
$ $ $ $
Balance, beginning of year 111,674 118,272 104,567 116,966
Net earnings (loss) (2,787) (12,695) 4,320 (11,232)
108,887 105,577 108,887 105,734
Premium on purchase for
cancellation of
common shares 157
Balance, end of year 108,887 105,577 108,887 105,577
Intertape Polymer Group Inc.
Consolidated Balance Sheets
(In thousands of US dollars)
As at As at As at
September 30 September 30 December 31
2002 2001 2001
$ $ $
ASSETS
Current assets
Trade receivables (net of
allowance for doubtful accounts
of $3,552 ($7,694 in September
2001, $6,670 in December 2001) 94,996 95,348 86,529
Other receivables 11,137 16,530 13,654
Inventories 71,637 70,786 70,688
Parts and supplies 12,566 11,390 11,592
Prepaid expenses 4,711 5,180 9,450
Future income tax assets 4,025 10,585 4,025
199,072 209,819 195,938
Capital assets 357,041 368,985 366,567
Other assets 12,508 10,502 11,680
Goodwill, at amortized cost 228,525 229,192 227,804
797,146 818,498 801,989
LIABILITIES
Current liabilities
Bank indebtedness 25,992 118,786 28,046
Accounts payable and
accrued liabilities 73,433 88,226 91,507
Instalments on long-term debt 9,929 1,324 8,310
109,354 208,336 127,863
Long-term debt 311,722 275,510 354,663
Other liabilities 3,785 4,500 3,785
Future income tax liabilities 22,112 36,078 21,588
446,973 524,424 507,899
SHAREHOLDERS' EQUITY
Capital stock and share
purchase warrants 238,538 189,523 189,496
Retained earnings 108,887 105,577 104,567
Accumulated foreign currency
translation adjustments 2,748 (1,026) 27
350,173 294,074 294,090
797,146 818,498 801,989
Intertape Polymer Group Inc.
Consolidated Cash Flows
Periods ended September 30,
(In thousands of US dollars)
THREE MONTHS NINE MONTHS
2002 2001 2002 2001
$ $ $ $
OPERATING ACTIVITIES
Net earnings (loss) (2,787) (12,695) 4,320 (11,232)
Non-cash items
Depreciation and amortization 7,342 8,065 21,006 24,622
Loss on disposal of
capital assets 1,250 1,250
Future income taxes (357) (658) 525 (658)
Cash from operations before
funding of changes in non-
cash working capital items 5,448 (5,288) 27,101 2,732
Changes in non-cash working
capital items
Trade receivables (5,237) 3,707 (8,350) 2,069
Other receivables 1,877 (4,769) 2,655 (5,058)
Inventories 4,713 14,667 (815) 17,807
Parts and supplies (122) (2,716) (655) (1,403)
Prepaid expenses 1,423 (68) 4,744 939
Accounts payable and
accrued liabilities (11,981) 2,345 (18,283) 8,845
(9,327) 13,166 (20,704) 23,199
Cash flows from operating
activities (3,879) 7,878 6,397 35,931
INVESTING ACTIVITIES
Capital assets, net of
investment tax credits (3,119) (3,202) (9,586) (20,939)
Proceed on sale of capital
assets 8,000
Other assets (1,323) (2,192) (3,594) (4,172)
Cash flows from investing
activities (4,442) (5,394) (13,180) (17,111)
FINANCING ACTIVITIES
Net change in bank
indebtedness 6,269 (2,356) (2,106) (8,572)
Repayment of long-term debt (3,635) (402) (41,324) (9,374)
Issue of Common Shares 1,716 2,533 49,042 3,387
Common Shares purchased
for cancellation (923)
Cash flows from financing
activities 4,350 (225) 5,612 (15,482)
Net increase (decrease) in
cash position (3,971) 2,259 (1,171) 3,338
Effect of foreign currency
translation adjus 3,971 (2,259) 1,171 (3,338)
Cash position, beginning
and end of year - - - -