[LOGO - intertape polymer group(TM)]
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
Intertape Polymer Group Inc.
Announces September 2001
Third Quarter Results
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
quarterly reports under cover Form 20-F or Form 40-F
Form 20-F (X) Form 40-F ( )
(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):
SIGNATURE
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, hereunto duly authorized.
Intertape Polymer Group Inc.
November 21, 2001 By: /s/ John Fain
-----------------------------------
John Fain
Vice President, Corporate Marketing
Intertape Polymer Group Inc.
[GLOBE 2001 LOGO]
THIRD
QUARTERLY
REPORT
Intertape
Polymer
Group Inc.
[INTERTAPE POLYMER GROUP LOGO]
[GLOBE 2001 LOGO] THIRD QUARTERLY REPORT SAFE HARBOR STATEMENT
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Certain statements and information set forth in this report, as well as other
written or oral statements made from time to time by the Company or by its
authorized executive officers on its behalf, constitute "forward-looking
statements" within the meaning of the United States Federal Private Securities
Litigation Reform Act of 1995. The Company intends for its forward-looking
statements to be covered by the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The reader should note that the Company's
forward-looking statements speak only as of the date of this report 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 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 Company's ability to successfully complete
negotiations with its lenders; 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.
[INTERTAPE POLYMER GROUP LOGO]
[GLOBE 2001 LOGO] THIRD QUARTERLY REPORT MANAGEMENT'S DISCUSSION & ANALYSIS
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REVIEW OF OPERATIONS
SALES
Sales declined 10.6% or $17.8 million to $148.6 million for the three-month
period ended September 30, 2001 as compared to $166.4 million for the same
period in 2000. Sales declined 10.8% or $54.2 million to $448.7 million for the
nine-month period ended September 30, 2001 as compared to $502.9 million for the
same period in 2000. The decline in sales is related to the softening of both
domestic and export economies; and to lower selling prices.
Prior to September 11, domestic markets had been slowing over the past year.
Sales in the third quarter were impacted by the events of September 11, which
resulted in cross-border transportation slowdowns effecting deliveries to both
customers and from suppliers. Export markets have also negatively impacted
sales. The Company has withdrawn from commodity export markets in Masking Tape,
which were derived from previous acquisitions and do not fall within our overall
strategy.
Declines of 1.8% in average selling prices had a negative effect on sales of
approximately $8.0 million for the nine-month period ended September 30, 2001.
These declines are mostly related to lower raw material prices.
GROSS PROFIT AND GROSS MARGINS
Gross margins declined 9.4% to 17.5% for the third quarter and declined 4.2% to
20.4% for the nine months. Included in gross profits for the three and
nine-month period ended September 2001 are three unusual charges. The Company
has completed its Regional Distribution Centers (RDC's) strategy and all five
locations are now open and fully functional. The Company has been able to close
the approximately twenty-five leased warehouse facilities during the year and
has consolidated shipments through the five RDC's. The relocation of inventory
and the necessary product brand changes related to the acquisition of United
Tape Co, (UTC) has resulted in a reduction in finished goods inventory value of
$3.2 million related to obsolete product.
Even though IPG's order entry has remained relatively steady since September 11,
management has determined further staff cuts are necessary to insure the Company
is prepared for any further erosion in the economy. During the third quarter,
$0.5 million of additional severance related charges were recorded in addition
to the $0.7 million recorded in the first half. Finally, during the first half
of the year, the Company also recorded a charge of $2.3 million for the cost of
setting up the RDC's. Before these charges, gross margins for the three and
nine-month period ended September 30, 2001 would have been 20.0% and 21.9%.
Over the next four quarters, gross margins should start to recover. Raw material
prices appear to have levelled off. Fixed costs in the various facilities will
continue to decline as a result of the various cost reduction initiatives. Order
entry levels are also holding at the current time. The Company's overall
strategy should provide for growth provided the economy does not erode further.
SELLING, GENERAL AND ADMINISTRATION EXPENSES
Selling, general and administration (SG&A) costs were $27.8 million for the
third quarter of 2001 as compared to $21.3 million for the same period last
year; and were $69.8 million and $59.2 million for the nine-month period ended
September 30, 2001 and 2000 respectively. Included in SG&A for the three and
nine-month period ended September 30, 2001 are two factors as a result of
management decisions. First of all, the uncertain economy and the events of
September 11 have adversely effected several segments of the Company's customer
base (steel, lumber, export retail etc.). As a result, management has increased
reserves for bad debts by $4.0 million. In addition, bad debt reserves set up
during the fourth quarter of 2000 against accounts receivable have proven to be
insufficient related to the migration of Central Products during the second
quarter; and a further $3.0 million has been recorded in the third quarter of
2001. Total charges for the third quarter related to reserves for bad debts are
$7.0 million. Second of all, in addition to the charges for severance included
in cost of sales are $1.0 million of such charges
[INTERTAPE POLYMER GROUP LOGO]
[GLOBE 2001 LOGO] THIRD QUARTERLY REPORT MANAGEMENT'S DISCUSSION & ANALYSIS
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included in SG&A for the third quarter of 2001 and an additional $2.0 million
from the previous first half. Excluding these charges, SG&A for the three and
nine-month period ended September 30, 2001 were $19.8 million and $59.8 million
respectively.
Included in SG&A for 2001 are the costs related to UTC; an acquisition which was
completed on September 1, 2000. The SG&A costs of UTC are approximately $2.0
million per quarter.
OPERATING PROFIT
Operating profit for the three months ended September 30, 2001 was a loss of
$1.8 million after the effect of the above noted charges or a profit of $9.9
million before the effect of these charges. This compares to a profit of $23.4
million for the same period last year. The nine-month comparisons are profits of
$21.8 million as reported and $38.5 million after the effect of the above noted
charges; compared to $64.5 million for the same period in 2000. This decline in
operating profits for 2001 is as a result of lower sales volume and lower unit
selling prices, the impact of lower value added applied against fixed
manufacturing costs and selling general and administrative costs which are not
related to changes in volume.
FINANCIAL EXPENSES
During the course of 2001, the Company has successfully resolved its long-term
financing needs. Final closing is expected to take place by November 30, 2001.
In this regard, $6.7 million in related financing costs have been accrued and
expensed in the third quarter. These costs have been recorded in financial
expenses.
EARNINGS BEFORE INTEREST, TAXES AND DEPRECIATION AND AMORTIZATION COSTS
(EBITDA).
EBITDA for the three-month period ended September 30, 2001 were $3.6 million as
reported and $15.3 million before the effect of the above mentioned charges.
This compares to $28.4 million for the same period last year. For the nine-month
period ended September 30, 2001, EBITDA was $37.8 million as reported and $54.5
million before the effect of the above noted charges. This compares to $84.2
million for the nine-month period in 2000.
NET EARNINGS
As a result of lower volume, compressed margins and the above noted charges, the
Company recorded a net loss of $12.7 million for the third quarter compared to
net earnings of $9.6 million last year. For the nine-month period ended
September 30, 2001, the comparison is a net loss of $11.2 million as compared to
a net earnings of $29.8 million. Excluding the above noted charges, the third
quarter and nine-month period ended September 30, net earnings for 2001 would
have been $0.6 million and $5.0 million.
LIQUIDITY AND CAPITAL RESOURCES
CHANGES IN CASH FLOW
THIRD QUARTER 2001 COMPARED TO 2000
During the third quarter of 2001, the Company reduced debt. This was
accomplished by generating of $13.2 million from working capital less cash
operating losses of $5.2 million. To these net funds from operations of $7.9
million was a further amount of $2.5 million derived from the issue of capital
stock. The combined net cash inflows of $10.4 million were used to acquire
capital and other assets of $5.4 million, repay long-term debt of $0.4 million,
fund foreign exchange changes of $2.3 million, and reduce bank indebtedness in
the amount of $2.4 million.
The third quarter of 2000 was different. Bank indebtedness increased by $28.2
million. The Company generated funds from operations of $20.1 million but used
$4.4 million to increase working capital. The Company borrowed $40.0 million and
used these funds to acquire UTC for $28.2 million, purchase capital and other
assets of $16.9 million, repay long-term debt and repurchase common shares in
the amount of $2.2 million and fund foreign exchange of $2.8 million.
[INTERTAPE POLYMER GROUP LOGO]
[GLOBE 2001 LOGO] THIRD QUARTERLY REPORT MANAGEMENT'S DISCUSSION & ANALYSIS
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NINE MONTHS ENDED SEPTEMBER 2001 COMPARED TO 2000
The nine months ended September 30, 2001 can be characterized as being one of
debt reduction and operational consolidation. During this period, the Company
reduced its bank indebtedness by $8.6 million and repaid long-term debt by $9.4
million. This total reduction of interest bearing debt in the amount of $18.0
million was accomplished by funds provided through operations of $12.7 million
and a decrease in working capital of $23.2 million; proceeds from the sale of a
capital asset of $8.0 million and the issuance of common shares of $3.4 million.
Total funds provided of $47.3 million were used to acquire capital and other
assets of $25.1 million, repurchase common shares in the amount of $0.9 million
and fund foreign exchange of $3.3 million with the balance used to reduce debts.
The nine months ended September 30, 2000 was the end of a five-year period of
rapid expansion through acquisitions and capacity increases for new and current
products. The Company generated cash of $62.8 million but increased working
capital in the amount of $40.8 million leaving a balance of $21.8 million from
operations. The Company generated an additional $23.2 million as a result of the
sale of its interest in IFCO Systems. However, the Company had to increase its
bank indebtedness by $38.4 million as funds were required to purchase UTC for
$28.2 million, acquire capital assets in the amount of $36.0 million, repay
long-term debt and pay dividends of $2.0 million and $3.0 million respectively,
repurchase common shares for a net cost of $1.0 million and fund foreign
exchange in the amount of $3.8 million.
CAPITAL EXPENDITURES
Capital expenditures for the three and nine-month period ended September 30,
2001 were $3.2 million and $20.9 million respectively. For the same periods in
2000, the expenditures were $15.6 million and $36.0 million. In light of the
current economic climate, the Company has curtailed most significant capital
expenditures programs related to new products and capacity increases beyond the
level of approximately $2.5 million per quarter.
CREDIT FACILITIES
The Company has reported that it has concluded the discussions with the Senior
Unsecured Noteholders (Noteholders) and its Banks. It is anticipated that
closing of these new arrangements will take place before November 30, 2001. The
financial effect of these new arrangements is that interest due on the $274.0
million Noteholders' debt will increase by approximately $1.5 million per
quarter commencing with the fourth quarter of 2001.
[INTERTAPE POLYMER GROUP LOGO]
CONSOLIDATED EARNINGS
[GLOBE 2001 LOGO] THIRD QUARTERLY REPORT AND RETAINED EARNINGS
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(Unaudited)/ Using Canadian GAAP
CONSOLIDATED EARNINGS
(In thousands of U.S. dollars; except per share amounts)
FOR THE PERIOD ENDED SEPTEMBER 30, THREE MONTHS NINE MONTHS
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2001 2000 2001 2000
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$ $ $ $
SALES 148,602 166,356 448,730 502,945
Cost of sales (Note 4) 122,544 121,612 357,183 379,242
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GROSS PROFIT 26,058 44,744 91,547 123,703
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17.5% 26.9% 20.4% 24.6%
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Selling, general and administrative expenses
(Note 4) 27,837 21,306 69,785 59,229
Amortization of goodwill 1,757 1,663 5,297 4,735
Research and development 884 1,073 3,250 3,807
Financial expenses (Note 4) 13,212 7,345 29,384 19,992
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43,690 31,387 107,716 87,763
Gain on sale of interest in joint venture -- -- -- (5,500)
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43,690 31,387 107,716 82,263
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Earnings (loss) before income taxes (17,632) 13,357 (16,169) 41,440
Income taxes (recovery) (4,937) 3,741 (4,937) 11,603
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NET EARNINGS (LOSS) FOR THE PERIOD (12,695) 9,616 (11,232) 29,837
=========================================================================================================
EARNINGS (LOSS) PER SHARE
Basic (0.45) 0.34 (0.40) 1.05
Diluted ( Note 2) (0.45) 0.33 (0.40) 1.03
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COMMON SHARES
Average number of shares outstanding
Basic 28,346,102 28,342,803 28,188,650 28,310,698
Diluted ( Note 2) 28,346,102 28,763,582 28,188,650 28,783,774
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CONSOLIDATED RETAINED EARNINGS
(In thousands of U.S. dollars)
FOR THE PERIOD ENDED SEPTEMBER 30, THREE MONTHS NINE MONTHS
---------------------------------------------------------------------------------------------------------
2001 2000 2001 2000
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$ $ $ $
Retained earnings - beginning of period 118,272 105,523 116,966 88,422
Net earnings (loss) for the period (12,695) 9,616 (11,232) 29,837
Premium on purchase for cancellation of common -- (589) (157) (703)
shares
Dividends paid -- -- -- (3,006)
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RETAINED EARNINGS - END OF PERIOD 105,577 114,550 105,577 114,550
=========================================================================================================
[INTERTAPE POLYMER GROUP LOGO]
[GLOBE 2001 LOGO] THIRD QUARTERLY REPORT CONSOLIDATED CASH FLOWS
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In thousands of U.S. dollars
(Unaudited)/ Using Canadian GAAP
FOR THE PERIOD ENDED SEPTEMBER 30, THREE MONTHS NINE MONTHS
---------------------------------------------------------------------------------------------------------
2001 2000 2001 2000
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$ $ $ $
OPERATING ACTIVITIES
Net earnings (loss) for the period (12,695) 9,616 (11,232) 29,837
Non-cash items
Depreciation and amortization 8,065 7,736 24,622 22,805
Future income taxes (recovery) (658) 2,737 (658) 8,514
Write-off of capital assets -- -- -- 1,594
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CASH FROM OPERATIONS BEFORE FUNDING OF
CHANGES IN NON-CASH WORKING CAPITAL ITEMS (5,288) 20,089 12,732 62,750
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Changes in non-cash working capital items
Trade and other receivables (1,062) (8,094) (2,989) (29,558)
Inventories and parts and supplies 11,951 (6,524) 16,404 (4,967)
Prepaid expenses (68) (1,183) 939 (960)
Accounts payable and accrued liabilities 2,345 11,394 8,845 (5,423)
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13,166 (4,407) 23,199 (40,908)
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CASH FLOWS FROM OPERATING ACTIVITIES 7,878 15,682 35,931 21,842
=========================================================================================================
INVESTING ACTIVITIES
Business acquisitions -- (28,195) -- (28,195)
Capital assets (3,202) (15,601) (20,939) (36,017)
Proceeds on sale of capital assets -- (15) 8,000 4,239
Other assets (2,192) (1,291) (4,172) 18,981
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CASH FLOWS FROM INVESTING ACTIVITIES (5,394) (45,102) (17,111) (40,992)
=========================================================================================================
FINANCING ACTIVITIES
Net change in bank indebtedness (2,356) 39,971 (8,572) 38,433
Repayment of long-term debt (402) (1,226) (9,374) (2,012)
Issue of common shares 2,533 53 3,387 176
Common shares purchased for cancellation -- (990) (923) (1,243)
Dividends paid -- -- -- (3,006)
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CASH FLOWS FROM FINANCING ACTIVITIES (225) 37,808 (15,482) 32,348
=========================================================================================================
NET INCREASE IN CASH DURING THE PERIOD 2,259 8,388 3,338 13,198
Effect of foreign currency translation
adjustments (2,259) (2,813) (3,338) (3,774)
Bank indebtedness assumed on
business acquisitions -- (9,424) -- (9,424)
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CASH POSITION, BEGINNING OF PERIOD -- 3,849 -- --
=========================================================================================================
CASH POSITION, END OF PERIOD -- -- -- --
=========================================================================================================
[INTERTAPE POLYMER GROUP LOGO]
[GLOBE 2001 LOGO] THIRD QUARTERLY REPORT CONSOLIDATED BALANCE SHEET
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In thousands of U.S. dollars
(Unaudited)/ Using Canadian GAAP
AS AT SEPTEMBER 30, AS AT DECEMBER 31,
2001 2000 2000
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$ $ $
ASSETS
Current assets
Trade receivables 95,348 122,725 97,478
Other receivables 16,530 15,282 11,659
Inventories 70,786 98,151 89,264
Parts and supplies 11,390 9,768 10,069
Prepaid expenses 5,180 5,274 6,114
Future income tax assets 10,585 10,907 10,810
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209,819 262,107 225,394
Capital assets 368,985 362,843 374,753
Other assets 10,502 11,615 10,636
Goodwill, at amortized cost 229,192 232,525 234,257
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TOTAL ASSETS 818,498 869,090 845,040
=============================================================================================================
LIABILITIES
Current liabilities
Bank indebtedness (including checks in circulation of $7.9M) 118,786 129,487 127,333
Accounts payable and accrued liabilities 88,226 85,093 79,811
Installments on long-term debt 1,324 10,014 9,532
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208,336 224,594 216,676
Long-term debt 275,510 276,442 276,684
Other liabilities 4,500 14,000 4,500
Future income tax liabilities 36,078 45,200 37,538
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TOTAL LIABILITIES 524,424 560,236 535,398
=============================================================================================================
SHAREHOLDERS' EQUITY
Capital stock and share purchase warrants 189,523 188,784 186,908
Retained earnings 105,577 114,550 116,966
Accumulated foreign currency translation adjustments (1,026) 5,520 5,768
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TOTAL SHAREHOLDERS' EQUITY 294,074 308,854 309,642
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TOTAL LIABILITY AND SHAREHOLDERS' EQUITY 818,498 869,090 845,040
=============================================================================================================
[INTERTAPE POLYMER GROUP LOGO]
[GLOBE 2001 LOGO] THIRD QUARTERLY REPORT NOTES TO FINANCIAL STATEMENTS
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In thousands of U.S. dollars; except per share amounts
(Unaudited)/ Using Canadian GAAP
NOTE 1.
BASIS OF PRESENTATION
In the opinion of Management, the accompanying unaudited, interim consolidated
financial statements, prepared in accordance with Canadian generally accepted
accounting principles, contain all adjustments necessary to present fairly
Intertape Polymer Group Inc.'s (IPG) financial position for the three-month and
nine-month periods ended September 30, 2001 and 2000 and December 31, 2000 as
well as its results of operations and its cash flow for the three-month and
nine-month periods ended September 30, 2001 and 2000.
While Management believes that the disclosures presented are adequate, these
unaudited interim consolidated financial statements and notes should be read in
conjunction with IPG's annual consolidated financial statements.
These unaudited interim consolidated financial statements and notes follow the
same accounting policies as the most recent annual consolidated financial
statements.
NOTE 2.
ACCOUNTING CHANGES
Effective December 1, 2000, IPG has adopted the Canadian Institute of Chartered
Accountants recommendations related to the accounting for earnings per share.
The recommendations require the application of the treasury stock method for the
calculation of the dilutive effect of stock options and other dilutive
securities. In accordance with the provisions of the new recommendations, IPG
has restated the diluted earnings per share for comparative periods.
During the first quarter of 2001, IPG has adopted retroactively the Canadian
Institute of Chartered Accountants recommendations on the presentation of the
interim financial statements. The new recommendations require minimal
disclosures including the basis of presentation. These new recommendations also
require a comparative balance sheet established as of December 31st.
NOTE 3.
EARNINGS PER SHARE
The following table provides a reconciliation between basic and diluted earnings
per share:
THREE MONTHS NINE MONTHS
FOR THE PERIOD ENDED SEPT. 30, 2001 2000 2001 2000
-----------------------------------------------------------------------------
$ $ $ $
Net earnings (loss) applicable
to common shares (12,695) 9,616 (11,232) 29,837
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Weighted average number of
common shares outstanding 28,346 28,343 28,188 28,311
Effect of dilutive stock options
and warrants(a) - 421 - 473
-----------------------------------------------------------------------------
Weighted average number
of diluted common shares
Outstanding 28,346 28,764 28,188 28,784
Basic earnings (loss) per share (0.45) 0.34 (0.40) 1.05
Diluted earnings (loss) per share (0.45) 0.33 (0.40) 1.03
-----------------------------------------------------------------------------
(a) Diluted earnings per share is calculated by adjusting outstanding shares,
assuming any dilutive effects of stock options and warrants. For the nine- month
and the three-month periods ended September 30, 2001, the effect of stock
options and warrants were not included, as the effect would be anti-dilutive.
NOTE 4.
STATEMENT OF CONSOLIDATED EARNINGS
Included in the Statement of Consolidated Earnings are the following items:
COST OF SALES:
a) The Company has undertaken a series of workforce reductions. During the
third quarter, $0.5 million charge was recorded for workforce reductions.
An additional $0.7 million was recorded during the first half for a total
amount of $1.2 million. As at September 30, 2001, a provision of $2.4
million in respect of a program of workforce reductions was reflected in
the consolidated accounts payable and accrued liabilities.
[INTERTAPE POLYMER GROUP LOGO]
[GLOBE 2001 LOGO] THIRD QUARTERLY REPORT NOTES TO FINANCIAL STATEMENTS
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In thousands of U.S. dollars; except per share amounts
(Unaudited)/ Using Canadian GAAP
b) The Company has completed the opening of its five Regional Distribution
Centers (RDC) and as a result, has been able to close approximately 25
leased warehouses. The relocation of inventory to these centers plus the
necessary product brand changes related to the acquisition of United Tape
has resulted in a charge for finished goods inventory reduction of $3.2
million related to obsolete inventory in the third quarter.
c) During the second quarter, a one-time charge was recorded in the amount of
$2.3 million in cost of sales related to the cost of setting up the five
RDC's.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
During the third quarter, the allowance for doubtful accounts was increased
resulting in a charge of $7.0 million - of this amount, $4.0 million is as a
result of current economic conditions and $3.0 million is as a result of the
migration of Central Product Company's business onto the Company's systems.
FINANCIAL EXPENSES
During the quarter, the Company recorded $6.7 million of costs related to debt
refinancing.
NOTE 5.
BANK INDEBTEDNESS AND LONG-TERM-DEBT
The Company accepted a term sheet provided by the Company's bankers. The term
sheet provides for three facilities as follows:
- a $50.0 million revolving line of credit for a period of one year
extendable annually at the option of the banks and, if not extended,
converting to a one year term loan with a $50.0 million payment due at the
expiration of the term;
- a $40.0 million term loan repayable over eight quarters ending December 31,
2003;
- and a $60.0 million four year term loan with semi-annual payments
commencing March 2004.
Proceeds of these three facilities will be used to repay all bank indebtedness
outstanding at the time of closing, of approximately $111.0 million. Interest
rates on the three facilities will initially be 395 bps over Libor, and will be
adjusted downwards by as much as 300 bps in the event certain financial
thresholds are achieved. The Company currently pays 395 bps over Libor on most
of its bank facilities. The term sheet contemplates that certain security will
be granted to the Banks and the Senior Unsecured Noteholders. In the event that
certain financial thresholds are achieved, the security will be released. It is
anticipated that these new facilities will close before November 30, 2001.
NOTE 6.
DIFFERENCES IN ACCOUNTING BETWEEN THE UNITED STATES OF AMERICA AND CANADA
RE-PRICING OF STOCK OPTIONS
The re-pricing of stock options that occurred in January 2001 has resulted,
under US GAAP, in variable plan accounting for the re-priced options. Under US
GAAP, the Company would have recorded a non-cash gain of $2.6 million in the
quarter ended September 30, 2001 and a non-cash charge of $2.6 million in the
quarter ended June 30, 2001. These would have no income tax consequences for the
Company and would reflect the changes in the market price of the common shares.
Accordingly, the Company's net loss, basic loss per share and diluted loss per
share would have been reduced by $2.6 million, $0.09 and $0.10 respectively for
the three-month period ended September 30, 2001. The net loss, basic loss per
share and diluted loss per share would not have been impacted by the re-pricing
of stock options for the nine months ended September 30, 2001 as the cumulative
impact is nil. There would be no impact for the three-month and nine-month
periods ended September 30, 2000.
[INTERTAPE POLYMER GROUP LOGO]
[GLOBE 2001 LOGO] THIRD QUARTERLY REPORT NOTES TO FINANCIAL STATEMENTS
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In thousands of U.S. dollars; except per share amounts
(Unaudited)/ Using Canadian GAAP
NOTE 7.
NEW ACCOUNTING PRONOUNCEMENTS
Over the past several months, the Financial Accounting Standards Board approved
the issuance of SFAS No. 141, "Business Combinations" and SFAS 142, "Goodwill
and Other Intangible Assets". The new standards require that all business
combinations initiated after June 30, 2001 must be accounted for under the
purchase method. In addition, all intangible assets acquired that are obtained
through contractual or legal right, or are capable of being separately sold,
transferred, licensed, rented or exchanged shall be recognized as an asset apart
from goodwill. Goodwill and intangibles with indefinite lives will no longer be
subject to amortization, but will be subject to at least an annual assessment
for impairment by applying a fair value based test.
The Company will continue to amortize goodwill under its current method until
January 1, 2002. Thereafter, annual and quarterly goodwill amortization will no
longer be recognized. The impact of this change cannot be determined with
certainty at this time. By June 30, 2002, the Company will perform a
transitional fair value based impairment test. If the fair value is less than
the recorded value at January 1, 2002, the Company will recognise any such
impairment as a loss in the March 31, 2002 quarter, as a cumulative effect of a
change in accounting principle.
[INTERTAPE POLYMER GROUP LOGO]