Intertape Polymer Group Inc. Announces Fourth Quarter and Annual Results for 2005.MONTREAL Montreal (mŏn'trēôl`), Fr. Montréal (môNrāäl`), city (1991 pop. 1,017,666), S Que., Canada, on Montreal island, surrounded by St. Lawrence River and Rivière des Prairies. & BRADENTON Bradenton (brā`dəntən), city (1990 pop. 43,779), seat of Manatee co., SW Fla., on Tampa Bay at the mouths of the Braden and Manatee rivers; inc. 1903. , Fla. -- Intertape Polymer polymer (pŏl`əmər), chemical compound with high molecular weight consisting of a number of structural units linked together by covalent bonds (see chemical bond). Group Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :ITP ITP - Intent to Package )(NYSE NYSE See: New York Stock Exchange :ITP) - Annual sales were up 15.8% over 2004 - Annual operating profit was $59.3 million, up from $48.0 million in 2004 - Fourth quarter sales were up 23.2% over the same quarter last year - Fourth quarter operating profit was $15.2 million, up from $9.9 million for the same quarter last year Intertape Polymer Group Inc. today released results for the fourth quarter and year ended December December: see month. 31, 2005. "During the course of 2005, we successfully met the multiple challenges presented by both the rising costs and supply shortages of raw materials," said Intertape Polymer Group Inc. (IPG IPG Implantable pulse generator, see there ) Chairman and Chief Executive Officer, Melbourne Melbourne, city, Australia Melbourne, city (1991 pop. 2,761,995), capital of Victoria, SE Australia, on Port Phillip Bay at the mouth of the Yarra River. Melbourne, Australia's second largest city, is a rail and air hub and financial and commercial center. F. Yull. "Despite these difficult market conditions, we achieved significant revenue growth, increased our overall gross profit and improved our adjusted net earnings. During this period of rising prices and material shortages, we took advantage of market conditions to improve the mix of products we are selling. While the acquisition in October October: see month. of Flexia Corporation ("Flexia") and Fib-Pak Industries Inc. ("Fib-Pak") contributed positively to our fourth quarter sales and earnings, the lower margins of these products had a dampening effect on our overall gross margin. However, we expect to see improvements on this front as the integration of the operations advances during the course of 2006." Operating Results Sales for the year were $801.8 million, up 15.8% compared to 2004. Excluding revenues related to the Flexia and Fib-Pak acquisition that occurred in 2005, sales were up about 12.5% from $692.4 million for 2004 to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $780 million in 2005. Sales for the fourth quarter were $222.7 million, up 23.2% compared to the corresponding quarter last year. These sales were negatively impacted by $2.8 million as the result of an increase in the provision for doubtful accounts relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc outstanding claims and short payments by existing customers, principally in the retail distribution channel.Selected customers have the contractual right to perform post-audits on prior years' sales and related incentive activities. Included in the $2.8 million of additional allowance for doubtful accounts Allowance for Doubtful Accounts An estimation made by a company and documented on its balance sheet for receivables that might go uncollected. Notes: It is standard practice for a company to have funds set aside for money that cannot be collected. are customer post-audit Post-audit A set of procedures for evaluating a capital budgeting decision after the fact. claims submitted to the Company in 2005 for periods as far back as 2000.Excluding revenues related to the Flexia and Fib-Pak acquisition that occurred in October 2005, sales were up about 10.7% from $180.7 million for the fourth quarter of 2004 to approximately $200 million for the fourth quarter of 2005. This increase was due primarily to selling price increases. Gross profit for the year increased by 15.9% compared to 2004. Gross margin for the year was flat at 20.7%. Gross profit for the quarter increased by 26.9% to $45.8 million mainly due to increased selling prices and the Flexia and Fib-Pak acquisition. In the fourth quarter of 2005, the Company recorded a $3.4 million insurance claim related to the boiler explosion Boiler explosions are catastrophic failures of boilers. As seen today, boiler explosions are of two kinds. One kind is over-pressure in the pressure parts of the steam and water sides. The second kind is explosion in the furnace. that occurred earlier in the year. The Company has reduced cost of sales by $2.0 million with the balance of the claim recorded against an earlier recorded loss provision and the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of the boilers destroyed in the explosion. Gross margin for the fourth quarter was 20.5% compared to 19.9% for the same quarter last year reflecting the improvements generated by price increases, somewhat dampened by the lower margins of Flexia and Fib-Pak products. Selling, general and administrative ("SG&A") expenses were $30.1 million in the fourth quarter of 2005, compared to $25.8 million for the fourth quarter of 2004. Much of the increase was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the SG&A costs of Flexia and Fib-Pak, expenses incurred to support sales activities, increased variable selling costs as a result of higher sales, and approximately $1.2 million in performance bonuses. "While SG&A expenses increased in certain areas compared to the same period last year, as a percent of sales for the quarter, they were down from 14.3% in 2004 to 13.5% in 2005," said IPG's Chief Financial Officer, Andrew M. Archibald Archibald is a given name or surname. As a given name (often shortened to "Archie") it may refer to:
Financial expenses in the fourth quarter were $6.7 million, a 54.7% increase compared to $4.3 million for the fourth quarter last year. The increase was principally because of the increase in borrowings at the end of September September: see month. 2005 to fund the acquisition of Flexia and Fib-Pak and the higher interest rates in the fourth quarter of 2005 compared to the fourth quarter of 2004, reflecting the numerous increases in the U.S. prime rate OverviewIn general, the prime rate runs approximately 300 basis points (or 3 percent) above the federal funds rate. The Federal Open Market Committee (FOMC) meets eight times per year wherein they set a target for the federal funds rate. over the course of this period. "During 2005, interest rates rose steadily throughout the year, reducing the benefit of the Company's 2004 refinancing Refinancing An extension and/or increase in amount of existing debt. . In response to the rising interest rate environment, in June June: see month. and July July: see month. 2005, IPG entered into interest-rate swap agreements that effectively fixed the interest rate on $75.0 million of bank debt for five years," commented Mr. Archibald. Financial expenses for the year were $23.8 million compared to $24.3 million, excluding the $30.4 million cost of refinancing, for last year. For the year, the Company recorded an income tax expense of $1.5 million, compared to an income tax recovery of $29.8 million for the year 2004, this latter amount 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 both the fourth quarter of 2005 and 2004, the Company recorded income tax recoveries, which reflected reductions to the Company's valuation allowance for future income tax benefits of $4.1 million and $19.0 million respectively. These adjustments were a result of the Company's periodic assessment of its ability to realize future income tax assets. Net earnings were $27.8 million for the year, or $0.67 per share (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ), compared to net earnings of $11.4 million, or $0.27 per share (diluted), for the year 2004. Net earnings for the fourth quarter of 2005 were $9.7 million, or $0.24 per share (diluted), compared to net earnings of $17.7 million or $0.43 per share (diluted) for the fourth quarter of 2004. Included in the net earnings of these periods were refinancing expenses, manufacturing facility closure costs, industrial accident costs, and valuation allowance adjustments for future income tax benefits. Excluding these items, and related tax benefits, adjusted net earnings for the fourth quarter of 2005 were $6.1 million or $0.15 per share (diluted) compared to $3.7 million or $0.09 per share (diluted) for the same quarter last year, a 64.9% increase. Adjusted net earnings for 2005 were $26.2 million or $0.63 per share (diluted) compared to $15.4 million or $0.37 per share (diluted) for 2004, a 70.1% increase. The improvement in adjusted net earnings resulted from the increase in gross profit partly offset by higher selling and financial expenses. The Company is including adjusted net earnings, a non-GAAP financial measure, because it believes the measure permits more meaningful comparisons of its core business performance between the periods presented. Adjusted net earnings does not have any standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. meaning prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). by GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and is therefore unlikely to be comparable to similar measures presented by other issuers. A reconciliation of adjusted net earnings to GAAP net earnings is set forth below. The Company is including earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
As announced in December 2005, the Company intends to sell a portion of its interest in the combined coated products operation and flexible intermediate bulk container A Flexible Intermediate Bulk Container, FIBC , big bag, bulk bag, or super sack is a standardized container in large dimensions for storing and transporting and storing for example sand, fertilizers , granules of plastics or other dry products. (FIBC FIBC Flexible Intermediate Bulk Container ) business through an initial public offering of the combined business using a Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. Income Trust.The Company's announced plan was to file a prospectus A document, notice, circular, advertisement, letter, or communication in written form or by radio or television that offers any security for sale, or confirms the sale of any security. in the first quarter of 2006. While it is now unlikely that the Company will file a prospectus during the first quarter of 2006, the Company's intention remains to file a prospectus at the earliest opportunity. Cash Flows From a cash perspective, free cash flow for the year was $8.3 million, an increase of $30.8 million compared to 2004. The Company generated $3.8 million of free cash flow in the quarter, an increase of $7.0 million compared to the same quarter last year. Free cash flow is defined by the Company as cash flows from operating activities less expenditures for plant, property and equipment (capital expenditures). The Company is including free cash flow, a non-GAAP financial measure, because it is used by management and the Company's investors in evaluating the Company's performance. Free cash flow does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. A reconciliation of free cash flow to cash flows from operating activities, the most directly comparable GAAP measure, is set forth below. "Our cash flow was favourably Adv. 1. favourably - showing approval; "he reviewed the play favorably" favorably favourably U.S. favorably adverb 1. affected by increased sales and profitability," commented Mr. Archibald. "However, the improvement in free cash flow for 2005 was not as substantial as anticipated, particularly in the fourth quarter, as the rapid escalation es·ca·late v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates v.tr. To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf. v.intr. in raw material costs and the resulting increase in inventory values, offset the inventory unit reduction achieved in the fourth quarter." The decrease in accounts payable and accrued expenses Accrued Expense An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection. was due to lack of inventory pre-buying at December 31, 2005 compared to December 31, 2004 and the fact that the Company was taking increased advantage of prompt pay discounts from suppliers at the end of 2005. Balance Sheet Total debt, net of cash, was increased by $23.5 million over the course of 2005, primarily as a result of the Flexia and Fib-Pak acquisition. While total debt, net of cash, increased, compared to shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. , the ratio remained constant at the December 31, 2004 level of 77%. As of December 31, 2005, the Company had cash of $10.1 million, as well as a committed revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility of $75.0 million, of which $22.0 million has been drawn, including $7.0 million for letters of credit.
Reconciliation of Net Earnings to Adjusted Net Earnings
--------------------------------------------------------------------
Periods ended December 31,
(in millions of US dollars)
Three months Twelve months
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $
Net earnings - as reported 9.7 17.7 27.8 11.4
Add back:
Refinancing expense - - - 30.4
Manufacturing facility closure and
industrial accident costs (0.7) 7.4 1.4 7.4
Income taxes (recovery) (1.7) (20.5) 1.5 (29.8)
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Adjusted pretax earnings 7.3 4.6 30.7 19.4
Subtract:
Income taxes - at effective
tax rate(i) 1.2 0.9 4.5 4.0
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Adjusted net earnings 6.1 3.7 26.2 15.4
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(i) Effective tax rate 16.4% 19.5% 14.6% 20.6%
(in US dollars per share - diluted)
Net earnings - as reported 0.24 0.43 0.67 0.28
Adjusted net earnings 0.15 0.09 0.63 0.37
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Operating profit is not a financial measure under GAAP in Canada or
the United States. The Company's management uses operating profit to
measure and evaluate the profit contributions of the Company's
product offerings as well as the contribution by channel of
distribution.
Because "operating profit" is a non-GAAP financial measure, companies
may present similar titled items determined with differing
adjustments. Presented below is a table reconciling this non-GAAP
financial measure with the most comparable GAAP measurement.
Operating profit is defined by the Company as gross profit less SG&A
expenses and stock-based compensation.
Reconciliation of Operating Profit to Gross Profit
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Periods ended December 31,
(in millions of US dollars)
Three months Twelve months
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $
Gross profit 45.8 36.1 166.0 143.2
Subtract:
SG&A expense 30.1 25.8 104.8 94.2
Stock-based compensation 0.5 0.4 1.9 1.0
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Operating profit 15.2 9.9 59.3 48.0
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EBITDA and Adjusted EBITDA Reconciliation to Net Earnings
--------------------------------------------------------------------
Periods ended December 31,
(in millions of US dollars)
Three months Twelve months
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $
Net earnings - As reported 9.7 17.7 27.8 11.4
Add back:
Financial expenses,
net of amortization 6.3 4.1 22.4 23.0
Refinancing expense - - - 30.4
Income taxes (recovery) (1.7) (20.5) 1.5 (29.7)
Depreciation and amortization 7.5 7.8 31.1 29.9
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EBITDA 21.8 9.1 82.8 65.0
Add back:
Manufacturing facility closure
and industrial accident costs (0.7) 7.4 1.4 7.4
--------------------------------------------------------------------
Adjusted EBITDA 21.1 16.5 84.2 72.4
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Reconciliation of Cash Flows from Operating Activities to Free Cash
Flow
--------------------------------------------------------------------
Periods ended December 31,
(in millions of US dollars)
Three months Twelve months
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $
Cash flows from (used in)
operating activities - as reported 11.9 1.7 32.3 (4.1)
Subtract:
Property, plant and
equipment expenditures 8.1 4.9 24.0 18.4
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Free cash flow 3.8 (3.2) 8.3 (22.5)
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(All figures in U.S. dollars, unless otherwise stated; December 31,
2005, exchange rate: Cdn $1.1659 equals U.S.$1.00)
Conference Call A conference call to discuss IPG's fourth quarter results will be held Wednesday Wednesday: see week. , March 1, 2006 at 10:00 A.M. Eastern Time. Participants may dial 1-800-762-4758 (U.S. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of ) and 1-480-629-9035 (International). The conference call will also be simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics 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 820431. The recording will be available from Wednesday, March 1, 2006 at 5:00 P.M. until Wednesday, March 8, 2006 at 11:59 P.M, Eastern Time. About Intertape Polymer Group Intertape Polymer Group is a recognized leader in the development and manufacture of specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. polyolefin polyolefin synthetic material used for surgical sutures, e.g. in polyethylene and polypropylene sutures. plastic and paper based packaging products and complementary packaging systems for industrial and retail use.Headquartered in Montreal, Quebec Quebec, city, Canada Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. and Sarasota/Bradenton, Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and , the Company employs approximately 3,000 employees with operations in 19 locations, including 14 manufacturing facilities in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and one in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). .Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Certain statements and information included in this release constitute "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Federal Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. 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, adjusted EBITDA, operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. and free cash flow. The Company believes such non-GAAP financial measures improve the transparency (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. of the Company's disclosure, provide a meaningful presentation of the Company's results from its core business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets by 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.
Selected Financial Information
Intertape Polymer Group Inc.
Consolidated Earnings
Periods ended December 31,
(In thousands of US dollars,
except per share amounts)
(Unaudited)
-------------------------------------------------------------------
Three months Twelve months
-------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------
$ $ $ $
Sales 222,688 180,744 801,844 692,449
Cost of sales 176,927 144,689 635,845 549,252
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Gross profit 45,761 36,055 165,999 143,197
-------------------------------------------------------------------
Selling, general and
administrative expenses 30,083 25,799 104,814 94,226
Stock-based compensation
expense 488 355 1,911 1,046
Research and development 1,257 997 4,725 4,233
Financial expenses 6,655 4,302 23,799 24,253
Refinancing expense 30,444
Manufacturing facility
closure and industrial
accident costs (760) 7,386 1,431 7,386
-------------------------------------------------------------------
37,723 38,839 136,680 161,588
-------------------------------------------------------------------
Earnings (loss) before
income taxes 8,038 (2,784) 29,319 (18,391)
Income taxes (recovery) (1,689) (20,455) 1,528 (29,749)
-------------------------------------------------------------------
Net earnings 9,727 17,671 27,791 11,358
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Earnings per share
Basic 0.24 0.43 0.67 0.28
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Diluted 0.24 0.43 0.67 0.27
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Consolidated Retained Earnings
Periods ended December 31,
(In thousands of US dollars)
(Unaudited)
-------------------------------------------------------------------
Three months Twelve months
-------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------
$ $ $ $
Balance, beginning
of period 97,657 61,978 79,609 68,291
Net earnings 9,727 17,671 27,791 11,358
-------------------------------------------------------------------
107,384 79,649 107,400 79,649
Premium on purchase
for cancellation
of common shares 223 40 239 40
-------------------------------------------------------------------
Balance, end of period 107,161 79,609 107,161 79,609
-------------------------------------------------------------------
-------------------------------------------------------------------
Weighted average number
of common shares outstanding
CDN GAAP - Basic 41,039,278 41,273,840 41,174,316 41,186,143
CDN GAAP - Diluted 41,157,568 41,468,992 41,308,918 41,445,864
U.S. GAAP - Basic 41,039,278 41,273,840 41,174,316 41,186,143
U.S. GAAP - Diluted 41,157,568 41,468,992 41,308,918 41,445,864
Intertape Polymer Group Inc.
Consolidated Balance Sheets
December 31
(In thousands of US dollars)
-------------------------------------------------------------------
2005 2004
-------------------------------------------------------------------
(Unaudited) (Audited)
-------------------------------------------------------------------
$ $
ASSETS
Current assets
Cash and cash equivalents 10,134 21,882
Temporary investment 497
Trade receivables, net of allowance
for doubtful accounts of $7,574
($4,065 in December 2004) 124,440 101,628
Other assets and receivables 17,125 13,381
Inventories 105,565 90,677
Parts and supplies 14,836 13,618
Prepaid expenses 8,406 7,788
Future income taxes 16,142 1,509
-------------------------------------------------------------------
296,648 250,980
Property, plant and equipment 362,827 352,610
Other assets 21,071 20,663
Future income taxes 24,014 36,689
Goodwill 184,756 179,958
-------------------------------------------------------------------
889,316 840,900
-------------------------------------------------------------------
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LIABILITIES
Current liabilities
Bank indebtedness 15,000
Accounts payable and accrued
liabilities 104,256 101,115
Installments on long-term debt 2,784 3,032
-------------------------------------------------------------------
122,040 104,147
Long-term debt 328,113 331,095
Pension and post-retirement benefits 4,313 923
Other liabilities 435 435
-------------------------------------------------------------------
454,901 436,600
-------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital stock 287,187 289,180
Contributed surplus 6,237 4,326
Retained earnings 107,161 79,609
Accumulated currency
translation adjustments 33,830 31,185
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434,415 404,300
--------------------------------------------------------------------
889,316 840,900
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Intertape Polymer Group Inc.
Consolidated Cash Flows
Periods ended December 31,
(In thousands of US dollars)
(Unaudited)
-------------------------------------------------------------------
Three months Twelve months
-------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
Net earnings 9,727 17,671 27,791 11,358
Non-cash items
Depreciation and
amortization 7,493 7,770 31,131 29,889
Property, plant and
equipment impairment
and other non-cash
charges in connection
with facility closures 99 5,848 299 5,848
Future income taxes (1,678) (21,341) 714 (28,806)
Insurance claim (3,679) (3,679)
Write-off of deferred
debt issue expenses 8,482
Stock-based compensation
expense 488 355 1,911 1,046
Pension and post-retirement
benefits funding in excess
of amounts expensed (479) (858) (479) (858)
Other non-cash items (95) (95)
-------------------------------------------------------------------
Cash flows from operations
before changes in non-cash
working capital items 11,971 9,350 57,688 26,864
-------------------------------------------------------------------
Changes in non-cash
working capital items
Trade receivables 9,874 5,502 (10,750) (11,345)
Other receivables (2,756) (444) 535 (1,308)
Inventories (375) (12,112) (1,366) (20,115)
Parts and supplies (546) 222 (1,145) (266)
Prepaid expenses (2,463) (3,710) (95) 202
Accounts payable and
accrued liabilities (3,815) 2,899 (12,500) 1,909
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(81) (7,643) (25,321) (30,923)
-------------------------------------------------------------------
Cash flows from
operating activities 11,890 1,707 32,367 (4,059)
-------------------------------------------------------------------
INVESTING ACTIVITIES
Temporary investment (497) 489 (497)
Property, plant
and equipment (8,081) (4,869) (24,026) (18,408)
Business acquisition (28,118) (28,118) (5,500)
Goodwill (300)
Other assets (210) (1,328) (3,852) (13,178)
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Cash flows from
investing activities (36,409) (6,694) (55,807) (37,583)
-------------------------------------------------------------------
FINANCING ACTIVITIES
Net change in
bank indebtedness (13,529) (298) 15,000 (13,967)
Issue of long-term debt 325,787
Repayment of long-term debt (668) (408) (3,032) (250,936)
Issue of common shares 14 20 89 2,717
Common shares purchased
for cancellation (418) (340) (418)
-------------------------------------------------------------------
Cash flows from
financing activities (14,183) (1,104) 11,717 63,183
-------------------------------------------------------------------
Net increase (decrease)
in cash and cash
equivalents (38,702) (6,091) (11,723) 21,541
Effect of foreign
currency translation
adjustments 127 105 25 341
Cash and cash equivalents,
beginning of period 48,759 27,868 21,882
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Cash and cash equivalents,
end of period 10,184 21,882 10,184 21,882
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Supplementary Financial Information
Intertape Polymer Group Inc.
(In thousands of US dollars)
-------------------------------------------------------------------
-------------------------------------------------------------------
1. Other assets and receivables
2005 2004
-------------------------------------------------------------------
$ $
Income and other taxes receivable 8,724 8,914
Rebates receivable 1,348 1,193
Sales taxes receivable 923 1,316
Insurance claim 3,400
Other 2,730 1,958
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17,125 13,381
-------------------------------------------------------------------
-------------------------------------------------------------------
2. Inventories
2005 2004
-------------------------------------------------------------------
$ $
Raw materials 37,662 30,908
Work in process 16,205 14,255
Finished goods 51,698 45,514
-------------------------------------------------------------------
105,565 90,677
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3. Other assets
2005 2004
-------------------------------------------------------------------
$ $
Debt issue expenses and other
deferred charges,at amortized cost 11,681 13,941
Loans to officers and directors,
including loans regarding the exercise of
stock options, without interest,
various repayment terms 924 914
Pension plan prepaid benefits 5,107 4,694
Other receivables 1,292 301
Other, at cost 2,067 813
-------------------------------------------------------------------
21,071 20,663
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4. Long-term debt
2005 2004
-------------------------------------------------------------------
Long-term debt consists of the following: $ $
a) US$125,000,000 Senior Subordinated Notes 125,000 125,000
b) US$200,000,000 Term Loan 197,500 199,500
c) Obligation under capital lease 6,982 7,166
d) Other debt 1,415 2,461
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330,897 334,127
Less: Current portion of long-term debt 2,784 3,032
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328,113 331,095
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5. Income taxes
The provision for income taxes
consists of the following:
2005 2004
-------------------------------------------------------------------
$ $
Current 814 (943)
Future 714 (28,806)
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1,528 (29,749)
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-------------------------------------------------------------------
The net future income tax
assets are detailed as follows:
2005 2004
-------------------------------------------------------------------
$ $
Future income tax assets
Trade and other receivables 2,029 1,112
Accounts payable and accrued liabilities 346
Tax credits and loss carry-forwards 98,633 104,350
Other 11,209 14,658
Valuation allowance (12,446) (16,508)
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99,771 103,612
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-------------------------------------------------------------------
Future income tax liabilities
Inventories 198 214
Property, plant and equipment 59,267 64,134
Accounts payable and accrued liabilities 1,066
Pension and post-retirement benefits 150
-------------------------------------------------------------------
59,615 65,414
-------------------------------------------------------------------
Net future income tax assets 40,156 38,198
-------------------------------------------------------------------
-------------------------------------------------------------------
Net current future income tax assets 16,142 1,509
Net long-term future income tax assets 24,014 36,689
--------------------------------------------------------------------
Total net future income tax assets 40,156 38,198
-------------------------------------------------------------------
-------------------------------------------------------------------
As at December 31, 2005, the Company has $69.3 million of Canadian
operating loss carry-forwards expiring 2007 through 2015 and $153.9
million of US federal and state operating losses expiring 2018
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,
2005, 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 $4.1 million for the twelve months ended December 31, 2005 and
$14.6 million for the twelve months ended December 31, 2004. For the
three months ended December 31, 2005 and 2004, the valuation
allowance was decreased by $4.1 million and $19.0 million,
respectively. The remaining valuation allowance as of December 31,
2005 was $12.4 million.
Intertape Polymer Group Inc. (NYSE:ITP) (TSX:ITP) |
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