1
Intertape Polymer Group Inc. -
3647 Cortez Road West, Bradenton, Florida, U.S.A. 34210 -
Tel: (941) 727-5788 - Fax: (941) 727-5293
[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. 2001 Second Quarterly Report
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.
August 29, 2001 By: /s/ Angela Massaro-Fain
-----------------------------------
Angela Massaro-Fain
Advertising and Investor Relations Manager
Intertape Polymer Group Inc.
2
2001
SECOND
QUARTERLY
REPORT
Intertape
Polymer
Group Inc.
[LOGO] INTERTAPE POLYMER GROUP(TM)
3
SECOND QUARTERLY REPORT SAFE HARBOR STATEMENT
The business, financial condition, results of operations, cash flows and
prospects, and the prevailing market price and performance of the Company's
common stock, may be adversely affected by a number of factors, including the
matters discussed below. Certain statements and information set forth in this
Quarterly Report as well as other written or oral statements made from time to
time by the Company or by our authorized executive officers on our 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
for forward-looking statements contained in the United States Federal Private
Securities Litigation Reform Act of 1995, and it sets forth this statement and
these risk factors in order to comply with such safe harbor provisions. The
reader should note that the Company's forward-looking statements speak only as
of the date of this Quarterly Report or when made and IPG undertakes no duty or
obligation to update or revise its forward-looking statements, whether as a
result of new information, future events or otherwise. 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 risk, uncertainties and other factors that IPG's
stockholders and prospective investors should consider include, but are not
limited to, the following: the packaging industry is cyclical and is sensitive
to changing economic conditions; the Company is in the midst of an industry and
general economic slowdown that could materially adversely impact the Company's
financing business; risks associated with pricing, volume and continued strength
of markets where the Company's products are sold; the Company's ability to
successfully integrate the operations and information systems of acquired
companies with its existing operations, and information system, including risks
and uncertainties relating to its ability to achieve projected earnings
estimates, achieve administrative and operating cost savings and anticipated
synergies; and the effect of competition on the Company's ability to maintain
margins on existing or acquired operations.
[LOGO] INTERTAPE POLYMER GROUP(TM)
4
SECOND QUARTERLY REPORT 2001 MANAGEMENT'S DISCUSSION & ANALYSIS
REVIEW OF OPERATIONS
SALES
Net sales declined 15.6% or $26.0 million for the three month period ended June
30th 2001 as compared to the same period in 2000; and 10.9% or $36.5 million for
the comparable six month periods. Approximately one-half of the second quarter
sales decline was experienced during April. Commencing with the fourth quarter
of 2000, the Company began to see a decline in orders for all its markets. This
slowdown has been confirmed by both the Company's suppliers and its major
customers. Since May, the Company has been maintaining an order rate that would
imply that the economy has perhaps leveled off. In addition, the strength of the
US$ has made the commodity side of export markets unattractive and consequently,
Management decided to withdraw from some of these markets. While revenue derived
during both the three months and six months ended June 2001 include those of
United Tape (UTC), these revenues are offset by both the loss of sales to a
competitor in the retail market as well as sales to UTC which are no longer
considered as third party sales. Prior to the acquisition of UTC, the Company
sold to UTC as one of its retail distribution customers.
Management is of the opinion that revenue for the year should be approximately
7% to 9% lower than that of 2000. The economy continues to be unpredictable.
However, the Company has implemented various programs to increase market share.
One of these is the Regional Distribution Center (RDC) strategy. As at June
30th, all five RDCs are operational and order fulfillment rates have increased
throughout the product line. The RDCs will provide a significant value added to
IPG. Combined with the most diverse offering of packaging products and a wide
variety of new products, the RDCs should bring about an increase in volume in
North America.
GROSS PROFIT AND GROSS MARGINS
Gross margins declined 3.8% to 20.5% for the quarter ended June 30, 2001 and
declined 0.9% for the six month period. Value added (the difference between the
cost of a pound of raw material as compared to the selling price of a pound of
product) have remained steady for the quarter and six months. The decline in
revenue experienced during the second quarter negatively impacted the Company's
ability to maintain gross margins and gross profit. During January 2001,
Management announced cost reduction programs of approximately $12.0 million
which was followed up with a further reduction of approximately $9.0 million.
Management believes it generally requires three fiscal quarters to realize the
full benefit of these reductions. As a result, the second quarter gross profit
and margins were marginally improved by the January announced cuts. Management
believes that the first quarter of 2002 will be the first quarter that the full
effect of all cost reductions will be realized.
SELLING, GENERAL AND ADMINISTRATION EXPENSES
Selling, general and administration (SG&A) costs were $18.1 million for the
second quarter of 2001 as compared to $17.9 million for the same period last
year; and were $39.3 million and $37.9 million for the six month period 2001 and
2000 respectively. SG&A for 2001 include those of UTC which was acquired during
the third quarter of 2000. The SG&A costs of UTC are approximately $2.0 million
per quarter.
OPERATING PROFITS
For the second quarter, operating profits were $10.9 million or 7.7% of sales as
compared to $22.8 million or 13.6% for the same quarter last year. The six month
comparisons are $28.5 million and 9.4% compared to $41.0 million and 12.1%. The
decline in operating profits is as a direct result of the decline in sales.
EARNINGS BEFORE INTEREST, TAXES AND DEPRECIATION AND
AMORTIZATION COSTS (EBITDA).
Adjusted for the effect of non recurring items as highlighted in the
Consolidated Earnings Statement, EBITDA for the second quarter of 2001 was $16.3
million as compared to $27.5 million for the same period last year; and were
$39.2 million and $55.8 million for the comparable six month periods. The
decline in EBITDA is as a direct result of lower sales volume.
[LOGO] INTERTAPE POLYMER GROUP(TM)
5
2001 SECOND QUARTERLY REPORT MANAGEMENT'S DISCUSSION & ANALYSIS
EARNINGS
Earnings before income taxes and non-recurring items were $0.2 million for the
second quarter of 2001 as compared to $13.2 million for the same period last
year; and were $6.5 million and $22.6 million for the comparable six month
periods. The decline in earnings was mostly the result of the effect of lower
sales volume; an increase in amortization of goodwill costs related to the
acquisition of UTC, and an increase in financial costs both related to the
addition debt to acquire the assets of UTC as well as an increase in interest
rate spreads.
EARNINGS PER SHARE (EPS) - CANADIAN GAAP
For the second quarter of 2001, basic and fully diluted EPS were a loss of $0.10
as compared to $0.34 for the same period last year; and were $0.05 for the six
months ended June 2001 as compared to $0.72 last year. After taking into account
the various non recurring items, the second quarter results for both basic and
fully diluted EPS are $0.00 for 2001 as compared to $0.34 last year; and $0.17
for the six months ended June 2001 as compared to $0.72 for the same period last
year.
LIQUIDITY AND CAPITAL RESOURCES
CHANGES IN CASH FLOW
SECOND QUARTER 2001 COMPARED TO 2000
Cash from operations before the funding of changes in working capital was $5.6
million for 2001 as compared to $19.8 million last year. Working capital
contributed an additional $9.3 million for 2001 as compared to a consumption of
($18.4 million) last year. This is a change in working capital of $27.7 million
when comparing the two quarters. An overall increase in account payables and
accrued liabilities contributed $29.3 of this change. Inventory reductions
contributed a further $5.1 million. This strong increase in funds from working
capital was partially eroded by an increase in accounts receivables of $6.2
million and an increase in prepaid costs of $0.5 million.
SIX MONTHS ENDED JUNE 2001 COMPARED TO 2000
Cash from operations before the funding of changes in working capital was $18.0
million for 2001 as compared to $42.7 million last year. Working capital
contributed an additional $10.0 million for 2001 as compared to a consumption
($36.5 million) last year. This is a change in working capital of $46.5 million
when comparing the two six month periods. An overall increase in account
payables and accrued liabilities contributed $23.3 of this change and a decrease
in accounts receivables contributed $19.5 million. Inventory reductions
contributed a further $2.9 million. Finally, there was an increase in prepaid
costs of $0.8 million.
The net inventory reduction of $5.1 million was accomplished by a decrease in
raw material level of $8.1 million less an increase in finished goods on $3.0
million. The increase in finished goods was required to stock the new RDC's
during the period. Management anticipates that finished goods will be reduced by
approximately $10.0 by the end of the year and that raw material inventory
should see a further reduction of $2.0 million.
CAPITAL EXPENDITURES
Capital expenditures were $5.5 million for the second quarter of 2001 and $17.7
million year to date as compared to $12.5 million for the second quarter of 2000
and $20.4 for the six months last year. The level of expenditures during the
second quarter of 2001 reflects a planned slow down in capital spending. The
Company has sufficient capacity and the current economy does not require that
the Company further expand this capacity. The expenditures during the first half
of 2001 were required to complete projects started in 2000 and new equipment to
make certain facilities more productive and assist in overall efficiencies.
Management anticipates capital expenditures to be approximately $6.0 million for
the balance of the year. During the second quarter of 2001, the Company sold and
leased back an asset for $8.0 million.
OTHER FINANCING ACTIVITIES
During the second quarter, the Company repaid a Senior Unsecured Note in the
amount of $8.0 million and reduced its overall bank borrowings by $8.8 million.
This bank debt reduction was accomplished through the use of internally
generated funds.
[LOGO] INTERTAPE POLYMER GROUP(TM)
6
2001 SECOND QUARTERLY REPORT MANAGEMENT'S DISCUSSION & ANALYSIS
CREDIT FACILITIES
During July, 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 six quarters ending December 31st 2002; and a $60.0
million four year term loan with semi-annual payments commencing eighteen months
after funding.
Proceeds of these three facilities will be used to repay all bank indebtedness
outstanding at the time of closing of the facility which is anticipated to be
approximately $121 million. Interest rates on the three facilities will
initially be 395 bps over Libor, and will be adjusted downwards in the event
certain financial thresholds are achieved. The Company currently pays 395 bps
over Libor on most of its bank facilities. The first facility contemplates the
issuance of security on receivables and inventory to a maximum of $50.0 million;
the second and third facilities will provide that security issued thereunder be
shared rateably between the holders of the Company's Senior Unsecured Notes and
the Company's bankers. It is currently contemplated that such security will be
in the form of a lien against all other assets of the Company. Until such
closing, the Company's present facilities remain in place.
[LOGO] INTERTAPE POLYMER GROUP(TM)
7
2001 SECOND QUARTERLY REPORT CONSOLIDATED EARNINGS
AND RETAINED EARNINGS
(Unaudited/Using Canadian GAAP
CONSOLIDATED EARNINGS
(In thousands of U.S. dollars; except per share amounts)
FOR THE PERIOD ENDED JUNE 30, THREE MONTHS SIX MONTHS
----------------------------- ----------------------- ------------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
$ $ $ $
SALES 141,265 167,231 300,128 336,589
Cost of sales 112,249 126,513 232,339 257,630
---------- ---------- ---------- ----------
GROSS PROFIT 29,016 40,718 67,789 78,959
---------- ---------- ---------- ----------
20.5% 24.3% 22.6% 23.5%
---------- ---------- ---------- ----------
Selling, general and administrative
expenses 18,090 17,891 39,258 37,923
Amortization of goodwill 1,797 1,522 3,540 3,072
Research and development 1,198 1,409 2,366 2,734
Financial expenses 7,736 6,652 16,172 12,647
---------- ---------- ---------- ----------
28,821 27,474 61,336 56,376
Severances 2,000 -- 2,690 --
Start-up of Regional Distribution Centers 2,300 -- 2,300 --
Gain on sale of interest in joint venture -- -- -- (5,500)
---------- ---------- ---------- ----------
33,121 27,474 66,326 50,876
---------- ---------- ---------- ----------
Earnings (loss) before income taxes (4,105) 13,244 1,463 28,083
Income taxes (recovery) (1,392) 3,707 -- 7,862
---------- ---------- ---------- ----------
NET EARNINGS (LOSS) FOR THE PERIOD (2,713) 9,537 1,463 20,221
========== ========== ========== ==========
EARNINGS (LOSS) PER SHARE
CDN GAAP -- Basic (0.10) 0.34 0.05 0.72
CDN GAAP -- Diluted (0.10) 0.33 0.05 0.70
---------- ---------- ---------- ----------
COMMON SHARES
Average number of shares outstanding
CDN GAAP -- Basic 28,199,535 28,297,621 28,109,576 28,294,756
CDN GAAP -- Diluted 27,304,725 28,716,590 28,363,604 28,785,865
---------- ---------- ---------- ----------
CONSOLIDATED RETAINED EARNINGS
(In thousands of U.S. dollars)
FOR THE PERIOD ENDED JUNE 30, THREE MONTHS SIX MONTHS
----------------------------- ----------------------- ------------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
$ $ $ $
Retained earnings -- beginning of period 120,985 98,992 116,966 88,422
Net earnings (loss) for the period (2,713) 9,537 1,463 20,221
Premium on purchase for cancellation of
common shares -- -- (157) (114)
Dividends paid -- -- (3,006) (3,006)
---------- ---------- ---------- ----------
RETAINED EARNINGS -- END OF PERIOD 118,272 105,523 118,272 105,523
========== ========== ========== ==========
INTERTAPE POLYMER GROUP(TM)
8
2001 SECOND QUARTERLY REPORT CONSOLIDATED CASH FLOWS
AND RETAINED EARNINGS
(Unaudited/Using Canadian GAAP
FOR THE PERIOD ENDED JUNE 30, THREE MONTHS SIX MONTHS
----------------------------- ----------------------- ------------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
$ $ $ $
OPERATING ACTIVITIES
Net earnings (loss) for the period (2,713) 9,537 1,463 20,221
Non-cash items
Depreciation and amortization 8,516 7,554 16,556 15,069
Deferred income taxes (recovery) (192) 2,708 -- 5,778
Write-off of capital assets -- -- -- 1,600
---------- ---------- ---------- ----------
CASH FROM OPERATIONS BEFORE FUNDING OF
CHANGES IN NON-CASH WORKING CAPITAL ITEMS 5,611 19,799 18,019 42,668
---------- ---------- ---------- ----------
Changes in non-cash working capital items
Trade and other receivables (7,860) (1,623) (1,927) (21,470)
Inventories and parts and supplies 4,980 (115) 4,453 1,557
Prepaid expenses 1,224 1,723 1,007 223
Accounts payable and accrued liabilities 10,928 (18,399) 6,499 (16,817)
---------- ---------- ---------- ----------
9,272 (18,414) 10,032 (36,507)
---------- ---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES 14,883 1,385 28,051 6,161
========== ========== ========== ==========
INVESTING ACTIVITIES
Capital assets and construction in progress,
net of investment tax credits (5,450) (12,546) (17,736) (20,416)
Proceed on sale of capital assets 8,000 -- 8,000 4,254
Other assets (750) (866) (1,980) 20,272
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES 1,800 (13,412) (11,716) 4,110
========== ========== ========== ==========
FINANCING ACTIVITIES
Net change in bank indebtedness (8,819) 20,019 (6,216) (1,539)
Repayment of long-term debt (8,425) 50 (8,972) (787)
Issue of common shares 839 43 853 125
Common shares purchased for cancellation -- -- (923) (254)
Dividends paid -- (3,006) -- (3,006)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES (16,405) 17,106 (15,258) (5,461)
========== ========== ========== ==========
NET INCREASE IN CASH DURING THE PERIOD 278 5,079 1,077 4,810
Effect of foreign currency translation
adjustments (278) (1,230) (1,077) (961)
---------- ---------- ---------- ----------
CASH POSITION, BEGINNING OF PERIOD -- -- -- --
========== ========== ========== ==========
CASH POSITION, END OF PERIOD -- 3,849 -- 3,849
========== ========== ========== ==========
INTERTAPE POLYMER GROUP(TM)
9
2001 SECOND QUARTERLY REPORT CONSOLIDATED BALANCE SHEET
In thousands of U.S. dollars
(unaudited / Using Canadian GAAP
AS AT JUNE 30, AS AT DECEMBER 31,
------------------ ------------------
2001 2000 2000
------- ------- ------------------
$ $ $
ASSETS
Current assets
Cash - 3,849 -
Trade receivables 101,479 106,949 97,478
Other receivables 9,425 15,055 11,659
Inventories 83,333 84,799 89,264
Parts and supplies 11,369 10,301 10,069
Prepaid expenses 5,114 3,987 6,114
Future income tax assets 10,776 11,085 10,810
------- ------- -------
221,496 236,025 225,394
Capital assets and construction in progress 373,287 352,488 374,753
Other assets 9,299 9,925 10,636
Goodwill, at amortized cost 231,651 215,066 234,257
------- ------- -------
TOTAL ASSETS 835,733 813,504 845,040
======= ======= =======
LIABILITIES
Current liabilities
Bank indebtedness 121,059 51,271 127,333
Accounts payable and accrued liabilities 86,262 69,607 79,811
Installments on long-term debt 1,377 10,152 9,532
------- ------- -------
208,698 131,030 216,676
Long-term debt 275,865 326,682 276,684
Other liabilities 4,500 14,697 4,500
Future income tax liabilities 37,419 42,903 37,538
------- ------- -------
TOTAL LIABILITIES 526,482 515,312 535,398
======= ======= =======
SHAREHOLDERS' EQUITY
Capital stock and share purchase warrants 186,990 185,145 186,908
Retained earnings 118,272 105,523 116,966
Accumulated foreign currency translation adjustments 3,989 7,524 5,768
------- ------- -------
TOTAL SHAREHOLDERS' EQUITY 309,251 298,192 309,642
------- ------- -------
TOTAL LIABILITY AND SHAREHOLDERS' EQUITY 835,733 813,504 845,040
======= ======= =======
[INTERTAPE POLYMER GROUP(TM)]
10
Second Quarterly Report 2001 Notes to Financial Statements
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
six month periods ended June 30, 2001 and 2000 and December 31, 2000 as well as
its results of operations and its cash flow for the three month and six month
periods ended June 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:
In Thousands of US Dollars
Earnings (loss) per Share
THREE MONTHS SIX MONTHS
-------------------- -------------------
FOR THE PERIODS ENDED JUNE 30, 2001 2000 2001 2000
------- ------- ------- -------
$ $ $ $
Net earnings (loss) applicable
to common shares (2,713) 9,537 1,463 20,221
------- ------- ------- -------
Weighted average number of
common shares outstanding 28,120 28,298 28,110 28,295
Effect of dilutive stock options
and warrants(a) -- 419 254 491
------- ------- ------- -------
Weighted average number
of diluted common shares
outstanding 28,120 28,717 28,364 28,786
Basic earnings (loss) per share (0.10) 0.34 0.05 0.72
Diluted earnings (loss) per share (0.10) 0.33 0.05 0.70
------- ------- ------- -------
(a) Diluted earnings per share is calculated by adjusting outstanding shares,
assuming any dilutive effects of stock options and warrants. For the three month
period ended June 30, 2001, the effect of stock options and warrants were not
included, as the effect would be anti-dilutive.
NOTE 4.
SEVERANCES
A further 8% reduction in the Company's overall workforce was implemented during
June 2001. As at June 30, 2001, virtually all of the notifications had been
given to employees and 88% of the reduction was effective. Of the total cost of
the program, $2.0 million is charged to the three month period ended June 30,
2001 and $.69 million relates to the three month period ended March 31, 2001. As
at June 30, 2001, a provision of $1.5 million in respect of a program of
workforce reduction was reflected in the consolidated accounts payable and
accrued liabilities.
[intertape polymer groupTM logo]
11
Second Quarterly Report 2001 Notes to Financial Statements
In thousands of U.S. dollars; except per share amounts.
(Unaudited) / Using Canadian GAAP
NOTE 5.
BANK INDEBTEDNESS AND LONG-TERM-DEBT
During July, the Company accepted a term sheet provided by the Company's
bankers. The term sheet provides for three facilities as follows:
o 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;
o a $40.0 million term loan repayable over six quarters ending December 31st
2002;
o and a $60.0 million four year term loan with semi-annual payments
commencing eighteen months after funding.
Proceeds of these three facilities will be used to repay all bank indebtedness
outstanding at the time of closing, of approximately $121.0 million. Interest
rates on the three facilities will initially be 395 bps over Libor, and will be
adjusted downwards by as much as 300bps 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.
NOTE 6.
DIFFERENCES IN ACCOUNTING BETWEEN
THE UNITED STATES OF AMERICA AND CANADA
A) 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 charge of $2.6 million in the
three month period ended June 30, 2001, which would have no tax consequence for
the Company at this point, to 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 increased by $2.6 million, $0.09 and $0.10 respectively
for the three month period ended June 30, 2001 and net earnings, basic earnings
per share and diluted earnings per share would have been reduced by $2.6
million, $0.09 and $0.09 respectively for the six months ended June 30, 2001 and
there would be no impact for the three month and six month periods ended June
30, 2000.
B) 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 existing at June 30, 2001 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 and if the fair
value is less than the recorded value at January 1, 2002, the Company will
recognize an impairment loss in the March 31, 2002 quarter, as a cumulative
effect of a change in accounting principle.
[LOGO] INTERTAPE POLYMER GROUP(TM)