INTERTAPE POLYMER GROUP INC.

INTERTAPE POLYMER GROUP INC.

March 11, 2005 17:59 ET

Intertape Polymer Group Inc. Announces Fourth Quarter and Annual Results for 2004


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: INTERTAPE POLYMER GROUP INC.

NYSE, TSX SYMBOL: ITP

MARCH 11, 2005 - 17:59 ET

Intertape Polymer Group Inc. Announces Fourth Quarter
and Annual Results for 2004

MONTREAL, QUEBEC and BRADENTON, FLORIDA--(CCNMatthews - March 11, 2005)
- Intertape Polymer Group Inc. (NYSE:ITP)(TSX:ITP) -



- Fourth quarter sales were up 14.6% over last year
- Adjusted pretax earnings were up 16.9% over last year


Intertape Polymer Group Inc. (NYSE:ITP)(TSX:ITP) today released results
for the fourth quarter and year ended December 31, 2004. "Our sales
growth for the fourth quarter was particularly strong, and we exceeded
our revenue growth target of 10% for the year," said Intertape Polymer
Group Inc. (IPG) Chairman and Chief Executive Officer, Melbourne F.
Yull. "We made progress in recovering raw material cost increases
through price increases to our customers. Additionally, during the
fourth quarter we announced the closure of two facilities, which should
have a positive effect on our cost structure going forward. Improvements
in our financial and selling, general and administrative cost structures
also helped to offset the pressure of raw material cost increases,
resulting in a 16.9% increase in our adjusted pretax earnings compared
to the same period last year. Net income was up even more significantly,
mainly driven by an adjustment for income taxes recoverable in future
periods."

Operating Results

Sales for the fourth quarter were $180.7 million, up 14.6% compared to
the corresponding quarter last year. The increase was due to unit
growth, price increases, and acquisition-related revenues. Sales for the
year were $692.4 million, up 11.4% compared to 2003.

Gross margin for the fourth quarter was 19.9% compared to 22.0% for the
same quarter last year. The Company was successful in achieving sales
price increases during the fourth quarter of 2004. Raw material cost
increases contributed to the decline in the gross margin. Nonetheless,
gross profit increased by 3.9% compared to the same period in 2003.
Gross margin for the year decreased to 20.7% from 22.4% in the prior
year.

Selling, general and administrative ("SG&A") expenses were $25.8 million
in the fourth quarter of 2004, compared to $24.8 million for the fourth
quarter of 2003. The increase relates to higher sales within the retail
distribution channel, which carries a more expensive selling structure
than other sales channels. "While SG&A expenses increased slightly
compared to the same period last year, as a percent of sales, they were
down from 15.8% in 2003 to 14.3% in 2004," said IPG's Chief Financial
Officer, Andrew M. Archibald, C.A. SG&A expenses were $94.2 million, or
13.6% of sales, for the year, compared to $89.9 million, or 14.5% of
sales, for 2003.

Financial expenses in the fourth quarter were $4.3 million, a 23.0%
decrease compared to $5.6 million for the fourth quarter last year. "The
reduction in financial expenses is the result of the various debt
restructuring activities over the past year," commented Mr. Archibald.
"Assuming interest rates and our outstanding debt remain constant, we
would expect financial expenses for 2005 to be in the range of $17.0
million to $18.0 million." Financial expenses for the year were $24.3
million, excluding the $30.4 million cost of refinancing, compared to
$28.5 million for last year. The lower financial expenses for the year
were also partly the result of a substantial debt repayment at the end
of the third quarter of 2003, which was accomplished with the proceeds
of the $40.8 million common stock issuance in late September 2003.

The Company is including adjusted pretax earnings, a non-GAAP financial
measure, in this discussion of results because it believes the measure
permits more meaningful comparisons of its performance between the
periods presented. See the table below for a reconciliation of adjusted
pretax earnings to net earnings. Adjusted pretax earnings were $4.6
million for the quarter, up 16.9% from $3.9 million for the same quarter
last year. Adjusted pretax earnings were $19.4 million for the year,
compared to adjusted pretax earnings of $17.1 million for the previous
year.



Reconciliation of Net Earnings to Adjusted Pretax Earnings
---------------------------------------------------------------------
Periods ended December 31,
(in millions of US dollars)
Three months Twelve months
---------------------------------------------------------------------
2004 2003 2004 2003
---------------------------------------------------------------------
$ $ $ $
Net earnings - As reported 17.7 5.2 11.4 18.2
Add back:
Income taxes (recovery) (20.5) (4.3) (29.7) (4.1)
---------------------------------------------------------------------
Pretax earnings (2.8) 0.9 (18.4) 14.1
Add back:
Refinancing expense - - 30.4 -
Manufacturing facility
closure costs 7.4 3.0 7.4 3.0
---------------------------------------------------------------------
Adjusted pretax earnings 4.6 3.9 19.4 17.1
---------------------------------------------------------------------
---------------------------------------------------------------------


For the fourth quarter, the Company recorded an income tax recovery of
$20.5 million, of which $19.0 million was due to a reduction in the
Company's valuation allowance for future income tax benefits. This
adjustment was a result of the Company's periodic assessment of its
ability to realize future income tax assets. For the same period in
2003, the Company booked an income tax recovery of $4.2 million. For the
year, the Company recorded an income tax recovery of $29.7 million,
compared to an income tax recovery of $4.1 million for the year 2003,
reflecting primarily the impact of the valuation allowance adjustment in
the fourth quarter of 2004 and the tax effect of the $30.4 million of
refinancing expenses incurred in the third quarter of 2004. For 2005,
the Company expects its effective tax rate to be in the range of 20.0%
to 23.0% and cash taxes to be less than $2.0 million for the year.

Net earnings for the fourth quarter of 2004 were $17.7 million, or $0.43
per share (basic and diluted), compared to net earnings of $5.2 million
or $0.13 per share (basic and diluted) for the fourth quarter of 2003.
Net earnings were $11.4 million for the year, or $0.27 per share
(diluted), compared to net income of $18.2 million, or $0.50 per share
(diluted), for the year 2003.

The Company is including earnings before interest, taxes, depreciation
and amortization ("EBITDA") and Adjusted EBITDA, non-GAAP financial
measures, in this discussion of results because it believes these
measures permit more meaningful comparisons of its performance between
the periods presented. In addition, the Company's covenants contained in
the loan agreement with its lenders require certain debt to Adjusted
EBITDA ratios be maintained, thus EBITDA and Adjusted EBITDA are used by
management and the Company's lenders in evaluating the Company's
performance. A reconciliation of the Company's EBITDA and Adjusted
EBITDA, non-GAAP financial measures, to GAAP net earnings (loss) is set
out in the EBITDA and Adjusted EBITDA reconciliation table below. The
Company's EBITDA for the fourth quarter of 2004 was $9.1 million
compared to $13.9 million for the fourth quarter of 2003. The adjusted
EBITDA was $16.5 million in the fourth quarter of 2004 as compared to
$16.9 million in the fourth quarter of 2003. EBITDA was $65.0 million
for 2004 compared to $70.2 million for 2003. The adjusted EBITDA was
$72.4 million for 2004 compared to $73.2 million in 2003.



EBITDA and Adjusted EBITDA Reconciliation to Net Earnings
---------------------------------------------------------------------
Periods ended December 31,
(in millions of US dollars)
Three months Twelve months
---------------------------------------------------------------------
2004 2003 2004 2003
---------------------------------------------------------------------
$ $ $ $
Net earnings - As reported 17.7 5.2 11.4 18.2
Add back:
Financial expenses,
net of amortization 4.1 5.1 23.0 26.7
Refinancing expense - - 30.4 -
Income taxes (20.5) (4.2) (29.7) (4.1)
Depreciation and amortization 7.8 7.8 29.9 29.4
---------------------------------------------------------------------
EBITDA 9.1 13.9 65.0 70.2
Add back:
Manufacturing facility
closure costs 7.4 3.0 7.4 3.0
---------------------------------------------------------------------
Adjusted EBITDA 16.5 16.9 72.4 73.2
---------------------------------------------------------------------


Cash Flows

Cash flows from operating activities were a net $1.7 million for the
fourth quarter of 2004, compared to $9.2 million for the fourth quarter
2003. While cash from operating activities before non-cash working
capital items was up significantly in 2004, non-cash working capital
items used more cash in 2004 because of higher raw material costs
included in inventories and the planned build-up of inventories to
facilitate the closing of the Montreal, Quebec and Cumming, Georgia
plants at year-end. Cash flows used by operating activities in 2004 were
$4.1 million compared to cash flows from operating activities for 2003
of $40.4 million. The decline in cash flow on an annual basis was also
partly attributable to the make-whole payment of $21.9 million made in
the third quarter of 2004.

Cash used in operating and investing activities totaled $5.0 million in
the fourth quarter of 2004 and was funded by cash on hand at the
beginning of the period. Cash used in operating and investing activities
for the year totaled $41.6 million and was funded by a net increase in
debt.

Balance Sheet

While total debt, net of cash, was increased by 17.4% over the course of
2004, the Company expects the benefits of the debt restructuring
undertaken in the third quarter of 2004 to be reflected in lower annual
financial expenses in future years and an improved repayment schedule
which should provide greater financial flexibility to the Company over
the next few years. As of December 31, 2004, the Company had cash and a
temporary investment of $22.4 million, as well as a committed revolving
credit facility of $75.0 million that remained undrawn. Mr. Archibald
also noted that the Company recently completed a registered exchange
offer for its senior subordinated notes.

Outlook

"We continue to target 10% sales growth for 2005 and are pleased with
our sales so far this year," said Mr. Yull. "Our ability to make
significant bottom line improvement is dependent on our ability to
improve our gross margin. This should occur if we are able to achieve
product price increases, as well as planned cost reductions."

Capital expenditures are expected to be between $23.0 million and $27.0
million for 2005 as the Company continues to invest in equipment to
improve its productivity and expand certain operations vertically, which
at the same time will create new product capabilities.

(All figures in U.S. dollars, unless otherwise stated; December 31,
2004, exchange rate: Cdn $1.2062 equals U.S.$1.00)

Conference Call

A conference call to discuss IPG's fourth quarter results will be held
Monday, March 14, 2005 at 10:00 A.M. Eastern Standard Time. Participants
may dial 1-877-209-0397 (U.S. and Canada) and 1-612-332-1025
(International). The conference call will also be simultaneously webcast
on the Company's website at www.intertapepolymer.com.

You may access a replay of the call by dialing 1-800-475-6701 (U.S. and
Canada), or 1-320-365-3844 (International), and entering the passcode
771687. The recording will be available from Monday, March 14, 2005 at
5:00 P.M. until Monday, March 21, 2005 at 11:59 P.M, Eastern Standard
Time.

About Intertape Polymer Group

Intertape Polymer Group is a recognized leader in the development and
manufacture of specialized polyolefin plastic and paper based packaging
products and complementary packaging systems for industrial and retail
use. Headquartered in Montreal, Quebec and Sarasota/Bradenton, Florida,
the Company employs approximately 2,600 employees with operations in 15
locations, including 10 manufacturing facilities in North America and
one in Europe.

Safe Harbor Statement

Certain statements and information included in this release constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements
of the Company to be materially different from any future results,
performance or achievements expressed or implied in such forward-looking
statements. Additional discussion of factors that could cause actual
results to differ materially from management's projections, estimates
and expectations is contained in the Company's SEC filings. The Company
undertakes no duty to update its forward-looking statements, including
its earnings outlook. This release contains certain non-GAAP financial
measures as defined under SEC rules, including adjusted net earnings,
EBITDA, and adjusted EBITDA. The Company believes such non-GAAP
financial measures improve the transparency of the Company's disclosure,
provide a meaningful presentation of the Company's results from its core
business operations, excluding the impact of items not related to the
Company's ongoing core business operations, and improve the
period-to-period comparability of the Company's results from its core
business operations. As required by SEC rules, the Company has provided
reconciliations of those measures to the most directly comparable GAAP
measures.



Selected Financial Information

Intertape Polymer Group Inc.
Consolidated Earnings
Periods ended December 31,
(In thousands of US dollars,
except per share amounts)
--------------------------------------------------------------------
Three months Twelve months
--------------------------------------------------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
$ $ $ $
Sales 180,744 157,682 692,449 621,321
Cost of sales 144,689 122,975 549,252 482,423
--------------------------------------------------------------------
Gross profit 36,055 34,707 143,197 138,898
--------------------------------------------------------------------

Selling, general and
administrative expenses 25,799 24,841 94,226 89,917
Stock-based compensation 355 130 1,046 130
Research and development 997 212 4,233 3,272
Financial expenses 4,302 5,587 24,253 28,521
Refinancing expense 30,444
Manufacturing facility
closure costs 7,386 3,005 7,386 3,005
--------------------------------------------------------------------
38,839 33,775 161,588 124,845
--------------------------------------------------------------------

Earnings (loss) before
income taxes (2,784) 932 (18,391) 14,053
Income taxes (recovery) (20,455) (4,243) (29,749) (4,125)
--------------------------------------------------------------------
Net earnings 17,671 5,175 11,358 18,178
--------------------------------------------------------------------
--------------------------------------------------------------------

Earnings per share
Basic 0.43 0.13 0.28 0.51
--------------------------------------------------------------------
--------------------------------------------------------------------

Diluted 0.43 0.13 0.27 0.50
--------------------------------------------------------------------
--------------------------------------------------------------------

Consolidated Retained Earnings
Periods ended December 31,
(In thousands of US dollars)
--------------------------------------------------------------------
Three months Twelve months
--------------------------------------------------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
$ $ $ $
Balance, beginning
of period 61,978 63,116 68,291 50,113
Net earnings 17,671 5,175 11,358 18,178
--------------------------------------------------------------------
79,649 68,291 79,649 68,291
Premium on purchase for
cancellation of
common shares 40 40
--------------------------------------------------------------------
Balance, end of period 79,609 68,291 79,609 68,291
--------------------------------------------------------------------
--------------------------------------------------------------------

Common shares
Average number of
shares outstanding

CDN GAAP - Basic 41,273,840 40,870,426 41,186,143 35,956,550
CDN GAAP - Diluted 41,468,992 41,225,776 41,445,864 36,052,320
U.S. GAAP - Basic 41,273,840 40,870,426 41,186,143 35,956,550
U.S. GAAP - Diluted 41,468,992 41,225,776 41,445,864 36,052,320


Intertape Polymer Group Inc.
Consolidated Balance Sheets
As at December 31,
(in thousands of US dollars)
--------------------------------------------------------------------
2004 2003
--------------------------------------------------------------------
$ $
ASSETS
Current assets
Cash and cash equivalents 21,882
Temporary investment 497
Trade receivables
(net of allowance for doubtful
accounts of $4,065; $3,911 in 2003) 101,628 89,297
Other receivables 13,381 11,852
Inventories 90,677 69,956
Parts and supplies 13,618 13,153
Prepaid expenses 7,788 7,924
Future income tax 1,509 2,682
--------------------------------------------------------------------
250,980 194,864
Property, plant and equipment 352,610 354,627
Other assets 16,474 12,886
Future income taxes 36,689 3,812
Goodwill 179,958 173,056
--------------------------------------------------------------------
836,711 739,245
--------------------------------------------------------------------
--------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank indebtedness 13,944
Accounts payable and accrued liabilities 97,849 95,270
Installments on long-term debt 3,032 16,925
--------------------------------------------------------------------
100,881 126,139


Long-term debt 331,095 235,066
Other liabilities 435 530
--------------------------------------------------------------------
432,411 361,735
--------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital stock 289,180 286,841
Contributed surplus 4,326 3,150
Retained earnings 79,609 68,291
Accumulated currency translation adjustments 31,185 19,228
--------------------------------------------------------------------
404,300 377,510
--------------------------------------------------------------------
836,711 739,245
--------------------------------------------------------------------
--------------------------------------------------------------------


Intertape Polymer Group Inc.
Consolidated Cash Flows
As at December 31,
(in thousands of US dollars)
--------------------------------------------------------------------
Three months Twelve months
--------------------------------------------------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
Net earnings 17,671 5,175 11,358 18,178
Non-cash items
Depreciation and
amortization 7,770 7,786 29,889 29,375
Property, plant and
equipment impairment
and other non-cash
charges in connection
with facility closures 5,848 732 5,848 732
Future income taxes (21,341) (5,982) (28,806) (7,148)
Write-off of debt
issue expenses 8,482
Stock-based
compensation expense 355 1,046
Other non-cash items (95) (3,000) (95) (3,000)
--------------------------------------------------------------------
Cash flows from operations
before changes in
non-cash working
capital items 10,208 4,711 27,722 38,137
--------------------------------------------------------------------
Changes in non-cash
working capital items
Trade receivables 5,502 8,616 (11,345) (741)
Other receivables (444) (1,693) (1,308) (1,647)
Inventories (12,112) (2,021) (20,115) (5,139)
Parts and supplies 222 (107) (266) (776)
Prepaid expenses (3,710) (1,957) 202 100
Accounts payable and
accrued liabilities 2,041 1,606 1,051 10,465
--------------------------------------------------------------------
(8,501) 4,444 (31,781) 2,262
--------------------------------------------------------------------
Cash flows from
operating activities 1,707 9,155 (4,059) 40,399
--------------------------------------------------------------------
INVESTING ACTIVITIES
Temporary investment (497) (497)
Property, plant
and equipment (4,869) (3,280) (18,408) (12,980)
Business acquisition (5,500)
Goodwill (6,217)
Other assets (1,328) (752) (13,178) (1,435)
--------------------------------------------------------------------
Cash flows from
investing activities (6,694) (4,032) (37,583) (20,632)
--------------------------------------------------------------------
FINANCING ACTIVITIES
Net change in bank
indebtedness (298) (4,503) (13,967) 4,910
Issue of long-term debt 325,787
Repayment of long-term debt (408) (250,936) (64,329)
Issue of common shares 20 552 2,717 43,009
Common shares purchased
for cancellation (418) (418)
--------------------------------------------------------------------
Cash flows from
financing activities (1,104) (3,951) 63,183 (16,410)
--------------------------------------------------------------------
Net increase (decrease)
in cash and cash
equivalents (6,091) 1,172 21,541 3,357
Effect of foreign
currency translation
adjustments 105 (1,172) 341 (3,357)
Cash, beginning of period 27,868
--------------------------------------------------------------------
Cash and cash equivalents,
end of period 21,882 21,882
--------------------------------------------------------------------
--------------------------------------------------------------------


Supplementary Financial Information

Intertape Polymer Group Inc.
(In thousands of US dollars)
--------------------------------------------------------------------

1. Other receivables

2004 2003
--------------------------------------------------------------------
$ $
Income and other taxes 8,914 7,009
Rebates receivable 1,193 861
Sales taxes 1,316 863
Other 1,958 3,119
--------------------------------------------------------------------
13,381 11,852
--------------------------------------------------------------------
--------------------------------------------------------------------

2. Inventories

2004 2003
--------------------------------------------------------------------
$ $
Raw materials 30,908 18,910
Work in process 14,255 12,583
Finished goods 45,514 38,463


--------------------------------------------------------------------
90,677 69,956
--------------------------------------------------------------------
--------------------------------------------------------------------

3. Other assets

2004 2003
--------------------------------------------------------------------
$ $
Debt issue expenses and other
deferred charges, at amortized cost 14,446 10,460
Loans without interest, various repayment terms 914 877
Other receivables 301 271
Other, at cost 813 1,278
--------------------------------------------------------------------
16,474 12,886
--------------------------------------------------------------------
--------------------------------------------------------------------

4. Long-term debt
Long-term debt consists of the following:

2004 2003
--------------------------------------------------------------------
$ $
a) US$125,000,000 Senior Subordinated Notes 125,000
b) US$200,000,000 Term Loan 199,500
c) US$137,000,000 Series A and B Senior Notes 123,804
d) US$137,000,000 Senior Notes 123,330
e) Obligation under capital lease 7,166
f) Other debt 2,461 4,857
--------------------------------------------------------------------
334,127 251,991
Less: current portion of long-term debt 3,032 16,925
--------------------------------------------------------------------
331,095 235,066
--------------------------------------------------------------------
--------------------------------------------------------------------

5. Income taxes
The provision for income taxes consists of the following:

2004 2003
--------------------------------------------------------------------
$ $
Current (943) 3,023
Future (28,806) (7,148)
--------------------------------------------------------------------
(29,749) (4,125)
--------------------------------------------------------------------
--------------------------------------------------------------------

The net future income tax assets are detailed as follows:

2004 2003
--------------------------------------------------------------------
$ $
Future income tax assets
Trade and other receivables 1,112 1,104
Accounts payable and accrued liabilities 765
Tax credits and loss carry-forwards 104,350 94,719
Other 14,658 5,901
Valuation allowance (16,508) (31,145)
--------------------------------------------------------------------
103,612 71,344
Future income tax liabilities
Inventories 214 311
Property, plant and equipment 64,134 64,539
Accounts payable and accrued liabilities 1,066
--------------------------------------------------------------------
65,414 64,850
--------------------------------------------------------------------
Net future income tax assets 38,198 6,494
--------------------------------------------------------------------
--------------------------------------------------------------------

Net current future income tax assets 1,509 2,682
Net long-term future income tax assets 36,689 3,812
--------------------------------------------------------------------
Total net future income tax assets 38,198 6,494
--------------------------------------------------------------------
--------------------------------------------------------------------


As at December 31, 2004, the Company has $55.7 million of Canadian
operating loss carry-forwards expiring 2007 through 2014 and $175.5
million of US federal and state operating losses expiring 2010 through
2024.

In assessing the realizability of future income tax assets, management
considers whether it is more likely than not that some portion or all of
the future income tax assets will not be realized. Management considers
the scheduled reversal of future income tax liabilities, projected
future taxable income, and tax planning strategies in making this
assessment. The Company expects the future income tax assets, net of the
valuation allowance, as at December 31, 2004, to be realized as a result
of the reversal of existing taxable temporary differences.

As part of the above analysis, the valuation allowance was decreased by
$14.6 million for the twelve months ended December 31, 2004 and
increased $4.5 million for the twelve months ended December 31, 2003.
For the three months ended December 31, 2004, the valuation allowance
was decreased by $19.0 million and for the three months ended December
31, 2003, it was increased by $1.4 million. The remaining valuation
allowance as of December 31, 2004 was $16.5 million.

-30-

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