INTERTAPE POLYMER GROUP INC.
NYSE : ITP
TSX : ITP

INTERTAPE POLYMER GROUP INC.

July 28, 2005 18:35 ET

Intertape Polymer Group Inc. Announces Second Quarter Results

MONTREAL, QUEBEC and BRADENTON, FLORIDA--(CCNMatthews - July 28, 2005) - Intertape Polymer Group Inc. (TSX:ITP)(NYSE:ITP)



- Sales up 10.7% compared to last year
- Adjusted net earnings up 7.0% compared to last year
- Free cash flow of $7.6 million


Intertape Polymer Group Inc. (TSX:ITP)(NYSE:ITP) today released results for its second quarter ended June 30, 2005.

Sales for the second quarter were $190.3 million, up 10.7% from $171.9 million for the same quarter of 2004, while the Company reported net earnings of $5.4 million or $0.13 per share (basic and diluted) compared to $5.7 million or $0.14 per share (basic and diluted) for the same period last year. The quarter's results included total charges of $1.1 million for costs associated with manufacturing facility closures and an industrial accident. Excluding the manufacturing facility closure and industrial accident costs and related tax benefits, adjusted net earnings for the second quarter of 2005 were $6.1 million or $0.15 per share (basic and diluted) compared to $5.7 million or $0.14 per share (basic and diluted) for the same quarter last year. 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. A reconciliation of adjusted net earnings to GAAP net earnings is set forth at the end of this press release.

"We were able to achieve double-digit sales growth again this quarter, despite a softening of the market for film products and an industry-wide shortage of synthetic rubber, a key raw material for certain of our tape adhesives," said Intertape Polymer Group Inc. ("IPG") Chairman and Chief Executive Officer, Melbourne F. Yull. "While we were able to satisfy some of our customers' demand with alternative products, we were not able to meet all of their demands, which resulted in lower sales volumes compared to last year. This shortage in synthetic rubber is expected to be rectified by the end of 2005, but it could take longer. Higher sales were the result of price increases implemented over the past few quarters to recover increased raw material costs."

"Our net earnings, however, did not grow proportionately as they were impacted negatively by higher raw material costs, including that of synthetic rubber, costs related to an industrial accident and increased staffing as a result of the organizational realignment that we began at the end of 2004," said Mr. Yull. "The sales price increases that have been implemented over the past while have allowed us to recover raw material cost increases, as well as some gross margin, but we have not yet been able to get back to historical gross margin levels. The additional staffing costs this quarter are an investment in our new organizational structure which we believe will begin to reap benefits in the second half of this year."

With completion of the preliminary investigation of the accident at its Columbia, South Carolina facility, the Company has established a loss provision totaling approximately $1.1 million, almost all of which was recorded in the second quarter. Most of the loss provision relates to applicable insurance policy deductibles.

"Decreased financial expenses continue to have a positive impact on our net earnings as they were down 18.2% in the second quarter of 2005 compared to the second quarter last year, reflecting the benefits of the refinancing undertaken in the third quarter of last year," said IPG's Chief Financial Officer, Andrew M. Archibald, C.A. "From a cash perspective, we were able to generate $7.6 million of free cash flow in the quarter. This was in part due to improved collection of trade receivables and the receipt of a tax refund during the quarter. The Company's target for free cash flow in 2005 remains $25.0 million to $30.0 million." Free cash flow is defined 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. A reconciliation of free cash flow to cash flows from operating activities, the most directly comparable GAAP measure, is set forth at the end of this press release.

The Company is also including earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA, both non-GAAP financial measures, because these measures 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, both non-GAAP financial measures, to GAAP net earnings is set forth in the EBITDA reconciliation table at the end of this press release. The Company's EBITDA for the second quarter of 2005 was $19.6 million compared to $20.9 million for the second quarter of 2004. The adjusted EBITDA was $20.7 million in the second quarter of 2005 as compared to $20.9 million in the second quarter of 2004.

Sales for the first six months of 2005 were $378.0 million, up 13.2% from $334.0 million for the same period in 2004. Net earnings for the first six months of 2005 were $11.5 million or $0.28 per share (basic and diluted) compared to $7.9 million or $0.19 per share (basic and diluted) for the same period of the preceding year. Adjusted net earnings for the first six months of 2005 were $12.6 million or $0.31 per share (basic) and $0.30 per share (diluted) compared to $7.9 million or $0.19 per share (basic and diluted) for the same period of the preceding year.

"While sales growth for the first half of the year has been good, our outlook for full year 2005 sales has been adjusted downwards from the range of $775 million to $790 million to a range of $755 million to $775 million, which would represent annual sales growth in the range of 9% to 12%," said Mr. Yull. "The impact of the synthetic rubber shortage, which had an impact on both sales and gross margins this past quarter, is expected to continue through the summer and possibly into next year."



Reconciliation of Net Earnings to Adjusted Net Earnings

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(in millions of US dollars)
For the three months ended For the six months ended
June 30 June 30
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
$ $ $ $
Net earnings
- as reported 5.4 5.7 11.5 7.9
Add back:
Manufacturing facility
closure and industrial
accident costs
(after-tax) 0.7 1.1
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Adjusted net earnings 6.1 5.7 12.6 7.9
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Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA

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(in millions of US dollars)
For the three months ended For the six months ended
June 30 June 30
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
$ $ $ $
Net earnings
- as reported 5.4 5.7 11.5 7.9
Add back:
Financial expenses,
net of amortization 5.6 7.0 10.9 13.3
Income taxes 0.4 0.7 1.7 0.4
Depreciation and
amortization 8.2 7.5 16.1 14.6
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EBITDA 19.6 20.9 40.2 36.2
Add back:
Manufacturing facility
closure and industrial
accident costs
(after-tax) 1.1 1.8
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Adjusted EBITDA 20.7 20.9 42.0 36.2
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Reconciliation of Cash Flows from Operating Activities to Free Cash
Flow

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(in millions of US dollars)
For the three months ended For the six months ended
June 30 June 30
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2005 2004 2005 2004
---------------------------------------------------------------------
$ $ $ $
Cash flows from
(used in) operating
activities -
as reported 11.7 (0.6) 9.9 5.8
Subtract:
Property, plant and
equipment expenditures 4.1 4.1 9.1 9.9
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Free cash flow 7.6 (4.7) 0.8 (4.1)
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(All figures in U.S. dollars, unless otherwise stated; June 30, 2005, exchange rate: Cdn $1.2263 equals U.S.$1.00)

Conference Call

A conference call to discuss IPG's 2005 second quarter results will be held Friday, July 29, 2005 at 10:00 A.M. Eastern Standard Time. Participants may dial 1-800-553-0358 (U.S. and Canada) and 1-612-332-0636 (International). The conference call will also be simultaneously 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 788816. The recording will be available from Friday, July 29, 2005 at 3:15 P.M. until Friday, August 5, 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 non-GAAP measures to the most directly comparable GAAP measures.

MONTREAL, QUEBEC--(CCNMatthews - July 28, 2005) - Intertape Polymer Group Inc. (TSX:ITP)(NYSE:ITP)



Selected Financial Information

Intertape Polymer Group Inc.
Consolidated Earnings
Periods ended June 30,
(In thousands of US dollars, except per share amounts)

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Three months Six months
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
$ $ $ $

Sales 190,282 171,934 377,979 334,034
Cost of sales 150,895 134,097 299,469 264,083
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Gross profit 39,387 37,837 78,510 69,951
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Selling, general and
administrative
expenses 24,844 22,793 48,761 45,100
Stock based
compensation 483 351 938 421
Research and
development 1,224 1,153 2,235 2,115
Financial expenses 5,918 7,235 11,567 14,003
Manufacturing facility
closure and
industrial accident
costs 1,087 1,806
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33,556 31,532 65,307 61,639
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Earnings before
income taxes 5,831 6,305 13,203 8,312
Income taxes 399 654 1,738 370
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Net earnings 5,432 5,651 11,465 7,942
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Earnings per share
Basic 0.13 0.14 0.28 0.19
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Diluted 0.13 0.14 0.28 0.19
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Consolidated Retained Earnings
Periods ended June 30,
(In thousands of US dollars)

---------------------------------------------------------------------
Three months Six months
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
$ $ $ $
Balance, beginning
of period 85,642 70,582 79,609 68,291
Net earnings 5,432 5,651 11,465 7,942
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91,074 76,233 91,074 76,233

Premium on purchase
for cancellation
of common shares 11 11
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Balance, end of
period 91,063 76,233 91,063 76,233
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Common shares
Average number of
shares outstanding

Cdn GAAP - Basic 41,214,969 41,215,111 41,226,215 41,092,785
Cdn GAAP - Diluted 41,550,160 41,396,403 41,493,093 41,429,232
US GAAP - Basic 41,214,969 41,215,111 41,226,215 41,092,785
US GAAP - Diluted 41,550,160 41,396,403 41,493,093 41,429,232



Intertape Polymer Group Inc.
Consolidated Cash Flows
Periods ended June 30,
(In thousands of US dollars)

---------------------------------------------------------------------
Three months Six months
2005 2004 2005 2004
---------------------------------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
Net earnings 5,432 5,651 11,465 7,942
Non-cash items
Depreciation and
amortization 8,234 7,514 16,142 14,637
Other non-cash
charges in
connection with
facility closures 81 127
Future income taxes 203 310 1,372 (586)
Stock-based
compensation
expense 483 351 938 421
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Cash flows from
operations before
changes in non-cash
working capital
items 14,433 13,826 30,044 22,414
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Changes in non-cash
working capital
items
Trade receivables 2,801 (2,163) (9,100) (12,248)
Other receivables 2,082 2,017 487
Inventories (6,338) (3,366) (9,535) (3,878)
Parts and supplies (96) 43 (409) (148)
Prepaid expenses 449 1,039 132 2,140
Accounts payable
and accrued
liabilities (1,616) (9,935) (3,285) (2,997)
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(2,718) (14,382) (20,180) (16,644)
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Cash flows from
operating activities 11,715 (556) 9,864 5,770
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INVESTING ACTIVITIES
Property, plant
and equipment (4,069) (4,055) (9,058) (9,875)
Business acquisition (5,500)
Other assets (800) (501) (1,721) (1,064)
Goodwill (58) (300) (58)
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Cash flows from
investing activities (4,869) (4,614) (11,079) (16,497)
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FINANCING ACTIVITIES
Net change in bank
indebtedness 15,907 5,000 20,840
Issue of long-term
debt 787
Repayment of
long-term debt (1,164) (2,477) (1,703) (2,477)
Issue of common
shares 68 1,408 71 2,378
Common shares
purchased for
cancellation (340) (340)
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Cash flows from
financing activities (1,436) 14,838 3,028 21,528
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Net increase (decrease)
in cash position 5,410 9,668 1,813 10,801
Effect of currency
translation
adjustments (246) (180) (448) (1,313)
Cash position,
beginning of period 18,083 21,882
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Cash position, end
of period 23,247 9,488 23,247 9,488
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Intertape Polymer Group Inc.
Consolidated Balance Sheets
As at
(In thousands of US dollars)

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June 30, 2005 June 30, 2004 December 31, 2004
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$ $ $
ASSETS
Current assets
Cash and cash
equivalents 23,247 9,488 21,882
Temporary investment 489 497
Trade receivables, net
of allowance for
doubtful accounts
of $4,463 ($4,037 in
June 2004, $4,065
in December 2004) 110,167 101,201 101,628
Other receivables 11,283 11,353 13,381
Inventories 99,632 73,213 90,677
Parts and supplies 13,979 13,301 13,618
Prepaid expenses 7,642 5,761 7,788
Future income taxes 1,509 2,682 1,509
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267,948 216,999 250,980
Property, plant and
equipment 343,839 357,227 352,610
Other assets 17,397 13,181 16,474
Future income taxes 34,731 4,457 36,689
Goodwill 179,767 176,231 179,958
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843,682 768,095 836,711
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LIABILITIES
Current liabilities
Bank indebtedness 5,000
Accounts payable
and accrued
liabilities 94,059 91,834 97,849
Installments on
long-term debt 2,802 1,958 3,032
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101,861 93,792 100,881
Long-term debt 329,539 290,240 331,095
Other liabilities 435 530 435
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431,835 384,562 432,411
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SHAREHOLDERS' EQUITY
Capital stock 288,911 289,219 289,180
Contributed surplus 5,264 3,701 4,326
Retained earnings 91,063 76,233 79,609
Accumulated currency
translation adjustments 26,609 14,380 31,185
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411,847 383,533 404,300
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843,682 768,095 836,711
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