<PAGE>   1

2000

TWO THOUSAND ANNUAL REPORT

INTERTAPE
POLYMER
GROUP INC.




[INTERTAPE POLYMER GROUP(TM) LOGO]


                                       33
<PAGE>   2



IPG Corporate Profile

--------------------------------------------------------------------------------


         Intertape Polymer Group Inc. (IPG) is a recognized leader in the
development and manufacture of specialized polyolefin plastic & paper packaging
products and complementary packaging systems. Headquartered in Montreal, Quebec,
the Company has strategically grown to support operations in 26 locations
including 20 manufacturing facilities, with approximately 2,700 employees.

         IPG's advanced manufacturing technologies offer the flexibility to
produce a wide range of products that reflect the needs of our customers.
Products sold through IPG distributors include Intertape(R) brand hot-melt,
acrylic and natural rubber pressure-sensitive carton sealing tapes,
water-activated carton sealing tape, masking tape, cloth duct tape, HVAC tape,
electrical/electronic tape, automotive high-performance and a variety of
specialty tapes. Other products include Exlfilm(R) brand shrink film;
StretchFlex(R) brand stretch wrap; Interpack(R) brand packaging equipment,
carton sealers, case erectors, shrink packaging, ink jet printers and labeling
systems. Examples of products sold directly to end users include a wide range of
Nova(TM) brand woven polyolefin fabrics and Intertape(R) brand flexible
intermediate bulk containers (FIBC).

     Since its inception in 1981, IPG has become a major presence in North
America by focusing on large niche markets, continuing its momentum of
successful rapid growth and remaining a low cost producer. With this strategy,
IPGs' competitively priced products are sold to both a broad range of
industrial/specialty distributors, retail stores and large end-users in diverse
industries. These industries include the aeronautical, agricultural, automotive,
beverage, chemical, construction, food, forest, geotextile, mining,
pharmaceutical, paper, recreational, retail, sports and transportation
industries.

         The Company's financial strength establishes the foundation for
continued organic growth, acquisitions and new product development. These
combine to form the basis for continued expansion in both current and new
markets.

         Intertape Polymer Group Inc. is a publicly traded company with its
common shares listed on the New York Stock Exchange and The Toronto Stock
Exchange under the Stock Symbol "ITP".






[LOGO - INTERTAPE POLYMER GROUP(TM)]




                                       34
<PAGE>   3


                                                               Table of Contents
--------------------------------------------------------------------------------

Table of Contents

Financial Highlights ......................................................    2

2000 Share Trading Data ...................................................    3

Message to Shareholders ...................................................    4

Management's Discussion and Analysis ......................................    6

Consolidated Quarterly Statements of Earnings .............................    7

Management's Responsibility for Financial Statements ......................   18

Auditor's Report to the Shareholders ......................................   18

Consolidated Financial Statements .........................................   19

IPG Locations .............................................................   40

Other Information ...........................................  Inside back cover

Notice of Annual and Special Meeting ........................  Inside back cover


Corporate Headquarters

   110 E Montee de Liesse
   Montreal, Quebec
   Canada, H4T 1N4

   Investor Relations Tel: 866-202-4713
   Fax:   514-731-5477
   Web:   www.intertapepolymer.com
   Email: itp$info@intertapeipg.com

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
Annual 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 Annual 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
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)]


                                       35



<PAGE>   4

Financial Highlights
--------------------------------------------------------------------------------

This data should be read in conjunction with the Consolidated Financial
Statements of the Company and the Notes thereto and Management's Discussion and
Analysis of Financial Condition and Results of Operations.

(In thousands of U.S. dollars except per share data, selected ratios and trading
volume information.)

<TABLE>
<CAPTION>

YEARS ENDED DECEMBER 31,                                     2000            1999            1998
                                                           --------        --------        --------
<S>                                                         <C>             <C>             <C>
RESULTS FROM OPERATIONS                                        $               $               $
 Consolidated sales                                         653,915         569,947         378,030
 Net earnings (Cdn GAAP)                                     33,422           8,098          28,751
 Net earnings (U.S. GAAP)                                    33,422           8,098          28,751
 Cash from operations before funding of changes in
  non-cash working capital items                             57,932          36,130          57,922
                                                           --------        --------        --------

PER COMMON SHARE

 Net earnings (Cdn GAAP)                                       1.18            0.29            1.14
 Net earnings (U.S. GAAP)                                      1.18            0.29            1.14
 Cash from operations before funding of changes in
  non-cash working capital items                               2.05            1.31            2.31
 Book value after restructuring charges (Cdn GAAP)            10.98            9.97            7.71
 Book value after restructuring charges (U.S. GAAP)           10.98            9.97            7.71
                                                           --------        --------        --------

FINANCIAL POSITION

 Working capital                                              8,718          68,937         (11,313)
 Total assets (Cdn GAAP)                                    845,040         815,006         622,152
 Total assets (U.S. GAAP)                                   845,040         815,006         622,152
 Total debt                                                 286,216         338,094         211,844
 Shareholders' equity (Cdn GAAP)                            309,642         282,003         194,249
 Shareholders' equity (U.S. GAAP)                           309,642         282,003         194,249
                                                           --------        --------        --------
</TABLE>

[LOGO - intertape polymer group(TM)]


                                       36




<PAGE>   5


                                                            Financial Highlights
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                            2000               1999               1998
                                                 ----------         ----------         ----------
<S>                                               <C>                <C>                <C>
SELECTED RATIOS

 Working Capital                                        1.04               1.48               0.94
 Debt/Capital Employed (Cdn GAAP)                       0.48               0.55               0.52
 Debt/Capital Employed (U.S. GAAP)                      0.48               0.55               0.52
 Return on equity (Cdn GAAP)                            10.8%               2.9%              14.8%
 Return on equity (U.S. GAAP)                           10.8%               2.9%              14.8%
                                                  ----------         ----------         ----------

STOCK INFORMATION

 Weighted average shares o/s (Cdn GAAP)++             28,328             27,679             25,124
 Weighted average shares o/s (U.S. GAAP)++            28,328             27,679             25,124

Toronto Stock Exchange:
 Market price at year end                         $    11.00         $    40.80         $    39.00
 High: 52 weeks                                   $    41.00         $    46.30         $    39.00
 Low: 52 weeks                                    $    11.00         $    35.50         $    25.75
 Volume: 52 weeks++                                   14,053             10,611              9,361

New York Stock Exchange:
 Market price at year end in U.S. $               $     7.31         $    28.19         $    25.50
 High: 52 weeks in U.S. $                         $    28.19         $    30.94         $    25.50
 Low: 52 weeks in U.S. $                          $     7.19         $    24.06         $    16.25
 Volume: 52 weeks++                                    4,929              1,264              1,381
                                                  ----------         ----------         ----------
</TABLE>

++ In thousands

2000 SHARE TRADING DATA
SYMBOL: ITP

TORONTO STOCK EXCHANGE
----------------------
<TABLE>
<CAPTION>
                      HIGH          LOW          CLOSE        ADV*
                   ---------     ---------     ---------     ------
                                  Canadian $                   #
<S>                <C>           <C>           <C>           <C>
1st Quarter        $   41.00     $   15.20     $   16.30     61,637
2nd Quarter        $   28.30     $   15.80     $   25.75     47,165
3rd Quarter        $   27.00     $   20.00     $   20.00     41,873
4th Quarter        $   22.00     $   11.00     $   11.00     73,234
</TABLE>


NEW YORK STOCK EXCHANGE
-----------------------
<TABLE>
<CAPTION>
                      HIGH          LOW          CLOSE        ADV*
                   ---------     ---------     ---------     ------
                                    U.S. $                     #
<S>                <C>           <C>           <C>           <C>
1st Quarter**      $   28.19     $   10.63     $   11.38     23,315
2nd Quarter**      $   19.00     $   10.81     $   17.26     14,551
3rd Quarter**      $   18.00     $   13.56     $   13.56     12,463
4th Quarter**      $   14.75     $    7.19     $    7.31     28,283
</TABLE>


<TABLE>
<CAPTION>
AVERAGE DAILY VOLUME                     TOTAL
--------------------                    -------
<S>                                      <C>
1st Quarter                              84,952
2nd Quarter                              61,716
3rd Quarter                              54,336
4th Quarter                             101,517
</TABLE>

*  Average Daily Volume
** Prior to August 16, 1999 stock was traded on the American Stock
   Exchange (AMEX).



                                            [LOGO - intertape polymer group(TM)]

                                       37



<PAGE>   6


Message to Shareholders
--------------------------------------------------------------------------------

Dear Shareholders,

     During the first nine months, the Company focused on the integration issues
that surfaced at the end of 1999. Our priority was to validate and correct our
systems. This was completed during the third quarter of 2000 and the results
have put us in a position of confidence with respect to asset valuation and the
ability to successfully communicate with and service our customers. As a result,
the Company is returning to what it does best, expanding revenues and increasing
bottom line.

     Now we can focus on our customers and implement our strategy to provide
them with unique value-added programs to reduce their transaction costs as well
as improve their cash flow. In doing so, we must first regain the trust of our
customers and with that, we will quickly regain revenues lost during 2000. We
are already seeing results during the first quarter of 2001 with 90% plus
"on-time deliveries" as opposed to 40% in 2000; a dramatic improvement which we
expect to continue throughout the year.

     The Company has moved ahead with providing efficiencies in the supply
chain. During the latter part of the year, our B2B and EDI capabilities were
perfected and tested in the market. Transaction costs for both IPG and our
customers, will be significantly reduced by using these tools and we expect that
most of our clients will rapidly embrace this new technology. Five Regional
Distribution Centers (RDCs) will swing into full operation by June 2001. These
centers are designed to at least double our customers' inventory turns of IPG
products. This is a value-added feature that no one in our industry can match.
We of course will benefit from lower logistics costs as well as an anticipated
surge in volume.

     Along with these improvements, the Company has concentrated on the
development of new distribution channels for its new as well as existing
products. In support of these efforts, the assets of United Tape Company
(United) were acquired in late August. United services the $500 million plus
retail market and will provide substantial growth for us in the oncoming years.
We have also started to leverage our manufacturing and product development
expertise into the Electronic, Aerospace, HVAC and other OEM markets; all new
avenues to create growth. With all of these elements in place, the sales force
has returned to its traditional aggressive mode.

[UNITED LOGO]

     Our existing markets are continuing to grow, and I cannot help but be
excited with our new product developments. We have an extremely strong product
line, which has been augmented by these new and proprietary products that touch
virtually all areas of the economy. This diversity by its nature will allow the
Company to provide double-digit growth in relatively small bites... a very
powerful advantage.




[LOGO - intertape polymer group(TM)]

                                       38





<PAGE>   7


                                                         Message to Shareholders
--------------------------------------------------------------------------------


     There are numerous examples of these new products in all areas of our
business. Some of the most notable for 2000: are Exlfilmplus(TM) LTG shrink
film, which revolutionized the use of light gauge shrink film; patent-pending
Pallet-Free(TM) FIBCs which now provide a replacement for expensive corrugated
bulk boxes; and patent-pending Nova-Stat(TM) static dissipative fabric which is
used in FIBCs and other applications where there is a risk of explosion due to
static discharge. Additionally, we introduced PG-511 a NEW paper masking tape
combines the high performance of natural rubber adhesive with a value price.

     The tools to manage our business are now in place. Performance in all areas
can be measured and acted on. Our focus is now growth. We will continue to
realize the potential of new markets, introduce innovative products, expand and
improve both manufacturing and distribution, and develop stronger customer
relationships...all avenues for continued growth.

     Finally, the employees in every sector of our business met the challenges
presented to them during the year and their dedication enabled us to quickly
correct the deficiencies that hindered IPG during the integration of our
acquisitions and systems. My thanks to them.


/s/ Melbourne F. Yull


Melbourne F. Yull
Chairman & Chief Executive Officer
May 19, 2001




                                            [LOGO - intertape polymer group(TM)]


                                       39
<PAGE>   8


Management's Discussion and Analysis
--------------------------------------------------------------------------------

OVERVIEW

1999

On March 28, 2000, the fourth quarter and annual financial results for 1999 were
released and detailed that 1999 earnings had been negatively impacted by issues
related to the total integration of the new enterprise-wide resource planning
system, the reorganization of customer service, and issues related to
integration, transition and non-recurring charges. During 1999, the Company
consolidated four separate non-year 2000 (Y2K) compliant legacy systems
inherited with the acquisitions of Tape, Inc., American Tape Co. (ATC or
American Tape), Anchor Continental, Inc. (Anchor) and Rexford Paper Company
(Rexford), as well as an older in-house system. This complex systems integration
contributed to significant inaccuracies in unit-of-measure and pricing history
files, order fulfillment and tracking routines. The reorganization of customer
service was completed during the fourth quarter of 1999, and should have been
positive for the Company's customers as procedures were installed to facilitate
a "one order for all products" process. However, complications with the new
phone systems combined with the aforementioned Management Information Systems
(MIS) issues, caused order placement obstacles for customers resulting in a
slow-down in orders during December of 1999 which impacted results for 1999 and
2000. Unit-of-measure and pricing inaccuracies resulted in improper inventory
valuations and levels.

Furthermore, the Company also detailed the effect on 1999 earnings of higher
than anticipated costs which were incurred due to extended lead times to acquire
equipment to automate and reduce waste in certain operations. The costs of
rationalizing plants, products and brands were higher than expected due to
manufacturing process changes and increased R&D expenditures. Finally, the
acquisition of Central Products Company (CPC or Central Products) postponed the
Company's fourth quarter 1999 plans to eliminate duplicate warehouses until a
full assessment of plant rationalization and markets was completed. These
factors resulted in an unusual charge against cost of sales.

An evaluation was carried out to assess the value of the account receivables and
inventories due to the effect of both pricing and unit-of-measure issues. This
resulted in an increase in the reserve for doubtful accounts and inventory. In
addition, during the last three fiscal years, IPG had actively pursued and
acquired suitable companies in line with its strategy to maintain a leading
position in the packaging industry. The costs related to certain acquisitions
that had been previously pursued and abandoned during the fourth quarter; as
well as the finalization of the costs incurred to relocate key Management to
IPG's corporate office in Sarasota, Florida resulted in a non-recurring charge.

2000

During the third quarter of 2000, the last of the problems set forth above that
impacted 1999 earnings were overcome. During the fourth quarter of 2000 a review
was conducted of receivable and inventory balances and a further charge to
earnings of $9.5 million was recorded. Management believes that the identified
problems related to both integration and systems difficulties have been resolved
and that these charges reflect the financial impact of these issues. The Company
recently integrated the operations of Spinnaker Electrical Tape Company (SETco)
and Central Products and does not anticipate significant further difficulties
with respect to systems integration.

At various sections of the following, the discussion takes into account the 1999
and 2000 non-recurring charges. These sections have been clearly noted as
including non-recurring charges.




[LOGO - intertape polymer group(TM)]


                                       40




<PAGE>   9


                                   Consolidated Quarterly Statements of Earnings
--------------------------------------------------------------------------------
                        (In thousands of U.S. dollars, except per share amounts)


<TABLE>
<CAPTION>
                                  1ST QUARTER               2ND QUARTER               3RD QUARTER               4TH QUARTER
                           -------------------------  ------------------------  ------------------------  -------------------------
                                2000          1999        2000         1999         2000         1999         2000         1999
                           -----------   -----------  -----------  -----------  -----------  -----------  -----------   -----------
                                 $             $            $            $            $            $            $            $
<S>                         <C>           <C>          <C>          <C>          <C>          <C>          <C>           <C>
SALES                          169,358       121,471      167,231      133,234      166,356      161,470      150,970       153,772
Cost of sales                  131,117        86,593      126,513       96,711      121,612      118,893      121,305       143,125
                           -----------   -----------  -----------  -----------  -----------  -----------  -----------   -----------
GROSS PROFIT                    38,241        34,878       40,718       36,523       44,744       42,577       29,665        10,647
                           -----------   -----------  -----------  -----------  -----------  -----------  -----------   -----------
Selling, general and
 administrative expenses        20,032        16,098       17,891       15,959       21,306       19,918       23,863        33,355
Amortization of goodwill         1,550         1,224        1,522        1,256        1,663        1,436        1,805         1,535
Research and development         1,325           813        1,409          766        1,073        1,003        1,302         1,319
Financial expenses               5,995         5,249        6,652        4,901        7,345        5,806        7,213         6,193
Gain on sale of interest
 in joint venture               (5,500)         --           --           --           --           --           --            --
                           -----------   -----------  -----------  -----------  -----------  -----------  -----------   -----------
                                23,402        23,384       27,474       22,882       31,387       28,163       34,183        42,402
                           -----------   -----------  -----------  -----------  -----------  -----------  -----------   -----------

Earnings (losses) before
  income taxes                  14,839        11,494       13,244       13,641       13,357       14,414       (4,518)      (31,755)
Income taxes (recovery)          4,155         3,333        3,707        3,957        3,741        4,180       (8,103)      (11,774)
                           -----------   -----------  -----------  -----------  -----------  -----------  -----------   -----------

NET EARNINGS (LOSSES)           10,684         8,161        9,537        9,684        9,616       10,234        3,585       (19,981)
                           ===========   ===========  ===========  ===========  ===========  ===========  ===========   ===========


EARNINGS (LOSS) PER SHARE

Cdn GAAP - Basic - US $           0.38          0.32         0.34         0.34         0.34         0.36         0.13         (0.71)
Cdn GAAP - Diluted - US $         0.37          0.30         0.33         0.34         0.33         0.35         0.13         (0.71)
U.S. GAAP - Basic - US $          0.38          0.32         0.34         0.34         0.34         0.36         0.13         (0.71)
U.S. GAAP - Diluted - US $        0.37          0.30         0.33         0.34         0.33         0.35         0.13         (0.71)
                           ===========   ===========  ===========  ===========  ===========  ===========  ===========   ===========


AVERAGE NUMBER OF
SHARES OUTSTANDING

Cdn GAAP - Basic            28,300,781    25,836,000   28,297,621   28,296,915   28,342,803   28,531,518   28,380,530    28,356,241
Cdn GAAP - Diluted          28,879,770    26,769,000   28,716,590   29,262,328   28,763,582   29,560,516   28,565,564    28,320,327
U.S. GAAP - Basic           28,300,781    25,836,000   28,297,621   28,296,915   28,342,803   28,531,518   28,380,530    28,356,241
U.S. GAAP - Diluted         28,879,770    26,769,000   28,716,590   29,262,328   28,763,582   29,560,516   28,565,564    28,320,327
                           ===========   ===========  ===========  ===========  ===========  ===========  ===========   ===========
</TABLE>

Note:  In the 4th quarter of 2000, Canadian GAAP adopted the US GAAP definition
       of the diluted earnings per share retroactively.



                                            [LOGO - intertape polymer group(TM)]


                                       41




<PAGE>   10


Management's Discussion and Analysis
--------------------------------------------------------------------------------

SALES
In Millions of U.S. Dollars

[Bar Graph]

REVIEW OF OPERATIONS

SALES

Intertape Polymer Group's consolidated sales increased by 14.73% to $653.9
million for the year 2000; and by 51.0% to $570.0 million for the year 1999 from
$378.0 for 1998. All sales continue to be derived from packaging products made
from various combinations of resins and papers which are then converted into
high quality, value-added products. The Company is managed based on all products
being within one operational segment. Products are made from somewhat the same
extrusion processes and differ to some degree only in the final stages of
manufacturing. Furthermore, most of the Company's products, while brought into
the market through varying sales methods and channels bear the same economic
characteristics in all respects. The two basic methods of bringing products to
market are either through distributors or by selling directly to end-users. In
both cases, the Company's highly trained sales force works closely with either
the sales forces of the distributors or directly with the distributor's
customer; or with the end-user customer.

Examples of products sold through distributors are Intertape(R) brand
pressure-sensitive carton sealing tapes which include both hot-melt (introduced
in 1981) and acrylic (1995); water-activated carton sealing tape (1996); masking
tapes (1997); duct tapes (1998) Exlfilm(R) brand shrink wrap (1992); and
StretchFlex(R) brand stretch wrap (1996). Examples of products sold directly to
end-users include a wide range of Nova-Thene(R) brand woven polyolefin products
(1989); Intertape(R) brand flexible intermediate bulk containers (FIBC) (1994).

The following are the highlights of factors that contributed to changes in sales
volume during 2000.

 o  In almost all of the major product lines, selling prices generally started
    to fall during 1996; and this trend continued through 2000. These changes
    in unit selling prices are mostly in relation to raw material resin prices,
    which cycled with a downward trend beginning in 1995 continuing thru 2000.
    Consequently, increases in sales resulting from increases in unit volume
    were lessened in dollars by falling unit-selling prices.

 o  Acquisitions continue to play an important role as the Company broadens its
    range of products. During 2000 IPG acquired the assets of United Tape
    Company (UTC); a company devoted to sales of various packaging products to
    large retail chains. Approximately $22.0 million of sales were derived from
    this acquisition since its acquisition effective September 1, 2000. At the
    same time, UTC ceased to be a customer of IPG and after September 1, 2000,
    revenue no longer includes IPG sales to UTC. During 1999, IPG acquired CPC,
    which contributed $55.5 million to the Company's revenues in that year.
    Revenues recorded during 1998 from the acquisitions of Anchor (September
    1998) and Rexford (October 1998) as well as those derived from the
    acquisition of ATC, which was completed during the last days of 1997, were
    $147.1 million.

 o  A limited number of new products were introduced by the Company in the
    period 1998 to 2000 other than those derived from acquisitions.

Despite the fact that the North American economy started to slow down during the
latter stages of the 3rd quarter of 2000 and has remained slow in so far as the
packaging industry is concerned, Management is anticipating further increases in
revenue during 2001 partially as a result of the following factors:

 o  Intertape Polymer Group is continuing to increase its manufacturing
    capacities. The Company's new facility located in Tremonton, Utah is to be
    further expanded during 2001. Various additional capacities were installed
    in a number of facilities during the 2000 year as well



[LOGO - intertape polymer group(TM)]


                                       42

<PAGE>   11


                                            Management's Discussion and Analysis
--------------------------------------------------------------------------------


    as the completion of the addition of a multi-layer coater in the Truro, Nova
    Scotia facility which was begun during 1999. The continuation of the
    integration of the previously acquired facilities in Columbia, South
    Carolina and Richmond, Kentucky within the Company's other tape plants will
    continue to provide further capacity for various products. In order to keep
    pace with FIBC's long-term demand, IPG continues to further expand in Mexico
    to gain the anticipated capacity requirements. Finally, the Company's
    continuous programs to reduce waste and increase running speeds which should
    provide additional throughput.

 o  The Company had enjoyed unit growth in substantially all product lines under
    various economic conditions throughout its history. As a result of the
    recent economic slowdown, there were some declines in unit growth within the
    product mix components which are commodity products. Management believes
    that unit growth should resume during the latter half of 2001.

 o  Importers continue to take advantage of revaluations in their home
    currencies that have the effect of lowering prices in selected North
    American geographical areas. In addition, the continuing strength of the US
    dollar vs other currencies has negatively impacted export markets during
    2000. Management does not anticipate that this situation will reverse until
    the home currencies of these importers begin to strengthen against the U.S.
    dollar.

GROSS PROFIT AND GROSS MARGIN

The Company's gross profit excluding non-recurring amounts increased 13.1% to
$162.9 million in 2000; and 35.8% to $144.1 million for 1999; and 68.4% to
$106.1 million for 1998. As a percentage of sales, gross margins excluding
non-recurring amounts for 1999 and 2000 decreased to 24.9% for 2000, and to
25.3% for 1999, and had increased to 28.1% for 1998 from 27.7% for 1997.

For the year 2000, the following are highlights of contributing factors which
lead to lower gross margins:

 o  An important factor is the effect of the economy on the Company's commodity
    products. These products are subject to market driven pricing pressures.
    During 2000, as the economy slowed, pricing declined to some degree. In
    addition, the economy impacted the costs of resins which declined during the
    year. As commodity products sales prices bear a relationship to raw material
    costs, this had an additional negative effect on IPG's selling prices.

 o  Certain of IPG's products are experiencing below normal margins and recent
    acquisitions have added lower margin lines to our product mix. Most notably,
    Stretch wrap continues to suffer from the impact of over supply and margins
    remain very low throughout the industry. Water-activated tapes are also a
    low margin product as this is a niche product with limited growth
    opportunities. With the acquisition of UTC, the Company took on a retail
    product line with margins that are lower than our historic base.

 o  Gross profits were negatively impacted by further charges of a net amount of
    $9.5 million which were recorded during the fourth quarter of 2000. This is
    made up of additional account receivable and inventory reserves of $15.0
    million less the impact of the reversal against earnings of $5.5 million of
    provisions which had been established in prior years related to
    environmental, transfer pricing and employee related benefits. During the
    year ended December 2000, the Company completed its review of these
    provisions and decided to reduce them to more appropriate levels based on
    third party studies. As the Company has made a series of acquisitions over
    the past few years, Management contracted with a third party consultant to
    have an extensive review conducted of its major manufacturing equipment.
    Their report supported the decision to standardize the useful lives of major
    equipment to twenty years.


GROSS PROFIT
In Millions of U.S. Dollars

[Bar Graph]

'99 and '00 numbers have been adjusted. See note in MD&A.


GROSS MARGIN
As a % of Sales

[Bar Graph]

'99 and '00 numbers have been adjusted. See note in MD&A.



                                            [LOGO - intertape polymer group(TM)]

                                       43



<PAGE>   12


Management's Discussion and Analysis
--------------------------------------------------------------------------------

GROSS PROFIT AND GROSS MARGIN (Continued)

    Previously, equipment had been depreciated from twelve to twenty years.

For the year 1999, the following are highlights of contributing factors which
lead to lower gross margins:

 o  Sales were impacted during December 1999 due to the Company's customers
    inability to place orders and receive their product on time. The result was
    a shortfall in revenues of $17.0 million. Based on historical raw material
    content expressed as a percentage of sales, Management estimates that the
    Company lost $8.5 million in contribution to labor and overhead costs. As
    this shortfall happened quickly, this lost contribution generated lost gross
    profits of the same amount.

 o  Unit-of-measure computer errors and incorrect information in the selling
    price computer files, resulted in a combination of shipping inaccuracies and
    a build up of finished goods inventory. After an extensive review of both
    the Company's shipping records and the year end inventory position, the
    Company recorded an unusual and non-recurring charge in the cost of sales of
    approximately $9.7 million to reflect the combined impact of these factors.

 o  During 1999, the Company incurred unusual costs of approximately $9.8
    million related to the integration of recently acquired businesses,
    principally Anchor's facility in Columbia, South Carolina. These integration
    difficulties at that location resulted in additional costs that were borne
    by other IPG facilities. Examples of the costs related directly to the
    Columbia facility are poor maintenance practices, which led to equipment
    breakdown, excessive labor charges and low productivity, all as a result of
    past management practices. The Anchor facility integration difficulties
    impacted costs in other IPG facilities because of excess freight, overtime
    and incremental manufacturing charges incurred to accommodate manufacturing
    of products, which were previously made in the Anchor facility.

 o  Circumstances within several product lines resulted in margins below the
    Company's targeted levels. Specifically, margins for StretchFlex(R) stretch
    wrap were and are currently lower than the Company's overall margins due to
    over-capacity in the market, leading to lower unit selling prices. This
    situation became even more critical during the fourth quarter of 1999 when
    market conditions resulted in a decline in selling prices even as raw
    material costs increased. The effect on gross profit for the fourth quarter
    of 1999 was approximately $3.0 million.

The combined effect of the above was that gross profits were negatively impacted
by approximately $31.0 million for 1999 and $9.5 million for 2000. Had these
factors not occurred, gross profits for 2000 would have been $162.9 million
instead of $153.4 million; and would have been $144.1 million instead of $124.6
million for 1999. Gross margins would have been 24.9% instead of 23.4% for 2000;
and 25.3% instead of 21.9% for 1999.

Based on information available to Management at the current time, we anticipate
that the trend of increasing gross profits for 2001 will continue and that gross
margins should begin to recover during the latter half of 2001 due to:

 o  The Company's sales have continued to be impacted by the slow economy. At
    this time, we anticipate that both unit volume and pricing should start to
    increase as the economy recovers.

 o  Except for continuing difficulties at the Columbia facility, Management
    believes that the underlying causes of the various unusual and non-recurring
    charges against cost of sales in 1999 and 2000 have been corrected and
    should not reoccur during 2001.



                                            [LOGO - intertape polymer group(TM)]


                                       44

<PAGE>   13


                                            Management's Discussion and Analysis
--------------------------------------------------------------------------------


 o  The Company has begun to implement its supply chain strategy, which should
    result in logistic savings gained by way of the introduction of Regional
    Distribution Centers (RDC). The first such RDC was opened during the last
    quarter of 2000 and is generating cost reductions in freight costs. The
    remaining four (4) RDC's are scheduled to be operational during the second
    quarter of 2001. The Company anticipates the RDC's will result in lower
    freight costs, and will increase efficiencies through complete and on-time
    delivery of products to our customers.

 o  The impact of expanded plant outputs should continue during 2001 as further
    efficiency measures are implemented.

 o  New equipment installed during 2000 should have a positive effect on gross
    profits for 2001.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, General and Administrative (SG&A) expenses increased $9.4 million to
$83.1 million for 2000 from $73.7 million excluding non-recurring items for
1999; and increased $26.9 million to $73.7 million from $46.8 million for 1998.
As a percentage of sales, these expenses were 12.7% for 2000, 12.9% for 1999
excluding the non-recurring items and 12.4% for 1998. These increases occurred
primarily for the following reasons:

THE YEAR 2000 RESULTS:

 o  SG&A costs increased as a result of the acquisitions of UTC during 2000 and
    CPC during 1999. In both cases, the Company did not obtain the anticipated
    synergies due to the decision not to integrate these operations' systems
    until IPG's MIS systems stabilized. CPC was integrated during April 2001 and
    UTC will not be scheduled for integration before the fourth quarter of 2001.

 o  The majority of sales costs are not driven by either sales volume or
    pricing.

THE YEAR 1999 RESULTS:

In order to fully understand the 1999 results and comparisons to prior year,
both sales and the SG&A costs should take into account the following
non-recurring items:

 o  Reported sales for 1999 should take into account the previously discussed
    drop in volume during December 1999 in the amount of approximately $17.0
    million as SG&A costs did not proportionally decrease as a result of this
    rapid decline.

 o  There are several unusual non-recurring charges included in SG&A costs in
    the amount of $8.5 million which are a direct result of the MIS
    difficulties. This primarily relates to the increase in the allowance for
    doubtful accounts.

 o  Finally, $3.1 million of further non-recurring costs related to several
    abandoned acquisitions and the final costs of relocating more than 25 key
    managers to the Company's new corporate office in Sarasota, Florida.

When these factors are taken into account, the comparisons are as follows:

 o  Increase in SG&A costs year-over-year for 1999 and 1998 are 57.7% and 71.4%.
    These increases are directly related to acquisitions.



SELLING, GENERAL AND ADMINISTRATIVE
In Millions of U.S. Dollars

[Bar Graph]

The '99 number has been adjusted. See note in MD&A.


SELLING, GENERAL AND ADMINISTRATIVE
As a %of Sales

[Bar Graph]

The '99 number has been adjusted. See note in MD&A.




                                           [LOGO - intertape polymer group(TM)]

                                       45

<PAGE>   14


Management's Discussion and Analysis
--------------------------------------------------------------------------------


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Continued)

o    More importantly, SG&A costs for 1999 would have been $73.7 million and as
     a percent of sales would have been 12.9% for 1999.

Over the past 3 years, these costs have been increasing as a percentage of sales
as the Company expanded through acquisitions. The Company did not attain its
expected synergies from its acquisitions as a result of the MIS difficulties
during 1999 and 2000.


RESEARCH AND DEVELOPMENT

Research and Development (R&D) remains an extremely important function within
the Company. Taken as a percentage of sales, R&D is 0.8% for the year 2000
compared to 0.7% for 1999 and 0.8% for 1998. R&D is focused on new products, new
technology developments and new product processes. While there have been new
products introduced in prior years, Management believes that fiscal 2001 will
start to see a steady rollout of significant new products into the Company's
markets.


OPERATING PROFIT

When adjusted for all of the above highlighted effects on revenue, cost of sales
and SG&A costs as a result of the MIS and plant integration difficulties for the
year 1999 and 2000, the operating profits are $79.8 million for 2000 (12.2%);
$70.4 million (12.4%) for 1999, $59.3 million (15.7%) for 1998 respectively. The
recent decline in operating margins is as a result of several factors.
Acquisitions consummated in 1998, 1999 and 2000 have brought into the Company
more products, which currently have gross margins below the Company's historic
levels.

Stretch-Flex(R) stretch wrap margins are under intense pressure as a result of
market conditions. MIS difficulties made certain synergistic cost reductions
unattainable during both 1999 and 2000. Ongoing plant integration difficulties
have depressed both gross margins and operating margins for both during 1999 and
2000.

Management anticipates that operating margins will expand when the 2001
synergistic cost reductions are attained, as the RDC strategy begins to reduce
logistic costs, and the effects of plant integration efforts are achieved.


INCOME TAX

The Company's statutory income tax rate was approximately 43.0% the period from
1998 to 2000. Except for the impact of certain items for tax purposes discussed
below, the amortization of that part of the goodwill which is non-deductible for
income tax purposes, will result in the Company's effective income tax rate
exceeding its statutory tax rate. The Company's effective tax rate was impacted
by two material events during the years commencing with 1998. First, the
Company's foreign based income is taxed at rates which are significantly lower
than the rates that would have applied on the income had it been earned in
Canada. Second, the Company entered into a series of transactions that resulted
in permanent differences greater than prior years. It is expected that the
effective tax rate for 2001 should stabilize between 23-28%. This rate depends
somewhat on both there being no significant changes increases in corporate
income tax rates for fiscal 2001 in Canada, the United States of America or
Portugal; and that pre-tax income be at least $50.0 million. If pre-tax
accounting income is less than $50.0 million, this will have the effect of
reducing the effective tax rate lower than the expected percent.


RESEARCH & DEVELOPMENT
In Millions of U.S. Dollars

[BAR GRAPH]

OPERATING PROFIT
In Millions of U.S. Dollars

[BAR GRAPH]

`99 and `00 numbers have been adjusted. See note in MD&A.


OPERATING PROFIT
As a % of Sales

[BAR GRAPH]

`99 and `00 numbers have been adjusted. See note in MD&A.

[LOGO - intertape polymer group(TM)]


                                       46



<PAGE>   15


                                            Management's Discussion and Analysis
--------------------------------------------------------------------------------


NET EARNINGS - CANADIAN AND U.S. GAAP

During 1997, the Company recorded a charge against earnings for a restructuring
of certain operations. Generally Accepted Accounting Principles (GAAP) in Canada
permits the disclosure of a subtotal representing "earnings before restructuring
charges and income taxes". US GAAP does not permit the presentation of this
subtotal. Consequently, net earnings under both Canadian and US GAAP was $8.1
million for 1999 as compared to $28.8 million for 1998.

For purposes of the ten year graphical presentation, 1997 net earnings are based
on the earnings that would have been recorded as if the restructuring had not
taken place; 1999 net earnings are being presented before the above highlighted
negative effects on revenue, cost of sales and SG&A as a result of the MIS and
plant integration difficulties; and 2000 earnings are being presented before the
final effect on cost of goods sold. IPG's net earnings adjusted as per the above
for the years 2000, 1999 and 1998 would have been $42.9 million, $39.2 million,
and $28.8 million respectively. As a percentage of sales adjusted net earnings
are 6.6% for 2000, 6.9% for 1999, and 7.6% for 1998.

Canadian GAAP net earnings conform in all material respects to amounts that
would have to be reported if the financial statements would have been prepared
under U.S. GAAP.


EARNINGS PER SHARE - CANADIAN AND U.S. GAAP

CANADIAN GAAP
As noted previously, Canadian GAAP and U.S. GAAP differ in the presentation of
the restructuring charges taken against earnings during 1997. Neither allows for
the presentation of earnings per share (EPS) before the effect of restructuring
charges. Consequently, for purposes of the ten year graphical presentation, the
1997 charge against earnings which reduced EPS by $0.49 are included in all
computations of EPS for 1997.

Adjusted basic EPS increased 6.5% to $1.48 for 2000 from $1.39 in 1999; and
increased 21.9% to $1.14 for 1998. The weighted average number of common shares
outstanding for the purpose of the basic EPS calculation was 28.3 million shares
for 2000, 27.7 million shares for 1999, and 25.1 million shares for 1998.

U.S. GAAP
Commencing in 1997, basic EPS under U.S. GAAP is calculated in a manner
consistent with Canadian GAAP. In the 4th quarter of 2000, Canadian GAAP adopted
the US GAAP definition of diluted earnings per share retroactively.

INCOME TAXES
Effective Income Tax Rates

[BAR GRAPH]

NET EARNINGS - CDN GAAP
In Millions of U.S. Dollars

[BAR GRAPH]

`97, `99 and `00 numbers have been adjusted. See note in MD&A.


EPS - BASIC CDN GAAP
U.S. Dollars Per Share

[BAR GRAPH]

`97, `99 and `00 numbers have been adjusted. See note in MD&A.


                                         [LOGO - intertape polymer group(TM)]

                                       47



<PAGE>   16


Management's Discussion and Analysis
--------------------------------------------------------------------------------


LIQUIDITY AND CAPITAL RESOURCES

CHANGES IN CASH FLOW
Cash flow from operations increased by $21.8 million to $57.9 million for 2000,
and decreased $21.8 million in 1999 from $57.9 million in 1998. Of this amount,
$17.9 million was used to support working capital during 2000; $10.4 million
was added from the decrease in non-cash working capital items.

The balance of $40.0 million in 2000 was augmented by $17.2 million through an
increase in bank indebtedness of $26.5 million less $2.2 million, $4.2 million
and $3.0 million used to repay long-term debt, purchase common shares for
cancellation and payment of the 2000 dividend respectively. These combined
sources of funds from operations and bank financing activities were used to
acquire certain assets of UTC in the amount of $28.2 million; increase in fixed
assets and construction in progress in the amount of $48.1 million; less the
impact of the sale of certain fixed assets of $4.2 million and increases in
other assets and deferred charges.

The balance of $46.5 million in 1999 was augmented by an increase in long-term
debt of $187.0 million, $76.9 million from the issue of common shares in March
1999, and $1.7 million by way of the exercise of stock options. This was then
reduced by $60.8 million for the repayment of long-term debts, $2.5 million for
the purchase of shares for cancellation under a Normal Course Issuer Bid, $3.0
million for the payment of dividends, and by $68.8 million for the reimbursement
of bank indebtedness. These funds totalling $177.0 million were used to invest
in capital and other assets in the amount of $67.7 million and the acquisition
of CPC of $108.1 million.


CREDIT FACILITIES

The Company has various credit facilities, most of which expired during 2000 and
have been extended until June 30th, 2001. Of the amount outstanding as at
December 2000, $120.0 million were loans related to the acquisition of UTC and
CPC. The Company has negotiated and accepted a term sheet with its two largest
bank lenders. Currently, both IPG and these major lenders are conducting
negotiations with several additional Canadian Financial Institutions with a view
to syndicate a $175.0 million facility to replace the current facilities. It is
anticipated that the final financing package will comprise a $50.0 million
revolving facility, a $25.0 million one year term facility, and a 5 year $100.0
million term facility which will require eight semi-annual capital repayments of
$12.5 million commencing eighteen months after closing, Closing is anticipated
to be late June, 2001.


LONG-TERM DEBT

During 1999, the Company successfully completed a Series A and B Notes Offering
of $137.0 million of Senior Unsecured U.S. dollar Notes bearing interest at the
rate of 7.78%, interest payable semi-annually, $25.0 million principle maturing
November 2005 and the balance on May 2009. The proceeds were used primarily to
repay some bank debt incurred during 1999 for part of the acquisition of Central
Products and to repay the balance of bank debt incurred during 1998 for part of
the purchase of Anchor.

During 1998, the Company successfully completed a U.S. Offering of $137.0
million of Senior Unsecured U.S. dollar Notes bearing interest at the rate of
6.82%, interest payable semi-annually, principle maturing March 31st, 2008. The
proceeds were used primarily to repay the bank debt $114.0 million incurred
during 1997 in relation to the acquisition of American Tape.

CASH FLOW
In Millions of U.S. Dollars

[BAR GRAPH]

CASH FLOW FROM OPERATIONS BEFORE FUNDING NON-CASH WORKING CAPITAL ITEMS


CASH FLOW
In Millions of U.S. Dollars

[BAR GRAPH]

CASH FLOW FROM OPERATIONS AFTER FUNDING NON-CASH WORKING CAPITAL ITEMS


BANK INDEBTEDNESS
In Millions of U.S. Dollars

[BAR GRAPH]

[LOGO - intertape polymer group(TM)]

                                       48



<PAGE>   17


                                            Management's Discussion and Analysis
--------------------------------------------------------------------------------


CAPITAL STOCK

From time to time, various employees exercised stock options which contributed
$0.2 million, $1.7 million and $1.2 million during 2000, 1999 and 1998
respectively.

As part of the financing of the purchase of certain assets of UTC during the
third quarter of 2000, $4.0 million worth of shares were issued from treasury at
a per share price of $15.9625.

During the first quarter of 1999, the Company issued 3,000,000 additional common
shares at a price of CDN $40.25 per share (US $25.63 per share after issue
costs) for a total cash infusion of US $76.9 million after issue costs. Proceeds
were used to repay short-term and long-term debts.

During 1999, the Company announced that it had registered a Normal Course Issuer
Bid in Canada. During December 1999, 100,000 shares were purchased for
cancellation, which resulted in a reduction of $2.5 million in the stated value
of the Company's issued common shares. During the fourth quarter of 2000, the
Normal Course Issuer Bid was extended for another year. During 2000, 353,200
shares were purchased for cancellation which resulted in a reduction of $2.4
million in the stated value on the Company's issued common shares.

As part of the purchase price for the acquisition of Central Products, the
Company issued 300,000 share purchase warrants. These warrants expire on August
9, 2004 and permit the holder to purchase common shares of the Company at a
price of $29.50 per share.


CAPITAL EXPENDITURES

Total capital expenditures for 2000 were $48.1 million; and for 1999 were $57.2
million. There were a number of major projects either ongoing or completed
during this period.

o    The expansion of our Truro, Nova Scotia plant began in 1999 and was
     completed in 2000. This expansion added much needed capacity for production
     of both traditional and new woven products such as vinyl replacement
     products. As well, new printing capacity for woven products was brought in
     line in 2000.

o    The installation of a 6th BOPP extrusion line was commercialized at the
     Company's Danville, Virginia facility. This enabled the Company to be
     completely self-sufficient in the production of film for pressure sensitive
     tapes for both hot-melt and acrylic based adhesives tapes.

o    The Virginia plant also saw the addition of a 7th cast line for the
     production of Stretch Films to bring the Company's capacity in this product
     line to more 100 million pounds.

o    The Company added irradiated film capacity for the production of a new type
     of Shrink Film in its Tremonton, Utah facility. This is a new process which
     broadens the markets for this film into areas that were previously supplied
     solely by PVC manufacturers. PVC type films represent 60% of the Shrink
     Film market.

o    Other expenditures were made in order to lower manufacturing costs and
     improve output of tape production facilities in Columbia, South Carolina,
     Marysville, Michigan and Richmond, Kentucky, primarily in the areas of
     finishing and packaging.


BANK INDEBTEDNESS PRO FORMA FOR NEW FINANCING
In Millions of U.S. Dollars

[BAR GRAPH]

LONG-TERM DEBT
In Millions of U.S. Dollars

[BAR GRAPH]

LONG-TERM DEBT PRO FORMA FOR NEW FINANCING
In Millions of U.S. Dollars

[BAR GRAPH]


                                           [LOGO - intertape polymer group(TM)]

                                       49


<PAGE>   18


Management's Discussion and Analysis
--------------------------------------------------------------------------------


CAPITAL EXPENDITURES (Continued)

o    Expenditures in the MIS area continued in 2000 as the Company completed the
     migration of most of its systems onto a new enterprise platform, which is
     essential to the "Basket-of-Products" programs. As well, the Company
     continued with the role- out of Warehouse Management Systems (WMS). All
     major manufacturing locations and RDC's will have a WMS by the end of 2001.
     During 2000, the Company also started to bring the entire payroll function
     in house.


BUSINESS ACQUISITIONS

2000
On September 1st, 2000, the Company completed the acquisition of UTC. With this
acquisition IPG established a presence in the retail market for North America.
Prior to the acquisition, IPG was involved to a lesser degree in this channel of
distribution. The UTC acquisition has accelerated the development of this
important channel. Effective September 1, 2000, the Company acquired certain
assets of Olympian Tape Sales, Inc. d/b/a United Tape Company ("UTC"). UTC was a
manufacturer and distributor of certain packaging products into the retail
market. UTC was a long-term customer of one particular product line of IPG.

The purchase price was paid for in both cash in the amount of $28.2 million and
$4.0 million worth of common shares of Intertape stock from treasury.

The preliminary purchase price allocation, which includes approximately $20.4
million allocated to goodwill, was based upon available information and
preliminary appraisals and is subject to revision as more facts become known.
Goodwill from the acquisition is being amortized over a twenty-year period.

1999
On July 30 and August 9, 1999, respectively, the Company acquired from Spinnaker
Industries, Inc. (Amex: SKK) substantially all the assets of SETco and all of
the outstanding shares of Central Products Company, manufacturers of
pressure-sensitive, water-activated and electrical tapes. The total cash
consideration and estimated transactions costs for these acquisitions were
approximately $108.1 million. In addition, the Company issued 300,000 share
purchase warrants valued at $3.2 million to the seller of these companies.
Preliminary purchase price allocations reflect approximately $48.5 million of
goodwill, which is amortized over a forty-year period.


CAPITAL STOCK
In Millions of U.S. Dollars

[BAR GRAPH]

CAPITAL EXPENDITURES
In Millions of U.S. Dollars

[BAR GRAPH]

[LOGO - intertape polymer group(TM)]

                                       50

<PAGE>   19


                                            Management's Discussion and Analysis
--------------------------------------------------------------------------------


1998
On September 23 and October 7th, 1998 respectively, the Company purchased 100%
of the outstanding shares of Anchor, a manufacturer of pressure-sensitive tapes
including both duct and masking tapes and substantially all the operating assets
of Rexford paper, which is a Wisconsin redistributor of a variety of
pressure-sensitive tapes as well as a manufacturer of water-activated tapes. The
total cash consideration and estimated transaction costs for these acquisitions
were approximately $113.2 million.


BOOK VALUE PER SHARE

The unadjusted book value per share for the years ended 2000, 1999, and 1998 are
$10.98, $9.97 and $7.71 respectively.


DIVIDEND ON COMMON SHARES

On May 15 2000, the Company declared an annual dividend of $0.106 per share (CDN
$0.16) to shareholders of record on May 30, 2000. The dividend was paid on June
8, 2000 and amounted to approximately $3.0 million.

On March 9, 1999, the Company declared an annual dividend of $0.106 per share
(CDN $0.16) to shareholders of record on March 19, 1999. The dividend was paid
on April 5, 1999 and amounted to approximately $3.0 million.

On March 10, 1998, the Company declared an annual dividend of $0.092 per share
(CDN $0.13) to shareholders of record on March 20, 1998. The dividend was paid
on March 31, 1998 and amounted to approximately $2.1 million.


BOOK VALUE PER SHARE
U.S. Dollars Per Share

[BAR GRAPH]
`97 and `99 numbers have been adjusted. See note in MD&A.


                                           [LOGO - intertape polymer group(TM)]

                                       51
<PAGE>   20


To the Shareholders of Intertape Polymer Group Inc.
--------------------------------------------------------------------------------


MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The consolidated financial statements of Intertape Polymer Group Inc. and the
other financial information included in this annual report are the
responsibility of the Company's Management and have been examined and approved
by its Board of Directors. These consolidated financial statements have been
prepared by Management in accordance with Canadian generally accepted accounting
principles and include some amounts that are based on Management's best
estimates and judgements. The selection of accounting principles and methods is
Management's responsibility.

The Company maintains internal control systems designed to ensure that the
financial information produced is relevant and reliable.

Management recognizes its responsibility for conducting the Company's affairs in
a manner to comply with the requirements of applicable laws and established
financial standards and principles, and for maintaining proper standards of
conduct in its activities.

The Board of Directors assigns its responsibility for the financial statements
and other financial information to the audit committee, the majority of whom are
non-management directors.

The audit committee's role is to examine the financial statements and annual
report and recommend that the Board of Directors approve them, to examine the
internal control and information protection systems and all other matters
relating to the Company's accounting and finances. In order to do so, the audit
committee meets periodically with the external auditors, to review their audit
plans and discuss the results of their examination. This committee is
responsible for recommending the appointment of the external auditors or the
renewal of their engagement.

The Company's external auditors, Raymond Chabot Grant Thornton, appointed by the
shareholders at the Annual and Special Meeting, have audited the Company's
financial statements and their report indicating the scope of their audit and
their opinion on the financial statements follows.

Sarasota, Florida and Montreal, Canada March 19, 2001


/s/ Melbourne F. Yull                   /s/ Andrew M. Archibald, C.A.
------------------------------------    ----------------------------------------
Melbourne F. Yull                       Andrew M. Archibald, C.A.
Chairman and Chief Executive Officer    Chief Financial Officer, Secretary,
                                        Treasurer, Vice President Administration


AUDITOR'S REPORT

We have audited the consolidated balance sheets of Intertape Polymer Group Inc.
as at December 31, 2000 and 1999 and the consolidated statements of earnings,
retained earnings and cash flows for each of the years in the three-year period
ended December 31, 2000. These financial statements are the responsibility of
the Company's Management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
Management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 2000
and 1999 and the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 2000 in accordance with
Canadian generally accepted accounting principles.


/s/ Raymond Chabot Grant Thornton
------------------------------------------
General Partnership, Chartered Accountants
Montreal, Canada
March 19, 2001


[LOGO - intertape polymer group(TM)]

                                       52

<PAGE>   21


                                     Consolidated Earnings and Retained Earnings
--------------------------------------------------------------------------------


CONSOLIDATED EARNINGS (In thousands of U.S. dollars; except per share amounts)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                                       2000          1999          1998
                                                              -------       -------       -------
                                                                $             $             $
<S>                                                           <C>           <C>           <C>
SALES                                                         653,915       569,947       378,030
Cost of sales (Note 4)                                        500,547       445,322       271,971
                                                              -------       -------       -------
GROSS PROFIT                                                  153,368       124,625       106,059
                                                              =======       =======       =======
Selling, general and administrative expenses (Note 4)          83,092        85,330        46,747
Amortization of goodwill                                        6,540         5,451         3,330
Research and development                                        5,109         3,901         3,059
Financial expenses (Note 5)                                    27,205        22,149        12,429
Gain on sale on interest in joint venture (Note 4)             (5,500)           --            --
                                                              -------       -------       -------
                                                              116,446       116,831        65,565
                                                              -------       -------       -------
Earnings before income taxes                                   36,922         7,794        40,494
Income taxes (Note 6)                                           3,500          (304)       11,743
                                                              -------       -------       -------
NET EARNINGS                                                   33,422         8,098        28,751
                                                              =======       =======       =======
EARNINGS PER SHARE
Basic                                                            1.18          0.29          1.14
Diluted                                                          1.16          0.29          1.10
</TABLE>


CONSOLIDATED RETAINED EARNINGS (In thousands of U.S. dollars)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                                       2000          1999          1998
                                                              -------       -------       -------
                                                                 $             $             $
<S>                                                           <C>           <C>           <C>
Balance, beginning of year                                     88,422        85,184        58,563
                                                              -------       -------       -------
Net earnings                                                   33,422         8,098        28,751
                                                              -------       -------       -------
                                                              121,844        93,282        87,314
                                                              =======       =======       =======
Dividends                                                       3,006         2,993         2,130
Premium on purchase for cancellation of Common Shares           1,872         1,867            --
                                                              -------       -------       -------
                                                                4,878         4,860         2,130
                                                              -------       -------       -------
BALANCE, END OF YEAR                                          116,966        88,422        85,184
                                                              =======       =======       =======
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                           [LOGO - intertape polymer group(TM)]

                                       53
<PAGE>   22


Consolidated Cash Flows
--------------------------------------------------------------------------------
(In thousands of U.S. dollars)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                                       2000          1999          1998
                                                              -------       -------       -------
OPERATING ACTIVITIES                                             $             $             $
<S>                                                           <C>            <C>          <C>
Net earnings                                                   33,422         8,098        28,751
Non-cash items
   Depreciation and amortization                               27,934        31,229        20,544
   Future income taxes                                            482        (3,197)        8,627
   Write-off of capital assets                                  1,594            --            --
   Other non-cash items (Note 14)                              (5,500)           --            --
                                                              -------       -------       -------
Cash from operations before funding of changes
   in non-cash working capital items                           57,932        36,130        57,922
                                                              =======       =======       =======
Changes in non-cash working capital items
   Trade and other receivables                                 (3,894)       (3,321)         (175)
   Inventories and parts and supplies                           3,493        (6,085)      (15,076)
   Prepaid expenses                                            (1,809)       (2,123)        1,939
   Accounts payable and accrued liabilities                   (15,697)       21,903       (24,033)
                                                              -------       -------       -------
                                                              (17,907)       10,374       (37,345)
                                                              -------       -------       -------
CASH FLOWS FROM OPERATING ACTIVITIES                           40,025        46,504        20,577
                                                              =======       =======       =======
INVESTING ACTIVITIES
Acquisitions of businesses (Note 7)                           (28,195)     (108,172)     (113,187)
Capital assets, net of investment tax credits                 (48,142)      (57,154)      (45,941)
Proceed on sale of capital assets                               4,239            --            --
Other assets                                                   17,637       (10,577)       (8,923)
                                                              -------       -------       -------
CASH FLOWS FROM INVESTING ACTIVITIES                          (54,461)     (175,903)     (168,051)
                                                              =======       =======       =======
FINANCING ACTIVITIES
Net change in bank indebtedness                                26,468       (68,835)      103,460
Issue of long-term debt                                            --       187,000       166,553
Repayment of long-term debt                                    (2,249)      (60,767)     (120,099)
Issue of Common Shares                                            176        78,583         1,172
Common Shares purchased for cancellation                       (4,194)       (2,542)           --
Dividends paid                                                 (3,006)       (2,993)       (2,130)
                                                              -------       -------       -------
CASH FLOWS FROM FINANCING ACTIVITIES                           17,195       130,446       148,956
                                                              -------       -------       -------
NET INCREASE IN CASH POSITION                                   2,759         1,047         1,482
Effect of foreign currency translation adjustments             (2,759)       (1,047)       (1,482)
                                                              -------       -------       -------
CASH POSITION, BEGINNING AND END OF YEAR                           --            --            --
                                                              =======       =======       =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
INTEREST PAID                                                  29,319        22,065        15,257
                                                              =======       =======       =======
INCOME TAXES PAID                                               3,118         3,153         3,339
                                                              =======       =======       =======
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


[LOGO - intertape polymer group(TM)]

                                       54
<PAGE>   23


                                                     Consolidated Balance Sheets
--------------------------------------------------------------------------------
                                                  (In thousands of U.S. dollars)
<TABLE>
<CAPTION>
DECEMBER 31,                                                   2000          1999
                                                              -------       -------
                                                                 $             $
<S>                                                           <C>           <C>
ASSETS
 Current assets
 Trade receivables (net of allowance for
  doubtful accounts of $10,300 ($6,178 in 1999))               97,478        83,120
 Other receivables (Note 8)                                    11,659        17,712
 Inventories (Note 9)                                          89,264        87,301
 Parts and supplies                                            10,069         9,813
 Prepaid expenses                                               6,114         4,204
 Future income tax assets                                      10,810        11,349
                                                              -------       -------
                                                              225,394       213,499

Capital assets (Note 10)                                      374,753       351,722
Other assets (Note 11)                                         10,636        31,899
Goodwill, at amortized cost                                   234,257       217,886
                                                              -------       -------
TOTAL ASSETS                                                  845,040       815,006
                                                              =======       =======
LIABILITIES
Current liabilities
 Bank indebtedness (Note 12)                                  127,333        53,920
 Accounts payable and accrued liabilities                      79,811        88,563
 Installments on long-term debt                                 9,532         2,079
                                                              -------       -------
                                                              216,676       144,562

Long-term debt (Note 13)                                      276,684       336,015
Other liabilities (Note 14)                                    42,038        52,426
                                                              -------       -------
TOTAL LIABILITIES                                             535,398       533,003
                                                              =======       =======
SHAREHOLDERS' EQUITY
Capital stock and share purchase warrants (Note 15)           186,908       185,091
Retained earnings                                             116,966        88,422
Accumulated foreign currency translation adjustments            5,768         8,490
                                                              -------       -------
TOTAL SHAREHOLDERS' EQUITY                                    309,642       282,003
                                                              -------       -------
TOTAL LIABILITY AND SHAREHOLDERS' EQUITY                      845,040       815,006
                                                              =======       =======
</TABLE>

On behalf of the Board,



/s/ Gordon R. Cunningham               /s/ Ben J. Davenport, Jr.

Gordon R. Cunningham, Director         Ben J. Davenport, Jr., Director

The accompanying notes are an integral part of the consolidated financial
statements.


                                          [LOGO - intertape polymer group(TM)]

                                       55
<PAGE>   24


Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
(In U.S. dollars; tabular amounts in thousands, except per share amounts)


1 -- GOVERNING STATUTES
The Company, incorporated under the Canada Business Corporations Act, is based
in Montreal, Canada.

The common shares of the Company are listed on the New York Stock Exchange in
the United States of America ("United States") and on The Toronto Stock Exchange
in Canada.


2 -- ACCOUNTING POLICIES
The consolidated financial statements are expressed in U.S. dollars and were
prepared in accordance with Canadian generally accepted accounting principles,
which, in certain respects, differ from the accounting principles generally
accepted in the United States, as shown in Note 20.

ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with Canadian generally
accepted accounting principles requires Management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly-owned. All significant intercompany
accounts and transactions have been eliminated. Investments in joint ventures
have been proportionately consolidated based on the Company's ownership
interest.

FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of trade receivables, other receivables, bank indebtedness as
well as accounts payable and accrued liabilities is equivalent to carrying
amounts, given the short maturity period of such financial instruments.

The fair value of receivables from joint ventures approximates the carrying
amounts reported in the consolidated balance sheets.

The fair value of long-term debt was established as described in Note 13.


FOREIGN CURRENCY TRANSLATION

REPORTING CURRENCY
     The financial statements of the Company were reported in Canadian dollars
     until December 31, 1998. As a result of business acquisitions and
     increasing activities in the United States, the Company adopted the U.S.
     dollar as its reporting currency effective January 1, 1999. In accordance
     with Canadian generally accepted accounting principles, for periods up to
     and including December 31, 1998, amounts pertaining to the consolidated
     financial statements and notes thereto were converted into U.S. dollars
     using a translation of convenience with the December 31, 1998 exchange rate
     of CDN $1.5305 per US $1.00.

     For years after December 31, 1998, the accounts of the Company's operations
     having a functional currency other than the U.S. dollar have been
     translated into the reporting currency using the current rate method as
     follows: assets and liabilities have been translated at the exchange rate
     in effect at the year end and revenues and expenses have been translated at
     the average rate during the year. All translation gains or losses of the
     Company's net equity investments in these operations have been included in
     the accumulated foreign currency translation adjustments account in
     shareholders' equity. Changes in this account for all periods presented
     result solely from the application of this translation method.

FOREIGN CURRENCY TRANSLATION
     Transactions denominated in currencies other than the functional currency
     have been translated into the functional currency as follows: monetary
     assets and liabilities have been translated at the exchange rate in effect
     at the end of each year and revenues and expenses have been translated at
     the average exchange rate for each year; non-monetary assets and
     liabilities have been translated at the rates prevailing at the transaction
     dates. Exchange gains and losses arising from such transactions are
     included in earnings.


[LOGO - intertape polymer group(TM)]

                                       56


<PAGE>   25


                                      Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
      (In  U.S. dollars; tabular amounts in thousands, except per share amounts)


CASH AND CASH EQUIVALENTS
The Company's policy is to present cash and temporary investments having a term
of three months or less with cash and cash equivalents.

INVENTORIES AND PARTS AND SUPPLIES VALUATION
Raw materials are valued at the lower of cost and replacement cost. Work in
process and finished goods are valued at the lower of cost and net realizable
value. Cost is principally determined by the first in, first out method. The
cost of work in process and finished goods includes the cost of raw materials,
direct labour and manufacturing overhead.

Parts and supplies are valued at the lower of cost and replacement cost.

CAPITAL ASSETS
Capital assets are stated at cost less applicable investment tax credits and
government grants earned and are depreciated over their estimated useful lives
principally as follows:

<TABLE>
<CAPTION>
                                            METHODS            RATES AND PERIODS
                                      -------------------      -----------------
<S>                                   <C>                        <C>
Buildings........................     Diminishing balance        5%
                                      or Straight-line           15 to 40 years
Buildings under capital leases...     Straight-line              20 years
Manufacturing equipment..........     Straight-line              20 years(a)
Furniture, office, computer
   equipment and software........     Diminishing balance        20%
   and other.....................     or Straight-line           7 years
</TABLE>

(a)  As a result of an extensive review of the useful lives of the Company's
     principal manufacturing equipment, Management decided to extend to 20 years
     the estimated useful lives of all manufacturing equipment. Prior to such
     revision, these assets were depreciated over periods of 12 to 20 years.
     This change in estimated useful life was applied prospectively commencing
     January 1, 2000 and has resulted in a decrease to depreciation expense and
     corresponding increase in earnings before income taxes of approximately
     $11.6 million for the year ended December 31, 2000.

The Company follows the policy of capitalizing interest during the construction
and preproduction periods as part of the cost of significant capital assets.
Normal repairs and maintenance are expensed as incurred. Expenditures which
materially increase values, change capacities or extend useful lives are
capitalized. Depreciation is not charged on new capital assets until they become
operative.

DEFERRED CHARGES
Debt issue expenses are deferred and amortized on a straight-line basis over the
term of the related obligation. Other deferred charges are amortized on a
straight-line basis over a five-year period.

GOODWILL
Goodwill represents the excess of the purchase price and related cost over the
value assigned to the net tangible assets of investments in subsidiaries and
joint ventures at the dates of acquisition. Goodwill is being amortized on a
straight-line basis over periods ranging from 20 to 40 years, the estimated life
of the underlying benefit. The value of goodwill is regularly evaluated by
reviewing the returns of the related business, taking into account the risk
associated with the investment. Any permanent impairment in the amortized value
of goodwill would be written off against earnings.

ENVIRONMENTAL COSTS
The Company expenses, on a current basis, recurring costs associated with
managing hazardous substances and pollution in ongoing operations. The Company
also accrues for costs associated with the remediation of environmental
pollution when it becomes probable that a liability has been incurred and its
share of the amount can be reasonably estimated.

PENSION PLANS AND OTHER RETIREMENT BENEFITS
The Company has defined benefit and defined contribution pension plans and other
retirement benefit plans for its Canadian and American employees.

In the year ended December 31, 2000, the Company adopted, without restating
prior period financial statements, the new recommendations of the Canadian
Institute of Chartered Accountants with respect to accounting for the cost of
pension benefits and


                                          [LOGO - intertape polymer group(TM)]

                                       57
<PAGE>   26


Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
(In U.S. dollars; tabular amounts in thousands, except per share amounts)


2 -- ACCOUNTING POLICIES (Continued)

PENSION PLANS AND OTHER RETIREMENT BENEFITS (Continued)
other employee future benefits. The new recommendations require that the
discount rate used to value pension obligations and current costs be changed
from an estimated long-term rate to a market interest rate. The adoption of
these new recommendations has not resulted in a significant impact to the
current or prior year's financial statements.

The following policies are used with respect the accounting for the defined
benefit and other retirement benefit plans:

o    The cost of pensions and other retirement benefits earned by employees is
     actuarially determined using the projected benefit method prorated on
     service and is charged to earnings as services are provided by the
     employees. The calculations take into account Management's best estimate of
     expected plan investment performance, salary escalation, retirement ages of
     employees, participants' mortality rates and expected health care costs.

o    For the purpose of calculating the expected return on plan assets, those
     assets are valued at fair value.

o    Past service costs from plan amendments are amortized on a straight-line
     basis over the average remaining service period of employees active at the
     date of amendment.

o    The excess of the net actuarial gains (losses) over 10% of the greater of
     the benefit obligation and the fair value of plan assets is amortized over
     the average remaining service period of active employees.

INCOME TAXES
The Company provides for income taxes using the liability method of tax
allocation. Under this method, future income tax assets and liabilities are
determined based on deductible or taxable temporary differences between the
financial statement values and tax values of assets and liabilities, using
enacted income tax rates expected to be in effect for the year in which the
differences are expected to reverse.

STOCK OPTIONS
The Company has granted stock options as described in Note 15. No compensation
expense is recognized when stock options are granted. Any consideration paid by
employees on exercise of stock options is credited to capital stock.

EARNINGS PER SHARE
In the year ended December 31, 2000, the Company adopted, on a retroactive
basis, the new recommendations of the Canadian Institute of Chartered
Accountants with respect to Section 3500, Earnings per share. Under the new
recommendations, the treasury stock method is to be used, instead of the current
imputed earnings approach, for determining the dilutive effect of warrants and
options. Previously reported diluted earnings per share amounts have been
recalculated in accordance with the new requirements. This change in accounting
policy has not resulted in differences in previously reported diluted earnings
per share and has not impacted the establishment of the current year's diluted
earnings per share.

Basic earnings per share are calculated using the weighted average number of
common shares outstanding during the year.


[LOGO - intertape polymer group(TM)]

                                       58
<PAGE>   27


                                      Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
       (In U.S. dollars; tabular amounts in thousands, except per share amounts)

3.   JOINT VENTURES

The Company's pro rata share of its joint ventures' operations included in the
consolidated financial statements is summarized as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                          2000        1999        1998
                                                -------     -------     -------
                                                   $           $           $
<S>                                              <C>         <C>         <C>
EARNINGS
   Sales......................................    2,671       4,467       3,934
   Gross profit...............................      383       1,010       1,130
   Financial expenses (income)................     (320)        882         440
   Net earnings (net loss)....................      136        (767)        (59)

CASH FLOWS
   Cash flows from operating activities.......      643      (1,331)        827
   Cash flows for investing activities........   (2,232)      2,343      (1,309)
   Cash flows from financing activities.......      512       2,566       1,136
                                                 ======      ======      ======
</TABLE>

<TABLE>
<CAPTION>

DECEMBER 31,                                      2000        1999
                                                -------     -------
                                                   $           $
<S>                                              <C>         <C>
BALANCE SHEET
Assets
   Current assets.............................    1,483       3,091
   Long-term assets...........................    7,119      11,243

Liabilities
   Current liabilities........................    2,885      10,817
   Long-term debt.............................    1,862       3,187
                                                  =====      ======
</TABLE>

During the year ended December 31, 2000, the Company recorded sales of
$2,790,000 to its joint ventures ($7,716,000 in 1999 and $1,745,000 in 1998).
Also, the Company recorded interest income of $58,000 from a joint venture for
the year ended December 31, 2000 ($1,494,000 in 1999 and $996,000 in 1998).


4.   INTEGRATION AND TRANSITION, ASSET WRITE-DOWNS AND OTHER NON-RECURRING ITEMS

During the year ended December 31, 2000, the Company realized a gain of $5.5
million on the sale of its interest in a joint venture.

For the year ended December 31, 1999 the Company incurred substantial
integration and transition, asset write-downs and other non-recurring costs as a
result of recent business acquisitions and the implementation of a major
enterprise-wide Management Information System. Such costs were included in cost
of sales ($19.5 million) and selling, general and administrative expenses ($11.6
million).


5.   INFORMATION INCLUDED IN THE CONSOLIDATED STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                          2000        1999        1998
                                                -------     -------     -------
                                                   $           $           $
<S>                                             <C>         <C>         <C>
Depreciation of capital assets................   20,334      25,077      16,090
                                                =======     =======     =======
Amortization of debt issue expenses
 and other deferred charges...................    1,060         701       1,124
                                                =======     =======     =======
Financial expenses
   Interest on long-term debt.................   20,812      17,924      10,078
   Interest on credit facilities..............    8,747       6,519       6,473
   Interest income, gain on
      foreign exchange and other..............   (1,116)     (1,154)     (2,542)
    Interest capitalized to capital assets....   (1,238)     (1,140)     (1,580)
                                                -------     -------     -------
                                                 27,205      22,149      12,429
                                                =======     =======     =======
</TABLE>

                                           [LOGO - intertape polymer group(TM)]

                                       59



<PAGE>   28


Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
(In U.S. dollars; tabular amounts in thousands, except per share amounts)


6.   INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                          2000        1999        1998
                                                -------     -------     -------
                                                   $           $           $
<S>                                             <C>         <C>         <C>
Current.......................................    3,018       2,893       3,116
Future........................................      482      (3,197)      8,627
                                                -------     -------     -------
                                                  3,500        (304)     11,743
                                                =======     =======     =======
</TABLE>


The reconciliation of the combined Federal and Provincial statutory income tax
rate to the Company's effective tax rate is detailed as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                          2000        1999        1998
                                                -------     -------     -------
                                                   %           %           %
<S>                                             <C>         <C>         <C>
Combined Federal and
   Provincial income tax rate..................    43.1        42.7        42.9
Manufacturing and processing...................     2.2        14.0        (2.1)
Foreign losses recovered
   (income taxed) at lower rates...............    (5.1)        0.3        (5.1)
Impact of other differences....................   (30.7)      (60.9)       (6.7)
                                                -------     -------     -------
EFFECTIVE INCOME TAX RATE......................     9.5        (3.9)       29.0
                                                =======     =======     =======
</TABLE>


The net future income tax liabilities are detailed as follows:

<TABLE>
<CAPTION>
DECEMBER 31,                                      2000        1999
                                                -------     -------
                                                   $           $
<S>                                             <C>         <C>
Future income tax assets
   Accounts payable and accrued liabilities....   4,131       6,944
   Tax credits and loss carry-forwards.........  17,843      16,528
   Trade and other receivables.................   5,561       2,101
   Inventories.................................   1,761       4,264
                                                -------     -------
                                                 29,296      29,837
                                                =======     =======

Future income tax liabilities
   Capital assets.............................. (54,613)    (50,112)
   Other.......................................  (1,411)     (6,094)
                                                -------     -------
                                                (56,024)    (56,206)
                                                -------     -------
NET FUTURE INCOME TAX LIABILITIES.............. (26,728)    (26,369)
                                                =======     =======
</TABLE>


7.   ACQUISITIONS OF BUSINESSES

In the last three years, the following business acquisitions have been accounted
for using the purchase method of accounting and, accordingly, the purchase price
was allocated to the assets and liabilities based on their estimated fair value
as of acquisition date.

The operating results of the acquired businesses have been included in the
consolidated financial statements from the dates of acquisition.

A)   YEAR ENDED DECEMBER 31, 2000

     Effective September 1, 2000, the Company acquired certain assets of
     Olympian Tape Sales, Inc. d/b/a United Tape Company ("UTC"). UTC was a
     manufacturer and distributor of certain packaging products into the retail
     market. UTC was a long term customer of one particular product line of the
     Company.


[LOGO - intertape polymer group(TM)]

                                       60

<PAGE>   29


                                      Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
       (In U.S. dollars; tabular amounts in thousands, except per share amounts)


     The purchase price was paid for in both cash in the amount of $28.2 million
     and $4.0 million worth of common shares of the Company's stock from
     treasury.

     The preliminary purchase price allocation, which includes approximately
     $20.4 million allocated to goodwill, was based upon available information
     and preliminary appraisals and is subject to revision as more facts become
     known. Goodwill from the acquisition is being amortized over a 20-year
     period.

B)   YEAR ENDED DECEMBER 31, 1999

     On July 30, 1999 and August 9, 1999 respectively, the Company purchased
     certain assets of Spinnaker Electrical Tape Company (SETco) and 100% of the
     outstanding shares of Central Products Company (CPC), manufacturers of
     pressure-sensitive, water-activated and electrical tapes.

The total cash consideration and estimated transaction costs for the
acquisitions were approximately $108.1 million. In addition, the Company issued
share purchase warrants valued at $3.2 million to the former owners.

C)   YEAR ENDED DECEMBER 31, 1998

     On September 23, 1998 and October 7, 1998 respectively, the Company
     purchased 100% of the outstanding shares of Anchor Continental, Inc., a
     manufacturer of pressure-sensitive tapes including both masking and duct
     tapes and substantially all the operating assets of Rexford Paper Company,
     a redistributor of a variety of pressure-sensitive tapes as well as a
     manufacturer of water-activated tapes.

     The total cash consideration and estimated transactions costs for the
     acquisitions were approximately $113.2 million.

The following is a summary of the initial values of the net assets purchased in
the last three years:

<TABLE>
<CAPTION>
DECEMBER 31,                                      2000        1999        1998
                                                -------     -------     -------
                                                   $           $           $
<S>                                             <C>         <C>         <C>
Current assets...............................    14,383      26,523      32,473
Capital assets...............................     1,316      66,541      51,745
Goodwill and other assets....................    20,963      49,763      72,116
                                                -------     -------     -------
                                                 36,662     142,827     156,334
Current liabilities assumed..................    (4,467)    (23,250)    (38,926)
Net future income tax liabilities............        --      (8,255)     (4,221)
                                                -------     -------     -------
NET ASSETS PURCHASED.........................    32,195     111,322     113,187
                                                =======     =======     =======
Consideration
   Cash......................................    28,195     108,172     113,187
   Issue of common shares....................     4,000          --          --
   Issue of share purchase warrants..........        --       3,150          --
                                                -------     -------     -------
                                                 32,195     111,322     113,187
                                                =======     =======     =======
</TABLE>

                                            [LOGO - intertape polymer group(TM)]

                                       61


<PAGE>   30


Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
(In U.S. dollars; tabular amounts in thousands, except per share amounts)


8.   OTHER RECEIVABLES

<TABLE>
<CAPTION>
DECEMBER 31,                                      2000        1999
                                                -------     -------
                                                   $           $
<S>                                             <C>         <C>
Rebates receivable...........................     5,734       5,560
Income and other taxes.......................     1,046       5,354
Sales taxes..................................     1,051       2,059
Other........................................     3,828       4,739
                                                -------     -------
                                                 11,659      17,712
                                                =======     =======
</TABLE>


9.   INVENTORIES

<TABLE>
<CAPTION>
DECEMBER 31,                                      2000        1999
                                                -------     -------
                                                   $           $
<S>                                             <C>         <C>
Raw materials................................    23,198      25,460
Work in process..............................    14,483      12,189
Finished goods...............................    51,583      49,652
                                                -------     -------
                                                 89,264      87,301
                                                =======     =======
</TABLE>


10.  CAPITAL ASSETS

<TABLE>
<CAPTION>
                                                          ACCUMULATED
DECEMBER 31, 2000                                COST     DEPRECIATION    NET
                                                -------   ------------  -------
                                                   $           $           $
<S>                                             <C>         <C>         <C>
Land.........................................     3,329          --       3,329
Buildings and related capital leases.........    57,024      10,573      46,451
Manufacturing equipment......................   359,883      88,540     271,343
Furniture, office, computer equipment
   and software and other....................    33,629       7,351      26,278
Manufacturing equipment under
   construction and software
   projects under development................    27,352          --      27,352
                                                -------     -------     -------
                                                481,217     106,464     374,753
                                                =======     =======     =======
</TABLE>

<TABLE>
<CAPTION>
                                                          ACCUMULATED
DECEMBER 31, 1999                                COST     DEPRECIATION    NET
                                                -------   ------------  -------
                                                   $           $           $
<S>                                             <C>         <C>         <C>
Land.........................................     3,219          --       3,219
Buildings and related capital leases.........    51,853       8,348      43,505
Manufacturing equipment......................   341,445      75,709     265,736
Furniture, office, computer equipment
   and software and other....................    30,160       8,625      21,535
Manufacturing equipment under
   construction and software
   projects under development................    17,727          --      17,727
                                                -------     -------     -------
                                                444,404      92,682     351,722
                                                =======     =======     =======
</TABLE>


11.  OTHER ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,                                                  2000        1999
                                                            -------     -------
                                                               $           $
<S>                                                         <C>         <C>
Debt issue expenses and other deferred
   charges, at amortized cost.............................    5,773       4,067
Loans to officers and directors including loans
   regarding the exercise of stock options, without
   interest, various repayment terms......................    1,675         275
Receivables from joint ventures...........................      648      23,449
Other receivables.........................................       65       1,452
Other, at cost............................................    2,475       2,656
                                                            -------     -------
                                                             10,636      31,899
                                                            =======     =======
</TABLE>

[LOGO - intertape polymer group(TM)]

                                       62



<PAGE>   31


                                      Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
       (In U.S. dollars; tabular amounts in thousands, except per share amounts)


12.  BANK INDEBTEDNESS AND CREDIT FACILITIES

The bank indebtedness consists of the utilized portion of unsecured demand and
revolving bank credit facilities and cheques issued which have not been drawn
from the facilities and is reduced by any cash and cash equivalent balances.

As at December 31, 2000, the Company had:

o    A senior unsecured bank loan under a US $80.0 million revolving credit
     facility which matures June 30, 2001. This loan bears interest at U.S.
     prime rate plus a premium bearing between 0 and 125 basis points or at
     LIBOR plus a premium varying between 40 and 225 basis points. As at
     December 31, 2000, the effective rate was approximately 7.40% and the
     facility was fully utilized;

o    A senior unsecured bank loan under a US $50.0 million revolving credit
     facility which matures June 30, 2001. This loan bears interest at U.S.
     prime rate or at LIBOR plus a premium varying between 125 and 150 basis
     points. As at December 31, 2000, the effective interest rate was
     approximately 8.70% and US $40.0 million was utilized;

o    A senior unsecured bank loan under a US $15.0 million revolving credit
     facility which matures June 30, 2001. This loan bears interest at U.S.
     prime rate. As at December 31, 2000, the effective rate was approximately
     9.50% and US $14.8 million was utilized;

o    A senior unsecured US $10.0 million demand bank loan, bearing interest at
     U.S. prime rate. As at December 31, 2000, the effective interest rate was
     approximately 9.50% and US $7.7 million was utilized; and

o    A senior unsecured CDN $5.0 million of demand bank loan, bearing interest
     at Canadian prime rate. As at December 31, 2000, the effective rate was
     approximately 7.50% and CDN $2.6 million was utilized.


13.  LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,                                                  2000        1999
                                                            -------     -------
                                                               $           $
<S>                                                         <C>         <C>
a) $137,000,000 Series A and B Senior Notes...............  137,000     137,000
b) $137,000,000 Senior Notes..............................  137,000     137,000
c) $8,000,000 Series 3 Notes..............................    8,000       8,000
d) Bank loan under a revolving credit facility............       --      50,000
e) Other debt.............................................    4,216       6,094
                                                            -------     -------
                                                            286,216     338,094
Less
   Current portion of long-term debt......................    9,532       2,079
                                                            -------     -------
                                                            276,684     336,015
                                                            =======     =======
</TABLE>


A)   SERIES A AND B SENIOR NOTES
     Senior Unsecured Notes, bearing interest at an average rate of 7.78%,
     payable semi-annually. The Series A $25.0 million Notes mature on May 31,
     2005. The Series B $112.0 million Notes are repayable in semi-annual
     installments of $13,440,000 starting in November 2005 and mature on May 31,
     2009.

B)   SENIOR NOTES
     Senior Unsecured Notes, bearing interest at 6.82%, payable semi-annually,
     repayable in semi-annual installments of $16,500,000 starting in September
     2004 and maturing on March 31, 2008.

C)   SERIES 3 NOTES
     Senior Unsecured Notes, bearing interest at a rate of 8.08%, payable
     semi-annually. These Notes mature on June 1, 2001.


                                          [LOGO - intertape polymer group(TM)]

                                       63



<PAGE>   32

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
(In U.S. dollars; tabular amounts in thousands, except per share amounts)

13.  LONG-TERM DEBT (Continued)

D)   BANK LOAN UNDER A REVOLVING CREDIT FACILITY
     As at December 31, 2000, the bank loan under a revolving credit facility is
     classified with bank indebtedness and credit facilities.

E)   OTHER DEBT
     Other debt consisting of government loans, mortgage loans in a joint
     venture, obligations related to capitalized leases and other loans at fixed
     and variable interest rates ranging from interest-free to 8.25% and
     requiring periodic principal repayments through 2008.

The Company has complied with the maintenance of financial ratios and with other
conditions that are stipulated in the covenants pertaining to the various loan
agreements.

Long-term debt repayments are due as follows:

<TABLE>
<CAPTION>
                                                               $
                                                            -------
<S>                                                         <C>
2001......................................................    9,532
2002......................................................    1,242
2003......................................................      463
2004......................................................   16,922
2005......................................................   72,688
Thereafter................................................  185,369
                                                            -------
TOTAL.....................................................  286,216
                                                            =======
</TABLE>


FAIR VALUE
For all debts with fixed interest rates, the fair value has been determined
based on the discounted value of cash flows under the existing contracts using
rates representing those which the Company could currently obtain for loans with
similar terms, conditions and maturity dates. For the debts with floating
interest rates, the fair value is closely equivalent to their carrying amounts.

The carrying amounts and fair values of the Company's long-term debt as at
December 31, 2000 and 1999 are:

<TABLE>
<CAPTION>
                        2000                                          1999
 FAIR                 CARRYING                 FAIR                 CARRYING
 VALUE                 AMOUNT                  VALUE                 AMOUNT
-------               ---------               -------               ---------
   $                      $                      $                      $
<S>                    <C>                    <C>                    <C>
264,680                286,216                333,193                338,094
=======                =======                =======                =======
</TABLE>


14.  OTHER LIABILITIES

<TABLE>
<CAPTION>
DECEMBER 31,                                      2000        1999
------------                                    -------     -------
                                                   $           $
<S>                                             <C>         <C>
Provision for future site
 rehabilitation costs..........................   1,500       4,500
Future income tax liabilities..................  37,538      37,718
Other..........................................   3,000      10,208
                                                -------     -------
                                                 42,038      52,426
                                                =======     =======
</TABLE>


During the year ended December 31, 2000, the Company completed its review of
certain provisions previously established in accounting for prior years'
business acquisitions. This process included obtaining from third parties
environmental, transfer pricing and employee benefit related studies.
Furthermore, the Company holds letters of guarantee provided by the vendors
against certain future related claims.

As a result of the above, the Company reversed against earning $5,500,000 of
provisions which had been recorded in prior years.


[LOGO - intertape polymer group(TM)]

                                       64

<PAGE>   33


                                      Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
       (In U.S. dollars; tabular amounts in thousands, except per share amounts)


15.  CAPITAL STOCK AND SHARE PURCHASE WARRANTS

A)   CAPITAL STOCK -- AUTHORIZED

     Unlimited number of shares without par value.

     --   Common shares, voting and participating

     --   Class "A" preferred shares, issuable in series, ranking in priority to
          the common shares with respect to dividends and return of capital on
          dissolution. The Board of Directors is authorized to fix, before
          issuance, the designation, rights, privileges, restrictions and
          conditions attached to the shares of each series.

B)   CAPITAL STOCK -- ISSUED AND FULLY PAID

     The changes in the number of outstanding common shares and their aggregate
     stated value from January 1, 1998 to December 31, 2000 were as follows:

<TABLE>
<CAPTION>
                                                       2000                     1999                     1998
                                               ---------------------    ---------------------    ---------------------
                                                 NUMBER       STATED      NUMBER       STATED      NUMBER       STATED
                                               OF SHARES      VALUE     OF SHARES      VALUE     OF SHARES      VALUE
                                               ----------    -------    ----------    -------    ----------    -------
                                                   #            $           #            $           #            $
<S>                                            <C>           <C>        <C>           <C>        <C>           <C>
Balance, beginning of year...................  28,296,392    181,941    25,194,333    104,033    25,019,921    102,861
Shares issued for cash in public offering....          --         --     3,000,000     76,887            --         --
Shares issued for business acquisitions......     250,587      4,000            --         --            --         --
Shares purchased for cancellation............    (353,200)    (2,359)     (100,000)      (675)           --         --
Shares issued for cash upon
  exercise of stock options..................      17,400        176       202,059      1,696        174,412     1,172
                                               ----------    -------    ----------    -------     ----------   -------
BALANCE, END OF YEAR.........................  28,211,179    183,758    28,296,392    181,941     25,194,333   104,033
                                               ==========    =======    ==========    =======     ==========   =======
</TABLE>


During the year ended December 31, 2000, the Corporation purchased for
cancellation 353,200 common shares at an average stated value per share of $6.68
under a Normal Course Issuer Bid. The excess of the purchase price over the
average stated capital of the shares has been charged to retained earnings.

For basic earnings per share calculation purposes, the weighted average number
of common shares outstanding was 28,328,114 for the year ended December 31, 2000
(27,679,385 in 1999 and 25,123,812 in 1998).


C)   SHARE PURCHASE WARRANTS

<TABLE>
<CAPTION>
DECEMBER 31,                                      2000        1999
                                                -------     -------
                                                   $           $
<S>                                             <C>         <C>
300,000 share purchase warrants...............    3,150       3,150
</TABLE>


The warrants, which expire on August 9, 2004, permit holders to purchase common
shares of the Company at a price of $29.50 per share.


                                            [LOGO - intertape polymer group(TM)]

                                       65


<PAGE>   34


Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
(In U.S. dollars; tabular amounts in thousands, except per share amounts)


15.  CAPITAL STOCK AND SHARE PURCHASE WARRANTS (Continued)

D)   SHAREHOLDERS' PROTECTION RIGHTS PLAN

     On May 21, 1998, the shareholders approved the extension to September 2003
     of a Shareholders' Protection Rights Plan originally established in 1993.
     The effect of the Rights Plan is to require anyone who seeks to acquire 20
     percent or more of the Company's voting shares to make a bid complying with
     specific provisions.

E)   STOCK OPTIONS

     Under the Company's Amended Executive Stock Option Plan, options may be
     granted to the Company's executives and directors. Options expire no later
     than ten years after the date of granting. The plan provides that such
     options will vest and may be exercisable 25 percent per year over four
     years.

Options granted during the last three years were as follows:

<TABLE>
<CAPTION>
                                                 2000        1999        1998
                                              ---------   ---------   ---------
                                                  #           #           #
<S>                                           <C>         <C>         <C>
Number of common shares in respect
   of which new options were granted.......   1,183,000      14,000     744,650
                                              ---------   ---------   ---------
                                                  $8.13                  $16.69
Exercise price.............................   to $17.19      $27.88   to $23.26
                                              =========   =========   =========
</TABLE>


All options were granted at a price equal to the average closing market values
on the day immediately preceding the date the options were granted.


The following table presents the situation pertaining to common shares reserved
for issuance under the plan and options exercised:

<TABLE>
<CAPTION>
                                                 2000        1999        1998
                                              ---------   ---------   ---------
                                                  #           #           #
<S>                                           <C>         <C>         <C>
Number of common shares reserved
   for issuance under the plan.............   2,829,739   2,405,242   2,405,242
Number of shares remaining available
   for issuance under the plan.............      32,703          --          --
Number of common shares issued pursuant
   to the exercised stock options..........      17,400     202,059     174,412
                                              ---------   ---------   ---------
                                                  $4.25       $4.25       $4.25
PRICE RANGE AT ISSUANCE....................   to $27.28   to $23.26   to $20.59
                                              =========   =========   =========
</TABLE>


The changes in number of options outstanding were as follows:

<TABLE>
<CAPTION>
                                                 2000        1999        1998
                                              ---------------------------------
                              WEIGHTED
                              AVERAGE
                            EXERCISE PRICE      NUMBER      NUMBER      NUMBER
                            --------------    ---------   ---------   ---------
                                  $               #           #           #
<S>                             <C>           <C>         <C>         <C>
Balance,
   beginning of year.......     15.76         2,217,224   2,406,067   1,837,329
Granted....................     10.37         1,183,000      14,000     744,650
Exercised..................      8.23           (17,400)   (202,059)   (174,412)
Cancelled..................     16.84          (585,788)       (784)     (1,500)
                                -----         ---------   ---------   ---------
BALANCE, END OF YEAR.......     12.89         2,797,036   2,217,224   2,406,067
                                =====         =========   =========   =========
</TABLE>


[LOGO - intertape polymer group(TM)]

                                       66

<PAGE>   35

                                      Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
       (In U.S. dollars; tabular amounts in thousands, except per share amounts)

The following table summarizes information about options outstanding and
exercisable at December 31, 2000:

<TABLE>
<CAPTION>
                        OPTIONS OUTSTANDING                OPTIONS EXERCISABLE
             -----------------------------------------    ---------------------
                              WEIGHTED        WEIGHTED                 WEIGHTED
RANGE OF                      AVERAGE         AVERAGE                  AVERAGE
EXERCISE                  CONTRACTUAL LIFE    EXERCISE                 EXERCISE
 PRICES        NUMBER        (IN YEARS)        PRICE        NUMBER      PRICE
--------     ---------    ----------------    --------    ---------    --------
   $             #                               $            #           $
<S>          <C>                <C>             <C>       <C>            <C>
4.25
TO 8.13        812,832           4.8             7.01       402,832       5.83

10.86
TO 19.30     1,704,454           5.1            14.20       730,312      15.90

19.49
TO 27.88       279,750           4.0            21.97       133,875      21.74
             ---------                                    ---------
             2,797,036                                    1,267,019
             =========                                    =========
</TABLE>

     Subsequent to year-end, on January 10, 2001 the Company repriced 474,163 of
     unexercised stock options held by employees, other than directors and
     executive officers. The repriced options had exercise prices ranging from
     US $16.30 to US $23.26 (CDN $22.50 to CDN $32.92) and expire in 2003 and
     2006. The revised exercise price was set at US $8.28 (CDN $12.40), being
     the average of the closing price on the Toronto and New York Stock
     Exchanges on January 9, 2001. All other terms and conditions of the
     respective options including the percentage vesting and the vesting and
     expiry dates remain unchanged.

16.  COMMITMENTS AND CONTINGENCIES

A)   COMMITMENTS

     As at December 31, 2000, the Company had commitments aggregating
     approximately $23,626,000 to 2005 for the rental of offices, warehouse
     space, manufacturing equipment, automobiles and other. Minimum lease
     payments for the next five years are $7,377,000 in 2001, $6,754,000 in
     2002, $6,249,000 in 2003, $1,920,000 in 2004 and $1,326,000 in 2005.

     The Company also had commitments aggregating approximately $9,600,000 for
     the purchase of manufacturing equipment. Most of these costs will be
     incurred in 2001.

B)   CONTINGENCIES

     The Company is party to various claims and lawsuits which are being
     contested. In the opinion of Management, the outcome of such claims and
     lawsuits will not have a material adverse effect on the Company.


17.  PENSION AND POST-RETIREMENT BENEFIT PLANS

The Company has several defined contribution plans and defined benefit plans for
substantially all its employees in both Canada and the United States. These
plans are generally contributory in Canada and non-contributory in the United
States.

DEFINED CONTRIBUTION PLANS
In the United States, the Company maintains a savings retirement plan (401[k]
Plan) for the benefit of certain employees who have been employed for at least
90 days. Contribution to these plans is at the discretion of the Company.

The Company contributes as well to a multi-employer plan for employees covered
by collective bargaining agreements.

In Canada, the Company maintains a defined contribution plan for its salaried
employees. The Company contributes to the plan amounts equal to 4 percent of
each participant's eligible salary.

The Company has expensed $3,033,000 for these plans for the year ended December
31, 2000 ($2,937,000 and $1,367,000 for 1999 and 1998 respectively).

DEFINED BENEFIT PLANS
The Company has, in the United States, two defined benefit plans (hourly and
salaried). Benefits for employees are based on compensation and years of service
for salaried employees and fixed benefits per month for each year of service for
hourly employees.

                                            [LOGO - intertape polymer group(TM)]

                                       67


<PAGE>   36


Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
(In U.S. dollars; tabular amounts in thousands, except per share amounts)


17.  PENSION AND POST-RETIREMENT BENEFIT PLANS (Continued)

DEFINED BENEFIT PLANS (Continued)
The funding policy is consistent with the funding requirements of federal laws
and regulations. Plan assets consist primarily of equity securities and fixed
income investments.

In Canada, certain non-union hourly employees of the Company are covered by a
plan which provides a fixed benefit of $9.95 ($10.33 and $9.15 in 1999 and 1998
respectively) per month for each year of service.

In the United States, the Company provides group health care and life insurance
benefits to certain retirees.

Information relating to the various plans is as follows:

<TABLE>
<CAPTION>
                                       PENSION PLANS            OTHER PLANS
                                    -------------------     -------------------
                                      2000        1999        2000        1999
                                    -------     -------     -------     -------
                                       $           $           $           $
<S>                                 <C>         <C>         <C>         <C>
ACCRUED BENEFIT OBLIGATIONS
Balance, beginning of year.........  16,690       7,423         712       1,002
Business acquisition...............      --      10,294          --          --
Current service cost...............     393         420           9          21
Interest cost......................   1,309         804          53          58
Benefits paid......................    (686)       (399)        (54)        (30)
Plan amendments....................      --          --          --        (109)
Actuarial losses (gains)...........   1,203      (1,359)         65        (230)
Foreign exchange
 rate adjustment...................     (43)       (493)         --          --
                                    -------     -------     -------     -------
BALANCE, END OF YEAR...............  18,866      16,690         785         712
                                    =======     =======     =======     =======
PLAN ASSETS
Balance, beginning of year.........  16,706       7,145          --          --
Business acquisition...............      --       8,775          --          --
Actual return
 on plan assets....................  (1,260)      1,512          --          --
Employer Contributions.............   2,206         185          --          --
Benefits paid......................    (686)       (399)         --          --
Foreign exchange
 rate adjustment...................     (35)       (512)         --          --
                                    -------     -------     -------     -------
BALANCE, END OF YEAR...............  16,931      16,706          --          --
                                    =======     =======     =======     =======
FUNDED STATUS
 DEFICIT (SURPLUS).................   1,935         (16)        785         712
Unamortized past
 service costs.....................    (633)       (691)         --          --
Unamortized net
 actuarial loss (gain).............  (1,772)      2,154         128         206
Unamortized transition
 assets (obligation)...............     100         106         (45)        (49)
                                    -------     -------     -------     -------
ACCRUED BENEFIT LIABILITY
 (PREPAID BENEFIT).................    (370)      1,553         868         869
                                    =======     =======     =======     =======
</TABLE>


[LOGO - intertape polymer group(TM)]

                                       68



<PAGE>   37


                                      Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
       (In U.S. dollars; tabular amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                    PENSION PLANS                        OTHER PLANS
                                           -------------------------------     -------------------------------
                                             2000        1999        1998        2000        1999        1998
                                           -------     -------     -------     -------     -------     -------
                                              $           $           $           $           $           $
<S>                                        <C>         <C>         <C>         <C>         <C>         <C>
ACCRUED BENEFIT EXPENSE
Current service cost.....................      393         420         642           9          21          27
Interest cost............................    1,309         804       1,954          53          58          66
Expected return on plan assets...........   (1,459)       (846)     (2,434)         --          --          --
Amortization of past service costs.......       53          52          49         (14)         (2)         (1)
Amortization of transition
  obligation (asset).....................       (4)         (4)         (4)          4          32          34
Amortization of unrecognised
   loss (gain)...........................      (21)          7           7          --          --          --
                                           -------     -------     -------     -------     -------     -------
PENSION EXPENSE FOR THE YEAR.............      271         433         214          52         109         126
                                           =======     =======     =======     =======     =======     =======
</TABLE>


The significant assumptions which management considers to be the most likely and
which were used to measure its accrued benefit obligations are as follows
(weighted average assumptions, as at December 31):

<TABLE>
<CAPTION>
                                                    PENSION PLANS                        OTHER PLANS
                                           -------------------------------     -------------------------------
                                             2000        1999        1998        2000        1999        1998
                                           -------     -------     -------     -------     -------     -------
<S>                                        <C>         <C>         <C>         <C>         <C>         <C>
CANADIAN PLANS
Discount rate............................    7.50%       6.50%       6.75%          --          --          --
Expected rate of return
   on plan assets........................    9.00%       9.00%       9.00%          --          --          --
                                             -----       -----       -----     -------     -------     -------
</TABLE>

<TABLE>
<CAPTION>
                                                    PENSION PLANS                        OTHER PLANS
                                           -------------------------------     -------------------------------
                                             2000        1999        1998        2000        1999        1998
                                           -------     -------     -------     -------     -------     -------
<S>                                        <C>         <C>         <C>         <C>         <C>         <C>
U.S. PLANS
Discount rate............................    7.50%       7.50%       7.00%       7.50%       8.25%          --
Expected rate of return
   on plan assets........................    8.60%       8.60%       9.50%          --          --          --
Rate of compensation increase
   (only for one plan)...................    4.00%       4.00%       4.00%          --          --          --
                                             -----       -----       -----     -------     -------     -------

</TABLE>


For measurement purposes, a 5.0% annual rate of increase in the per capita cost
covered health care benefits was assumed for 2000 (8.0% in 1999, 9.0% in 1998)
and deemed to remain constant through 2005.


                                           [LOGO - intertape polymer group(TM)]

                                       69



<PAGE>   38

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
(In U.S. dollars; tabular amounts in thousands, except per share amounts)

18.  SEGMENT DISCLOSURES

The Company manufactures and sells an extensive range of specialized polyolefin
plastic packaging products primarily in Canada and in the United States. All
products have to be considered part of one reportable segment as they are made
from similar extrusion processes and differ only in the final stages of
manufacturing. A vast majority of the Company's products, while brought to
market through various distribution channels, generally have similar economic
characteristics.

The following table presents sales by country based on the location of the
manufacturing facilities:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                          2000        1999        1998
                                                -------     -------     -------
                                                   $           $           $
<S>                                             <C>         <C>         <C>
SALES
Canada.......................................   117,799     107,072      94,186
United States................................   581,723     487,640     334,367
Other........................................     2,443       3,333       3,390
Transfers between geographic areas...........   (48,050)    (28,098)    (53,913)
                                                -------     -------     -------
TOTAL SALES..................................   653,915     569,947     378,030
                                                =======     =======     =======
</TABLE>

The following table presents capital assets and goodwill by country based on the
locations of assets:

<TABLE>
<CAPTION>
DECEMBER 31,                                      2000        1999
                                                -------     -------
                                                   $           $
<S>                                             <C>         <C>
CAPITAL ASSETS
   Canada....................................    51,388      48,016
   United States.............................   316,900     296,326
   Other.....................................     6,465       7,380
                                                -------     -------
TOTAL CAPITAL ASSETS.........................   374,753     351,722
                                                =======     =======

GOODWILL
   Canada....................................    17,955      19,053
   United States.............................   216,302     198,833
                                                -------     -------
TOTAL GOODWILL...............................   234,257     217,886
                                                =======     =======
</TABLE>

No customer accounted for 10 percent or more of revenues in 2000, 1999 and 1998.

19.  COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform with the
presentation adopted in the current year.

20.  DIFFERENCES IN ACCOUNTING BETWEEN THE UNITED STATES OF AMERICA AND CANADA

A)   NET EARNINGS AND EARNINGS PER SHARE

     Net earnings of the Company and earnings per share established under
     Canadian GAAP, conform in all material respects to the amounts that would
     be reported if the financial statements would have been prepared under U.S.
     GAAP.

B)   CONSOLIDATED STATEMENTS OF EARNINGS

     Under Canadian GAAP, the changes in reporting currency effected on January
     1, 1999 has been accounted for using a translation of convenience, as
     described in Note 2. Under U.S. GAAP, the financial statements for periods
     presented prior to the change in reporting currency would be translated to
     U.S. dollars using the current rate method, which method uses specific
     year-end or annual average exchange rates as appropriate. Accordingly,
     using the current rate method, the following amounts would have been
     reported for sales and cost of sales, under U.S. GAAP:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                           1998
                                                -------
                                                   $
<S>                                             <C>
Sales........................................   390,007
Cost of Sales................................   280,588
</TABLE>

C)   CONSOLIDATED BALANCE SHEETS

     Under Canadian GAAP, the financial statements are prepared using the
     proportionate consolidation method of accounting for joint ventures. Under
     U.S. GAAP, these investments would be accounted for using the equity
     method. Note 3 to the consolidated financial statements provides details of
     the impact of proportionate consolidation on the Company's consolidated
     financial statements for 2000, 1999 and 1998, including the impact on the
     consolidated balance sheets.

[LOGO - intertape polymer group(TM)]

                                       70

<PAGE>   39


                                      Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
       (In U.S. dollars; tabular amounts in thousands, except per share amounts)


     The other differences in presentation that would be required under U.S.
     GAAP to the consolidated balance sheets are not viewed as significant
     enough to require further disclosure.

D)   CONSOLIDATED CASH FLOWS

     Canadian GAAP permits the disclosure of a subtotal of the amount of funds
     provided by operations before changes in non-cash working capital items to
     be included in the consolidated statements of cash flows. U.S. GAAP does
     not permit this subtotal to be presented.

E)   ACCOUNTING FOR COMPENSATION PROGRAMS

     The Company has chosen to continue to measure compensation costs related to
     awards of stock options using the intrinsic value based method of
     accounting. Under U.S. GAAP, the Company is required to make pro forma
     disclosures of net earnings, basic earnings per share and diluted earnings
     per share as if the fair value based method of accounting had been applied.
     The fair value of options granted in 2000, 1999 and 1998 was estimated
     using the Black-Scholes option-pricing model, taking into account an
     expected life of five years, expected volatility of 45% in 2000 (25% in
     1999 and 1998) risk-free interest rates of 5.96% (5.39% in 1999, 5.27% in
     1998) and maintenance of the existing dividend policy. A compensation
     charge is amortized over the vesting periods.

     Accordingly, the Company's net earnings, basic earnings per share and
     diluted earnings per share for the year ended December 31, 2000 would have
     been reduced, on a pro forma basis, by $3,362,000, $0.12 and $0.12
     ($2,499,000, $0.09 and $0.09 respectively in 1999 and $2,100,000, $0.08 and
     $0.08 respectively in 1998).

     The weighted average fair value of options granted in 2000 was $4.42 ($8.79
     in 1999 and $5.98 in 1998).

     The Black-Scholes option valuation model was developed for use in
     estimating the fair value of traded options which have no vesting
     restrictions and are fully transferable. In addition, option valuation
     models require the input of highly subjective assumptions including the
     expected stock price volatility. Because the Company's Amended Executive
     Stock Option Plan has characteristics significantly different from those of
     traded options and because changes in the subjective input assumptions can
     materially affect the fair value estimate, in Management's opinion, the
     existing models do not necessarily provide a reliable single measure of the
     fair value of its employee stock options.

     In March 2000, the Financial Accounting Standards Board issued FASB
     Interpretation No. 44 (FIN 44), which became effective on July 1, 2000. FIN
     44 requires that the cancellation, in November 2000, of 400,000 outstanding
     stock options by the Company and the granting of new options with a lower
     exercise price (the replacement options) be considered as an indirect
     reduction of the exercise price of the stock options. The replacement
     options will be subject to variable accounting from the cancellation date
     of date of grant, depending on which stock options were identified as the
     replacement options. Under variable accounting, the Company is required to
     recognize compensation expense for any increase in the quoted market price
     of the stock above the exercise price of US $10.13 and US $14.71 (CDN
     $15.50 and CDN $21.94) of the replacement options. The compensation expense
     must be recorded until the replacement options are exercised, forfeited or
     expire. The impact on the Company's financial results will depend on the
     fluctuations in the Company's stock price and the dates of the exercise,
     forfeitures or cancellations of the stock options. Depending on these
     factors, the Company could be required to record significant compensation
     expense during the life of the options which expire in 2006.

     As at December 31, 2000, the Company's quoted market stock price was US
     $7.31 (CDN $11.00) per share. There was no compensation expense recognized
     in the year 2000 related to the replacement options since the quoted market
     stock price was below the exercise prices of these options.

     FIN 44 will also require that options repriced in January 2001 (see Note
     15) be subject to variable accounting starting in 2001.


                                           [LOGO - intertape polymer group(TM)]

                                       71



<PAGE>   40


Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
(In U.S. dollars; tabular amounts in thousands, except per share amounts)


20.  DIFFERENCES IN ACCOUNTING BETWEEN THE UNITED STATES OF AMERICA AND CANADA
     (Continued)

F)   CONSOLIDATED COMPREHENSIVE INCOME

     As required under U.S. GAAP, the Company would have reported the following
     consolidated comprehensive income:

<TABLE>
<CAPTION>
                                                  2000        1999        1998
                                                -------     -------     -------
                                                   $           $           $
<S>                                             <C>         <C>         <C>
Net earnings in accordance
   with U.S. GAAP............................    33,422       8,098      28,751
Foreign currency translation
   adjustments...............................    (2,722)      3,458     (17,581)
                                                -------     -------     -------
CONSOLIDATED COMPREHENSIVE INCOME............    30,700      11,556      11,170
                                                =======     =======     =======
</TABLE>


G)   NEW ACCOUNTING PRONOUNCEMENTS

     The Financial Accounting Standards Board (FASB) has issued SFAS No. 133
     which outlines accounting and reporting standards pertaining to derivative
     instruments and hedging activities. For U.S. GAAP reporting purposes, this
     statement should be adopted for fiscal years commencing after June 15,
     2000. As the Company does not presently use derivative or hedging
     instruments, there is no foreseen impact for the implementation of this new
     recommendation.


[LOGO - intertape polymer group(TM)]

                                       72



<PAGE>   41




                                                                            Memo
--------------------------------------------------------------------------------







                                           [LOGO - intertape polymer group(TM)]

                                       73




<PAGE>   42


Intertape Polymer Group - Locations
--------------------------------------------------------------------------------

CORPORATE OFFICES:

         o MONTREAL, QUEBEC, CANADA
         o SARASOTA, FLORIDA, U.S.A.

         t Atlanta, Georgia, U.S.A.
        ab Brighton, Colorado, U.S.A.
        ab Carbondale, Illinois, U.S.A.
         t Chicago, Illinois, U.S.A.
        ab Columbia, South Carolina, U.S.A.
        ab Cumming, Georgia, U.S.A.
      txab Danville, Virginia, U.S.A.
       xab Edmundston, New Brunswick, Canada
         x Georgetown, Barbados
        ab Green Bay, Wisconsin, U.S.A.
         b Lachine, Quebec, Canada
         t Los Angeles, California, U.S.A.
       xab Marysville, Michigan, U.S.A.
         b Matomoros, Mexico
        ab Menasha, Wisconsin, U.S.A.
         o Piedras Negras, Mexico
        ab Porto, Portugal
       xab Rayne, Louisiana, U.S.A.
        ab Richmond, Kentucky, U.S.A.
         b San Luis Potosi, Mexico
        ab Santa Fe Springs, California, U.S.A.
      txab St. Laurent, Quebec, Canada
        ab Tremonton, Utah, U.S.A.
       xab Truro, Nova Scotia, Canada

                 Manufacturing Location a
                           Distribution b
                          ISO Certified x
                       Corporate Office o
          Regional Distribution Centers t


[LOGO - intertape polymer group(TM)]

                                       74

<PAGE>   43


                                                               Other Information

--------------------------------------------------------------------------------

BOARD OF DIRECTORS

MELBOURNE F. YULL
Chairman and Chief Executive Officer

GORDON R. CUNNINGHAM (1)
President, Cumberland Asset Management

BEN J. DAVENPORT, JR.
Chairman, First Piedmont Corporation;
Chairman and CEO, Chatham Oil Company

MICHAEL L. RICHARDS (1)
Senior Partner, Stikeman Elliott

L. ROBBIE SHAW (1)
Vice President,
Nova Scotia Community College

(1) Member of Audit Committee

HONORARY DIRECTORS

IRVINE MERMELSTEIN
Managing Partner, Market-Tek

JAMES A. MOTLEY SR.
Director, American National Bank and Trust Company
American National Bankshares, Inc.

EXECUTIVE OFFICERS

MELBOURNE F. YULL
Chairman and Chief Executive Officer

ANDREW M. ARCHIBALD, C.A.
Chief Financial Officer, Secretary,
Treasurer, Vice President Administration

JOSEPH D. BRUNO
Vice President, Supply Chain Management

JIM BOB CARPENTER
President, Woven Products

JOHN T. FAIN
Vice President, Corporate Marketing

BURGESS H. HILDRETH
Vice President, Human Resources

JAMES A. JACKSON
Vice President, Chief Information Officer

LLOYD W. JONES
Vice President, Procurement

H. DALE MCSWEEN
President, Distribution Products

SAL VITALE, C.A.
Vice President, Finance

DUNCAN R. YULL
Vice President Sales, Distribution Products

GREGORY A. YULL
President, Film Products

TRANSFER AGENT AND REGISTRAR

CANADA:   CIBC Mellon Trust Company
          2001 University Street, 16th Floor
          Montreal, Quebec, Canada H3A 2A6

USA:      Mellon Investor Services L.L.C.
          85 Challenger Road, 2nd Floor
          Ridgefield Park, New Jersey 07660

AUDITORS

CANADA:   Raymond Chabot Grant Thornton
          600 de la Gauchetiere West, Suite 1900
          Montreal, Quebec, Canada H3B 4L8

USA:      Grant Thornton International
          130 E. Randolf Street
          Chicago, Illinois, USA 60601-6203

INVESTOR INFORMATION

STOCK AND SHARE LISTING
Common shares are listed on the New York Stock Exchange and the Toronto Stock
Exchange, trading under the symbol ITP.

SHAREHOLDER AND INVESTOR RELATIONS
Shareholders and investors having inquiries or wishing to obtain copies of the
Company's Annual Report or other U.S. Securities Exchange Commission filings
should contact:

MR. ANDREW M. ARCHIBALD, C.A.
Chief Financial Officer

Intertape Polymer Group Inc.
110 E Montee de Liesse
St. Laurent, Quebec, Canada H4T 1N4

Toll Free: (866) 202-4713 o E-Mail: itp$info@intertapeipg.com

ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

The Annual and Special Meeting of Shareholders will be held on WEDNESDAY, JUNE
20, 2001 at 4:00 P.M. at Loews Hotel Vogue; 1425 de la Montagne, Montreal,
Quebec, Canada.




                                          [LOGO -- intertape polymer group(TM)]

                                       75

<PAGE>   44



      INTERTAPE  POLYMER  GROUP  INC.  o  TWO  THOUSAND  ANNUAL  REPORT




                                       [LOGO - intertape polymer group inc.(TM)]



              Design: Intertape Polymer Group, Corporate Marketing
              Printed in U.S.A., 5-01-13M


                                       76