News Release
A summary of results for continuing operations for the three months and
years ended
(In Millions, Except Per-Share Data)
Three Months
Ended Year Ended
December 31 December 31
----------- -----------
2008 2007 2008 2007
---- ---- ---- ----
Sales $192.7 $208.5 $883.9 $922.6
Income from continuing operations as
reported under generally accepted
accounting principles (GAAP) $5.9 $7.0 $29.6 $34.9
After-tax effects of:
Loss associated with plant
shutdowns, asset impairments
and restructurings 5.1 1.0 8.9 4.1
(Gains) losses from sale of
assets and other items (.8) (1.7) (6.6) (.6)
--- ---- ---- ---
Income from continuing manufacturing
operations* $10.2 $6.3 $31.9 $38.4
----- ---- ----- -----
Diluted earnings per share from
continuing operations as reported
under GAAP $.17 $.19 $.87 $.90
After-tax effects per diluted share of:
Loss associated with plant shutdowns,
asset impairments and restructurings .15 .03 .26 .11
(Gains) losses from sale of assets
and other items (.02) (.05) (.20) (.02)
---- ---- ---- ----
Diluted earnings per share from
continuing manufacturing operations* $.30 $.17 $.93 $.99
---- ---- ---- ----
* The after-tax effects of unusual items, plant shutdowns, asset
impairments and restructurings, and gains or losses from sale of
assets and other items have been presented separately and removed
from net income and earnings per share from continuing operations as
reported under GAAP to determine Tredegar's presentation of income and
earnings per share from continuing manufacturing operations. Income
and earnings per share from continuing manufacturing operations are
key financial and analytical measures used by Tredegar to gauge the
operating performance of its continuing manufacturing businesses.
They are not intended to represent the stand-alone results for
Tredegar's continuing manufacturing businesses under GAAP and should
not be considered as an alternative to net income or earnings per
share as defined by GAAP. They exclude items that we believe do not
relate to Tredegar's ongoing manufacturing operations.
Mr. Gottwald continued: "Operating profits for our ongoing U.S. operations
in aluminum extrusions decreased by
Mr. Gottwald further stated: "Our balance sheet remains strong with cash
in excess of debt of
MANUFACTURING OPERATIONS
Film Products
Fourth-quarter net sales (sales less freight) in Film Products were
Net sales in Film Products for 2008 were
Volume was down in the quarter and year ended
Operating profit from ongoing operations increased in the fourth quarter
of 2008 versus 2007 due primarily to the lag in the pass-through of
substantially lower resin costs, adjustments for inventories accounted for
under the last-in first-out method (LIFO) and cost reduction efforts,
partially offset by lower volume. Operating profit for 2008 in comparison to
2007 decreased as a result of lower volume, partially offset by cost reduction
efforts and the favorable impact of changes in the U.S. dollar value of
currencies for operations outside of the U.S. The company estimates that the
impact on operating profit of the lag in the pass-through of changes in
average resin costs and adjustments for LIFO was positive
Capital expenditures in Film Products were
Aluminum Extrusions
Fourth-quarter net sales from ongoing U.S. operations in Aluminum
Extrusions were
Net sales for ongoing U.S. operations in Aluminum Extrusions for 2008 were
The decreases in net sales in the fourth quarter and full year of 2008 compared with last year was mainly due to lower volume. Shipments declined in most markets. Shipments in non-residential construction, which comprised approximately 72% of total volume in 2008, declined by approximately 2.7% in 2008 compared with 2007. Operating profit from ongoing operations declined during the fourth quarter and all of 2008 versus the same periods last year mainly due to lower volume.
Capital expenditures for continuing operations in Aluminum Extrusions were
On
OTHER ITEMS
Net pension income from continuing operations was
At
The effective tax rate used to compute income taxes from continuing
manufacturing operations was 41.2% in the fourth quarter of 2008 compared with
44.7% in the fourth quarter of 2007, and 39.9% in 2008 compared with 38.8% in
2007. The increase in the effective tax rate for continuing manufacturing
operations for all of 2008 versus 2007, which had an adverse impact of
Overall results for continuing operations for the quarter include special
items. After-tax net charges for continuing operations for plant shutdowns,
asset impairments and restructurings and gains and losses from the sale of
assets and other items were after-tax net losses of
CAPITAL STRUCTURE AND ADJUSTED EBITDA
Cash in excess of debt was
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
Some of the information contained in this press release may constitute
"forward-looking statements" within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. When we
use the words "believe," "estimate," "anticipate," "expect," "project,"
"likely," "may" and similar expressions, we do so to identify forward-looking
statements. Such statements are based on our then current expectations and
are subject to a number of risks and uncertainties that could cause actual
results to differ materially from those addressed in the forward-looking
statements. It is possible that our actual results and financial condition
may differ, possibly materially, from the anticipated results and financial
condition indicated in these forward-looking statements. Factors that could
cause actual results to differ from expectations include, without limitation:
Film Products is highly dependent on sales to one customer -- The
To the extent that the financial information portion of this release
contains non-GAAP financial measures, it also presents both the most directly
comparable financial measures calculated and presented in accordance with GAAP
and a quantitative reconciliation of the difference between any such non-GAAP
measures and such comparable GAAP financial measures. Accompanying the
reconciliation is management's statement concerning the reasons why management
believes that presentation of non-GAAP measures provides useful information to
investors concerning
Based in
Tredegar Corporation
Condensed Consolidated Statements of Income
(In Thousands, Except Per-Share Data)
(Unaudited)
Fourth Quarter Ended Year Ended
December 31 December 31
----------- -----------
2008 2007 2008 2007
---- ---- ---- ----
Sales $192,702 $208,462 $883,899 $922,583
Other income (expense),
net (a) (e) 1,412 3,315 10,341 1,782
----- ----- ------ -----
194,114 211,777 894,240 924,365
------- ------- ------- -------
Cost of goods sold (a) 153,795 171,396 739,721 761,509
Freight 4,434 4,352 20,782 19,808
Selling, R&D and
general expenses 16,967 21,135 69,704 76,855
Amortization of
intangibles 30 37 123 149
Interest expense 472 712 2,393 2,721
Asset impairments and
costs associated with
exit and disposal
activities (a) 7,231 1,456 12,390 4,027
----- ----- ------ -----
182,929 199,088 845,113 865,069
------- ------- ------- -------
Income from continuing
operations before
income taxes 11,185 12,689 49,127 59,296
Income taxes (e) 5,272 5,653 19,486 24,366
----- ----- ------ ------
Income from continuing
operations 5,913 7,036 29,641 34,930
Income (loss) from
discontinued operations (b) 225 6,321 (705) (19,681)
--- ----- ---- -------
Net income (loss) (a)(c) $6,138 $13,357 $28,936 $15,249
------ ------- ------- -------
Earnings (loss) per share:
Basic:
Continuing operations $.17 $.19 $.87 $.91
Discontinued operations .01 .17 (.02) (.51)
--- --- ---- ----
Net income (loss) $.18 $.36 $.85 $.40
---- ---- ---- ----
Diluted:
Continuing operations $.17 $.19 $.87 $.90
Discontinued operations .01 .17 (.02) (.51)
--- --- ---- ----
Net income (loss) $.18 $.36 $.85 $.39
---- ---- ---- ----
Shares used to compute
earnings (loss) per share:
Basic 33,782 36,494 33,977 38,532
Diluted 33,990 36,587 34,194 38,688
Tredegar Corporation
Net Sales and Operating Profit by Segment
(In Thousands)
(Unaudited)
Fourth Quarter Ended Year Ended
December 31 December 31
----------- -----------
2008 2007 2008 2007
---- ---- ---- ----
Net Sales
Film Products $123,809 $130,587 $522,839 $530,972
Aluminum Extrusions 64,459 73,523 340,278 371,803
------ ------ ------- -------
Total net sales 188,268 204,110 863,117 902,775
Add back freight 4,434 4,352 20,782 19,808
----- ----- ------ ------
Sales as shown in the
Consolidated
Statements of Income $192,702 $208,462 $883,899 $922,583
-------- -------- -------- --------
Operating Profit
Film Products:
Ongoing operations 19,195 12,915 53,914 59,423
Plant shutdowns, asset
impairments,
restructurings and
gain on sale of
assets (a) (6,648) (256) (11,297) (649)
Aluminum Extrusions (b):
Ongoing operations 2,323 2,641 10,132 16,516
Plant shutdowns, asset
impairments and
restructurings (a) (72) - (687) (634)
AFBS:
Gain on sale of
investments in Theken
Spine and Therics,
LLC (d) - - 1,499 -
Plant shutdowns, asset
impairments and
restructurings (a) - (1,200) - (2,786)
--- ------ --- ------
Total 14,798 14,100 53,561 71,870
Interest income 351 252 1,006 1,212
Interest expense 472 712 2,393 2,721
Gain on the sale of
corporate assets (e) - 2,699 1,001 2,699
Gain from write-up of an
investment accounted for
under the fair value
method (e) 600 - 5,600 -
Loss from write-down of
an investment (e) - - - 2,095
Stock option-based
compensation costs 266 277 782 978
Corporate expenses, net 3,826 3,373 8,866 10,691
----- ----- ----- ------
Income before income
taxes 11,185 12,689 49,127 59,296
Income taxes (e) 5,272 5,653 19,486 24,366
----- ----- ------ ------
Income from continuing
operations 5,913 7,036 29,641 34,930
Income (loss) from
discontinued operations (b) 225 6,321 (705) (19,681)
--- ----- ---- -------
Net income (loss) (a)(c) $6,138 $13,357 $28,936 $15,249
------ ------- ------- -------
Tredegar Corporation
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
As of December 31
2008 2007
---- ----
Assets
Cash & cash equivalents $45,975 $48,217
Accounts & notes receivable, net 91,400 97,064
Income taxes recoverable 12,549 323
Inventories 36,809 48,666
Deferred income taxes 7,654 9,172
Prepaid expenses & other 5,374 4,077
Current assets of discontinued operation (b) - 37,750
--- ------
Total current assets 199,761 245,269
Property, plant & equipment, net 236,870 269,083
Other assets (f) 38,926 116,759
Goodwill & other intangibles 135,075 135,907
Noncurrent assets of discontinued
operation (b) - 17,460
--- ------
Total assets $610,632 $784,478
-------- --------
Liabilities and Shareholders' Equity
Accounts payable $54,990 $67,161
Accrued expenses 38,349 33,676
Current portion of long-term debt 529 540
Current liabilities of discontinued
operation (b) - 17,152
--- ------
Total current liabilities 93,868 118,529
Long-term debt 22,173 81,516
Deferred income taxes 45,152 68,625
Other noncurrent liabilities (f) 29,023 15,662
Noncurrent liabilities of discontinued
operation (b) - 8,818
Shareholders' equity (f) 420,416 491,328
-------- --------
Total liabilities and shareholders' equity $610,632 $784,478
-------- --------
Tredegar Corporation
Condensed Consolidated Statement of Cash Flows
(In Thousands)
(Unaudited)
Year Ended
December 31
-----------
2008 2007
---- ----
Cash flows from operating activities:
Net income $28,936 $15,249
Adjustments for noncash items:
Depreciation 43,068 45,892
Amortization of intangibles 123 149
Deferred income taxes 22,183 (24,241)
Accrued pension income and postretirement
benefits (4,426) (1,735)
Gain on the write-up of an investment
accounted for under the fair value
method (e) (5,600) -
Loss from write-down of investment - 2,095
Gain on sale of assets (3,083) (2,699)
Loss on asset impairments and divestitures 10,136 32,287
Changes in assets and liabilities, net of
effects of acquisitions and divestitures:
Accounts and notes receivables (678) 15,786
Inventories 13,374 4,099
Income taxes recoverable (12,092) 10,478
Prepaid expenses and other (1,873) 764
Accounts payable and accrued expenses (18,900) (2,932)
Other, net 4,238 362
----- ---
Net cash provided by operating activities 75,406 95,554
------ ------
Cash flows from investing activities:
Capital expenditures (net of related
accounts payable of $1.7 million in 2008) (19,235) (20,643)
Investment in a drug delivery company
($1 million in 2008 and $6.5 million in
2007), real estate in 2008 and 2007 and
Harbinger ($10 million in 2007) (5,391) (23,513)
Proceeds from the sale of the aluminum
extrusions business in Canada (net of
cash included in sale and transaction costs) 23,407 -
Proceeds from the sale of assets and
property disposals & reimbursements from
customers for purchases of equipment
in 2007 4,691 7,871
----- -----
Net cash provided by (used in) investing
activities 3,472 (36,285)
----- -------
Cash flows from financing activities:
Dividends paid (5,447) (6,126)
Debt principal payments (84,489) (39,964)
Borrowings 25,000 59,500
Repurchases of Tredegar common stock,
including settlement of $3,368 in 2008 and
net of settlement payable of $3,368 in 2007 (19,792) (73,959)
Proceeds from exercise of stock options 4,069 6,471
----- -----
Net cash used in financing activities (80,659) (54,078)
------- -------
Effect of exchange rate changes on cash (461) 2,128
---- -----
(Decrease) Increase in cash and cash
equivalents (2,242) 7,319
Cash and cash equivalents at beginning of
period 48,217 40,898
------ ------
Cash and cash equivalents at end of period $45,975 $48,217
------- -------
Selected Financial Measures
(In Millions)
(Unaudited)
For the Twelve Months
Ended December 31, 2008
-----------------------
Film Aluminum
Products Extrusions Total
-------- ---------- -----
Operating profit from continuing
ongoing operations $53.9 $10.1 $64.0
Allocation of corporate overhead (7.2) (1.5) (8.7)
Add back depreciation and
amortization from continuing
operations 34.7 8.0 42.7
---- --- ----
Adjusted EBITDA from continuing
operations (g) $81.4 $16.6 $98.0
----- ----- -----
Selected balance sheet and other
data as of December 31, 2008 :
Net debt (cash) (h) $(23.3)
Shares outstanding 33.9
Notes to the Financial Tables
-----------------------------
(a) Plant shutdowns, asset impairments and restructurings in the fourth
quarter of 2008 include:
-- Pretax charges of $7.2 million for asset impairments in Film
Products;
-- A pretax gain of $583,000 related to the sale of land rights
and related improvements at Film Products facility in Shanghai,
China (included in "Other income (expense), net" in the condensed
consolidated statements of income); and
-- A pretax charge of $72,000 related to expected future
environmental costs at Aluminum Extrusions facility in Newnan,
Georgia (included in "Cost of goods sold" in the condensed
consolidated statement of income).
Plant shutdowns, asset impairments and restructurings in 2008
include:
-- Pretax charges of $9.7 million for asset impairments in Film
Products;
-- Pretax charges of $2.7 million for severance and other
employee-related costs in connection with restructurings in Film
Products ($2.2 million ) and Aluminum Extrusions ($510,000 );
-- A pretax gain of $583,000 related to the sale of land rights
and related improvements at Film Products facility in Shanghai,
China (included in "Other income (expense), net" in the condensed
consolidated statements of income); and
-- A pretax charge of $177,000 related to expected future
environmental costs at Aluminum Extrusions facility in Newnan,
Georgia (included in "Cost of goods sold" in the condensed
consolidated statements of income).
Plant shutdowns, asset impairments and restructurings in the fourth
quarter of 2007 include:
-- A pretax charge of $1.2 million related to the estimated loss on
the sub-lease of a portion of the AFBS (formerly Therics)
facility in Princeton, New Jersey ; and
-- A pretax charge of $256,000 for asset impairments in Film
Products.
Plant shutdowns, asset impairments and restructurings in 2007
include:
-- A pretax charge of $2.8 million related to the estimated loss on
the sub-lease of a portion of the AFBS (formerly Therics)
facility in Princeton, New Jersey ;
-- Pretax charges of $594,000 for asset impairments in Film Products;
-- A pretax charge of $592,000 for severance and other
employee-related costs in Aluminum Extrusions;
-- A pretax charge of $55,000 for costs related to the shutdown of
the films manufacturing facility in LaGrange, Georgia ; and
-- A pretax charge of $42,000 related to expected future
environmental costs at the aluminum extrusions facility in Newnan,
Georgia (included in "Cost of goods sold" in the condensed
consolidated statements of income).
(b) On February 12, 2008 , Tredegar sold its aluminum extrusions business
in Canada for approximately $25 million to an affiliate of H.I.G.
Capital . Tredegar realized cash income tax benefits in 2008 from the
sale of approximately $12 million . All historical results for this
business have been reflected as discontinued operations in the
accompanying financial tables. The components of income (loss) from
discontinued operations are presented below:
Fourth Quarter Ended Year Ended
December 31 December 31
----------- -----------
(In thousands) 2008 2007 2008 2007
---- ---- ---- ----
Income (loss) from operations
before income taxes $- $(376) $(391) $(6,366)
Income tax cost (benefit) on
operations - (108) (98) (2,199)
--- ----- ---- -------
- (268) (293) (4,167)
--- ----- ----- -------
Loss associated with asset
impairments and disposal
activities - (4,144) (1,337) (31,755)
Income tax cost (benefit) on asset
impairments and costs associated
with disposal activities (225) (10,733) (925) (16,241)
---- ------- ---- -------
225 6,589 (412) (15,514)
--- ----- ---- -------
Income (loss) from discontinued
operations $225 $6,321 $(705) $(19,681)
---- ------ ----- ---------
(c) Comprehensive income (loss), defined as net income and other
comprehensive income (loss), was a loss of $67.9 million for the
fourth quarter of 2008 and income of $33.0 million for the fourth
quarter of 2007. Comprehensive income (loss) was a loss of $54.7
million for 2008 and income of $49.9 million for 2007. Other
comprehensive income (loss) includes changes in foreign currency
translation adjustments, unrealized gains and losses on derivative
financial instruments and prior service cost and net gains or
losses from pension and other postretirement benefit plans arising
during the period and the related amortization of these prior
service cost and net gains or losses recorded net of deferred
taxes directly in shareholders' equity. The loss in comprehensive
income for the fourth quarter and full year of 2008 relates to the
significant reduction since the end of 2007 in the funded status
of our pension plans (see Note (f)).
(d) The gain on the sale of the investments in Theken Spine and Therics,
LLC of $1.5 million is included in "Other income (expense), net" in
the condensed consolidated statements of income. AFBS (formerly
Therics, Inc. ) received these investments in 2005, when
substantially all of the assets of AFBS, Inc. , a wholly-owned
subsidiary of Tredegar , were sold or assigned to a newly-created
limited liability company, Therics, LLC , controlled and managed by
an individual not affiliated with Tredegar .
(e) Gain on the sale of corporate assets in 2008 includes a realized
gain related to the sale of equity securities ($509,000 ) and a
realized gain on the sale of corporate real estate ($492,000 ).
These gains are included in "Other income (expense), net" in the
condensed consolidated statements of income. The unrealized gain
from the write-up of an investment accounted for under the fair
value method of $5.6 million in 2008 is included in "Other income
(expense), net" in the condensed consolidated statements of income.
The write-up was based on the valuation of Tredegar's investment
implied from a new round of equity financing completed for the
investee in the fourth quarter of 2008. The loss from the
write-down of an investment of $2.1 million in 2007 is included in
"Other income (expense), net" in the condensed consolidated
statements of income.
Income taxes for 2008 include the reversal of a valuation
allowance recognized in the third quarter of 2007 of $1.1 million
that originally related to expected limitations on the utilization
of assumed capital losses on certain investments.
(f) In accordance with SFAS No. 158, "Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans" (SFAS 158), we
recognize in the balance sheets the funded status of each of our
defined benefit pension and other postretirement plans. As of
December 31, 2008 , the funded status of our defined benefit pension
plan was a net liability of $17.1 million in "Other noncurrent
liabilities" compared with an asset of $86.3 million in "Other
assets" and a liability of $2.3 million in "Other noncurrent
liabilities" as of December 31, 2007 . The impact of the change in
the funded status, net of deferred taxes, is recognized directly
in shareholders' equity and comprehensive income or loss.
Adjustments made as a result of this change in the funded status of
our plans will not impact our debt covenant computations since our
credit agreement allows us to elect to use generally accepted
accounting principles in effect when the agreement was signed, which
was prior to our adoption of SFAS 158.
(g) Adjusted EBITDA for the twelve months ended December 31, 2008 ,
represents income from continuing operations before interest, taxes,
depreciation, amortization, unusual items and losses associated with
plant shutdowns, asset impairments and restructurings, gains from the
sale of assets, investment write-downs or write-ups, charges related
to stock option awards accounted for under the fair value-based
method and other items. Adjusted EBITDA is not intended to
represent cash flow from operations as defined by GAAP and should
not be considered as either an alternative to net income (as an
indicator of operating performance) or to cash flow (as a measure of
liquidity). Tredegar uses Adjusted EBITDA as a measure of unlevered
(debt-free) operating cash flow. We also use it when comparing
relative enterprise values of manufacturing companies and when
measuring debt capacity. When comparing the valuations of a peer
group of manufacturing companies, we express enterprise value as a
multiple of Adjusted EBITDA. We believe Adjusted EBITDA is
preferable to operating profit and other GAAP measures when applying
a comparable multiple approach to enterprise valuation because it
excludes the items noted above, measures of which may vary among
peer companies.
(h) Net debt is calculated as follows (in millions):
Debt $22.7
Less: Cash and cash equivalents (46.0)
------
Net debt (cash) $(23.3)
------
Net debt is not intended to represent total debt or debt defined by
GAAP. Net debt is utilized by management in evaluating the company's
financial leverage and equity valuation and the Company believes that
investors also may find net debt to be helpful for the same purposes.
SOURCE
Fax: +1-804-330-1777, daedward@tredegar.com/
Web Site: http://www.tredegar.com /
