UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
report (Date of earliest event reported): May 3, 2007
|
Tredegar
Corporation
|
|
(Exact
Name of Registrant as Specified in its
Charter)
|
|
Virginia
|
1-10258
|
54-1497771
|
|
(State
or Other Jurisdiction
of
Incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
|
1100
Boulders Parkway
Richmond,
Virginia
|
23225
|
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Registrant's
telephone number, including area code: (804)
330-1000
|
___________________________________________
|
||
|
(Former
Name or Former Address, if Changed Since Last
Report)
|
Check
the
appropriate box below if the Form 8-K is intended to simultaneously satisfy
the
filing obligation of the registrant under any of the following provisions
(see
General
Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02 Results
of Operations and Financial Condition.
On
May 3,
2007, Tredegar Corporation announced its results of operations for the first
quarter of 2007. Furnished as Exhibit 99 and incorporated herein by reference
is
the press release by Tredegar Corporation containing that
announcement.
In
accordance with General Instruction B.2 of Form 8-K, the information in this
Current Report on Form 8-K, including Exhibit 99, shall not be deemed “filed”
for the purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liability of that section, nor shall it
be
deemed incorporated by reference in any filing under the Securities Act of
1933,
as amended, except as shall be expressly set forth by specific reference in
such
a filing.
Item
9.01 Financial
Statements and Exhibits.
(d) Exhibits.
99 Press
Release, dated May 3, 2007 (furnished pursuant to Item 2.02).
2
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
TREDEGAR
CORPORATION
|
||
| |
|
|
| Date: May 3, 2007 | By: | /s/ D. Andrew Edwards |
|
D. Andrew Edwards |
||
|
Vice
President, Chief Financial Officer and
Treasurer
|
||
3
EXHIBIT
INDEX
|
EXHIBIT
|
DESCRIPTION
|
|
|
99
|
Press
Release, dated May 3, 2007 (furnished pursuant to Item
2.02).
|
Tredegar
Reports First-Quarter Results
RICHMOND,
Va., May 3 /PRNewswire-FirstCall/ -- Tredegar Corporation (NYSE: TG) reported
first-quarter net income of $10.3 million (26 cents per share) compared to
$8.2
million (21 cents per share) in 2006. Earnings from manufacturing operations
in
the first quarter were $10.8 million (27 cents per share) versus $9.5 million
(24 cents per share) last year. First-quarter sales increased to $281.6 million
from $268.0 million in 2006. A summary of results for the first quarter is
shown
below:
|
(In
Millions, Except Per-Share Data)
|
First
Quarter Ended
|
||||||
|
March
31
|
|||||||
|
|
2007
|
|
2006
|
||||
|
Sales
|
$
|
281.6
|
$
|
268.0
|
|||
|
|
|||||||
|
Net
income as reported under generally accepted accounting principles
(GAAP)
|
$
|
10.3
|
$
|
8.2
|
|||
|
After-tax
effects of losses associated with plant shutdowns, asset impairments
and
restructurings
|
0.5
|
1.3
|
|||||
|
Income
from manufacturing operations*
|
$
|
10.8
|
$
|
9.5
|
|||
|
|
|||||||
|
|
|||||||
|
Diluted
earnings per share as reported under GAAP
|
$
|
.26
|
$
|
.21
|
|||
|
After-tax
effects per diluted share of losses associated with plant shutdowns,
asset
impairments and restructurings
|
.01
|
.03
|
|||||
|
Diluted
earnings per share from manufacturing operations*
|
$
|
.27
|
$
|
.24
|
|||
*
The
after-tax effects of unusual items, plant shutdowns, asset impairments and
restructurings, and gains from sale of assets and other items have been
presented separately and removed from net income and earnings per share as
reported under GAAP to determine Tredegar's presentation of income and earnings
per share from manufacturing operations. Income and earnings per share from
manufacturing operations are key financial and analytical measures used by
Tredegar to gauge the operating performance of its manufacturing businesses.
They are not intended to represent the stand-alone results for Tredegar's
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.
John
D.
Gottwald, Tredegar's president and chief executive officer, said: "Driven
by
strong performance in our films business, lower pension and interest costs
and a
lower effective income tax rate, earnings per share from manufacturing
operations increased by 13% in the first quarter of 2007 compared with the
first
quarter of last year. In
the
last twelve months, excluding the effects of resin lag, quarterly operating
profit in films has had significant ups and downs. Future performance in
this
business is likely to exhibit similar fluctuations, with growth primarily
dependent
on
further increases in sales of high-value surface protection, elastic and
apertured materials and new products developed using related core
technologies."
Mr.
Gottwald
continued: "In aluminum, operating profit decreased in the first quarter
of 2007
compared with 2006 mainly due to lower volume, especially extrusions used
in
hurricane protection products and residential construction. Overall backlog
is
down significantly. We're very focused on reducing our operating costs in
light
of the downturn in these markets, while trying to maintain sufficient
flexibility to participate in cyclical upswings. The bright spot continues
to be
healthy demand for extrusions used in commercial construction
applications."
MANUFACTURING
OPERATIONS
Film
Products
First-quarter
net sales in Film Products were $136.1 million, up 7.8% from $126.3 million
in
the first quarter of 2006, while operating profit from ongoing operations
increased to $16.8 million in the first quarter of 2007 from $15.6 million
in
2006. Volume was 65.3 million pounds in the first quarter of 2007 compared
with
64.5 million pounds in the first quarter of last year.
Net
sales and volume were up in the first quarter of 2007 compared with the first
quarter of 2006 primarily due to increased sales of high-value surface
protection films and elastic materials, partially offset by lower sales of
certain commodity barrier films that were dropped in conjunction with the
shutdown in the second quarter of 2006 of the plant in LaGrange, Georgia.
Volume
was up 2.6 million pounds or 4.1% from the depressed level existing in the
fourth quarter of 2006, which the company believes was adversely affected
by
customer inventory adjustments.
Profits
increased in the first quarter of 2007 compared with the first quarter of
2006
due primarily to higher volume noted above and appreciation of the U.S. Dollar
equivalent value of functional currencies for operations outside of the U.S.
The
company also estimates that the lag in the pass-through of lower average
resin
costs had a positive impact on operating profit of $500,000 in the first
quarter
of 2007. During the first quarter of last year, the company estimates that
profits were positively affected by $2.0 million from the lag in the
pass-through of lower average resin costs. Film Products has index-based
pass-through raw material cost agreements for the majority of its business.
However, under certain agreements, changes in resin prices are not passed
through for an average period of 90 days.
Capital
expenditures were $5.0 million in the first quarter of 2007 and are projected
to
be approximately $30 million for the year. Depreciation expense was $8.2
million
in the first quarter of 2007 and is projected to be $33 million for the
year.
Aluminum
Extrusions
First-quarter
net sales in Aluminum Extrusions were $139.4 million, up 3.1% from $135.2
million in the first quarter of 2006 primarily due to higher selling prices
substantially offset by lower volume. Operating profit from ongoing operations
decreased to $3.5 million in the first quarter of 2007, down 28.6% from $4.9
million in the first quarter of 2006. The decrease in operating profit was
mainly due to lower volume partially offset by higher selling prices. Volume
decreased to 57.7 million pounds in the first quarter of 2007, down 9.4%
from
63.7 million pounds in the first quarter of 2006. Lower shipments were primarily
due to declines in demand for extrusions used in hurricane protection products
and residential construction, partially offset by continued growth for
extrusions used in commercial construction. Overall backlog at the end of
the
quarter was 14.3 million pounds, down from 19.7 million pounds at March 31,
2006, and the lowest quarterly level since the December 2003 level of 13.1
million pounds.
Capital
expenditures in the first quarter of 2007 were $2.2 million and are projected
to
be approximately $11 million for the year. Depreciation expense was $3 million
in the first quarter of 2007 and is expected to be $12.7 million for the
year.
OTHER
ITEMS
Net
pension income was $596,000 in the first quarter of 2007, a favorable change
of
$1.3 million (2 cents per share after taxes) from the net pension expense
of
$675,000 recognized in the first quarter of 2006. Most of this favorable
change
relates to a pension plan that is reflected in "Corporate expenses, net"
in the
operating profit by segment table. The company contributed $1.1 million to
its
pension plans in 2006 and expects to contribute the same amount in
2007.
Interest
expense was $824,000 in the first quarter of 2007, a decline of $608,000
(1 cent
per share after taxes) versus the first quarter of last year due to lower
average debt outstanding.
The
effective
tax rate used to compute income from manufacturing operations was 35.2% in
the
first quarter of 2007 compared with 37.9% in the first quarter of 2006. The
decrease in the effective tax rate for manufacturing operations, which had
a
favorable impact of approximately 1 cent per share, was mainly due to
differences in income taxes accrued on operations outside of the
U.S.
During
the
first quarter of 2007, the company adopted new accounting standards for
maintenance costs and uncertain income tax positions, neither of which had
a
material impact on Tredegar's results of operations or financial
condition.
Results
for
the first quarters of 2007 and 2006 include net after-tax charges of $539,000
(1
cent per share) and $1.3 million (3 cents per share), respectively, for plant
shutdowns, asset impairments and restructurings. Details regarding these
items
are provided in the financial tables included with this press release.
CAPITAL
STRUCTURE
Net
debt (debt net of cash) was $3.7 million at March 31, 2007, compared with
$21.6
million at December 31, 2006, which is significantly less than the last twelve
months adjusted EBITDA from manufacturing operations of $111.5 million. See
notes to financial statements and tables for reconciliations to comparable
GAAP
measures.
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,"
"hope," "expect," "are likely," "project" 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 Procter & Gamble Company; growth
of Film Products depends on its ability to develop and deliver new products
at
competitive prices; sales volume and profitability of Aluminum Extrusions
is
cyclical and highly dependent on economic conditions of end-use markets in
the
United States and Canada, particularly in the construction, distribution
and
transportation industries and are also subject to seasonal slowdowns during
the
winter months; our substantial international operations subject us to risks
of
doing business in foreign countries, which could adversely affect our business,
financial condition and results of operations; our future performance is
influenced by costs incurred by our operating companies including, for example,
the cost of energy and raw materials; and the factors discussed in the reports
Tredegar files with or furnishes to the Securities and Exchange Commission
(the
"SEC") from time-to-time, including the risks and important factors set forth
in
"Risk Factors" in Part I, Item 1A of our 2006 Annual Report on Form 10-K
and our
Quarterly Report on Form 10-Q for this period that will be filed with the
SEC.
Tredegar
does
not undertake to update any forward-looking statement made in this press
release
to reflect any change in management's expectations or any change in conditions,
assumptions or circumstances on which such statements are based.
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 Tredegar's financial condition and results of
operations.
Based
in
Richmond, Va., Tredegar Corporation is a global manufacturer of plastic films
and aluminum extrusions.
|
Tredegar
Corporation
|
|
||||||
|
Condensed
Consolidated Statements of Income
|
|
||||||
|
(In
Thousands, Except Per-Share Data)
|
|
||||||
|
(Unaudited)
|
|||||||
|
|
|||||||
|
Three
Months Ended
|
|||||||
|
|
|
March
31
|
|||||
|
|
2007
|
2006
|
|||||
|
|
|||||||
|
Sales
|
$
|
281,594
|
$
|
267,964
|
|||
|
Other
income (expense), net (a)(b)
|
294
|
12
|
|||||
|
|
281,888
|
267,976
|
|||||
|
|
|||||||
|
Cost
of goods sold
|
238,388
|
226,638
|
|||||
|
Freight
|
6,147
|
6,474
|
|||||
|
Selling,
R&D and general expenses
|
19,722
|
18,101
|
|||||
|
Amortization
of intangibles
|
37
|
37
|
|||||
|
Interest
expense
|
824
|
1,432
|
|||||
|
Asset
impairments and costs associated with exit and disposal
activities (a)
|
733
|
1,692
|
|||||
|
|
265,851
|
254,374
|
|||||
|
|
|||||||
|
Income
before income taxes
|
16,037
|
13,602
|
|||||
|
Income
taxes
|
5,704
|
5,387
|
|||||
|
|
|||||||
|
Net
income (a)(b)(c)
|
$
|
10,333
|
$
|
8,215
|
|||
|
|
|||||||
|
|
|||||||
|
Earnings
per share:
|
|||||||
|
Basic
|
$
|
.26
|
$
|
.21
|
|||
|
Diluted
|
.26
|
.21
|
|||||
|
|
|||||||
|
Shares
used to compute earnings per share:
|
|||||||
|
Basic
|
39,272
|
38,602
|
|||||
|
Diluted
|
39,487
|
38,664
|
|||||
|
Tredegar
Corporation
|
|
||||||
|
Net
Sales and Operating Profit by Segment
|
|
||||||
|
(In
Thousands)
|
|
||||||
|
(Unaudited)
|
|||||||
|
|
|
|
|
|
|||
|
|
|
Three
Months Ended
|
|
||||
|
|
|
March
31
|
|
||||
|
|
|
2007
|
|
2006
|
|||
|
Net
Sales
|
|||||||
|
Film
Products
|
$
|
136,061
|
$
|
126,331
|
|||
|
Aluminum
Extrusions
|
139,386
|
135,159
|
|||||
|
Total
net sales
|
275,447
|
261,490
|
|||||
|
Add
back freight
|
6,147
|
6,474
|
|||||
|
Sales
as shown in the Consolidated Statements of Income
|
$
|
281,594
|
$
|
267,964
|
|||
|
|
|||||||
|
Operating
Profit
|
|||||||
|
Film
Products:
|
|||||||
|
Ongoing
operations
|
$
|
16,820
|
$
|
15,577
|
|||
|
Plant
shutdowns, asset impairments and restructurings (a)
|
(367
|
)
|
(1,583
|
)
|
|||
|
|
|||||||
|
Aluminum
Extrusions:
|
|||||||
|
Ongoing
operations
|
3,466
|
4,866
|
|||||
|
Plant
shutdowns, asset impairments and restructurings (a)
|
-
|
(109
|
)
|
||||
|
|
|||||||
|
AFBS
(d):
|
|||||||
|
Loss
on investment in Therics, LLC
|
-
|
(25
|
)
|
||||
|
Plant
shutdowns, asset impairments and restructurings (a)
|
(366
|
)
|
-
|
||||
|
Total
|
19,553
|
18,726
|
|||||
|
Interest
income
|
388
|
222
|
|||||
|
Interest
expense
|
824
|
1,432
|
|||||
|
Gain
on the sale of corporate assets (b)
|
-
|
56
|
|||||
|
Stock
option-based compensation costs (e)
|
269
|
211
|
|||||
|
Corporate
expenses, net
|
2,811
|
3,759
|
|||||
|
Income
before income taxes
|
16,037
|
13,602
|
|||||
|
Income
taxes
|
5,704
|
5,387
|
|||||
|
Net
income (a)(b)(c)
|
$
|
10,333
|
$
|
8,215
|
|||
|
Tredegar
Corporation
|
|
||||||
|
Condensed
Consolidated Balance Sheets
|
|
||||||
|
(In
Thousands)
|
|
||||||
|
(Unaudited)
|
|||||||
|
|
|||||||
|
|
March
31,
|
|
December
31,
|
|
|||
|
|
|
2007
|
|
2006
|
|||
|
Assets
|
|||||||
|
|
|||||||
|
Cash
& cash equivalents
|
$
|
38,480
|
$
|
40,898
|
|||
|
Accounts
& notes receivable, net
|
143,817
|
121,834
|
|||||
|
Income
taxes recoverable
|
2,850
|
10,975
|
|||||
|
Inventories
|
73,863
|
68,930
|
|||||
|
Deferred
income taxes
|
7,567
|
6,055
|
|||||
|
Prepaid
expenses & other
|
3,920
|
4,558
|
|||||
|
Total
current assets
|
270,497
|
253,250 | |||||
|
|
|||||||
|
Property,
plant & equipment, net
|
320,408
|
325,763
|
|||||
|
Other
assets (f)
|
64,360
|
64,078
|
|||||
|
Goodwill
& other intangibles
|
138,893
|
138,696 | |||||
|
|
|||||||
|
Total
assets
|
$
|
794,158
|
$
|
781,787
|
|||
|
|
|||||||
|
Liabilities
and Shareholders' Equity
|
|||||||
|
|
|||||||
|
Accounts
payable
|
$
|
88,181
|
$
|
69,426
|
|||
|
Accrued
expenses
|
36,706
|
41,906
|
|||||
|
Current
portion of long-term debt
|
481
|
678
|
|||||
|
Total
current liabilities
|
125,368
|
112,010
|
|||||
|
|
|||||||
|
Long-term
debt
|
41,716
|
61,842
|
|||||
|
Deferred
income taxes
|
77,065
|
75,772
|
|||||
|
Other
noncurrent liabilities (f)
|
17,635
|
15,568
|
|||||
|
Shareholders'
equity (f)
|
532,374
|
516,595
|
|||||
|
|
|||||||
|
Total
liabilities and shareholders' equity
|
$
|
794,158
|
$
|
781,787
|
|||
|
Tredegar
Corporation
|
|
||||||
|
Condensed
Consolidated Statement of Cash Flows
|
|
||||||
|
(In
Thousands)
|
|
||||||
|
(Unaudited)
|
|
||||||
|
|
|
|
|
|
|
||
|
|
|
Three
Months Ended
|
|
||||
|
|
|
March
31
|
|
||||
|
|
|
2007
|
|
2006
|
|||
|
Cash
flows from operating activities:
|
|||||||
|
Net
income
|
$
|
10,333
|
$
|
8,215
|
|||
|
Adjustments
for noncash items:
|
|||||||
|
Depreciation
|
11,259
|
10,713
|
|||||
|
Amortization
of intangibles
|
37
|
37
|
|||||
|
Deferred
income taxes
|
(1,633
|
)
|
4,478
|
||||
|
Accrued
pension income and postretirement benefits
|
(439
|
)
|
828
|
||||
|
Gain
on sale of assets
|
-
|
(56
|
)
|
||||
|
Loss
on asset impairments and divestitures
|
338
|
1,150 | |||||
|
Changes
in assets and liabilities, net of effects of acquisitions and
divestitures:
|
|||||||
|
Accounts
and notes receivables
|
(21,147
|
)
|
(32,633
|
)
|
|||
|
Inventories
|
(4,345
|
)
|
2,226
|
||||
|
Income
taxes recoverable
|
8,125
|
(284
|
)
|
||||
|
Prepaid
expenses and other
|
1,039
|
482
|
|||||
|
Accounts
payable
|
18,309
|
21,265
|
|||||
|
Accrued
expenses
|
(3,301
|
)
|
1,714
|
||||
|
Other,
net
|
1,095
|
(681
|
)
|
||||
|
Net
cash provided by operating activities
|
19,670
|
17,454
|
|||||
|
Cash
flows from investing activities:
|
|||||||
|
Capital
expenditures
|
(7,164
|
)
|
(13,074
|
)
|
|||
|
Proceeds
from the sale of assets and property disposals & reimbursements from
customers for purchases of equipment
|
2,762
|
56
|
|||||
|
Other,
net
|
-
|
(158
|
)
|
||||
|
Net
cash used in investing activities
|
(4,402
|
)
|
(13,176
|
)
|
|||
|
Cash
flows from financing activities:
|
|||||||
|
Dividends
paid
|
(1,579
|
)
|
(1,552
|
)
|
|||
|
Debt
principal payments
|
(20,323
|
)
|
(648
|
)
|
|||
|
Borrowings
|
-
|
4,000
|
|||||
|
Proceeds
from exercise of stock options
|
4,089 |
461
|
|||||
|
Net
cash (used in) provided by financing
activities
|
(17,813) |
2,261
|
|||||
|
Effect
of exchange rate changes on cash
|
127
|
165
|
|||||
|
Increase
in cash and cash equivalents
|
(2,418
|
)
|
6,704
|
||||
|
Cash
and cash equivalents at beginning of period
|
40,898
|
23,434
|
|||||
|
Cash
and cash equivalents at end of period
|
$
|
38,480
|
$
|
30,138
|
|||
|
Selected
Financial Measures
|
|
|||||||||
|
(In
Millions)
|
|
|||||||||
|
(Unaudited)
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|||
|
|
|
For
the Twelve Months Ended March 31,2007
|
|
|||||||
|
|
|
Film
Products
|
|
Aluminum
Extrusions
|
|
Total
|
||||
|
Operating
profit from ongoing operations
|
$
|
58.9
|
$
|
20.6
|
$
|
79.5
|
||||
|
Allocation
of corporate overhead
|
(9.3
|
)
|
(3.4
|
)
|
(12.7
|
)
|
||||
|
Add
back depreciation and amortization
|
32.3
|
12.4
|
44.7
|
|||||||
|
Adjusted
EBITDA (g)
|
$
|
81.9
|
$
|
29.6
|
$
|
111.5
|
||||
|
|
||||||||||
|
Selected
balance sheet and other data as of March 31, 2007:
|
||||||||||
|
Net
debt (h)
|
$
|
3.7
|
||||||||
|
Shares
outstanding
|
39.5
|
|||||||||
Notes
to the Financial Tables
(a)
Plant
shutdowns, asset impairments and restructurings in the first quarter of
2007
include:
|
·
|
A
pretax charge of $366,000 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 $338,000 for asset impairments in Film Products; and
|
|
·
|
A
pretax charge of $29,000 for costs related to the shutdown of
the films
manufacturing facility in LaGrange, Georgia.
|
Plant shutdowns, asset impairments and restructurings in the first quarter
of
2006 include:
|
·
|
A
pretax charge of $404,000 related to the planned shutdown of
the films
manufacturing facility in LaGrange, Georgia, including asset
impairment
charges of $130,000 and severance and other costs of
$274,000;
|
|
·
|
Pretax
charges of $1 million for asset impairments in Film Products;
and
|
| · |
Pretax
charges of $268,000 for severance and other employee- related
costs in
connection with restructurings in Film Products ($159,000) and
Aluminum
Extrusions ($109,000).
|
(b)
Gain
on the sale of corporate assets in 2006 includes a gain related to the
sale of
public equity securities.
(c)
Comprehensive income (loss), defined as net income and other comprehensive
income (loss), was a gain of $12.9 million for the first quarter of 2007
and a
gain of $9.0 million for the first quarter of 2006. Other comprehensive
income
(loss) includes changes in unrealized gains and losses on available-for-sale
securities, foreign currency translation adjustments, unrealized gains
and
losses on derivative financial instruments and amortization of prior
service
cost and net gains or losses from pension and other postretirement benefit
plans
recorded net of deferred taxes directly in shareholders' equity.
(d)
On
June 30, 2005, substantially all of the assets of AFBS, Inc. (formerly
Therics,
Inc.), a wholly-owned subsidiary of Tredegar, were sold or assigned to
a
newly-created limited liability company, Therics, LLC, which is controlled
and
managed by an individual not affiliated with Tredegar. AFBS retained
substantially all of its liabilities in the transaction, which included
customary indemnification provisions for pre-transaction liabilities.
AFBS
received a 17.5% equity interest in the new company valued at $170,000
and a
3.5% interest in Theken Spine, LLC valued at $800,000, along with potential
future payments on the sale of certain products by Therics, LLC.
(e)
Effective January 1, 2006, Tredegar adopted Statement of Financial Accounting
Standards (SFAS) No. 123(R), "Share-Based Payment" (SFAS 123(R)) using
the
modified prospective method. SFAS 123(R) requires the company to record
compensation expense for all share-based awards. Tredegar previously
applied
Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock
Issued
to Employees," and related interpretations and provided the required
pro forma
disclosures of SFAS No. 123, "Accounting for Stock-Based Compensation" (SFAS
123). Prior periods were not restated.
(f)
Effective December 31, 2006, Tredegar adopted SFAS No. 158, "Employers'
Accounting for Defined Benefit Pension and Other Postretirement Plans"
(SFAS
158). This statement requires the recognition in the balance sheet of
the funded
status of each of our defined benefit pension and other postretirement
plans.
Each overfunded plan is recognized as an asset and each underfunded plan
is
recognized as a liability. The initial impact of SFAS 158, net of deferred
taxes, was recognized directly in shareholders' equity. Adjustments from
the new
standard 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.
(g)
Adjusted EBITDA for the twelve months ended March 31, 2007, 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-down,
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
|
$
|
42.2
|
||
|
Less:
Cash and cash equivalents
|
(38.5
|
)
|
||
|
Net
debt
|
$
|
3.7
|
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
Tredegar Corporation
-0- 05/03/2007
/CONTACT:
D.
Andrew
Edwards of Tredegar Corporation, +1-804-330-1041, or fax, +1-804-330-1777,
daedward@tredegar.com/
/First
Call Analyst: /
/FCMN
Contact: dlphipps@tredegar.com /
/Web
site: http://www.tredegar.com /