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): August 7, 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
August
7, 2007, Tredegar Corporation announced its results of operations for the second
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.
(c) Exhibits.
| 99 |
Press
Release, dated August 7, 2007 (furnished pursuant to Item
2.02).
|
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: August 7, 2007 | By: | /s/ D. Andrew Edwards |
|
D. Andrew Edwards |
||
| Vice President, Chief Financial Officer and Treasurer | ||
EXHIBIT
INDEX
| EXHIBIT | DESCRIPTION |
| 99 |
Press
Release, dated August 7, 2007 (furnished pursuant to Item
2.02).
|
|
Tredegar
Corporation
|
Contact:
|
|
Corporate
Communications
|
D.
Andrew Edwards
|
|
1100
Boulders Parkway
|
Phone:
804/330-1041
|
|
Richmond,
Virginia 23225
|
Fax:
804/330-1777
|
|
E-mail:
invest@tredegar.com
|
E-mail:
daedward@tredegar.com
|
|
Web
Site: www.tredegar.com
|
|
FOR
IMMEDIATE RELEASE
TREDEGAR
REPORTS SECOND-QUARTER RESULTS
RICHMOND,
Va., August 7, 2007 - Tredegar Corporation (NYSE:TG) reported second-quarter
net
income of $9.9 million (25 cents per share) compared to $9.3 million (24 cents
per share) in 2006. Earnings from manufacturing operations in the second quarter
were $9.3 million (24 cents per share) versus $9.1 million (23 cents per share)
last year. Second-quarter sales decreased to $279.6 million from $282.5 million
in 2006. A summary of results for the second quarter and first six months of
2007 and 2006 are shown below:
|
(In
Millions, Except Per-Share Data)
|
Three
Months Ended
|
|
Six
Months Ended
|
|
|||||||||
|
|
|
June
30
|
|
June
30
|
|
||||||||
|
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
|
Sales
|
$
|
279.6
|
$
|
282.5
|
$
|
561.2
|
$
|
550.5
|
|||||
|
Net
income as reported under generally accepted
|
|||||||||||||
|
accounting
principles (GAAP)
|
$
|
9.9
|
$
|
9.3
|
$
|
20.3
|
$
|
17.5
|
|||||
|
After-tax
effects of:
|
|||||||||||||
|
Loss
associated with plant shutdowns, asset
|
|||||||||||||
|
impairments
and restructurings
|
.1
|
.6
|
.6
|
1.9
|
|||||||||
|
(Gains)
losses from sale of assets and other items
|
(.7
|
)
|
(.8
|
)
|
(.7
|
)
|
(.9
|
)
|
|||||
|
Income
from manufacturing operations*
|
$
|
9.3
|
$
|
9.1
|
$
|
20.2
|
$
|
18.5
|
|||||
|
Diluted
earnings per share as reported under GAAP
|
$
|
.25
|
$
|
.24
|
$
|
.51
|
$
|
.45
|
|||||
|
After-tax
effects per diluted share of:
|
|||||||||||||
|
Loss
associated with plant shutdowns, asset
|
|||||||||||||
|
impairments
and restructurings
|
.01
|
.01
|
.02
|
.05
|
|||||||||
|
(Gains)
losses from sale of assets and other items
|
(.02
|
)
|
(.02
|
)
|
(.02
|
)
|
(.02
|
)
|
|||||
|
Diluted
earnings per share from manufacturing operations*
|
$
|
.24
|
$
|
.23
|
$
|
.51
|
$
|
.48
|
|||||
*
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
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.
-
- more
- -
TREDEGAR
EARNINGS, page 2
John
D.
Gottwald, Tredegar’s president and chief executive officer, said: “Overall
earnings per share from manufacturing operations increased by 1 cent per share
or 4.3% in the second quarter of 2007 compared with the second quarter of last
year. The increase was due to lower pension and interest costs, a lower
effective income tax rate and higher profits in our films business, partially
offset by significantly lower profits in our aluminum business. Profit growth
in
films was driven by increases in sales of high-value surface protection, elastic
and apertured materials. Since the second quarter of last year, excluding the
effects of the lag in the passthrough of changes in resin costs, quarterly
operating profit in films has had significant ups and downs. Future performance
is likely to exhibit similar fluctuations.”
Mr.
Gottwald continued: “In aluminum, operating profit decreased by $2.4 million or
42% in the second quarter of 2007 compared with 2006 mainly due to lower volume,
especially extrusions used in hurricane protection products and residential
construction. Demand for extruded aluminum shapes is down significantly in
most
market segments. Our bookings and backlog are at historic lows for this time
of
year. The combination of poor demand and a much stronger Canadian Dollar, which
impacts our costs, make the prospects for this unit look weak in the near
future.”
MANUFACTURING
OPERATIONS
Film
Products
Second-quarter
net sales in Film Products were $130.3 million, up 7.3% from $121.4 million
in
the second quarter of 2006, while operating profit from ongoing operations
increased to $13.8 million in the second quarter of 2007 from $13.3 million
in
2006. Volume was 60.4 million pounds in the second quarter of 2007 compared
with
61.9 million pounds in the second quarter of last year.
Net
sales
were up in the second quarter of 2007 compared with the second quarter of 2006
primarily due to increased sales of high-value elastic, apertured and surface
protection 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 declined as a result
of exiting this market.
Profits
increased in the second quarter of 2007 compared with the second quarter of
2006
due primarily to appreciation of the U.S. Dollar equivalent value of functional
currencies for operations outside of the U.S. and improvement in the sales
of
high-value materials noted above. The company estimates that the impact of
the
lag in the pass-through of changes in average resin costs was not significant
in
the second quarter of 2007 compared with a positive impact on operating profit
of $500,000 in the second quarter of 2006. 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.
-
- more
- -
TREDEGAR
EARNINGS, page 3
Net
sales
in Film Products were $266.3 million in the first six months of 2007, up 7.5%
versus $247.7 million in the first six months of 2006. Operating profit from
ongoing operations was $30.6 million in the first six months of 2007, up 6.3%
compared with $28.8 million in the first six months of 2006. Operating profit
from ongoing operations excluding the estimated effects of resin pass-through
lag was $30.1 million in the first six months of 2007, up 14.0% versus $26.4
million in the first six months of 2006. Volume decreased to 125.7 million
pounds in the first six months of 2007 from 126.4 million pounds in the first
six months of 2006. The growth in sales and operating profit and decline in
volume during the first six months of 2007 versus 2006 were primarily due to
the
same factors discussed for the second quarter of 2007 versus 2006.
Capital
expenditures were $8.7 million in the first six months of 2007 and are projected
to be approximately $20 million for the year. Depreciation expense was $16.5
million in the first six months of 2007 and is projected to be $33
million
for the year.
Aluminum
Extrusions
Second-quarter
net sales in Aluminum Extrusions were $142.8 million, down 7.2% from $153.8
million in the second quarter of 2006. Operating profit from ongoing operations
decreased to $3.3 million in the second quarter of 2007, down 42.1% from $5.7
million in the second quarter of 2006. Volume decreased to 56.9
million
pounds in the second quarter of 2007, down 18.0% from 69.4 million pounds in
the
second quarter of 2006.
Net
sales
in Aluminum Extrusions were $282.2 million in the first six months of 2007,
down
2.4% from $289.0 million in the first six months of 2006. Operating profit
from
ongoing operations decreased to $6.8 million in the first six months of 2007,
down 35.2% from $10.5 million in the first six months of 2006. Volume decreased
to 114.7 million pounds in the first six months of 2007, down 13.8% from 133.0
million pounds in the first six months of 2006.
The
decreases in net sales and operating profit in the second quarter and first
six
months were mainly due to lower volume partially offset by higher selling
prices. Shipments declined in most markets, especially extrusions used in
hurricane protection products and residential construction. Overall backlog
at
the end of the quarter was 16.6 million pounds, down from 29.5 million pounds
at
June 30, 2006.
-
- more
- -
TREDEGAR
EARNINGS, page 4
Capital
expenditures were $3.4 million in the first six months of 2007 and are projected
to be approximately $8 million for the year. Depreciation expense was $6.2
million in the first six months of 2007 and is projected to be $13 million
for
the year.
OTHER
ITEMS
Net
pension income was $587,000 in the second quarter of 2007 and $1.2 million
in
the first six months of 2007, a favorable change of $1.3 million (2 cents per
share after taxes) and $2.6 million (4 cents per share after taxes) from amounts
recognized in the second quarter and first six months of 2006, respectively.
Most of the favorable changes relate 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 $557,000 in the second quarter of 2007 and $1.4 million in first
six
months of 2007, a decline of $911,000 (2 cent per share after taxes) and $1.5
million (3 cents per share after taxes) versus the second quarter and first
six
months of last year, respectively, due to lower average debt
outstanding.
The
effective tax rate used to compute income from manufacturing operations was
34.8% in the second quarter of 2007 and 35.0% in the first six months of 2007,
compared with 37.5% in the second quarter of 2006 and 37.7% in the first six
months of 2006. The decrease in the effective tax rate for manufacturing
operations, which had a favorable impact of approximately 1 cent and 2 cents
per
share in the second quarter and first six months of 2007 versus last year,
respectively, 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. In
addition, Tredegar adopted new accounting standards on fair value measurements
and the fair value option for financial assets and liabilities, neither of
which
had an impact on results for the second quarter or first six months of
2007.
Results
for 2007 and 2006 also include certain special items. After-tax charges for
plant shutdowns, asset impairments and restructurings were 1 cent and 2 cents
per share in the second quarter and first six months of 2007, respectively.
After-tax charges for plant shutdowns, asset impairments and restructurings
were
1 cent and 5 cents per share in the second quarter and first six months of
2006,
respectively. In addition, the results for the second quarter and first six
months of 2007 include after-tax income of $682,000 (2 cents per share)
resulting from an adjustment of deferred income taxes for a reduction in
statutory income tax rates in Canada (reflected as a credit to income tax
expense). Results for the second quarter and first six months of 2006 include
after-tax income of $835,000 (2 cents per share) for liquidation of inventories
from the shutdown of the films plant in LaGrange, Georgia that were accounted
for on the last-in, first-out (“LIFO”) method. Further details regarding these
items are provided in the financial tables included with this press release.
-
- more
- -
TREDEGAR
EARNINGS, page 5
On
April
2, 2007, Tredegar invested $10 million in Harbinger Capital Partners Special
Situations Fund, L.P. (“Harbinger”), a fund that seeks to achieve superior
absolute returns by participating primarily in medium to long-term investments
involving distressed/high yield debt securities, special situation equities
and
private loans and notes. The fund is a highly speculative investment subject
to
a two-year lock-up and additional limitations on withdrawal. There is no
secondary market for interests in the fund. Tredegar’s investment in Harbinger,
which represents less than 2% of Harbinger’s total partnership capital, is
accounted for under the cost method. At June 30, 2007, Harbinger reported
Tredegar’s capital account value at $12.4 million reflecting $2.4 million of
unrealized appreciation ($1.5 million or 4 cents per share after taxes) versus
the carrying value in Tredegar’s balance sheet of $10 million.
CAPITAL
STRUCTURE AND ADJUSTED EBITDA
Cash
in
excess of debt was $218,000 at June 30, 2007, compared with net debt (debt
in
excess of cash) of $3.7 million at March 31, 2007 and $21.6 million at December
31, 2006. Adjusted EBITDA from manufacturing operations, a key valuation and
borrowing capacity measure, was $110.8 million for the last twelve months ended
June 30, 2007. See notes to financial statements and tables for reconciliations
to comparable GAAP measures.
-
- more
- -
TREDEGAR
EARNINGS, page 6
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.
-
- more
- -
TREDEGAR
EARNINGS, page 7
|
Tredegar
Corporation
|
|
Condensed
Consolidated Statements of Income
|
|
(In
Thousands, Except Per-Share Data)
|
|
(Unaudited)
|
|
Second
Quarter Ended
|
|
Six
Months Ended
|
|
||||||||||
|
|
|
June
30
|
|
June
30
|
|
||||||||
|
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
|
Sales
|
$
|
279,582
|
$
|
282,491
|
$
|
561,176
|
$
|
550,455
|
|||||
|
Other
income (expense), net (a) (b)
|
160
|
248
|
454
|
260
|
|||||||||
|
|
279,742
|
282,739
|
561,630
|
550,715
|
|||||||||
|
|
|||||||||||||
|
Cost
of goods sold (a)
|
239,534
|
239,691
|
477,922
|
466,329
|
|||||||||
|
Freight
|
6,476
|
7,250
|
12,623
|
13,724
|
|||||||||
|
Selling,
R&D and general expenses
|
18,829
|
18,432
|
38,551
|
36,533
|
|||||||||
|
Amortization
of intangibles
|
38
|
38
|
75
|
75
|
|||||||||
|
Interest
expense
|
557
|
1,468
|
1,381
|
2,900
|
|||||||||
|
Asset
impairments and costs associated with exit and
|
|||||||||||||
|
disposal
activities (a)
|
125
|
1,026
|
858
|
2,718
|
|||||||||
|
|
265,559
|
267,905
|
531,410
|
522,279
|
|||||||||
|
|
|||||||||||||
|
Income
before income taxes
|
14,183
|
14,834
|
30,220
|
28,436
|
|||||||||
|
Income
taxes (b)
|
4,248
|
5,584
|
9,952
|
10,971
|
|||||||||
|
|
|||||||||||||
|
Net
income (a) (b) (c)
|
$
|
9,935
|
$
|
9,250
|
$
|
20,268
|
$
|
17,465
|
|||||
|
Earnings
per share:
|
|||||||||||||
|
Basic
|
$
|
.25
|
$
|
.24
|
$
|
.52
|
$
|
.45
|
|||||
|
Diluted
|
.25
|
.24
|
.51
|
.45
|
|||||||||
|
|
|||||||||||||
|
Shares
used to compute earnings per share:
|
|||||||||||||
|
Basic
|
39,402
|
38,632
|
39,337
|
38,617
|
|||||||||
|
Diluted
|
39,584
|
38,837
|
39,537
|
38,751
|
|||||||||
-
- more
- -
TREDEGAR
EARNINGS, page 8
|
Tredegar
Corporation
|
|
Net
Sales and Operating Profit by Segment
|
|
(In
Thousands)
|
|
(Unaudited)
|
|
Second
Quarter Ended
|
|
Six
Months Ended
|
|
||||||||||
|
|
|
June
30
|
|
June
30
|
|||||||||
|
2007
|
2006
|
2007
|
2006
|
||||||||||
|
Net
Sales
|
|||||||||||||
|
Film
Products
|
$
|
130,259
|
$
|
121,405
|
$
|
266,320
|
$
|
247,736
|
|||||
|
Aluminum
Extrusions
|
142,847
|
153,836
|
282,233
|
288,995
|
|||||||||
|
Total
net sales
|
273,106
|
275,241
|
548,553
|
536,731
|
|||||||||
|
Add
back freight
|
6,476
|
7,250
|
12,623
|
13,724
|
|||||||||
|
Sales
as shown in the Consolidated
|
|||||||||||||
|
Statements
of Income
|
$
|
279,582
|
$
|
282,491
|
$
|
561,176
|
$
|
550,455
|
|||||
|
Operating
Profit
|
|||||||||||||
|
Film
Products:
|
|||||||||||||
|
Ongoing
operations
|
$
|
13,762
|
$
|
13,264
|
$
|
30,582
|
$
|
28,841
|
|||||
|
Plant
shutdowns, asset impairments and
|
|||||||||||||
|
restructurings,
net of gains on sale of assets and
|
|||||||||||||
|
related
income from LIFO inventory liquidations (a)
|
(26
|
)
|
768
|
(393
|
)
|
(815
|
)
|
||||||
|
Aluminum
Extrusions:
|
|||||||||||||
|
Ongoing
operations
|
3,288
|
5,674
|
6,754
|
10,540
|
|||||||||
|
Plant
shutdowns, asset impairments and
|
|||||||||||||
|
restructurings
(a)
|
(99
|
)
|
(405
|
)
|
(99
|
)
|
(514
|
)
|
|||||
|
|
|||||||||||||
|
AFBS
(d):
|
|||||||||||||
|
Loss
on investment in Therics, LLC
|
-
|
-
|
-
|
(25
|
)
|
||||||||
|
Plant
shutdowns, asset impairments and
|
|||||||||||||
|
restructurings
(a)
|
-
|
-
|
(366
|
)
|
-
|
||||||||
|
Total
|
16,925
|
19,301
|
36,478
|
38,027
|
|||||||||
|
Interest
income
|
283
|
285
|
671
|
507
|
|||||||||
|
Interest
expense
|
557
|
1,468
|
1,381
|
2,900
|
|||||||||
|
Gain
on the sale of corporate assets (b)
|
-
|
-
|
-
|
56
|
|||||||||
|
Stock
option-based compensation costs (e)
|
196
|
282
|
465
|
493
|
|||||||||
|
Corporate
expenses, net
|
2,272
|
3,002
|
5,083
|
6,761
|
|||||||||
|
Income
before income taxes
|
14,183
|
14,834
|
30,220
|
28,436
|
|||||||||
|
Income
taxes (b)
|
4,248
|
5,584
|
9,952
|
10,971
|
|||||||||
|
Net
income (a) (b) (c)
|
$
|
9,935
|
$
|
9,250
|
$
|
20,268
|
$
|
17,465
|
|||||
-
- more
- -
TREDEGAR
EARNINGS, page 9
|
Tredegar
Corporation
|
|
Condensed
Consolidated Balance Sheets
|
|
(In
Thousands)
|
|
(Unaudited)
|
|
June
30,
|
|
December
31,
|
|
||||
|
|
|
2007
|
|
2006
|
|||
|
Assets
|
|||||||
|
Cash
& cash equivalents
|
$
|
32,397
|
$
|
40,898
|
|||
|
Accounts
& notes receivable, net
|
149,650
|
121,834
|
|||||
|
Income
taxes recoverable
|
5,265
|
10,975
|
|||||
|
Inventories
|
69,272
|
68,930
|
|||||
|
Deferred
income taxes
|
8,101
|
6,055
|
|||||
|
Prepaid
expenses & other
|
3,660
|
4,558
|
|||||
|
Total
current assets
|
268,345
|
253,250
|
|||||
|
Property,
plant & equipment, net
|
317,478
|
325,763
|
|||||
|
Other
assets (f)
|
76,923
|
64,078
|
|||||
|
Goodwill
& other intangibles
|
140,226
|
138,696
|
|||||
|
Total
assets
|
$
|
802,972
|
$
|
781,787
|
|||
|
Liabilities
and Shareholders' Equity
|
|||||||
|
Accounts
payable
|
$
|
86,757
|
$
|
69,426
|
|||
|
Accrued
expenses
|
36,425
|
41,906
|
|||||
|
Current
portion of long-term debt
|
488
|
678
|
|||||
|
Total
current liabilities
|
123,670
|
112,010
|
|||||
|
Long-term
debt
|
31,691
|
61,842
|
|||||
|
Deferred
income taxes
|
80,121
|
75,772
|
|||||
|
Other
noncurrent liabilities (f)
|
17,800
|
15,568
|
|||||
|
Shareholders'
equity (f)
|
549,690
|
516,595
|
|||||
|
Total
liabilities and shareholders' equity
|
$
|
802,972
|
$
|
781,787
|
|||
-
- more
- -
TREDEGAR
EARNINGS, page 10
|
Tredegar
Corporation
|
|
Condensed
Consolidated Statement of Cash Flows
|
|
(In
Thousands)
|
|
(Unaudited)
|
|
Six
Months Ended
|
|||||||
|
June
30
|
|||||||
|
2007
|
2006
|
||||||
|
Cash
flows from operating activities:
|
|||||||
|
Net
income
|
$
|
20,268
|
$
|
17,465
|
|||
|
Adjustments
for noncash items:
|
|||||||
|
Depreciation
|
22,785
|
21,757
|
|||||
|
Amortization
of intangibles
|
75
|
75
|
|||||
|
Deferred
income taxes
|
(2,528
|
)
|
9,708
|
||||
|
Accrued
pension income and postretirement benefits
|
(897
|
)
|
1,683
|
||||
|
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
|
(24,774
|
)
|
(35,838
|
)
|
|||
|
Inventories
|
2,323
|
2,352
|
|||||
|
Income
taxes recoverable
|
5,710
|
(1,345
|
)
|
||||
|
Prepaid
expenses and other
|
1,658
|
2,248
|
|||||
|
Accounts
payable
|
15,196
|
30,119
|
|||||
|
Accrued
expenses
|
(3,853
|
)
|
842
|
||||
|
Other,
net
|
719
|
(1,846
|
)
|
||||
|
Net
cash provided by operating activities
|
37,020
|
48,314
|
|||||
|
Cash
flows from investing activities:
|
|||||||
|
Capital
expenditures
|
(12,070
|
)
|
(24,903
|
)
|
|||
|
Investment
in Harbinger ($10 million) and real estate in 2007
|
|||||||
|
and
Novalux in 2006
|
(11,056
|
)
|
(400
|
)
|
|||
|
Proceeds
from the sale of assets and property disposals &
|
|||||||
|
reimbursements
from customers for purchases of equipment
|
3,842
|
56
|
|||||
|
Other,
net
|
-
|
(88
|
)
|
||||
|
Net
cash used in investing activities
|
(19,284
|
)
|
(25,335
|
)
|
|||
|
Cash
flows from financing activities:
|
|||||||
|
Dividends
paid
|
(3,163
|
)
|
(3,104
|
)
|
|||
|
Debt
principal payments
|
(30,341
|
)
|
(22,889
|
)
|
|||
|
Borrowings
|
-
|
4,000
|
|||||
|
Proceeds
from exercise of stock options
|
6,437
|
663
|
|||||
|
Net
cash (used in) provided by financing activities
|
(27,067
|
)
|
(21,330
|
)
|
|||
|
Effect
of exchange rate changes on cash
|
830
|
342
|
|||||
|
Increase
in cash and cash equivalents
|
(8,501
|
)
|
1,991
|
||||
|
Cash
and cash equivalents at beginning of period
|
40,898
|
23,434
|
|||||
|
Cash
and cash equivalents at end of period
|
$
|
32,397
|
$
|
25,425
|
|||
-
- more
- -
TREDEGAR
EARNINGS, page 11
|
Selected
Financial Measures
|
|
(In
Millions)
|
|
(Unaudited)
|
| For the Twelve Months Ended June 30, 2007 | ||||||||||
|
Film
|
Aluminum
|
|||||||||
|
Products
|
Extrusions
|
Total
|
||||||||
|
Operating
profit from ongoing operations
|
$
|
59.4
|
$
|
18.2
|
$
|
77.6
|
||||
|
Allocation
of corporate overhead
|
(8.9
|
)
|
(3.1
|
)
|
(12.0
|
)
|
||||
|
Add
back depreciation and amortization
|
32.7
|
12.5
|
45.2
|
|||||||
|
Adjusted
EBITDA (g)
|
$
|
83.2
|
$
|
27.6
|
$
|
110.8
|
||||
|
Selected
balance sheet and other data as of June 30, 2007:
|
||||||||||
|
Net
debt (cash) (h)
|
$
|
(.2
|
)
|
|||||||
|
Shares
outstanding
|
39.6
|
|||||||||
Notes
to the Financial Tables
| (a) |
Plant
shutdowns, asset impairments and restructurings in the second
quarter of
2007 include:
|
| · |
A
pretax charge of $99,000 for severance and other employee-related
costs in
Aluminum Extrusions; and
|
| · |
A
pretax charge of $26,000 for costs related to the shutdown
of the films
manufacturing facility in LaGrange, Georgia.
|
Plant
shutdowns, asset impairments and restructurings in the first six months
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;
|
| · |
A
pretax charge of $99,000 for severance and other employee-related
costs in
Aluminum Extrusions; and
|
| · |
A
pretax charge of $55,000 for costs related to the shutdown
of the films
manufacturing facility in LaGrange,
Georgia.
|
Plant
shutdowns, asset impairments and restructurings in the second quarter
of 2006
include:
| · |
A
net pretax gain of $822,000 associated with the shutdown of
the films
manufacturing facility in LaGrange, Georgia, including a gain
of $1.4
million for related LIFO inventory liquidations (included in
"Cost of
goods sold" in the condensed consolidated statements of income),
partially
offset by severance and other costs of $567,000; and
|
| · |
Pretax
charges of $459,000 for severance and other employee-related
costs in
connection with restructurings in Aluminum Extrusions ($405,000)
and Film
Products ($54,000).
|
Plant
shutdowns, asset impairments and restructurings in the first six months
of 2006
include:
| · |
A
net pretax gain of $418,000 associated with the shutdown of
the films
manufacturing facility in LaGrange, Georgia, including a gain
of $1.4
million for related LIFO inventory liquidations (included in
"Cost of
goods sold" in the condensed consolidated statements of income),
partially
offset by severance and other costs of $841,000 and asset impairment
charges of $130,000;
|
| · |
Pretax
charges of $1 million for asset impairments in Film Products;
and
|
| · |
Pretax
charges of $727,000 for severance and other employee-related
costs in
connection with restructurings in Film Products ($213,000)
and Aluminum
Extrusions ($514,000).
|
| (b) |
Gain
on the sale of corporate assets in 2006 includes a gain related
to the
sale of public equity securities.
|
|
Income
taxes in 2007 include a tax benefit of $682,000 recorded in the
second
quarter related to an adjustment to deferred income taxes for
a reduction
in statutory income tax rates in Canada.
|
| (c) |
Comprehensive
income (loss), defined as net income and other comprehensive
income
(loss), was a gain of $16.2 million for the second quarter
of 2007 and a
gain of $11.4 million for the second quarter of 2006. Comprehensive
income
(loss) was a gain of $29.1 million for the first six months
of 2007 and a
gain of $20.3 million for the first six months 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.
|
-
- more
- -
TREDEGAR
EARNINGS, page 12
|
(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,
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 June 30, 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
|
$
|
32.2
|
||
|
Less:
Cash and cash equivalents
|
(32.4
|
)
|
||
|
Net
debt
|
$
|
(.2
|
)
|