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): November 3, 2009
|
Tredegar
Corporation
|
|
(Exact
Name of Registrant as Specified in its
Charter)
|
|
Virginia
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1-10258
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54-1497771
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
|
|
1100 Boulders Parkway
Richmond, Virginia
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23225
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: (804)
330-1000
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|
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(Former
Name or Former Address, if Changed Since Last
Report)
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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):
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 2.02
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Results of Operations and
Financial Condition.
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On
November 2, 2009, Tredegar Corporation announced its results of operations for
the third quarter of 2009. 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.
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Item
9.01
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Financial Statements and
Exhibits.
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(d)
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Exhibits.
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99
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Press
Release, dated November 2, 2009 (furnished pursuant to Item
2.02).
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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.
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TREDEGAR
CORPORATION
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||
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Date: November
3, 2009
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By:
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/s/ D. Andrew Edwards
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D.
Andrew Edwards
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||
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Vice
President, Chief Financial Officer
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||
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and
Treasurer
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3
EXHIBIT
INDEX
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EXHIBIT
|
DESCRIPTION
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99
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Press
Release, dated November 2, 2009 (furnished pursuant to Item
2.02).
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Tredegar
Corporation
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Contact:
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Corporate
Communications
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D.
Andrew Edwards
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1100
Boulders Parkway
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Phone:
804/330-1041
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Richmond,
Virginia 23225
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Fax:
804/330-1777
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E-mail:
invest@tredegar.com
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E-mail:
daedward@tredegar.com
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Web
Site: www.tredegar.com
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FOR
IMMEDIATE RELEASE
TREDEGAR
REPORTS THIRD-QUARTER RESULTS
RICHMOND,
Va., November 2, 2009 – Tredegar Corporation (NYSE:TG) reported third-quarter
net income from continuing operations of $11.0 million (32 cents per share)
compared to $11.1 million (33 cents per share) in the third quarter of
2008. Earnings from continuing manufacturing operations in the third
quarter were $10.6 million (31 cents per share) versus $6.1 million (18 cents
per share) last year. Third-quarter sales from continuing operations
decreased to $175.7 million from $228.7 million in 2008.
A summary
of results for continuing operations for the three and nine months ended
September 30, 2009 and 2008 is shown below:
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(In Millions, Except Per-Share Data)
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Three Months Ended
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Nine Months Ended
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||||||||||||||
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September 30
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September 30
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|||||||||||||||
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2009
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2008
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2009
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2008
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|||||||||||||
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Sales
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$ | 175.7 | $ | 228.7 | $ | 486.8 | $ | 691.2 | ||||||||
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Income
(loss) from continuing operations as reported under generally accepted
accounting principles (GAAP)
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$ | 11.0 | $ | 11.1 | $ | (11.3 | ) | $ | 23.7 | |||||||
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After-tax
effects of:
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||||||||||||||||
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Goodwill
impairment relating to aluminum extrusions business
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- | - | 30.6 | - | ||||||||||||
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(Gains)
losses associated with plant shutdowns, asset impairments and
restructurings
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- | - | .9 | 3.8 | ||||||||||||
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(Gains)
losses from sale of assets and other items
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(.4 | ) | (5.0 | ) | 3.5 | (5.8 | ) | |||||||||
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Income
from continuing manufacturing operations*
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$ | 10.6 | $ | 6.1 | $ | 23.7 | $ | 21.7 | ||||||||
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Diluted
earnings (loss) per share from continuing operations as reported under
GAAP
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$ | .32 | $ | .33 | $ | (.33 | ) | $ | .69 | |||||||
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After-tax
effects per diluted share of:
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||||||||||||||||
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Goodwill
impairment relating to aluminum extrusions business
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- | - | .90 | - | ||||||||||||
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(Gains)
losses associated with plant shutdowns, asset impairments and
restructurings
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- | - | .01 | .11 | ||||||||||||
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(Gains)
losses from sale of assets and other items
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(.01 | ) | (.15 | ) | .12 | (.17 | ) | |||||||||
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Diluted
earnings per share from continuing manufacturing
operations*
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$ | .31 | $ | .18 | $ | .70 | $ | .63 | ||||||||
* 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.
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- - -
TREDEGAR
EARNINGS, page 2
John D.
Gottwald, Tredegar’s president and chief executive officer, said: “Our films
business had a strong quarter with the improvement in ongoing operating profit
primarily led by increased demand for surface protection and personal care
materials and the benefits from a continued focus on cost reduction efforts and
productivity gains. While results of our films business are positive,
we remain cautious due to the current global economic climate.”
“The
environment for our aluminum business continues to be
difficult. Shipments were down in most markets as volume in the third
quarter declined 30% from the third quarter of 2008. The timing of
any recovery in the nonresidential construction market, which accounted for
approximately 72% of our aluminum volume in 2008, remains
uncertain. As a result, our short-term focus in the aluminum business
continues to be on reducing our breakeven point.”
Mr.
Gottwald further stated: “Our balance sheet remains strong which
positions us well for opportunities that may result as business conditions
improve.”
MANUFACTURING
OPERATIONS
Film
Products
Third-quarter
net sales (sales less freight) in Film Products were $123.4 million, down 5.9%
from $131.2 million in the third quarter of 2008, while operating profit from
ongoing operations increased to $21.8 million in the third quarter of 2009 from
$10.5 million in 2008. Volume was 55.2 million pounds in the third
quarter of 2009, down 1.5% from 56.1 million pounds in the third quarter of
2008. Net sales, operating profit and volume in the second quarter of
2009 were $107.8 million, $14.2 million and 49.6 million pounds,
respectively.
Net sales
declined in the third quarter of 2009 compared with the third quarter of 2008
primarily due to the impact of lower selling prices from the pass-through of
reduced resin prices and unfavorable changes in the U.S. dollar value of
currencies for operations outside of the U.S., partially offset by the favorable
effect of a change in product mix driven mostly by an increase in sales of
high-value surface protection materials. Higher sales on a sequential
quarter basis, most notably in surface protection and personal care materials,
are believed to include a rebuilding of inventory at the customer
level. Operating profit from ongoing operations increased in the
third quarter of 2009 versus the same period in 2008 due primarily to the
positive impact of the change in product mix noted above, cost reduction
efforts, productivity gains and the lag in the pass-through of substantially
higher resin costs in 2008, partially offset by the unfavorable effect of
currency changes.
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- - -
TREDEGAR
EARNINGS, page 3
Net sales
in Film Products for the first nine months of 2009 were $336.0 million, a
decrease of 15.8% from $399.0 million for the same period in
2008. Operating profit from ongoing operations was $49.0 million in
the first nine months of 2009, up 41.1% from $34.7 million in the first nine
months of last year. Volume was 154.1 million pounds in the first
nine months of 2009, down 9.8% from 170.8 million pounds in the first nine
months of 2008.
Net sales
in the first nine months of 2009 declined primarily due to lower volume in all
market segments, most notably personal care materials and packaging films, and
the factors noted above for the current quarter. Operating profit
from ongoing operations increased in the first nine months of 2009 versus the
same period in 2008 as cost reduction efforts, productivity gains and the lag in
the pass-through of lower resin costs offset lower volumes and the unfavorable
effect of currency changes.
The
company estimates that the impact on operating profit of the lag in the
pass-through of changes in average resin costs was a negative $1.3 million and a
negative $4.0 million in the third quarters of 2009 and 2008,
respectively. The estimated impact of resin pass-through lag was a
positive $1.7 million in the first nine months of 2009 and a negative $7.2
million in the first nine months of 2008. The company estimates that
changes in the U.S. dollar value of currencies for operations outside of the
U.S. had an unfavorable impact on operating profit of $857,000 in the third
quarter of 2009 compared to the third quarter of 2008, and an unfavorable impact
of approximately $2.4 million in the first nine months of 2009 compared with
2008.
Capital
expenditures in Film Products were $9.1 million in the first nine months of 2009
compared with $9.5 million in the first nine months of 2008, and are projected
to be approximately $15 million in 2009. Depreciation expense was
$24.0 million in the first nine months of 2009 compared with $26.3 million in
the first nine months of last year, and is projected to be approximately $33
million in 2009.
Aluminum
Extrusions
Third-quarter
net sales from continuing operations in Aluminum Extrusions were $47.6 million,
down 48.3% from $92.1 million in the third quarter of 2008. Operating
losses from ongoing U.S. operations were $927,000 in the third quarter of 2009,
a change of $4.8 million from operating profits of $3.9 million in the third
quarter of 2008. Volume from continuing operations was 24.7 million
pounds in the third quarter of 2009, down 30.0% from 35.3 million pounds in the
third quarter of 2008.
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- - -
TREDEGAR
EARNINGS, page 4
Net sales
in Aluminum Extrusions for the first nine months of 2009 declined 49.6% to
$139.1 million from $275.8 million in the first nine months of
2008. Operating losses from ongoing U.S. operations were $2.1 million
in the first nine months of 2009, a $9.9 million change from operating profits
of $7.8 million in the first nine months of last year. Volume was
72.4 million pounds in the first nine months of 2009, down 32.9% from 107.9
million pounds in the first nine months of 2008.
The net
sales declines in the third quarter and first nine months of 2009 compared with
last year were mainly due to lower sales volume and lower average selling prices
driven by lower average aluminum costs. Weak market conditions led to
decreased shipments in most markets. Operating losses from ongoing
U.S. operations reported in the third quarter and first nine months of the year
were primarily driven by lower sales volumes.
Capital
expenditures for continuing operations in Aluminum Extrusions were $14.6 million
in the first nine months of 2009 compared with $4.3 million in the first nine
months of last year. Capital expenditures are projected to be
approximately $21 million in 2009, of which $17 million relates to the 18-month
project to expand capacity in the plant in Carthage, Tennessee announced in
January 2008. This new capacity will be dedicated to serving
customers in the nonresidential construction sector. Depreciation
expense was $5.6 million in the first nine months of 2009 compared with $6.0
million in the same period of last year, and is projected to be approximately
$7.6 million in 2009.
OTHER
ITEMS
Net
pension income from continuing operations was $1.0 million in the third quarter
and $2.5 million in the first nine months of 2009, a favorable change of
$417,000 (1 cent per share after taxes) and an unfavorable change of $1.2
million (2 cents per share after taxes), respectively, from amounts recognized
in the comparable periods of 2008. Most of the change in pension
income is reflected in “Corporate expenses, net” in the operating profit by
segment table. The Company contributed approximately $122,000 to its
pension plans for continuing operations in 2008 and expects to contribute a
similar amount in 2009. Corporate expenses, net in the third quarter
and first nine months of 2009 increased in comparison to 2008 primarily due to
adjustments made to accruals for certain performance-based compensation programs
and the unfavorable change in pension income noted above.
Interest
expense, which includes the amortization of debt issue costs, was $197,000 in
the third quarter of 2009, compared to $483,000 in the third quarter of 2008,
and $585,000 and $1.9 million in the first nine months of 2009 and 2008,
respectively, primarily due to lower average debt levels and lower average
interest rates in 2009.
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- - -
TREDEGAR
EARNINGS, page 5
The
effective tax rate used to compute income taxes from continuing manufacturing
operations was 36.8% in the third quarter of 2009 compared with 43.6% in the
third quarter of 2008, and 35.0% in the first nine months of 2009 compared with
39.3% in the first nine months of 2008. The decrease in the effective
tax rate for continuing manufacturing operations for 2009 versus 2008, which had
a favorable impact of approximately 3 cents per share during the third quarter
and a favorable impact of approximately 5 cents per share in the first nine
months, was primarily due to the recognition of a net tax benefit related to the
reversal of income tax contingency accruals upon the favorable conclusion of IRS
and state tax examinations through 2003 recognized in the second quarter of
2009, lower effective rates for operations outside the U.S., lower state income
taxes and higher research and development tax credits.
Overall
results for continuing operations for the quarter and year-to-date periods
include special items. After-tax charges for continuing operations
for plant shutdowns, asset impairments and restructurings and gains and losses
from the sale of assets and other items were an after-tax net gain of 1 cent and
15 cents per share in the third quarters of 2009 and 2008, respectively, and an
after-tax net loss of 13 cents in the first nine months of 2009 and an after-tax
net gain of 6 cents per share in the first nine months of 2008. In
addition, a non-cash goodwill impairment charge of $30.6 million (after-tax), or
90 cents per share, was recorded for Aluminum Extrusions in the first quarter of
2009. Further details regarding these items are provided in the
financial tables included with this press release.
Tredegar’s
investment in Harbinger Capital Partners Special Situations Fund, L.P. had a
reported capital account value of $11.5 million at September 30, 2009, compared
with $10.1 million at December 31, 2008. This investment has a
carrying value in Tredegar’s balance sheet of $10.0 million, which represents
the amount invested on April 2, 2007.
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- - -
TREDEGAR
EARNINGS, page 6
CAPITAL
STRUCTURE AND ADJUSTED EBITDA
Net cash
(cash and cash equivalents in excess of debt) was $80.4 million at September 30,
2009, compared with net cash of $23.3 million at December 31,
2008. Adjusted EBITDA from continuing manufacturing operations, a key
valuation and borrowing capacity measure, was $93.7 million in the twelve months
ended September 30, 2009, down from $98.0 million in the year ended December 31,
2008. 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,” “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 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 continuing
operations in Aluminum Extrusions are cyclical and highly dependent on economic
conditions of end-use markets in the U.S., particularly in the construction,
distribution and transportation industries, and are also subject to seasonal
slowdowns; 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
additional detail in “Risk Factors” in Part I, Item 1A of Tredegar’s 2008 Annual
Report on Form 10-K filed with the SEC. Readers are urged to review
and consider carefully the disclosures Tredegar makes in its filings with the
SEC.
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- - -
TREDEGAR
EARNINGS, page 7
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.
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- - -
TREDEGAR
EARNINGS, page 8
Tredegar
Corporation
Condensed
Consolidated Statements of Income
(In
Thousands, Except Per-Share Data)
(Unaudited)
|
Third
Quarter Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30
|
September
30
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Sales
|
$ | 175,662 | $ | 228,709 | $ | 486,843 | $ | 691,197 | ||||||||
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Other
income (expense), net (a) (d) (e)
|
300 | 7,709 | 1,657 | 8,929 | ||||||||||||
| 175,962 | 236,418 | 488,500 | 700,126 | |||||||||||||
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Cost
of goods sold (a)
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135,779 | 195,438 | 386,652 | 585,926 | ||||||||||||
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Freight
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4,692 | 5,450 | 11,791 | 16,348 | ||||||||||||
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Selling,
R&D and general expenses
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18,621 | 16,629 | 53,171 | 52,737 | ||||||||||||
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Amortization
of intangibles
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30 | 30 | 90 | 93 | ||||||||||||
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Interest
expense
|
197 | 483 | 585 | 1,921 | ||||||||||||
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Asset
impairments and costs associated with exit and disposal activities
(a)
|
- | - | 1,482 | 5,159 | ||||||||||||
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Goodwill
impairment charge (b)
|
- | - | 30,559 | - | ||||||||||||
| 159,319 | 218,030 | 484,330 | 662,184 | |||||||||||||
|
Income
from continuing operations before income
taxes
|
16,643 | 18,388 | 4,170 | 37,942 | ||||||||||||
|
Income
taxes (e)
|
5,647 | 7,310 | 15,504 | 14,214 | ||||||||||||
|
Income
(loss) from continuing operations
|
10,996 | 11,078 | (11,334 | ) | 23,728 | |||||||||||
|
Loss
from discontinued operations (f)
|
- | - | - | (930 | ) | |||||||||||
|
Net
income (loss) (c)
|
$ | 10,996 | $ | 11,078 | $ | (11,334 | ) | $ | 22,798 | |||||||
|
Earnings
(loss) per share:
|
||||||||||||||||
|
Basic:
|
||||||||||||||||
|
Continuing
operations
|
$ | .32 | $ | .33 | $ | (.33 | ) | $ | .70 | |||||||
|
Discontinued
operations
|
- | - | - | (.03 | ) | |||||||||||
|
Net
income (loss)
|
$ | .32 | $ | .33 | $ | (.33 | ) | $ | .67 | |||||||
|
Diluted:
|
||||||||||||||||
|
Continuing
operations
|
$ | .32 | $ | .33 | $ | (.33 | ) | $ | .69 | |||||||
|
Discontinued
operations
|
- | - | - | (.03 | ) | |||||||||||
|
Net
income (loss)
|
$ | .32 | $ | .33 | $ | (.33 | ) | $ | .66 | |||||||
|
Shares
used to compute earnings (loss) per share:
|
||||||||||||||||
|
Basic
|
33,878 | 33,672 | 33,873 | 34,042 | ||||||||||||
|
Diluted
|
33,922 | 33,903 | 33,873 | 34,262 | ||||||||||||
-- more
- --
TREDEGAR EARNINGS, page 9
Tredegar
Corporation
Net
Sales and Operating Profit by Segment
(In
Thousands)
(Unaudited)
|
Third
Quarter Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30
|
September
30
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Net
Sales
|
||||||||||||||||
|
Film
Products
|
$ | 123,397 | $ | 131,187 | $ | 335,984 | $ | 399,030 | ||||||||
|
Aluminum
Extrusions
|
47,573 | 92,072 | 139,068 | 275,819 | ||||||||||||
|
Total
net sales
|
170,970 | 223,259 | 475,052 | 674,849 | ||||||||||||
|
Add
back freight
|
4,692 | 5,450 | 11,791 | 16,348 | ||||||||||||
|
Sales
as shown in the Consolidated Statements of Income
|
$ | 175,662 | $ | 228,709 | $ | 486,843 | $ | 691,197 | ||||||||
|
Operating
Profit (Loss)
|
||||||||||||||||
|
Film
Products:
|
||||||||||||||||
|
Ongoing
operations
|
$ | 21,750 | $ | 10,454 | $ | 48,978 | $ | 34,719 | ||||||||
|
Plant
shutdowns, asset impairments, restructurings and other (a)
|
- | - | (660 | ) | (4,649 | ) | ||||||||||
|
Aluminum
Extrusions (f):
|
||||||||||||||||
|
Ongoing
operations
|
(927 | ) | 3,861 | (2,090 | ) | 7,809 | ||||||||||
|
Goodwill
impairment charge (b)
|
- | - | (30,559 | ) | - | |||||||||||
|
Plant
shutdowns, asset impairments, restructurings and other (a)
|
(111 | ) | - | (1,417 | ) | (615 | ) | |||||||||
|
AFBS:
|
||||||||||||||||
|
Gain
on sale of investments in Theken Spine and Therics, LLC
(d)
|
- | 1,499 | 150 | 1,499 | ||||||||||||
|
Total
|
20,712 | 15,814 | 14,402 | 38,763 | ||||||||||||
|
Interest
income
|
215 | 209 | 649 | 655 | ||||||||||||
|
Interest
expense
|
197 | 483 | 585 | 1,921 | ||||||||||||
|
Gain
on the sale of corporate assets (e)
|
- | 1,001 | 404 | 1,001 | ||||||||||||
|
Gain
from write-up of an investment accounted for under the fair value method
(e)
|
- | 5,000 | - | 5,000 | ||||||||||||
|
Stock
option-based compensation costs
|
424 | 178 | 1,227 | 516 | ||||||||||||
|
Corporate
expenses, net (a)
|
3,663 | 2,975 | 9,473 | 5,040 | ||||||||||||
|
Income
before income taxes
|
16,643 | 18,388 | 4,170 | 37,942 | ||||||||||||
|
Income
taxes (e)
|
5,647 | 7,310 | 15,504 | 14,214 | ||||||||||||
|
Income
(loss) from continuing operations
|
10,996 | 11,078 | (11,334 | ) | 23,728 | |||||||||||
|
Loss
from discontinued operations (f)
|
- | - | - | (930 | ) | |||||||||||
|
Net
income (loss) (c)
|
$ | 10,996 | $ | 11,078 | $ | (11,334 | ) | $ | 22,798 | |||||||
-- more --
TREDEGAR EARNINGS, page 10
Tredegar
Corporation
Condensed
Consolidated Balance Sheets
(In
Thousands)
(Unaudited)
|
September
30,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
Assets
|
||||||||
|
Cash
& cash equivalents
|
$ | 82,053 | $ | 45,975 | ||||
|
Accounts
& notes receivable, net
|
85,840 | 91,400 | ||||||
|
Income
taxes recoverable
|
1,300 | 12,549 | ||||||
|
Inventories
|
30,663 | 36,809 | ||||||
|
Deferred
income taxes
|
6,055 | 7,654 | ||||||
|
Prepaid
expenses & other
|
3,933 | 5,374 | ||||||
|
Total
current assets
|
209,844 | 199,761 | ||||||
|
Property,
plant & equipment, net
|
233,219 | 236,870 | ||||||
|
Other
assets
|
40,692 | 38,926 | ||||||
|
Goodwill
& other intangibles (b)
|
104,729 | 135,075 | ||||||
|
Total
assets
|
$ | 588,484 | $ | 610,632 | ||||
|
Liabilities
and Shareholders' Equity
|
||||||||
|
Accounts
payable
|
$ | 57,737 | $ | 54,990 | ||||
|
Accrued
expenses
|
35,129 | 38,349 | ||||||
|
Current
portion of long-term debt
|
862 | 529 | ||||||
|
Total
current liabilities
|
93,728 | 93,868 | ||||||
|
Long-term
debt
|
746 | 22,173 | ||||||
|
Deferred
income taxes
|
53,279 | 45,152 | ||||||
|
Other
noncurrent liabilities
|
25,691 | 29,023 | ||||||
|
Shareholders'
equity
|
415,040 | 420,416 | ||||||
|
Total
liabilities and shareholders' equity
|
$ | 588,484 | $ | 610,632 | ||||
-- more
- --
TREDEGAR EARNINGS, page 11
Tredegar
Corporation
Condensed
Consolidated Statement of Cash Flows
(In
Thousands)
(Unaudited)
|
Nine
Months Ended
|
||||||||
|
September
30
|
||||||||
|
2009
|
2008
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
income (loss)
|
$ | (11,334 | ) | $ | 22,798 | |||
|
Adjustments
for noncash items:
|
||||||||
|
Depreciation
|
29,607 | 32,844 | ||||||
|
Amortization
of intangibles
|
90 | 93 | ||||||
|
Goodwill
impairment charge
|
30,559 | - | ||||||
|
Deferred
income taxes
|
3,647 | 17,515 | ||||||
|
Accrued
pension income and postretirement benefits
|
(2,219 | ) | (3,354 | ) | ||||
|
Loss
on asset impairments and divestitures
|
- | 3,337 | ||||||
|
Gain
on the write-up of an investment accounted for under the fair value method
(e)
|
- | (5,000 | ) | |||||
|
Gain
on sale of assets
|
(1,004 | ) | (2,500 | ) | ||||
|
Changes
in assets and liabilities, net of effects of acquisitions and
divestitures:
|
||||||||
|
Accounts
and notes receivables
|
7,087 | (22,101 | ) | |||||
|
Inventories
|
7,088 | 16,430 | ||||||
|
Income
taxes recoverable
|
11,249 | (13,544 | ) | |||||
|
Prepaid
expenses and other
|
1,466 | (1,600 | ) | |||||
|
Accounts
payable and accrued expenses
|
10,425 | 12,120 | ||||||
|
Other,
net
|
(1,154 | ) | 3,359 | |||||
|
Net
cash provided by operating activities
|
85,507 | 60,397 | ||||||
|
Cash
flows from investing activities:
|
||||||||
|
Capital
expenditures (including settlement of related accounts payable of $1,709
in 2009)
|
(25,507 | ) | (13,849 | ) | ||||
|
Proceeds
from the sale of the aluminum extrusions business in Canada (net of cash
included in sale and transaction costs)
|
- | 23,616 | ||||||
|
Proceeds
from the sale of assets and property disposals
|
1,118 | 3,682 | ||||||
|
Investments
|
- | (2,059 | ) | |||||
|
Net
cash provided by (used in) investing activities
|
(24,389 | ) | 11,390 | |||||
|
Cash
flows from financing activities:
|
||||||||
|
Dividends
paid
|
(4,071 | ) | (4,090 | ) | ||||
|
Debt
principal payments
|
(21,094 | ) | (75,657 | ) | ||||
|
Borrowings
|
- | 22,000 | ||||||
|
Repurchases
of Tredegar common stock (including settlement of payable of
$3,368 in 2008)
|
(1,523 | ) | (19,792 | ) | ||||
|
Proceeds
from exercise of stock options and other
|
224 | 4,069 | ||||||
|
Net
cash used in financing activities
|
(26,464 | ) | (73,470 | ) | ||||
|
Effect
of exchange rate changes on cash
|
1,424 | 90 | ||||||
|
Increase
(decrease) in cash and cash equivalents
|
36,078 | (1,593 | ) | |||||
|
Cash
and cash equivalents at beginning of period
|
45,975 | 48,217 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 82,053 | $ | 46,624 | ||||
-- more
- --
TREDEGAR EARNINGS, page 12
Selected
Financial Measures
(In
Millions)
(Unaudited)
|
For the Twelve Months Ended
September 30, 2009
|
||||||||||||
|
Film
|
Aluminum
|
|||||||||||
|
Products
|
Extrusions
|
Total
|
||||||||||
|
Operating
profit from continuing ongoing operations
|
$ | 68.2 | $ | 0.2 | $ | 68.4 | ||||||
|
Allocation
of corporate overhead
|
(12.3 | ) | (2.3 | ) | (14.6 | ) | ||||||
|
Add
back depreciation and amortization from continuing
operations
|
32.3 | 7.6 | 39.9 | |||||||||
|
Adjusted
EBITDA from continuing operations (g)
|
$ | 88.2 | $ | 5.5 | $ | 93.7 | ||||||
|
Selected
balance sheet and other data as of September 30, 2009:
|
||||||||||||
|
Net
debt (cash) (h)
|
$ | (80.4 | ) | |||||||||
|
Shares
outstanding
|
33.9 | |||||||||||
Notes to
the Financial Tables
|
(a)
|
Plant
shutdowns, asset impairments, restructurings and other in the third
quarter of 2009 include:
|
|
Ÿ
|
Pretax losses of $111,000 associated with Aluminum
Extrusions for timing differences between the recognition of realized
losses on aluminum futures contracts and related revenues from the delayed
fulfillment by customers of fixed-price forward purchase commitments
(included in "Cost of goods sold" in the condensed consolidated statements
of income).
|
Plant
shutdowns, asset impairments, restructurings and other in the first nine months
of 2009 include:
|
Ÿ
|
Pretax charges of $1.6 million for severance and
other employee-related costs in connection with restructurings in Film
Products ($1.1 million), Aluminum Extrusions ($369,000) and corporate
headquarters ($178,000, included in "Corporate expenses, net" in the net
sales and operating profit by segment
table);
|
|
Ÿ
|
Pretax losses of $1.5 million associated with
Aluminum Extrusions for timing differences between the recognition of
realized losses on aluminum futures contracts and related revenues from
the delayed fulfillment by customers of fixed-price forward purchase
commitments (included in "Cost of goods sold" in the condensed
consolidated statements of
income);
|
|
Ÿ
|
Pretax gain of $276,000 (included in "Cost of
goods sold" in the condensed consolidated statements of income) related to
the reduction of future environmental costs expected to be incurred by
Aluminum Extrusions;
|
|
Ÿ
|
Pretax gain of $275,000 on the sale of equipment
(included in "Other income (expense), net" in the condensed consolidated
statements of income) from a previously shutdown films manufacturing
facility in LaGrange,
Georgia;
|
|
Ÿ
|
Pretax gain of $175,000 on the sale of a
previously shutdown aluminum extrusions manufacturing facility in El
Campo, Texas (included in "Other income (expense), net" in the condensed
consolidated statements of income);
and
|
|
Ÿ
|
Pretax gain of $149,000 related to the reversal to
income of certain inventory impairment accruals in Film
Products.
|
There
were no plant shutdowns, asset impairments, restructurings and other charges in
the third quarter of 2008. Plant shutdowns, asset impairments,
restructurings and other in the first nine months of 2008 include:
|
Ÿ
|
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);
|
|
Ÿ
|
Pretax charges of $2.5 million for asset
impairments in Film Products;
and
|
|
Ÿ
|
A pretax charge of $105,000 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)
|
Goodwill
impairment charge of $30.6 million ($30.6 million after taxes) was
recognized in Aluminum Extrusions in the first quarter of 2009 upon
completion of an impairment analysis performed as of March 31,
2009. This non-cash charge, as computed under U.S. generally
accepted accounting principles, resulted from the estimated adverse impact
on the business unit's fair value of possible future losses and the
uncertainty of the amount and timing of an economic
recovery.
|
-- more
- --
TREDEGAR EARNINGS, page 13
|
(c)
|
Comprehensive
income (loss), defined as net income and other comprehensive income
(loss), was income of $15.3 million in the third quarter of 2009 and
income of $1.3 million in the third quarter 2008. Comprehensive
income (loss) was a loss of $1.1 million in the first nine months of 2009
and income of $13.1 million in the nine months of 2008. 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.
|
|
(d)
|
Gain
on the sale of investments in Theken Spine and Therics, LLC includes a
post-closing contractual adjustment of $150,000 in 2009 and a gain of $1.5
million on the sale of the investments received at closing in
2008. These amounts are 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 sale of corporate assets in the first nine months of 2009 includes a
realized gain on the sale of corporate real estate ($404,000) in the first
quarter of 2009. 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), both in the third quarter of 2008. These gains are included in
"Other income (expense), net" in the condensed consolidated statement of
income. The unrealized gain from the write-up of an investment
accounted for under the fair value method of $5.0 million in 2008 is also
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 the term sheet of a new round of
equity financing for the investee.
|
|
|
Income
taxes for 2009 include the recognition of valuation allowances of $3.3
million (which includes a partial reversal of $476,000 recognized in the
third quarter) related to expected limitations on the utilization of
assumed capital losses on certain investments. Income taxes for the first
nine months of 2008 include the partial 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. The portion of the 2007
valuation allowance reversed in the third quarter of 2008 was
$150,000.
|
|
(f)
|
On
February 12, 2008, Tredegar sold its aluminum extrusions business in
Canada for a purchase price of approximately $25.0 million to an affiliate
of H.I.G. Capital. The purchase price was subject to adjustment
based upon the actual working capital of the business at the time of
sale. 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:
|
|
Third Quarter Ended
|
Nine Months Ended
|
|||||||||||||||
|
September 30
|
September 30
|
|||||||||||||||
|
(In thousands)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
|
Income
(loss) from operations before income taxes
|
$ | - | $ | - | $ | - | $ | (391 | ) | |||||||
|
Income
tax cost (benefit) on operations
|
- | - | - | (98 | ) | |||||||||||
| - | - | - | (293 | ) | ||||||||||||
|
Loss
associated with asset impairments and disposal activities
|
- | - | - | (1,337 | ) | |||||||||||
|
Income
tax cost (benefit) on asset impairments and costs associated with disposal
activities
|
- | - | - | (700 | ) | |||||||||||
| - | - | - | (637 | ) | ||||||||||||
|
Income
(loss) from discontinued operations
|
$ | - | $ | - | $ | - | $ | (930 | ) | |||||||
-- more --
TREDEGAR EARNINGS, page 14
|
(g)
|
Adjusted
EBITDA for the twelve months ended September 30, 2009, 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 and 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 (cash) is calculated as follows (in
millions):
|
|
Debt
|
$ | 1.6 | ||
|
Less: Cash
and cash equivalents
|
(82.0 | ) | ||
|
Net
debt (cash)
|
$ | (80.4 | ) |
|
|
Net
debt or cash is not intended to represent debt or cash as defined by
GAAP. Net debt or cash 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 or cash to be helpful for
the same purposes.
|
-- more --