| UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 |
| FORM 10-Q |
| (Mark One) | ||
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended March 31, 2005 | ||
| OR | ||
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from | _________________________ to _________________________ |
| Commission file number 1-10258 | ||
| Tredegar Corporation | ||
| (Exact Name of Registrant as Specified in Its Charter) | ||
| Virginia | 54-1497771 | |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. 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 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No o The number of shares of Common Stock, no par value, outstanding as of April 29, 2005: 38,625,794. |
|
PART I - FINANCIAL INFORMATION Item 1. Financial Statements. |
| Tredegar Corporation Consolidated Balance Sheets (In Thousands) (Unaudited) |
| March 31, 2005 |
Dec. 31, 2004 |
|||||
|---|---|---|---|---|---|---|
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 25,572 | $ | 22,994 | ||
| Accounts and notes receivable, net | 125,489 | 117,314 | ||||
| Inventories | 63,974 | 65,360 | ||||
| Deferred income taxes | 9,440 | 10,181 | ||||
| Prepaid expenses and other | 4,318 | 4,689 | ||||
| Total current assets | 228,793 | 220,538 | ||||
| Property, plant and equipment, at cost | 623,402 | 621,725 | ||||
| Less accumulated depreciation | 303,241 | 305,033 | ||||
| Net property, plant and equipment | 320,161 | 316,692 | ||||
| Other assets and deferred charges | 89,555 | 89,261 | ||||
| Goodwill and other intangibles | 142,632 | 142,983 | ||||
| Total assets | $ | 781,141 | $ | 769,474 | ||
| Liabilities and Shareholders’ Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 62,573 | $ | 63,852 | ||
| Accrued expenses | 36,258 | 38,141 | ||||
| Income taxes payable | 1,065 | 1,446 | ||||
| Current portion of long-term debt | 13,750 | 13,125 | ||||
| Total current liabilities | 113,646 | 116,564 | ||||
| Long-term debt | 104,167 | 90,327 | ||||
| Deferred income taxes | 70,578 | 71,141 | ||||
| Other noncurrent liabilities | 10,902 | 11,000 | ||||
| Total liabilities | 299,293 | 289,032 | ||||
| Commitments and contingencies (Notes 1 and 2) | ||||||
| Shareholders’ equity: | ||||||
| Common stock, no par value | 109,588 | 109,450 | ||||
| Common stock held in trust for savings restoration plan |
(1,274 | ) | (1,274 | ) | ||
| Unearned compensation on restricted stock | (1,248 | ) | (1,402 | ) | ||
| Unrealized gain on available-for-sale securities | 28 | — | ||||
| Foreign currency translation adjustment | 16,625 | 19,562 | ||||
| Gain on derivative financial instruments | 719 | 884 | ||||
| Minimum pension liability | (965 | ) | (1,156 | ) | ||
| Retained earnings | 358,375 | 354,378 | ||||
| Total shareholders’ equity | 481,848 | 480,442 | ||||
| Total liabilities and shareholders’ equity | $ | 781,141 | $ | 769,474 | ||
| See accompanying notes to financial statements. | ||||||
2 |
| Tredegar Corporation Consolidated Statements of Income (In Thousands, Except Per Share Data) (Unaudited) |
| Three Months Ended March 31 |
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|---|---|---|---|---|---|---|
| 2005
|
2004
|
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| Revenues: | ||||||
| Sales | $ | 232,757 | $ | 195,919 | ||
| Other income (expense), net | 2,560 | 6,106 | ||||
| 235,317 | 202,025 | |||||
| Costs and expenses: | ||||||
| Cost of goods sold | 198,352 | 163,744 | ||||
| Freight | 5,943 | 4,827 | ||||
| Selling, general and administrative | 17,064 | 13,627 | ||||
| Research and development | 2,800 | 4,317 | ||||
| Amortization of intangibles | 106 | 67 | ||||
| Interest expense | 963 | 923 | ||||
| Asset impairments and costs associated with exit and disposal activities |
867 | 10,783 | ||||
| Total | 226,095 | 198,288 | ||||
| Income before income taxes | 9,222 | 3,737 | ||||
| Income taxes | 3,672 | 1,308 | ||||
| Net income | $ | 5,550 | $ | 2,429 | ||
| Earnings per share: | ||||||
| Basic | $ | .14 | $ | .06 | ||
| Diluted | .14 | .06 | ||||
| Shares used to compute earnings per share: | ||||||
| Basic | 38,440 | 38,229 | ||||
| Diluted | 38,636 | 38,435 | ||||
| Dividends per share | $ | .04 | $ | .04 | ||
| See accompanying notes to financial statements. | ||||||
3 |
| Tredegar Corporation Consolidated Statements of Cash Flows (In Thousands) (Unaudited) |
| Three Months Ended March 31 |
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|---|---|---|---|---|---|---|
| 2005
|
2004
|
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| Cash flows from operating activities: | ||||||
| Net income | $ | 5,550 | $ | 2,429 | ||
| Adjustments for noncash items: | ||||||
| Depreciation | 9,185 | 8,202 | ||||
| Amortization of intangibles | 106 | 67 | ||||
| Deferred income taxes | 1,730 | (3,860 | ) | |||
| Accrued pension income and postretirement benefits | (618 | ) | (980 | ) | ||
| Gain on sale of assets | (1,815 | ) | (6,134 | ) | ||
| Loss on asset impairments and divestitures | 100 | 7,796 | ||||
| Changes in assets and liabilities, net of effects of acquisitions and divestitures: |
||||||
| Accounts and notes receivable | (9,044 | ) | (16,860 | ) | ||
| Inventories | 1,028 | 859 | ||||
| Income taxes recoverable | — | 59,084 | ||||
| Prepaid expenses and other | 358 | 170 | ||||
| Accounts payable | (1,947 | ) | 7,371 | |||
| Accrued expenses and income taxes payable | (2,030 | ) | 2,134 | |||
| Other, net | 1,882 | (1,331 | ) | |||
| Net cash provided by operating activities | 4,485 | 58,947 | ||||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (17,952 | ) | (11,491 | ) | ||
| Proceeds from the sale of assets and property disposals | 2,120 | 6,040 | ||||
| Other, net | 222 | (785 | ) | |||
| Net cash used in investing activities | (15,610 | ) | (6,236 | ) | ||
| Cash flows from financing activities: | ||||||
| Dividends paid | (1,553 | ) | (1,537 | ) | ||
| Debt principal payments | (10,035 | ) | (7,208 | ) | ||
| Borrowings | 24,500 | 5,000 | ||||
| Book overdrafts | 1,448 | — | ||||
| Proceeds from exercise of stock options | 192 | 441 | ||||
| Net cash provided by (used in) financing activities | 14,552 | (3,304 | ) | |||
| Effect of exchange rate changes on cash | (849 | ) | 51 | |||
| Increase in cash and cash equivalents | 2,578 | 49,458 | ||||
| Cash and cash equivalents at beginning of period | 22,994 | 19,943 | ||||
| Cash and cash equivalents at end of period | $ | 25,572 | $ | 69,401 | ||
| See accompanying notes to financial statements. | ||||||
4 |
| Tredegar Corporation Consolidated Statement of Shareholders’ Equity (In Thousands, Except Per Share Data) (Unaudited) |
| Accumulated Other Comprehensive Income (Loss) |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Common Stock |
Retained Earnings |
Trust for Savings Restora- tion Plan |
Unearned Restricted Stock Compen- sation |
Unrealized Gain on Available- for-Sale Securities |
Foreign Currency Trans- lation |
Gain (Loss) on Derivative Financial Instruments |
Minimum Pension Liability |
Total Share- holders’ Equity |
|||||||||||||||||||
| Balance December 31, 2004 | $ | 109,450 | $ | 354,378 | $ | (1,274 | ) | $ | (1,402 | ) | $ | — | $ | 19,562 | $ | 884 | $ | (1,156 | ) | $ | 480,442 | ||||||
| Comprehensive income: | |||||||||||||||||||||||||||
| Net income | — | 5,550 | — | — | — | — | — | — | 5,550 | ||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||||||
| Available-for-sale securities adjustment (net of tax of $15) |
— | — | — | — | 28 | — | — | — | 28 | ||||||||||||||||||
| Foreign currency translation adjustment (net of tax of $1,529) |
— | — | — | — | — | (2,937 | ) | — | — | (2,937 | ) | ||||||||||||||||
| Derivative financial instruments adjustment (net of tax of $92) |
— | — | — | — | — | — | (165 | ) | — | (165 | ) | ||||||||||||||||
| Minimum pension liability adjustment (net of tax of $101) |
— | — | — | — | — | — | — | 191 | 191 | ||||||||||||||||||
| Comprehensive income | 2,667 | ||||||||||||||||||||||||||
| Cash dividends declared ($.04 per share) | — | (1,553 | ) | — | — | — | — | — | — | (1,553 | ) | ||||||||||||||||
| Restricted stock forfeitures | (70 | ) | — | — | 70 | — | — | — | — | — | |||||||||||||||||
| Restricted stock amortization | — | — | — | 84 | — | — | — | — | 84 | ||||||||||||||||||
| Issued upon exercise of stock options (including related income tax benefits of $16) |
208 | — | — | — | — | — | — | — | 208 | ||||||||||||||||||
| Balance March 31, 2005 | $ | 109,588 | $ | 358,375 | $ | (1,274 | ) | $ | (1,248 | ) | $ | 28 | $ | 16,625 | $ | 719 | $ | (965 | ) | $ | 481,848 | ||||||
| See accompanying notes to financial statements. | |||||||||||||||||||||||||||
5 |
| TREDEGAR CORPORATION NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) |
| 1. | In the opinion of management, the accompanying consolidated financial statements of Tredegar Corporation and Subsidiaries (“Tredegar”) contain all adjustments necessary to present fairly, in all material respects, Tredegar’s consolidated financial position as of March 31, 2005, the consolidated results of operations for the three months ended March 31, 2005 and 2004, and the consolidated cash flows for the three months ended March 31, 2005 and 2004. All such adjustments are deemed to be of a normal, recurring nature. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in Tredegar’s Annual Report on Form 10-K for the year ended December 31, 2004. The results of operations for the three months ended March 31, 2005, are not necessarily indicative of the results to be expected for the full year. |
| 2. | Plant shutdowns, asset impairments and restructurings in 2005 shown in the segment operating profit table in Note 8 include: |
| • | A pretax gain of $1.6 million related to the shutdown of the films manufacturing facility in New Bern, North Carolina, including a $1.8 million gain on the sale of the facility (included in “Other income (expense), net” in the consolidated statements of income), partially offset by shutdown-related expenses of $198,000; | |
| • | A pretax charge of $1 million for process reengineering costs associated with the implementation of a global information system in Film Products (included in “Costs of goods sold” in the consolidated statements of income); | |