SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________ to __________
COMMISSION FILE NUMBER 1-10258
TREDEGAR INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1497771
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) 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
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange On Which Registered
COMMON STOCK NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: None
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 at least the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X].
Aggregate market value of voting stock held by non-affiliates of the
registrant as of January 31, 1994:* $126,257,342.50
Number of shares of Common Stock outstanding as of January 31, 1994:
10,895,611
*In determining this figure, an aggregate of 2,616,441 shares of Common
Stock, reported in the registrant's proxy statement for the 1994 annual
meeting of shareholders as beneficially owned by Floyd D. Gottwald, Jr.,
Bruce C. Gottwald and the members of their immediate families, including John
D. Gottwald, has been excluded because the shares are held by affiliates.
The aggregate market value has been computed based on the closing price in
the New York Stock Exchange Composite Transactions on January 31, 1994, as
reported by The Wall Street Journal.
<PAGE>
___________________________________________________________________________
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of Tredegar Industries, Inc.'s Annual Report to Shareholders
for the year ended December 31, 1993 (the "Annual Report"), are incorporated
by reference into Parts I, II, and IV of this Form 10-K.
2. Portions of Tredegar Industries, Inc.'s definitive Proxy Statement for
its 1994 Annual Meeting of Shareholders filed with the Securities and
Exchange Commission pursuant to Regulation 14A under the Securities Exchange
Act of 1934 (the "Proxy Statement") are incorporated by reference into Part
III of this Form 10-K.
<PAGE>
FORM 10-K TABLE OF CONTENTS/CROSS-REFERENCE
Annual Proxy
Form 10-K Report Statement
Part I page page page
1. Business . . . . . . . . . . . . . . . . . . 1-8 19-24, 26
2. Properties . . . . . . . . . . . . . . . . . 8-10
3. Legal proceedings. . . . . . . . . . . . . . None
4. Submission of matters to a vote of
security holders. . . . . . . . . . . . . . None
Part II
5. Market for registrant's common equity and
related stockholder matters . . . . . . . . 40
6. Selected financial data. . . . . . . . . . . 14
7. Management's discussion and analysis of
financial condition and results of
operations. . . . . . . . . . . . . . . . . 16-24, 26
8. Financial statements and supplementary data. 25-39
9. Changes in and disagreements with
accountants on accounting and financial
disclosure . . . . . . . . . . . . . . . . None
Part III
10. Directors and executive officers of the
registrant* . . . . . . . . . . . . . . . . 10-12 12 2-4, 6
11. Executive compensation*. . . . . . . . . . . 9-15
12. Security ownership of certain beneficial
owners and management*. . . . . . . . . . . 5-8
13. Certain relationships and related
transactions* . . . . . . . . . . . . . . . None
Part IV
14. Exhibits, financial statement schedules
and reports on Form 8-K
(a) Documents:
(1) Financial statements . . . . . . . 27-39
(2) Financial statement schedules. . . S-3 -
S-4
(3) Exhibits
(b) Reports on Form 8-K . . . . . . . . . . None
(c) Exhibits
(d) Financial statement schedules
*Items 11, 12 and 13 and portions of Item 10 are incorporated by reference
from the Proxy Statement pursuant to instructions G(1) and G(3) of the
General Instructions to Form 10-K.
Only those portions of the Annual Report to Shareholders referred to in the
foregoing table of contents are to be deemed "filed" as part of this Form 10-
K report.
The Securities and Exchange Commission has not approved or disapproved of
this report or passed upon its accuracy or adequacy.
<PAGE>
PART I
Item 1. BUSINESS
Description of Business
Tredegar Industries, Inc. ("Tredegar") was formed under the laws of the
Commonwealth of Virginia as a subsidiary of Ethyl Corporation ("Ethyl") on
June 1, 1988. On July 10, 1989, Ethyl distributed all of the outstanding
Tredegar common stock, no par value (the "Common Stock"), to the holders of
Ethyl common stock at the close of business on that day. Since July 10,
1989, Tredegar has been a publicly held operating company. Tredegar is
engaged directly or through subsidiaries in plastics, metal products, energy
and other businesses (primarily software and rational drug design research).
Tredegar's Energy segment is composed of its coal subsidiary, The Elk Horn
Coal Corporation ("Elk Horn"), and oil and gas properties located in Western
Canada. On February 4, 1994, Tredegar sold its remaining oil and gas
properties. In addition, in November 1993, Tredegar announced that it is
pursuing the sale of Elk Horn. Assuming Elk Horn can be sold on terms
agreeable to Tredegar, the sale is expected to be completed by mid-1994.
Tredegar's Energy segment has been reported as discontinued operations.
The following discussion of Tredegar's businesses should be read in
conjunction with the information contained in the "Financial Review" section
of the Annual Report referred to in Item 7 below.
Plastics
The Plastics segment is composed of the Film Products division ("Film
Products"), Tredegar Molded Products Company ("Molded Products") and
Fiberlux, Inc. ("Fiberlux"). Film Products and Molded Products manufacture
a wide range of products including specialty films, injection-molded products
and custom injection molds. Broad application for these products is found in
films for packaging, industrial, agricultural and disposable personal
products, including diapers, and in molded products for industrial,
household, personal-care, medical and electronics products. Fiberlux
produces vinyl extrusions, windows and patio doors. These products are
produced at various locations throughout the United States and are sold both
directly and through distributors. Tredegar also has films plants located in
the Netherlands and Brazil, where it produces films primarily for the
European and Latin American markets, respectively. The Plastics segment
competes in all of its markets on the basis of the quality and prices of its
products and its service.
Film Products
Film Products produces films for two major market categories:
disposables and industrial.
Disposables. Film Products is the largest U.S. supplier of embossed and
permeable films for disposable personal products. In each of the last three
years, this class of products accounted for more than 20% of the consolidated
revenues of Tredegar.
Film Products supplies embossed films to domestic and international
manufacturers for use as backsheet in such disposable products as baby
diapers, adult incontinent products, feminine hygiene pads and hospital
underpads. Film Products' primary customer for embossed films for backsheet
is The Procter & Gamble Company ("P&G"), the leading disposable diaper
manufacturer. Film Products also sells embossed films to several producers
of private label products. Film Products competes with several foreign and
domestic film products manufacturers in the backsheet market.
In response to environmental concerns, Film Products has been involved
in the development of new materials to replace the existing backsheet for
disposable diapers with a more environmentally friendly material.
In 1991, Film Products' U.S. disposable diaper backsheet volume declines
due to downgauging (i.e., making thinner films) were offset by higher volume
from increased P&G market share. In 1992, Film Products' U.S. disposable
diaper backsheet volume declined significantly due to lower P&G market share.
The economic recession caused many consumers to seek lower priced private
label diapers. In 1993, P&G's U.S. diaper market share stabilized resulting
in backsheet volumes roughly equal to 1992. On an international basis, 1993
backsheet sales were slightly higher than 1992. Overall, 1993 backsheet
volumes were higher than 1992 but below 1990 and 1991 levels.
Film Products supplies permeable films to P&G for use as topsheet in
adult incontinent products, feminine hygiene products and hospital underpads.
The processes used in manufacturing these films were developed jointly by
Film Products and P&G and are covered by applicable patents held by P&G and
Tredegar. Film Products also sells significant amounts of permeable films to
international affiliates of P&G.
In 1991, permeable film volumes improved over 1990 due to higher
international sales, primarily in the Far East. In 1992, volumes improved
over 1991 due to higher sales in all geographic areas. In 1993, permeable
film volumes declined in the U.S. and Far East, partially offset by increases
in Europe and Latin America. Overall, 1993 permeable film volumes were below
1992 and level with 1991.
P&G also purchases molded plastic products from Molded Products. P&G
and Tredegar have had a successful long-term relationship based on
cooperation, product innovation and continuous process improvement. The loss
or significant reduction of business associated with P&G would have a
material adverse effect on Tredegar's business.
Industrial. Film Products produces a line of oriented films under the name
MONAX(R). These are high strength, high moisture barrier films that allow both
cost and source reduction opportunities over current packaging mediums.
During 1994, Film Products will concentrate on increasing awareness of MONAX(R)
film and the development of heat sealable versions that can be used by end-
users in food, industrial, and medical packaging markets.
Film Products also produces coextruded and monolayer permeable formed
films under the name of VisPore(R). These films are used to regulate fluid
transmission in many industrial, medical, agricultural and packaging markets.
Specific examples include rubber bale wrap, filter plies for surgical masks
and other medical applications, permeable ground cover and cook-in-bag for
rice and pasta.
Differentially embossed monolayer and coextruded films are also produced
by Film Products. Some of these films are extruded in a Class 10,000 clean
room and act as a disposable, protective coversheet for photopolymers used in
the manufacture of circuit boards. Other films, sold under the name of
ULTRAMASK(R), are used as masking films that protect polycarbonate, acrylics
and glass from damage during fabrication, shipping and handling.
In January 1994, Film Products announced its intention to sell or close
its Flemington, New Jersey, plant in order to exit the non-strategic
conventional films business (single layer, blown polyethylene film used
primarily for general purpose industrial packaging).
Raw Materials. The primary raw materials for films produced by Film Products
are low-density and linear low-density polyethylene resins, which Film
Products obtains from domestic and foreign suppliers at competitive prices.
Tredegar's management believes that there will be an adequate supply of
polyethylene resins in the immediate future. Changes in resin prices, and
the timing thereof, could have a significant impact on the profitability of
this division.
Research and Development. Film Products has a technical center in Terre
Haute, Indiana. Film Products holds 35 U.S. patents and nine U.S.
trademarks. Expenditures for research and development have averaged
approximately $3.3 million per year during the past three years.
Molded Products
Molded Products manufactures five major categories of products:
packaging products, industrial products, parts for medical products, parts
for electronics products and injection-mold tools. Packaging products
represent more than half of Molded Products' business.
Packaging Products. The packaging group produces deodorant canisters, lip
balm sticks, custom jars, plugs, fitments and closures, primarily for
toiletries, cosmetics, pharmaceuticals and personal hygiene markets. Molded
Products is the leading U.S. producer of lip balm sticks. Molded Products
competes with various large producers in the packaging market.
Industrial Products. Molded Products produces molded plastic parts for
business machines, media storage products, cameras, appliances and various
custom products. In the business machine area, closer tolerances, made
possible by computer-aided design and manufacturing (CAD/CAM) and modern
resins, have led to expanded high-performance applications. Molded Products
works closely with customers in the design of new industrial products and
systems. The market for such products is very competitive.
Parts for Medical and Electronics Products. Effective July 31, 1993, Molded
Product's subsidiary, Polestar Plastics Manufacturing Company, acquired the
assets of a custom molder of precision parts for the medical and electronics
markets. Products supplied to the medical market include, among others,
disposable plastic parts for laparoscopic surgery instruments, staple guns,
needle protector devices and syringe housings. Products supplied to the
electronics market include, among others, connectors for computer cables and
circuit boards.
Injection-Mold Tools. Molded Products' tooling group produces injection
molds for internal use and for sale to other custom and captive molders.
Molded Products operates one of the largest independent tool shops in the
United States in St. Petersburg, Florida.
Raw Materials. Polypropylene and polyethylene resin are the primary raw
materials used by Molded Products. Molded Products also uses polystyrene
resins. Molded Products purchases these raw materials from domestic
suppliers at competitive prices. Changes in resin prices, and the timing
thereof, could have a significant impact on the profitability of this
division. Molded Products' management believes that there will be an
adequate supply of these resins in the immediate future.
Research and Development. Molded Products owns eight U.S. patents and has
spent an average of $.3 million each year for the last three years for
research and development. Molded Products maintains a technical center as
part of its St. Petersburg, Florida, complex.
Fiberlux
Fiberlux is a leading U.S. producer of rigid vinyl extrusions, windows
and patio doors. Fiberlux products are sold to fabricators and directly to
end users. The subsidiary's primary raw material, polyvinyl chloride resin,
is purchased from producers in open market purchases and under contract. No
critical shortages of polyvinyl chloride resins are expected.
Metal Products
The Metal Products segment is composed of The William L. Bonnell
Company, Inc. ("Bonnell"), Capitol Products Corporation ("Capitol") and
Brudi, Inc. ("Brudi"). Bonnell and Capitol ("Aluminum Extrusions") produce
soft alloy aluminum extrusions primarily for the building and construction
industry, and for transportation and consumer durables markets. Brudi,
acquired by Tredegar in April 1991, primarily produces steel attachments and
uprights for the forklift truck market.
Aluminum Extrusions
Aluminum Extrusions manufactures plain, anodized and painted aluminum
extrusions for sale directly to fabricators and distributors that use
aluminum extrusions in the production of curtain walls, moldings,
architectural shapes, running boards, tub and shower doors, boat windshields,
window components and furniture, among other products. Sales are made
primarily in the United States, principally east of the Rocky Mountains.
Sales are substantially affected by the strength of the building and
construction industry, which accounts for a majority of product sales.
Raw materials for Aluminum Extrusions, consisting of aluminum ingot,
aluminum scrap and various alloys, are purchased from domestic and foreign
producers in open market purchases and under short-term contracts. Profit
margins for products in Aluminum Extrusions are sensitive to significant
fluctuations in aluminum ingot and scrap prices, which account for more than
40 percent of product cost. Tredegar does not expect critical shortages of
aluminum or other required raw materials and supplies.
Aluminum Extrusions competes primarily based on the quality and prices
of its products and its service with a number of national and regional
manufacturers in the industry.
Brudi
Headquartered in Ridgefield, Washington, Brudi is the second largest
supplier of uprights and attachments for the forklift truck segment of the
domestic materials handling industry. Brudi markets its products and
services, which include in-house engineering and design capabilities,
primarily to dealers and original equipment manufacturers of forklift trucks.
Markets served include warehousing and distribution, food, fiber, primary
metals, pharmaceuticals, beverage and paper. Brudi products are made
primarily from steel, which is purchased on the open market and under
contract from domestic producers. Tredegar does not foresee critical
shortages of steel or other required raw materials and supplies.
During 1992, Brudi acquired the assets of a materials handling company
in Halifax, United Kingdom to serve the European market.
Energy
The Energy segment is composed of Elk Horn and oil and gas properties
located in Western Canada. On February 4, 1994, Tredegar sold its remaining
oil and gas properties. In addition, in November 1993, Tredegar announced
that it is pursuing the sale of Elk Horn. Assuming Elk Horn can be sold on
terms agreeable to Tredegar, the sale is expected to be completed by mid-
1994. Tredegar's Energy segment has been reported as discontinued
operations.
Coal
Elk Horn, an approximately 97 percent owned subsidiary, obtains income
from royalties by leasing part of its Eastern Kentucky mineral rights
(approximately 142,000 acres) for mining coal. The coal is generally
characterized as high-volatility, bituminous A-rank with low sulphur content.
Based on recent changes to the methodology used in classifying coal reserves,
Elk Horn estimates that, as of January 1, 1993, its proven and probable raw
recoverable reserves (reserves before any losses due to beneficiation)
approximate 124 million tons and 86 million tons, respectively. During the
last five years, Elk Horn's reserves have been mined at volumes ranging from
4 million to 6.2 million tons per year. Elk Horn leases its mineral rights
to coal operators, who mine the coal and pay royalties based on their sales
revenues. Elk Horn also uses independent contractors to mine coal. Elk Horn
sells coal on the open market on the basis of price and quality.
In January 1991, Elk Horn entered the coal trading business through a
new subsidiary. The Elk Horn Coal Sales Corporation facilitates the sale of
coal to customers from Elk Horn's production and from independent operators
mining non-Elk Horn reserves throughout Central Appalachia. Tredegar is
negotiating the sale of Elk Horn's coal trading business independently from
its other coal operations.
Oil and Gas
Tredegar sold its remaining oil and gas properties on February 4, 1994
for approximately $8 million. This transaction resulted in a gain of
approximately $6.1 million ($3.9 million after income taxes), which will be
recognized in 1994.
Other Businesses
The Other segment is composed primarily of investments in high-
technology businesses and related research.
In December 1992, Tredegar acquired APPX Software, Inc. (formerly
Kennedy & Company, Inc.) ("APPX Software"), a supplier of flexible software
development environments and business applications software. Headquartered
in Richmond, Virginia, APPX Software's leading product is a proprietary
application software development tool called APPX(R). APPX enables software
designers and programmers to develop and modify business applications
software much faster than customary programming techniques. APPX can run on
a variety of computers and is designed to adapt to changing hardware
environments. The market for software products is very competitive and
characterized by short product life cycles.
During 1992, Molecumetics, Ltd., a subsidiary of Tredegar
("Molecumetics"), commenced operation of its rational drug design research
laboratory in Seattle, Washington. Molecumetics provides proprietary
chemistry for the synthesis of small molecule therapeutics and vaccines.
Using synthetic chemistry techniques, researchers can fashion small molecules
that imitate the bioactive portion of larger and more complex molecules. For
customers in the pharmaceutical and biotechnology industries, these
synthetically-produced compounds offer significant advantages over naturally
occurring proteins in fighting diseases because they are smaller and more
easily absorbed in the human body, less subject to attack by enzymes, more
specific in their therapeutic activity, and faster and less expensive to
produce.
APPX Software owns four U.S. copyrights. Molecumetics has filed a
number of patent applications with respect to its technology. Businesses
included in the Other segment spent $5.6 million in 1993 and $1.9 million in
1992 for research and development.
Miscellaneous
Patents, Licenses and Trademarks. Tredegar considers patents, licenses and
trademarks to be of significance to its Plastics segment and its APPX
Software and Molecumetics subsidiaries. Tredegar routinely applies for
patents on significant patentable developments with respect to all of its
businesses. Tredegar and its subsidiaries now own numerous patents with
remaining terms ranging from 1 to 16 years. In addition, the Plastics
segment and certain of Tredegar's other subsidiaries have licenses under
patents owned by third parties.
Research and Development. During 1993, 1992 and 1991, approximately $9.1
million, $5.0 million and $4.5 million, respectively, was spent on company-
sponsored research and development activities in connection with the
businesses of Tredegar and its subsidiaries. See "Business of Tredegar -
Plastics and Other Businesses."
Backlog. Backlogs are not material to Tredegar.
Government Regulation. Laws concerning the environment that affect or could
affect Tredegar's domestic operations include, among others, the Clean Water
Act, the Clean Air Act, the Resource Conservation Recovery Act, the
Occupational Safety and Health Act, the National Environmental Policy Act,
the Toxic Substances Control Act, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), regulations promulgated under
these acts, and any other federal, state or local laws or regulations
governing environmental matters. The operations of Tredegar and its
subsidiaries are in substantial compliance with all applicable laws,
regulations and permits. In order to maintain substantial compliance with
such standards, Tredegar may be required to incur expenditures, the amounts
and timing of which are not presently determinable but which could be
significant, in constructing new facilities or in modifying existing
facilities.
Municipal, state and federal governments continue to consider
restrictions on the disposal of plastic products. Several states have
enacted such restrictions. The Plastics segment is conducting research into
source reduction through improved product quality and reduced plastic product
content and into the development of degradable films at its Terre Haute,
Indiana, research and development facility. At present, Tredegar cannot
determine the likely impact of proposed restrictions on the Plastics segment.
From time to time the Environmental Protection Agency (the "EPA") may
identify Tredegar or one of its subsidiaries as a potentially responsible
party with respect to a Superfund site under CERCLA. To date, Tredegar,
indirectly, is potentially responsible with respect to four Superfund sites.
As a result, Tredegar may be required to expend amounts on remedial
investigations and actions at such Superfund sites. Responsible parties
under CERCLA may be jointly and severally liable for costs at a site,
although typically costs are allocated among the responsible parties.
In addition, Tredegar, indirectly, is potentially responsible for one
New Jersey Spill Site Act location. Another New Jersey site is being
investigated pursuant to the New Jersey Environmental Cleanup Responsibility
Act.
Capital expenditures for pollution abatement and OSHA projects were
about $.4 million, $.8 million and $3.6 million in 1993, 1992 and 1991,
respectively. In 1991, approximately $2.3 million in capital expenditures
was related to the finishing operations in Aluminum Extrusions. Future
capital expenditures for pollution abatement and OSHA projects are expected
to approximate 1993 and 1992 levels.
Employees. Tredegar and its subsidiaries employ approximately 3,500 people.
Tredegar considers its relations with its employees to be good.
Item 2. PROPERTIES
General
Most of the improved real property and the other assets of Tredegar and
its subsidiaries are owned, and none of the owned property is subject to an
encumbrance material to the consolidated operations of Tredegar and its
subsidiaries. Tredegar considers the condition of the plants, warehouses and
other properties and assets owned or leased by Tredegar and its subsidiaries
to be generally good. Additionally, Tredegar considers the geographical
distribution of its plants to be well-suited to satisfying the needs of its
customers.
Tredegar believes that the capacity of its plants to be adequate for
immediate needs of its businesses. Tredegar's plants generally have operated
at 70-85 percent of capacity. Tredegar's corporate headquarters offices are
located at 1100 Boulders Parkway, Richmond, Virginia 23225.
Plastics
The Plastics segment has the following principal plants and facilities:
Location Principal Operations
Carbondale, Pennsylvania Production of plastic films
Flemington, New Jersey*
Fremont, California*
LaGrange, Georgia
Manchester, Iowa
New Bern, North Carolina
Tacoma, Washington
Terre Haute, Indiana (2)
(technical center and
production facility)
Kerkrade, the Netherlands
Sao Paulo, Brazil
Alsip, Illinois Production of molds and molded
Excelsior Springs, Missouri plastic products
South Grafton, Massachusetts
St. Petersburg, Florida (3)
(technical center and
two production
facilities)
Phillipsburg, Pennsylvania
State College, Pennsylvania
Pawling, New York Production of vinyl extrusions,
Purchase, New York (headquarters) windows and patio doors
South Bend, Indiana
*Tredegar has announced the closing or other disposition of these plants
during 1994.
Metal Products
The Metal Products segment has the following principal plants and
facilities:
Location Principal Operations
Carthage, Tennessee Production of aluminum
Kentland, Indiana extrusions, finishing
Newnan, Georgia
Ridgefield, Washington Production of uprights
Kelso, Washington and attachments
Adelaide, Australia
Halifax, United Kingdom
Energy
See page 5
Other Businesses
APPX Software leases office space in Richmond, Virginia. Molecumetics
leases its laboratory space in Bellevue, Washington.
Item 3. LEGAL PROCEEDINGS
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Executive Officers of Tredegar
Set forth below are the names, ages and titles of the executive officers
of Tredegar:
Name Age Title
John D. Gottwald 39 President and
Chief Executive Officer
Richard W. Goodrum 65 Executive Vice President and
Chief Operating Officer
Norman A. Scher 56 Executive Vice President,
Chief Financial Officer
and Treasurer
Michael W. Giancaspro 39 Vice President, Corporate
Planning
Steven M. Johnson 43 Vice President, Corporate
Development
Anthony J. Rinaldi 56 Vice President and General
Manager, Film Products
Frederick P. Woods 49 Vice President, Personnel
Except as described below, each of these officers has served in such
capacity since July 10, 1989. Each will hold office until his successor is
elected or until his earlier removal or resignation. The business experience
during the past five years of the executive officers is set forth below.
John D. Gottwald. Mr. Gottwald was Corporate Vice President-Aluminum,
Plastics and Energy of Ethyl from January 1, 1989, until July 10, 1989.
Richard W. Goodrum. Mr. Goodrum was the Divisional Vice President-Aluminum,
Plastics, and Energy of Ethyl from January 1, 1989, until July 10, 1989.
Norman A. Scher. Until July 10, 1989, Mr. Scher was a partner in the law
firm of Hunton & Williams, where he was a member of the firm's corporate and
securities team. He was an assistant managing partner in the firm for many
years, and since 1982 had primary responsibility for financial and planning
activities.
Michael W. Giancaspro. Mr. Giancaspro served as Director of Corporate
Planning from March 31, 1989, until February 27, 1992, when he was elected
Vice President, Corporate Planning. Mr. Giancaspro was Plant Manager of
Ethyl Film Products' Carbondale plant from April 1988 until March 1989.
Steven M. Johnson. Mr. Johnson served as Secretary of the Corporation until
February, 1994. Mr. Johnson served as Vice President, General Counsel and
Secretary from July 10, 1989, until July, 1992, when his position was changed
to Vice President, Corporate Development and Secretary. Mr. Johnson served
as counsel to the law firm of Hunton & Williams in Richmond, Virginia, from
March, 1989, until July 10, 1989.
Anthony J. Rinaldi. Mr. Rinaldi was elected Vice President on February 27,
1992. Mr. Rinaldi has served as General Manager of Tredegar Film Products
since July 1, 1991. During 1991, he also served as Managing Director of
European operations. Mr. Rinaldi served as Director of Sales and Marketing
for Tredegar Film Products from July 10, 1989 to June, 1991. In 1985, Mr.
Rinaldi became Director of Sales & Marketing for Ethyl Film Products.
Frederick P. Woods. Mr. Woods served as Vice President, Employee Relations
until December, 1993, when his position was changed to Vice President,
Personnel. Mr. Woods served as Director of Employee Relations for Ethyl from
February 1, 1988, until July 10, 1989.
<PAGE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The information contained on page 40 of the Annual Report under the
captions "Dividend Information," "Stock Listing" and "Market Prices
of Common Stock and Shareholder Data" is incorporated herein by
reference.
Item 6. SELECTED FINANCIAL DATA
The information for the five years ended December 31, 1993,
contained in the "Five-Year Summary" on page 14 of the Annual
Report is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The textual and tabular information concerning the years 1993, 1992
and 1991 contained on pages 16 through 24 and page 26 of the Annual
Report is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements contained on pages 28 through
31, the notes to financial statements contained on pages 32 through
39, the report of independent accountants on page 27, and the
information under the caption "Selected Quarterly Financial Data
(Unaudited)" on pages 25 and 26 of the Annual Report are
incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained on pages 2 through 4 of the Proxy
Statement under the caption "Election of Directors" concerning
directors and persons nominated to become directors of Tredegar is
incorporated herein by reference. See "Executive Officers of
Tredegar" at the end of Part I above for information about the
executive officers of Tredegar.
The information contained on page 6 of the Proxy Statement under
the caption "Stock Ownership" is incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
The information contained on pages 9 through 15 of the Proxy
Statement under the caption "Compensation of Executive Officers and
Directors" concerning executive compensation is incorporated herein
by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information contained on pages 5 through 8 of the Proxy
Statement under the caption "Stock Ownership" is incorporated
herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) Documents:
(1) Financial statements - the following consolidated financial
statements of the registrant are included on pages 27 to 39
in the Annual Report and are incorporated herein by reference
in Item 8.
Report of independent accountants.
Consolidated balance sheets as of December 31, 1993 and 1992.
Consolidated statements of income, shareholders' equity and
cash flows for the years ended December 31, 1993, 1992 and
1991.
Notes to financial statements.
(2) See Index to Financial Statement Schedules on page S-1.
(3) Exhibits
3.1 Amended and Restated Articles of Incorporation of
Tredegar (filed as Exhibit 3.1 to Tredegar's Annual
Report on Form 10-K for the year ended December 31,
1989, and incorporated herein by reference)
3.2 Amended By-laws of Tredegar
4.1 Form of Common Stock Certificate (filed as Exhibit 4.3
to Tredegar's Annual Report on Form 10-K for the year
ended December 31, 1989, and incorporated herein by
reference)
4.2 Rights Agreement dated as of June 15, 1989, between
Tredegar and NationsBank of Virginia, N.A. (formerly
Sovran Bank, N.A.), as Rights Agent (filed as Exhibit
4.4 to Tredegar's Annual Report on Form 10-K for the
year ended December 31, 1989, and incorporated herein
by reference)
4.2.1 Amendment and Substitution Agreement (Rights Agreement)
dated as of July 1, 1992, by and among Tredegar,
NationsBank of Virginia, N.A. (formerly Sovran Bank,
N.A.) and American Stock Transfer & Trust Company
4.3 Competitive Advance and Revolving Credit Agreement
dated as of June 16, 1989, among Tredegar, the Banks
named therein and Chemical Bank, as Agent (filed as
Exhibit 4.2 to Tredegar's Annual Report on Form 10-K
for the year ended December 31, 1989, and incorporated
herein by reference)
4.3.1 First Amendment to the Competitive Advance and
Revolving Credit Agreement dated as of September 15,
1990, among Tredegar, the Banks named therein and
Chemical Bank, as Agent (filed as Exhibit 4.2.1 to
Tredegar's Annual Report on Form 10-K for the year
ended December 31, 1990, and incorporated herein by
reference)
4.3.2 Second Amendment to the Competitive Advance and
Revolving Credit Agreement, dated as of December 6,
1991, among Tredegar, the Banks named therein and
Chemical Bank, as Agent (filed as Exhibit 4.4.2 to
Tredegar's Annual Report on Form 10-K for the year
ended December 31, 1991, and incorporated herein by
reference)
4.3.3 Third Amendment to the Competitive Advance and
Revolving Credit Agreement, dated as of June 8, 1992,
among Tredegar, the Banks named therein and Chemical
Bank, as Agent (filed as Exhibit 4.4.3 to Tredegar's
Annual Report on Form 10-K for the year ended December
31, 1992, and incorporated herein by reference)
4.3.4 Fourth Amendment, dated as of August 20, 1993, to the
Competitive Advance and Revolving Credit Agreement
among Tredegar, the Banks named therein and Chemical
Bank, as Agent (filed as Exhibit 4 to Tredegar's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993, and incorporated herein by
reference)
4.4 Loan Agreement dated as of June 8, 1992, among
Tredegar, the Banks named therein and LTCB Trust
Company, as Agent (filed as Exhibit 4 to Tredegar's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1992, and incorporated herein by reference)
4.4.1 Accession Agreement dated August 3, 1992, among
Tredegar, the Banks named in the Loan Agreement dated
as of June 8, 1992 and LTCB Trust Company, as Agent
(filed as Exhibit 4.5.1 to Tredegar's Annual Report on
Form 10-K for the year ended December 31, 1992, and
incorporated herein by reference)
4.5 Loan Agreement dated June 16, 1993 between Tredegar and
Metropolitan Life Insurance Company (filed as Exhibit
4 to Tredegar's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993, and incorporated herein by
reference)
10.1 Reorganization and Distribution Agreement dated as of
June 1, 1989, between Tredegar and Ethyl (filed as
Exhibit 10.1 to Tredegar's Annual Report on Form 10-K
for the year ended December 31, 1989, and incorporated
herein by reference)
*10.2 Employee Benefits Agreement dated as of June
1, 1989, between Tredegar and Ethyl (filed as
Exhibit 10.2 to Tredegar's Annual Report on
Form 10-K for the year ended December 31,
1989, and incorporated herein by reference)
10.3 Tax Sharing Agreement dated as of June 1, 1989, between
Tredegar and Ethyl (filed as Exhibit 10.3 to Tredegar's
Annual Report on Form 10-K for the year ended December
31, 1989, and incorporated herein by reference)
10.4 Master Services Agreement dated as of June 1, 1989,
between Tredegar and Ethyl (filed as Exhibit 10.4 to
Tredegar's Annual Report on Form 10-K for the year
ended December 31, 1989, and incorporated herein by
reference)
10.4.1 Amendment to Master Services Agreement dated as of
November 1, 1990, between Tredegar and Ethyl (filed
as Exhibit 10.4.1 to Tredegar's Annual Report on
Form 10-K for the year ended December 31, 1990, and
incorporated herein by reference)
10.5 Indemnification Agreement dated as of June 1, 1989,
between Tredegar and Ethyl (filed as Exhibit 10.5 to
Tredegar's Annual Report on Form 10-K for the year
ended December 31, 1989, and incorporated herein by
reference)
*10.6 Tredegar 1989 Incentive Stock Option Plan
(included as Exhibit A to the Prospectus
contained in the Form S-8 Registration
Statement No. 33-31047, and incorporated
herein by reference)
*10.7 Tredegar Bonus Plan (filed as Exhibit 10.7 to
Tredegar's Annual Report on Form 10-K for the
year ended December 31, 1989, and incorporated
herein by reference)
*10.8 Savings Plan for the Employees of Tredegar
(filed as Exhibit 4 to the Form S-8
Registration Statement No. 33-29582, and
incorporated herein by reference)
*10.9 Tredegar Retirement Income Plan (filed as
Exhibit 10.9 to Tredegar's Annual Report on
Form 10-K for the year ended December 31,
1990, and incorporated herein by reference)
*10.10 Agreement dated as of June 1, 1989, between
Tredegar and Norman A. Scher (filed as Exhibit
10.10 to Tredegar's Annual Report on Form 10-K
for the year ended December 31, 1989, and
incorporated herein by reference)
10.11 Stock and Warrant Purchase Agreement dated as of
February 15, 1991, by and between Tredegar Investments,
Inc. and Clinical Technologies Associates, Inc. (now
Emisphere Technologies, Inc.) (filed as Exhibit 10.11
to Tredegar's Annual Report on Form 10-K for the year
ended December 31, 1991, and incorporated herein by
reference)
10.11.1 Agreement dated as of October 23, 1992, by and among
Tredegar Investments, Inc., Emisphere Technologies,
Inc., Michael M. Goldberg, M.D. and Sam J. Milstein,
Ph.D. (filed as Exhibit 10.11.1 to Tredegar's Annual
Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference)
10.11.2 Letter Agreement dated December 30, 1992, by and
between Tredegar Investments, Inc. and Emisphere
Technologies, Inc. (filed as Exhibit 10.11.2 to
Tredegar's Annual Report on Form 10-K for the year
ended December 31, 1991, and incorporated herein by
reference)
*10.12 Tredegar 1992 Omnibus Stock Incentive Plan
(filed as Exhibit 10.12 to Tredegar's Annual
Report on Form 10-K for the year ended
December 31, 1991, and incorporated herein by
reference)
*10.13 Tredegar Industries, Inc. Retirement Benefit
Restoration Plan
*10.14 Tredegar Industries, Inc. Savings Plan Benefit
Restoration Plan
11 Computations of earnings per share
13 Tredegar Annual Report to Shareholders for the year
ended December 31, 1993 (See Note 1)
21 Subsidiaries of Tredegar
23.1 Consent of Independent Accountants
*The marked items are management contracts or compensatory plans,
contracts or arrangements required to be filed as exhibits to this
Form 10-K.
(b) Reports on Form 8-K
None
(c) Exhibits
The response to this portion of Item 14 is submitted as a separate
section of this report.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a separate
section of this report.
Note 1. With the exception of the information incorporated in this Form
10-K by reference thereto, the Annual Report shall not be deemed "filed"
as a part of Form 10-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
TREDEGAR INDUSTRIES, INC.
(Registrant)
Dated: February 25, 1994 By /s/ John D. Gottwald
John D. Gottwald
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on February 25, 1994.
Signature Title
/s/ John D. Gottwald President
(John D. Gottwald) (Principal Executive Officer
and Director)
/s/ N. A. Scher Executive Vice President,
(Norman A. Scher) Treasurer and Director
(Principal Financial Officer)
/s/ D. Andrew Edwards Corporate Controller
(D. Andrew Edwards) (Principal Accounting Officer)
/s/ R. W. Goodrum Executive Vice President and
(Richard W. Goodrum) Director
/s/ Phyllis Cothran Director
(Phyllis Cothran)
/s/ Bruce C. Gottwald Director
(Bruce C. Gottwald)
/s/ Floyd D. Gottwald, Jr. Director
(Floyd D. Gottwald)
/s/ Andre B. Lacy Director
(Andre B. Lacy)
/s/ James F. Miller Director
(James F. Miller)
/s/ Emmett J. Rice Director
(Emmett J. Rice)
/s/ W. Thomas Rice Director
(W. Thomas Rice)
<PAGE>
TREDEGAR INDUSTRIES, INC.
INDEX TO FINANCIAL STATEMENT SCHEDULES
Page
Report of Independent Accountants on Financial
Statement Schedules S-2
Schedule V - Property, Plant and Equipment for the
years ended December 31, 1993, 1992 and 1991 S-3
Schedule VI - Accumulated Depreciation and Amortization
of Property, Plant and Equipment for the years
ended December 31, 1993, 1992 and 1991 S-4
<PAGE>
Report of Independent Accountants
on Financial Statement Schedules
To the Board of Directors and
Shareholders of Tredegar
Industries, Inc.:
Our report on the consolidated financial statements of Tredegar Industries,
Inc. and Subsidiaries has been incorporated by reference in this Form 10-K
from page 27 of the 1993 Annual Report to Shareholders of Tredegar
Industries, Inc. In connection with our audits of such financial statements,
we have also audited the related financial statement schedules listed in the
index on page S-1 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand
Richmond, Virginia
January 17, 1994
<TABLE>
Schedule V -- Property, Plant and Equipment(1)
Tredegar Industries, Inc. and Subsidiaries
For years ended December 31, 1993, 1992 and 1991
(In thousands)
Beginning Ending
1993 Balance Additions Retirements Other Balance
<S> <C> <C> <C> <C> <C>
Land and land improvements $ 5,368 $ 2,290 $ 182 $ (282)(2) $ 7,194
Buildings 46,839 758 727 (381)(2) 46,608
119 (3)
Machinery and equipment 259,151 13,432 12,886 5,234 (2) 270,131
4,648 (3)
552 (4)
Total $311,358 $16,480 $13,795 $ 9,890 $323,933
1992
Land and land improvements $ 4,165 $ 141 $ 5 $ 823 (2) $ 5,368
244 (3)
Buildings 41,575 1,968 324 1,949 (2) 46,839
1,671 (3)
Machinery and equipment 248,435 18,596 14,537 2,578 (2) 259,151
4,079 (3)
Total $294,175 $20,705 $14,866 $ 11,344 $311,358
1991
Land and land improvements $ 3,866 $ 111 $ 15 $ (607)(2) $ 4,165
981 (3)
(171)(5)
Buildings 41,098 1,616 895 (3,687)(2) 41,575
4,709 (3)
(1,266)(5)
Machinery and equipment 226,230 19,633 9,145 (2,221)(2) 248,435
4,467 (3)
(13,165)(5)
22,636 (6)
Total $271,194 $21,360 $10,055 $ 11,676 $294,175
</TABLE>
Depreciation is computed on the straight-line basis over the estimated useful
lives of the related assets, resulting in annual depreciation rates of:
Land improvements: 5% - 10%
Buildings: 2.5% - 5%
Machinery and equipment: 5% - 33.3%
(1) Continuing operations.
(2) Reclassifications.
(3) Acquisitions of businesses.
(4) Write-up of assets to their pre-tax amounts in accordance with Statement
of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."
(5) Sales of businesses and assets.
(6) Adjustment for fully-depreciated divested assets.
<PAGE>
<TABLE>
Schedule VI -- Accumulated Depreciation and Amortization of Property, Plant
and Equipment (1)
Tredegar Industries, Inc. and Subsidiaries
For years ended December 31, 1993, 1992 and 1991
(In thousands)
Beginning Ending
1993 Balance Additions Retirements Other Balance
<S> <C> <C> <C> <C> <C>
Land and land improvements $ 710 $ 105 $ 5 $ 5 (2) $ 815
Buildings 18,622 1,996 671 63 (2) 20,010
Machinery and equipment 152,263 21,016 10,331 4,758 (2) 167,706
Total $171,595 $23,117 $11,007 $ 4,826 $188,531
1992
Land and land improvements $ 448 $ 92 $ 1 $ 171 (2) $ 710
Buildings 15,954 2,051 356 973 (2) 18,622
Machinery and equipment 143,910 19,820 12,474 1,007 (2) 152,263
Total $160,312 $21,963 $12,831 $ 2,151 $171,595
1991
Land and land improvements $ 564 $ 91 $ 4 $ (159)(2) $ 448
(44)(3)
Buildings 15,644 1,932 104 (1,438)(2) 15,954
(860)(3)
780 (4)
Machinery and equipment 117,872 22,066 9,147 (4,209)(2) 143,910
(7,062)(3)
1,754 (4)
22,636 (5)
Total $134,080 $24,089 $ 9,255 $ 11,398 $160,312
</TABLE>
(1) Continuing operations.
(2) Reclassifications.
(3) Sales of businesses and assets.
(4) Acquisitions of businesses.
(5) Adjustment for fully-depreciated divested assets.
<PAGE>
EXHIBIT INDEX
Page
3.1 Amended and Restated Articles of Incorporation of Tredegar (filed as
Exhibit 3.1 to Tredegar's Annual Report on Form 10-K for the year ended
December 31, 1989, and incorporated herein by reference)
3.2 Amended By-laws of Tredegar
4.1 Form of Common Stock Certificate (filed as Exhibit 4.3 to Tredegar's
Annual Report on Form 10-K for the year ended December 31, 1989, and
incorporated herein by reference)
4.2 Rights Agreement dated as of June 15, 1989, between Tredegar and
NationsBank of Virginia, N.A. (formerly Sovran Bank, N.A.), as Rights
Agent (filed as Exhibit 4.4 to Tredegar's Annual Report on Form 10-K
for the year ended December 31, 1989, and incorporated herein by
reference)
4.2.1 Amendment and Substitution Agreement (Rights Agreement) dated as of
July 1, 1992, by and among Tredegar, NationsBank of Virginia, N.A.
(formerly Sovran Bank, N.A.) and American Stock Transfer & Trust
Company (filed as Exhibit 4.2.1 to Tredegar's Annual Report on Form 10-
K for the year ended December 31, 1992, and incorporated herein by
reference)
4.3 Competitive Advance and Revolving Credit Agreement dated as of June 16,
1989, among Tredegar, the Banks named therein and Chemical Bank, as
Agent (filed as Exhibit 4.2 to Tredegar's Annual Report on Form 10-K
for the year ended December 31, 1989, and incorporated herein by
reference)
4.3.1 First Amendment to the Competitive Advance and Revolving Credit
Agreement dated as of September 15, 1990, among Tredegar, the Banks
named therein and Chemical Bank, as Agent (filed as Exhibit 4.2.1 to
Tredegar's Annual Report on Form 10-K for the year ended December 31,
1990, and incorporated herein by reference)
4.3.2 Second Amendment to the Competitive Advance and Revolving Credit
Agreement, dated as of December 6, 1991, among Tredegar, the Banks
named therein and Chemical Bank, as Agent (filed as Exhibit 4.4.2 to
Tredegar's Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference)
4.3.3 Third Amendment to the Competitive Advance and Revolving Credit
Agreement, dated as of June 8, 1992, among Tredegar, the Banks named
therein and Chemical Bank, as Agent (filed as Exhibit 4.4.3 to
Tredegar's Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference)
4.3.4 Fourth Amendment to the Competitive Advance and Revolving Credit
Agreement, dated as of August 20, 1993, among Tredegar, the Banks named
therein and Chemical Bank, as Agent (filed as Exhibit 4 to Tredegar's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993,
and incorporated herein by reference)
4.4 Loan Agreement dated as of June 8, 1992, among Tredegar, the Banks
named therein and LTCB Trust Company, as Agent (filed as Exhibit 4 to
Tredegar's Quarterly Report on Form 10-Q for the quarter ended June 30,
1992, and incorporated herein by reference)
4.4.1 Accession Agreement dated August 3, 1992, among Tredegar, the Banks
named in the Loan Agreement dated as of June 8, 1992 and LTCB Trust
Company, as Agent (filed as Exhibit 4.5.1 to Tredegar's Annual Report
on Form 10-K for the year ended December 31, 1992, and incorporated
herein by reference)
4.5 Loan Agreement dated June 16, 1993 between Tredegar and Metropolitan
Life Insurance Company (filed as Exhibit 4 to Tredegar's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1993, and
incorporated herein by reference)
10.1 Reorganization and Distribution Agreement dated as of June 1, 1989,
between Tredegar and Ethyl (filed as Exhibit 10.1 to Tredegar's Annual
Report on Form 10-K for the year ended December 31, 1989, and
incorporated herein by reference)
*10.2 Employee Benefits Agreement dated as of June 1, 1989, between
Tredegar and Ethyl (filed as Exhibit 10.2 to Tredegar's Annual
Report on Form 10-K for the year ended December 31, 1989, and
incorporated herein by reference)
10.3 Tax Sharing Agreement dated as of June 1, 1989, between Tredegar and
Ethyl (filed as Exhibit 10.3 to Tredegar's Annual Report on Form 10-K
for the year ended December 31, 1989, and incorporated herein by
reference)
10.4 Master Services Agreement dated as of June 1, 1989, between Tredegar
and Ethyl (filed as Exhibit 10.4 to Tredegar's Annual Report on Form
10-K for the year ended December 31, 1989, and incorporated herein by
reference)
10.4.1 Amendment to Master Services Agreement dated as of November 1,
1990, between Tredegar and Ethyl (filed as Exhibit 10.4.1 to
Tredegar's Annual Report on Form 10-K for the year ended December
31, 1990, and incorporated herein by reference)
10.5 Indemnification Agreement dated as of June 1, 1989, between Tredegar
and Ethyl (filed as Exhibit 10.5 to Tredegar's Annual Report on Form
10-K for the year ended December 31, 1989, and incorporated herein by
reference)
*10.6 Tredegar 1989 Incentive Stock Option Plan (included as Exhibit
A to the Prospectus contained in the Form S-8 Registration
Statement No. 33-31047, and incorporated herein by reference)
*10.7 Tredegar Bonus Plan (filed as Exhibit 10.7 to Tredegar's
Annual Report on Form 10-K for the year ended December 31,
1989, and incorporated herein by reference)
*10.8 Savings Plan for the Employees of Tredegar (filed as Exhibit
4 to the Form S-8 Registration Statement No. 33-29582, and
incorporated herein by reference)
*10.9 Tredegar Retirement Income Plan (filed as Exhibit 10.9 to
Tredegar's Annual Report on Form 10-K for the year ended
December 31, 1990, and incorporated herein by reference)
*10.10 Agreement dated as of June 1, 1989, between Tredegar and
Norman A. Scher (filed as Exhibit 10.10 to Tredegar's Annual
Report on Form 10-K for the year ended December 31, 1989, and
incorporated herein by reference)
10.11 Stock and Warrant Purchase Agreement dated as of February 15, 1991, by
and between Tredegar Investments, Inc. and Clinical Technologies
Associates, Inc. (now Emisphere Technologies, Inc.) (filed as Exhibit
10.11 to Tredegar's Annual Report on Form 10-K for the year ended
December 31, 1991, and incorporated herein by reference)
10.11.1 Agreement dated as of October 23, 1992, by and among Tredegar
Investments, Inc., Emisphere Technologies, Inc., Michael M.
Goldberg, M.D. and Sam J. Milstein, Ph.D. (filed as Exhibit 10.11.1
to Tredegar's Annual Report on Form 10-K for the year ended
December 31, 1991, and incorporated herein by reference)
10.11.2 Letter Agreement dated December 30, 1992, by and between Tredegar
Investments, Inc. and Emisphere Technologies, Inc. (filed as
Exhibit 10.11.2 to Tredegar's Annual Report on Form 10-K for the
year ended December 31, 1991, and incorporated herein by reference)
*10.12 Tredegar 1992 Omnibus Stock Incentive Plan (filed as Exhibit
10.12 to Tredegar's Annual Report on Form 10-K for the year
ended December 31, 1991, and incorporated herein by reference)
*10.13 Tredegar Industries, Inc. Retirement Benefit Restoration Plan
*10.14 Tredegar Industries, Inc. Savings Plan Benefit Restoration Plan
11 Computations of earnings per share
13 Tredegar Annual Report to Shareholders for the year ended December 31,
1993 (See Note 1)
21 Subsidiaries of Tredegar
23.1 Consent of Independent Accountants
*The marked items are management contracts or compensatory plans, contracts
or arrangements required to be filed as exhibits to this Form 10-K.
Exhibit 3.2
=================================================================
TREDEGAR INDUSTRIES, INC.
AMENDED BY-LAWS
As amended and in effect on April 23, 1993
=================================================================
<PAGE>
TREDEGAR INDUSTRIES, INC.
AMENDED BY-LAWS
ARTICLE I
Meeting of Shareholders
Section 1. Places of Meetings. All meetings of the shareholders
shall be held at such place, either within or without the State of
Virginia, as may, from time to time, be fixed by the Board of Directors.
Section 2. Annual Meetings. The annual meeting of the shareholders,
for the election of directors and transaction of such other business as may
come before the meeting, shall be held in each year on the fourth Wednesday
in May, at 2:00 p.m., Richmond, Virginia time, or on such other date and at
such other time as the Board of Directors of the Corporation may designate
from time to time.
Section 3. Special Meetings. Special meetings of shareholders for
any purpose or purposes may be called at any time by the President of the
Corporation, or by a majority of the Board of Directors. At a special
meeting no business shall be transacted and no corporate action shall be
taken other than that stated in the notice of the meeting.
Section 4. Notice of Meetings. Except as otherwise required by law,
written or printed notice stating the place, day and hour of every meeting
of the shareholders and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be mailed not less than ten
nor more than sixty days before the date of the meeting to each shareholder
of record entitled to vote at such meeting, at his address which appears in
the share transfer books of the Corporation. Meetings may be held without
notice if all the shareholders entitled to vote at the meeting are present
in person or by proxy or if notice is waived in writing by those not
present, either before or after the meeting.
Section 5. Quorum. Except as otherwise required by the Articles of
Incorporation, any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum
for the transaction of business. If less than a quorum shall be in
attendance at the time for which a meeting shall have been called, the
meeting may be adjourned from time to time by a majority of the
shareholders present or represented by proxy without notice other than by
announcement at the meeting.
Section 6. Voting. At any meeting of the shareholders each
shareholder of a class entitled to vote on the matters coming before the
meeting shall have one vote, in person or by proxy, for each share of
capital stock standing in his or her name on the books of the Corporation
at the time of such meeting or on any date fixed by the Board of Directors
not more than seventy (70) days prior to the meeting. Every proxy shall be
in writing, dated and signed by the shareholder entitled to vote or his
duly authorized attorney-in-fact.
Section 7. Voting List. The officer or agent having charge of the
stock transfer books for shares of the Corporation shall make, at least ten
(10) days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting or any adjournment thereof,
with the address of and the number of shares held by each. Such list, for
a period of ten (10) days prior to such meeting, shall be kept on file at
the registered office of the Corporation or at its principal place of
business or at the office of its transfer agent or registrar and shall be
subject to inspection by any shareholder at any time during usual business
hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original stock
transfer books shall be prima facie evidence as to who are the shareholders
entitled to examine such list or transfer books or to vote at any meeting
of shareholders. If the requirements of this section have not been
substantially complied with, the meeting shall, on the demand of any
shareholder in person or by proxy, be adjourned until the requirements are
complied with.
Section 8. Shareholder Proposals. To be properly brought before an
annual meeting of shareholders, business must be (i) specified in the
notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (ii) otherwise properly brought before the
meeting by or at the direction of the Board of Directors, or (iii)
otherwise properly brought before the meeting by a shareholder. In
addition to any other applicable requirements, for business to be properly
brought before an annual meeting by a shareholder, the shareholder must
have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice must be given, either by
personal delivery or by United States mail, postage prepaid, to the
Secretary of the Corporation not later than ninety (90) days in advance of
the annual meeting. A shareholder's notice to the Secretary shall set
forth as to each matter the shareholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought
before the annual meeting (including the specific proposal to be presented)
and the reasons for conducting such business at the annual meeting, (ii)
the name and record address of the shareholder proposing such business,
(iii) the class and number of shares of the Corporation that are
beneficially owned by the shareholder, and (iv) any material interest of
the shareholder in such business.
In the event that a shareholder attempts to bring business before an
annual meeting without complying with the provisions of this Section 8, the
Chairman of the meeting shall declare to the meeting that the business was
not properly brought before the meeting in accordance with the foregoing
procedures, and such business shall not be transacted.
No business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this Section 8, provided,
however, that nothing in this Section 8 shall be deemed to preclude
discussion by any shareholder of any business properly brought before the
annual meeting.
Section 9. Inspectors. An appropriate number of inspectors for any
meeting of shareholders may be appointed by the Chairman of such meeting.
Inspectors so appointed will open and close the polls, will receive and
take charge of proxies and ballots, and will decide all questions as to the
qualifications of voters, validity of proxies and ballots, and the number
of votes properly cast.
ARTICLE II
Directors
Section 1. General Powers. The property, affairs and business of the
Corporation shall be managed under the direction of the Board of Directors,
and except as otherwise expressly provided by law, the Articles of
Incorporation or these By-laws, all of the powers of the Corporation shall
be vested in such Board.
Section 2. Number of Directors. The Board of Directors shall be
eleven (11) in number.
Section 3. Election of Directors.
(a) Directors shall be elected at the annual meeting of
shareholders to succeed those Directors whose terms have expired and to
fill any vacancies thus existing.
(b) Directors shall hold their offices for terms as set forth in
the Articles of Incorporation and until their successors are elected. Any
director may be removed from office as set forth in the Articles of
Incorporation.
(c) Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of the majority of the remaining directors
though less than a quorum of the Board of Directors.
(d) A majority of the number of directors fixed by these By-laws
shall constitute a quorum for the transaction of business. The act of a
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 4. Meetings of Directors. Meetings of the Board of Directors
shall be held at places within or without the State of Virginia and at
times fixed by resolution of the Board, or upon call of the President, and
the Secretary or officer performing the Secretary's duties shall give not
less than twenty-four (24) hours' notice by letter, telegraph or telephone
(or in person) of all meetings of the directors, provided that notice need
not be given of regular meetings held at times and places fixed by
resolution of the Board. An annual meeting of the Board of Directors shall
be held as soon as practicable after the adjournment of the annual meeting
of shareholders. Meetings may be held at any time without notice if all of
the Directors are present, or if those not present waive notice in writing
either before or after the meeting. Directors may be allowed, by
resolution of the Board, a reasonable fee and expenses for attendance at
meetings.
Section 5. Nominations. Subject to the rights of holders of any
class or series of stock having a preference over the common stock as to
dividends or upon liquidation, nominations for the election of Directors
shall be made by the Board of Directors or a committee appointed by the
Board of Directors or by any shareholder entitled to vote in the election
of Directors generally. However, any shareholder entitled to vote in the
election of Directors generally may nominate one or more persons for
election as Directors at a meeting only if written notice of such
shareholder's intent to make such nomination or nominations has been given,
either by personal delivery or by United States mail, postage prepaid, to
the Secretary of the Corporation not later than (i) with respect to an
election to be held at an annual meeting of shareholders, ninety (90) days
in advance of such meeting, and (ii) with respect to an election to be held
at a special meeting of shareholders for the election of Directors, the
close of business on the seventh day following the date on which notice of
such meeting is first given to shareholders. Each notice shall set forth:
(a) the name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all arrangements or
understandings between the shareholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; (d) such other
information regarding each nominee proposed by such shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission, had the nominee been
nominated, or intended to be nominated, by the Board of Directors; and (e)
the consent of each nominee to serve as a Director of the Corporation if so
elected. The Chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing
procedure.
ARTICLE III
Committees
Section 1. Executive Committee. The Board of Directors shall, by
vote of a majority of the number of directors fixed by these By-laws,
designate an Executive Committee which shall consist of three or more
directors, including the President. The members of the Executive Committee
shall serve until their successors are designated by the Board of
Directors, until removed or until the Executive Committee is dissolved by
the Board of Directors. All vacancies which may occur in the Executive
Committee shall be filled by the Board of Directors.
When the Board of Directors is not in session, the Executive Committee
shall have all power vested in the Board of Directors by law, the Articles
of Incorporation or these By-laws, except as otherwise provided in the
Virginia Stock Corporation Act and except that the Executive Committee
shall not have the power to elect the President of the Corporation. The
Executive Committee shall report at the next regular or special meeting of
the Board of Directors all action which the Executive Committee may have
taken on behalf of the Board since the last regular or special meeting of
the Board of Directors.
Meetings of the Executive Committee shall be held at such places and
at such times fixed by resolution of the Committee, or upon call of the
President. Not less than twelve (12) hours' notice shall be given by
letter, telegraph or telephone (or in person) of all meetings of the
Executive Committee, provided that notice need not be given of regular
meetings held at times and places fixed by resolution of the Committee and
that meetings may be held at any time without notice if all of the members
of the Committee are present or if those not present waive notice in
writing either before or after the meeting. A majority of the members of
the Executive Committee then serving shall constitute a quorum for the
transaction of business at any meeting.
Section 2. Executive Compensation Committee. The Board of Directors,
at its regular annual meeting, shall designate an Executive Compensation
Committee which shall consist of three or more directors who shall not be
eligible for bonus, stock option or stock appreciation rights. In
addition, the Board at any time may designate one or more alternate members
of such Committee who shall be directors not eligible for bonus, stock
option or stock appreciation rights who may act in place of any absent
regular member upon invitation by the Chairman or Secretary of the
Committee.
With respect to bonuses, the Executive Compensation Committee shall
have and may exercise the powers to determine the amounts annually
available for bonuses pursuant to any bonus plan or formula approved by the
Board, to determine bonus awards to executive officers and to exercise such
further powers with respect to bonuses as may from time to time be
conferred by the Board of Directors.
With respect to salaries, the Executive Compensation Committee shall
have and may exercise the power to fix and determine from time to time all
salaries of the executive officers of the Corporation, and such further
powers with respect to salaries as may from time to time be conferred by
the Board of Directors.
The Executive Compensation Committee shall administer the
Corporation's Incentive Stock Option Plan (the Plan) and from time to time
may grant, consistent with the Plan, stock options and stock appreciation
rights.
Vacancies in the Executive Compensation Committee shall be filled by
the Board of Directors, and members shall be subject to removal by the
Board at any time.
The Executive Compensation Committee shall fix its own rules of
procedure. A majority of the number of regular members then serving shall
constitute a quorum; and regular and alternate members present shall be
counted to determine whether there is a quorum. The Executive Compensation
Committee shall keep minutes of its meetings, and all action taken by it
shall be reported to the Board of Directors.
Section 3. Audit Committee. The Board of Directors at its regular
annual meeting shall designate an Audit Committee which shall consist of
three or more directors whose membership on the Committee shall meet the
requirements set forth in the rules of the New York Stock Exchange, as
amended from time to time. Vacancies in the Committee shall be filled by
the Board of Directors with directors meeting the requirements set forth
above, giving consideration to continuity of the Committee, and members
shall be subject to removal by the Board at any time. The Committee shall
fix its own rules of procedure and a majority of the members serving shall
constitute a quorum. The Committee shall meet at least twice a year with
both the internal and the Corporation's outside auditors present at each
meeting and shall keep minutes of its meetings and all action taken shall
be reported to the Board of Directors. The Committee shall review the
reports and minutes of any audit committees of the Corporation's
subsidiaries. The Committee shall review the Corporation's financial
reporting process, including accounting policies and procedures. The
Committee shall examine the report of the Corporation's outside auditors,
consult with them with respect to their report and the standards and
procedures employed by them in their audit, report to the Board the results
of its study and recommend the selection of auditors for each fiscal year.
Section 4. Nominating Committee. The Board of Directors shall
designate a Nominating Committee which shall consist of three or more
directors. The Committee shall make recommendations to the Board regarding
nominees for election as directors by the shareholders at each Annual
Shareholders' Meeting and make such other recommendations regarding tenure,
classification and compensation of directors as the Committee may deem
advisable from time to time. The Committee shall fix its own rules of
procedure and a majority of the members serving shall constitute a quorum.
Section 5. Other Committees of Board. The Board of Directors, by
resolution duly adopted, may establish such other committees of the Board
having limited authority in the management of the affairs of the
Corporation as it may deem advisable and the members, terms and authority
of such committees shall be as set forth in the resolutions establishing
the same.
Section 6. Advisory Committees to President. The President may
establish such advisory committees as he may deem advisable to assist him
in the administration and management of the business of the Corporation;
such committees shall consist of officers, employees or consultants to be
appointed by the President who shall serve for such terms and have such
authority as may be designated by the President.
ARTICLE IV
Officers
Section 1. Election. The officers of the Corporation shall consist
of a President, a Vice Chairman of the Board, one or more Vice Presidents
(any one or more of whom may be designated as Executive Vice Presidents or
Senior Vice Presidents), a Secretary and a Treasurer. In addition, such
other officers as are provided in Section 3 of this Article may from time
to time be elected by the Board of Directors. All officers shall hold
office until the next annual meeting of the Board of Directors or until
their successors are elected. The President shall be chosen from among the
directors. Any two officers may be combined in the same person as the
Board of Directors may determine, except that the President and Secretary
may not be the same person.
Section 2. Removal of Officers; Vacancies. Any officer of the
Corporation may be removed summarily with or without cause, at any time by
a resolution passed at any meeting by affirmative vote of a majority of the
number of directors fixed by these By-laws. Vacancies may be filled at any
meeting of the Board of Directors.
Section 3. Other Officers. Other officers may from time to time be
elected by the Board, including, without limitation, one or more Assistant
Secretaries and Assistant Treasurers, and one or more Divisional Presidents
and Divisional Vice Presidents (any one or more of whom may be designated
as Divisional Executive Vice Presidents or Divisional Senior Vice
Presidents).
Section 4. Duties. The officers of the Corporation shall have such
duties as generally pertain to their offices, respectively, as well as such
powers and duties as are hereinafter provided and as from time to time
shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his
duties as the Board may see fit.
Section 5. Duties of the President. The President shall be the chief
executive and administrative officer of the Corporation, shall serve as the
Chairman of the Board of Directors and the Chairman of the Executive
Committee and shall have direct supervision over the business of the
Corporation and its several officers, subject to the Board of Directors.
The President shall preside at all meetings of shareholders and the Board
of Directors. The President may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts or other instruments, except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other
officer or agent of the Corporation or shall be required by law otherwise
to be signed or executed. He may appoint advisory committees as provided
in Section 6 of Article III. In addition, he shall perform all duties
incident to the office of the President and such other duties as from time
to time may be assigned to him by the Board of Directors.
Section 6. Duties of Vice Chairman. In the absence or incapacity of
the President, the Vice Chairman shall perform the duties of the Chairman
of the Board, shall have the same authority, including, but not limited to,
presiding at all meetings of the Board of Directors and the Corporation's
shareholders, and shall serve as a member of all committees of the Board of
which the President is a member. In addition, the Vice Chairman of the
Board shall perform all duties as from time to time may be assigned to him
by the Board of Directors.
Section 7. Duties of the Vice Presidents. Each Vice President of the
Corporation (including any Executive Vice President and Senior Vice
President) shall have powers and duties as may from time to time be
assigned to him by the Board of Directors or the President. When there
shall be more than one Vice President of the Corporation, the Board of
Directors may from time to time designate one of them to perform the duties
of the President in the absence of the President, except that the Vice
Chairman of the Board shall perform the President's duties as Chairman of
the Board and as a member of all committees of the Board of which the
President is a member. Any Vice President of the Corporation may sign and
execute in the name of the Corporation deeds, mortgages, bonds, contracts
and other instruments, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
By-laws to some other officer or agent of the Corporation or shall be
required by law otherwise to be signed or executed.
Section 8. Duties of the Treasurer. The Treasurer shall have charge
and custody of and be responsible for all funds and securities of the
Corporation, and shall cause all such funds and securities to be deposited
in such banks and depositories as the Board of Directors from time to time
may direct. He shall maintain adequate accounts and records of all assets,
liabilities and transactions of the Corporation in accordance with
generally accepted accounting practices; shall exhibit his accounts and
records to any of the directors of the Corporation at any time upon request
at the office of the Corporation; shall render such statements of his
accounts and records and such other statements to the Board of Directors
and officers as often and in such manner as they shall require; and shall
make and file (or supervise the making and filing of) all tax returns
required by law. He shall in general perform all duties incident to the
office of Treasurer and such other duties as from time to time may be
assigned to him by the Board of Directors or the President.
Section 9. Duties of the Secretary. The Secretary shall act as
secretary of all meetings of the Board of Directors, the Executive
Committee and all other Committees of the Board, and the shareholders of
the Corporation, and shall keep the minutes thereof in the proper book or
books to be provided for that purpose. He shall see that all notices
required to be given by the Corporation are duly given and served; shall
have custody of the seal of the Corporation and shall affix the seal or
cause it to be affixed to all certificates for stock of the Corporation and
to all documents the execution of which on behalf of the Corporation under
its corporate seal is duly authorized in accordance with the provisions of
these By-laws; shall have custody of all deeds, leases, contracts and other
important corporate documents; shall have charge of the books, records and
papers of the Corporation relating to its organization and management as a
Corporation; shall see that the reports, statements and other documents
required by law (except tax returns) are properly filed; and shall, in
general, perform all the duties incident to the office of Secretary and
such other duties as from time to time may be assigned to him by the Board
of Directors or the President.
Section 10. Other Duties of Officers. Any officer of the Corporation
shall have, in addition to the duties prescribed herein or by law, such
other duties as from time to time shall be prescribed by the Board of
Directors or the President.
Section 11. Duties of Divisional Officers. Divisional Presidents and
Divisional Vice Presidents shall be deemed to be officers of the
Corporation whose duties and authority shall relate only to the Division by
which they are employed, and they may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts and other instruments
authorized by the Board that relate only to the business and properties of
such Division. Other divisional officers may be designated from time to
time by the Board of Directors and shall serve at the pleasure of the Board
and have such duties as may be assigned by the Board and such officers
shall be officers of the respective divisions but shall not be deemed to be
officers of the Corporation.
ARTICLE V
Capital Stock
Section 1. Certificates. The shares of capital stock of the
Corporation shall be evidenced by certificates in forms prescribed by the
Board of Directors and executed in any manner permitted by law and stating
thereon the information required by law. Transfer agents and/or registrars
for one or more classes of the stock of the Corporation may be appointed by
the Board of Directors and may be required to countersign certificates
representing stock of such class or classes. In the event that any officer
whose signature or facsimile thereof shall have been used on a stock
certificate shall for any reason cease to be an officer of the Corporation
and such certificate shall not then have been delivered by the Corporation,
the Board of Directors may nevertheless adopt such certificate and it may
then be issued and delivered as though such person had not ceased to be an
officer of the Corporation.
Section 2. Lost, Destroyed and Mutilated Certificates. Holders of
the stock of the Corporation shall immediately notify the Corporation of
any loss, destruction or mutilation of the certificate therefor, and the
Board of Directors may, in its discretion, cause one or more new
certificates for the same number of shares in the aggregate to be issued to
such stockholder upon the surrender of the mutilated certificate or upon
satisfactory proof of such loss or destruction, and the deposit of a bond
in such form and amount and with such surety as the Board of Directors may
require.
Section 3. Transfer of Stock. The stock of the Corporation shall be
transferable or assignable only on the books of the Corporation by the
holders in person or by attorney on surrender of the certificate for such
shares duly endorsed and, if sought to be transferred by attorney,
accompanied by a written power of attorney to have the same transferred on
the books of the Corporation. The Corporation will recognize the exclusive
right of the person registered on its books as the owner of shares to
receive dividends and to vote as such owner.
Section 4. Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of the
shareholders or any adjournment thereof, or entitled to receive payment for
any dividend, or in order to make a determination of shareholders for any
other proper purpose, the Board of Directors may fix in advance a date as
the record date for any such determination of shareholders, such date in
any case to be not more than seventy (70) days prior to the date on which
the particular action, requiring such determination of shareholders, is to
be taken. If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section such determination
shall apply to any adjournment thereof.
ARTICLE VI
Miscellaneous Provisions
Section 1. Seal. The seal of the Corporation shall consist of a
flat-face circular die, of which there may be any number of counterparts,
on which there shall be engraved in the center the words "Tredegar
Industries, Inc."
Section 2. Fiscal Year. The fiscal year of the Corporation shall end
on December 31st of each year, and shall consist of such accounting periods
as may be recommended by the Treasurer and approved by the Executive
Committee.
Section 3. Books and Records. The Corporation shall keep correct and
complete books and records of account and shall keep minutes of the
proceedings of its shareholders and Board of Directors; and shall keep at
its registered office or principal place of business, or at the office of
its transfer agent or registrar a record of its shareholders, giving the
names and addresses of all shareholders, and the number, class and series
of the shares being held.
Any person who shall have been a shareholder of record for at least
six months immediately preceding his demand or who shall be the holder of
record of at least five percent (5%) of all the outstanding shares of the
Corporation, upon written demand stating the purpose thereof, shall have
the right to examine, in person, or by agent or attorney at any reasonable
time or times, for any proper purpose, its books and records of account,
minutes and records of shareholders and to make extracts therefrom. Upon
the written request of a shareholder, the Corporation shall mail to such
shareholder its most recent published financial statements showing in
reasonable detail its assets and liabilities and the results of its
operations.
The Board of Directors shall, subject to the provisions of the
foregoing paragraph of this section, to the provisions of Section 7 of
Article I and to the laws of the State of Virginia, have the power to
determine from time to time whether and to what extent and under what
conditions and limitations the accounts, records and books of the
Corporation, or any of them, shall be open to the inspection of the
shareholders.
Section 4. Checks, Notes and Drafts. Checks, notes, drafts and other
orders for the payment of money shall be signed by such persons as the
Board of Directors from time to time may authorize. When the Board of
Directors so authorizes, however, the signature of any such person may be a
facsimile.
Section 5. Amendment of By-Laws. These By-laws may be amended or
altered at any meeting of the Board of Directors by affirmative vote of a
majority of the number of directors fixed by these By-laws. The
shareholders entitled to vote in respect of the election of directors,
however, shall have the power to rescind, alter, amend or repeal any By-
laws and to enact By-laws which, if expressly so provided, may not be
amended, altered or repealed by the Board of Directors.
Section 6. Voting of Stock Held. Unless otherwise provided by
resolution of the Board of Directors or of the Executive Committee, the
President or any Executive Vice President shall from time to time appoint
an attorney or attorneys or agent or agents of this Corporation, in the
name and on behalf of this Corporation, to cast the vote which this
Corporation may be entitled to cast as a shareholder or otherwise in any
other corporation, any of whose stock or securities may be held in this
Corporation, at meetings of the holders of the stock or other securities of
such other corporation, or to consent in writing to any action by any of
such other corporation, and shall instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent and
may execute or cause to be executed on behalf of this Corporation and under
its corporate seal or otherwise, such written proxies, consents, waivers or
other instruments as may be necessary or proper in the premises; or, in
lieu of such appointment, the President or any Executive Vice President may
attend in person any meetings of the holders of stock or other securities
of any such other corporation and there vote or exercise any or all power
of this Corporation as the holder of such stock or other securities of such
other corporation.
Section 7. Restriction on Transfer. To the extent that any provision
of the Rights Agreement between the Corporation and Sovran Bank, N.A., as
Rights Agent, dated as of June 15, 1989, is deemed to constitute a
restriction on the transfer of any securities of the Corporation,
including, without limitation, the Rights, as defined therein, such
restriction is hereby authorized by the By-laws of the Corporation.
Section 8. Control Share Acquisition Statute. Article 14.1 of the
Virginia Stock Corporation Act ("Control Share Acquisitions") shall not
apply to acquisitions of shares of stock of the Corporation.
Exhibit 10.13
TREDEGAR INDUSTRIES, INC.
RETIREMENT BENEFIT RESTORATION PLAN
<PAGE>
INTRODUCTION
ARTICLE I DEFINITIONS
1.01. Affiliate . . . . . . . . . . . . . . .I-1
1.02. Beneficiary . . . . . . . . . . . . . .I-1
1.03. Change in Control . . . . . . . . . . .I-1
1.04. Code. . . . . . . . . . . . . . . . . .I-3
1.05. Committee . . . . . . . . . . . . . . .I-3
1.06. Company . . . . . . . . . . . . . . . .I-3
1.07. Control Change Date . . . . . . . . . .I-3
1.08. Eligible Employee . . . . . . . . . . .I-3
1.09. Participant . . . . . . . . . . . . . .I-3
1.10. Plan. . . . . . . . . . . . . . . . . .I-3
1.11. Retirement and Retire . . . . . . . . .I-3
1.12. Retirement Plan . . . . . . . . . . . .I-3
1.13. Totally and Permanently Disabled. . . .I-4
ARTICLE II PARTICIPATION
ARTICLE III BENEFITS FOR PARTICIPANTS LISTED ON
EXHIBIT I
3.01. Retirement Benefit. . . . . . . . . .III-1
3.02. Disability Benefit. . . . . . . . . .III-1
3.03. Beneficiary's Benefit . . . . . . . .III-2
ARTICLE IV BENEFITS FOR PARTICIPANTS LISTED ON
EXHIBIT II
4.01. Retirement Benefit. . . . . . . . . . IV-1
4.02. Disability Benefit. . . . . . . . . . IV-1
4.03. Beneficiary's Benefit . . . . . . . . IV-2
ARTICLE V GUARANTEES
ARTICLE VI TERMINATION OF EMPLOYMENT
6.01. No Right To Employment. . . . . . . . VI-1
6.02. Termination Of Employment . . . . . . VI-1
6.03. Change In Control . . . . . . . . . . VI-1
6.04. Reemployment. . . . . . . . . . . . . VI-2
ARTICLE VII TERMINATION, AMENDMENT OR MODIFICATION
OF PLAN
7.01. Plan Amendment Or Termination . . . .VII-1
7.02. Notice Requirements . . . . . . . . .VII-1
7.03. Limitation On Amendment, Termination,
Etc. . . . . . . . . . . . . . . . .VII-1
7.04. Effect Of Termination . . . . . . . .VII-1
ARTICLE VIII OTHER BENEFITS AND AGREEMENTS
ARTICLE IX RESTRICTIONS ON TRANSFER OF BENEFITS
ARTICLE X ADMINISTRATION OF THE PLAN
10.01. The Committee . . . . . . . . . . . . .X-1
10.02. Indemnification . . . . . . . . . . . .X-1
10.03. Power of the Committee. . . . . . . . .X-1
10.04. Information . . . . . . . . . . . . . .X-1
ARTICLE XI MISCELLANEOUS
11.01. Binding Effect. . . . . . . . . . . . XI-1
11.02. Governing Law . . . . . . . . . . . . XI-1
11.03. Gender; Singular and Plural . . . . . XI-1
<PAGE>
INTRODUCTION
The Board of Directors of Tredegar Industries, Inc.
(the "Company") determined that the adoption of the
Retirement Benefit Restoration Plan will assist the Company
in attracting and retaining those employees whose judgment,
abilities and experience will contribute to the Company's
continued progress. The Plan is intended to be an "excess
benefit plan" within the meaning of Section 3(36) of the
Employee Retirement Income Security Act of 1974, as amended,
and the Plan must be administered and construed in a manner
that is consistent with that intent.
<PAGE>
ARTICLE I
DEFINITIONS
As defined herein, the following phrases or terms
shall have the indicated meanings:
1.01. Affiliate means any entity that is (i) a member of
a controlled group of corporations as defined in
Section 1563(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), determined without regard to Code
sections 1563(a)(4) and 1563(e)(3)(c), of which the Company
is a member according to Code section 414(b); (ii) an
unincorporated trade or business that is under common control
with the Company, as determined according to Code
section 414(c); or (iii) a member of an affiliated service
group of which the Company is a member according to Code
section 414(m).
1.02. Beneficiary means the person, persons, entity,
entities or the estate of a Participant which, in accordance
with the provisions of the Retirement Plan, is entitled to
receive a benefit under the Retirement Plan on account of
the Participant's death.
1.03. Change in Control means the occurrence of any of the
following events:
(A) any Person or group (within the
meaning of Sections 13(d)(3) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended) (other
than a Person who is not an Acquiring Person), at any
time becomes the Beneficial Owner of 50% or more of
the combined voting power of the then outstanding
voting securities of the Company entitled to vote
generally in the election of directors (the "Voting
Securities"), other than (i) through an acquisition
of Voting Securities directly from the Company
(ii) as a result of the Company's repurchase of
Voting Securities if, thereafter, such Beneficial
Owner purchases no additional Voting Securities, or
(iii) pursuant to a Business Combination (as defined
below) that does not constitute a Change in Control
pursuant to subparagraph (c) hereof;
(B) Continuing Directors cease to
constitute a majority of the members of the Board
other than pursuant to a Business Combination that
does not constitute a Change in Control pursuant to
subparagraph (c) hereof;
(C) the shareholders of the Company
approve a reorganization, merger, share exchange or
consolidation (a "Business Combination"), in each
case, unless immediately following such Business
Combination, (i) all or substantially all of the
Persons who were the Beneficial Owners, respectively,
of the Common Stock and Voting Securities outstanding
immediately prior to such Business Combination
Beneficially Own more than 80% of, respectively, the
then outstanding shares of common stock and the
combined voting power of the then outstanding voting
securities entitled to vote generally in the election
of directors, as the case may be, of the corporation
resulting from such Business Combination (including,
without limitation, a corporation which as a result
of such transaction owns the Company through one or
more Subsidiaries) in substantially the same propor-
tions as their ownership, immediately prior to such
Business Combination, of the Common Stock and Voting
Securities, as the case may be, (ii) no Person (other
than a Person who is not an Acquiring Person)
Beneficially Owns 50% or more of, respectively, the
then outstanding shares of common stock of the cor-
poration resulting from such Business combination or
the combined voting power of the then outstanding
voting securities of such corporation and (iii) at
least a majority of the members of the board of
directors of the corporation resulting from such
Business Combination are Continuing Directors; or
(D) the shareholders of the Company
approve a complete liquidation or dissolution of the
Company or the sale or other disposition of all or
substantially all of the assets of the Company, in
each case, unless immediately following such
liquidation, dissolution, sale or other disposition,
(i) more than 80% of, respectively, the then
outstanding shares of common stock of such cor-
poration and the combined voting power of the then
outstanding voting securities of such corporation
entitled to vote generally in the election of
directors is then Beneficially Owned by all or
substantially all of the Persons who were the
Beneficial Owners, respectively, of the Common Stock
and Voting Securities outstanding immediately prior
to such sale or other disposition in substantially
the same proportion as their ownership, immediately
prior to such sale or other disposition, of such
Common Stock and Voting Securities, as the case may
be, (ii) less than 20% of, respectively, the then
outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation
entitled to vote generally in the election of
directors is then Beneficially Owned by any Person
(other than any Person who is not an Acquiring
Person), and (iii) at least a majority of the members
of the board of directors of such corporation are
Continuing Directors immediately following such sale
or disposition.
For purposes of the foregoing definition, the terms Acquiring
Person, Beneficial Owner, Company, Continuing Director, and
Person shall have the same definitions as set forth in the
Rights Agreement between Tredegar Industries, Inc. and
NationsBank of Virginia, N.A. (formerly Sovran Bank, N.A.),
dated as of June 15, 1989, as amended by that certain
Amendment and Substitution Agreement by and among Tredegar
Industries, Inc., NationsBank of Virginia, N.A. (formerly
Sovran Bank, N.A.) and American Stock Transfer & Trust
Company, dated as of July 1, 1992.
1.04. Code means the Internal Revenue Code of 1986, as
amended.
1.05. Committee means the Executive Compensation Committee
of the Board of Directors of the Company.
1.06. Company means Tredegar Industries, Inc.
1.07. Control Change Date means the date on which a Change
in Control event occurs. If a Change in Control occurs on
account of a series of transactions, the Control Change Date
is the date of the last of such transactions.
1.08. Eligible Employee means an individual (i) who is
employed by the Company or an Affiliate, (ii) who is a member
of a "select group of management or highly compensated
employees" (as such phrase is used in the Employee Retirement
Income Security Act of 1974, as amended), and (iii) whose
Retirement Plan benefit is reduced or limited by Code
section 415.
1.09. Participant means an Eligible Employee who is selected
by the Committee to participate in the Plan. An individual
shall remain a Participant only so long as the individual
remains an Eligible Employee and his designation as a
Participant has not been revoked or rescinded.
1.10. Plan means the Tredegar Industries, Inc. Retirement
Benefit Restoration Plan.
1.11. Retirement and Retire mean severance from employment
with the Company on or after attaining a vested or
nonforfeitable interest in the portion of his Retirement Plan
benefit attributable to Company contributions.
1.12. Retirement Plan means the Tredegar Industries, Inc.
Retirement Income Plan.
1.13. Totally and Permanently Disabled means a condition,
determined on the basis of medical evidence satisfactory to
a physician designated by the Administrator, rendering a
Participant, due to bodily injury or disease, unable to
perform services as follows: (i) during the first two years
of such disability (measured from the commencement of such
disability rather than the commencement of benefit payments)
such Participant is unable to perform any and every duty
pertaining to his employment with the Company; and (ii)
thereafter, such Participant is unable to engage in any
occupation or perform any work for compensation or profit
for which he is or may become reasonably fitted by education,
training or experience. In no event shall such condition
be deemed to exist during any period that the Participant
is not under the regular care and attendance of a legally
qualified physician during any period that he engages in any
occupation or performs any work for compensation or profit.
<PAGE>
ARTICLE II
PARTICIPATION
An Eligible Employee who is designated to participate
in the Plan by the Committee shall become a Participant in
the Plan as of the date specified by the Committee. A
Participant shall continue to participate in the Plan until
such date as the Committee may declare that he is no longer
a Participant or until the date that he is no longer an
Eligible Employee.
<PAGE>
ARTICLE III
BENEFITS FOR PARTICIPANTS LISTED ON EXHIBIT I
Subject to the limitations set forth in Articles VI
and VII, the benefits payable to or on behalf of a
Participant who the Committee, in its discretion, determines
will be listed on Exhibit I, shall be as provided in this
Article III. A Participant who is not listed on either
Exhibit I or Exhibit II shall be deemed to be listed on
Exhibit I. The Committee, in its discretion, may remove a
Participant from Exhibit I and include the Participant's name
on Exhibit II or rescind or revoke his designation as a
Participant, subject to the limitations set forth in
Articles VI and VII.
3.01. Retirement Benefit
Upon Retirement a Participant shall be entitled to
a monthly Retirement benefit equal to the difference between
(a) and (b) below where:
(a) = the monthly benefit that would have been
payable to the Participant under the Retirement Plan but for
the application of the limits set forth in Code section 415;
and
(b) = the monthly benefit that the Participant
is entitled to receive under the Retirement Plan.
The payment of the benefit under this Section 3.01 shall
begin as of the same date that the Participant's retirement
benefit under the Retirement Plan is scheduled to commence.
The benefit payable under this Section 3.01 also shall be
determined as of the date that the Participant's retirement
benefit under the Retirement Plan is scheduled to commence.
The benefit payable under this Section 3.01 shall be computed
and paid in the same form as the Participant's retirement
benefit under the Retirement Plan; provided, however, that
upon the Participant's death no further benefit shall be
payable under this Plan except as provided in Section 3.03.
3.02. Disability Benefit
If a Participant becomes Totally and Permanently
Disabled prior to his Retirement and during his employment
with the Company or an Affiliate, he shall be entitled to
receive a benefit calculated and paid in the manner set forth
in Section 3.01.
3.03. Beneficiary's Benefit
If a Beneficiary is entitled to a Retirement Plan
benefit on account of the Participant's death (regardless
of whether the Participant's death occurs before Retirement
or the commencement of his Retirement Plan benefit), the
Beneficiary shall be entitled to a monthly benefit under this
Plan equal to the difference between (a) and (b) where:
(a) = the monthly benefit that would have been
payable to the Beneficiary but for the application of Code
section 415 in the calculation of the Participant's accrued
benefit under the Retirement Plan; and
(b) = the monthly benefit that the Beneficiary
is entitled to receive under the Retirement Plan.
The payment of the benefit under this Section 3.03 shall
begin as of the same date that the Beneficiary's benefit
under the Retirement Plan is scheduled to commence. The
amount payable under this Section 3.03 also shall be
determined as of the date that the Beneficiary's benefit
under the Retirement Plan is scheduled to commence. The
benefit payable under this Section 3.03 shall be computed
and paid in the same form as the benefit payable to the
Beneficiary under the Retirement Plan.
<PAGE>
ARTICLE IV
BENEFITS FOR PARTICIPANTS LISTED ON EXHIBIT II
Subject to the limitations set forth in Articles VI
and VII, the benefits payable to or on behalf of a
Participant who the Committee, in its discretion, determines
will be listed on Exhibit II to the Plan shall be as provided
in this Article IV. The Committee, in its discretion may
remove a Participant from Exhibit II and include the
Participant on Exhibit I or rescind or revoke his designation
as a Participant, subject to the limitations set forth in
Articles VI and VII.
4.01. Retirement Benefit
Upon Retirement a Participant shall be entitled to
a monthly Retirement benefit equal to the difference between
(a) and (b) below where:
(a) = the monthly benefit that would have been
payable to the Participant under the Retirement Plan but for
the application of the limits set forth in Code
sections 401(a)(17) and 415; and
(b) = the monthly benefit that the Participant
is entitled to receive under the Retirement Plan.
The payment of the benefit under this Section 4.01 shall
begin as of the same date that the Participant's retirement
benefit under the Retirement Plan is scheduled to commence.
The benefit payable under this Section 4.01 also shall be
determined as of the date that the Participant's retirement
benefit under the Retirement Plan is scheduled to commence.
The benefit payable under this Section 4.01 shall be computed
and paid in the same form as the Participant's retirement
benefit under the Retirement Plan; provided, however, that
upon the Participant's death no further benefit shall be
payable under this Plan except as provided in Section 4.03.
4.02. Disability Benefit
If a Participant becomes Totally and Permanently
Disabled prior to his Retirement and during his employment
with the Company or an Affiliate, he shall be entitled to
receive a benefit calculated and paid in the manner set forth
in Section 4.01.
4.03. Beneficiary's Benefit
If a Beneficiary is entitled to a Retirement Plan
benefit on account of the Participant's death (regardless
of whether the Participant's death occurs before Retirement
or the commencement of his Retirement plan benefit), the
Beneficiary shall be entitled to a monthly benefit under this
Plan equal to the difference between (a) and (b) where:
(a) = the monthly benefit that would have been
payable to the Beneficiary but for the application of Code
sections 401(a)(17) and 415 in the calculation of the
Participant's accrued benefit under the Retirement Plan; and
(b) = the monthly benefit that the Beneficiary
is entitled to receive under the Retirement Plan.
The payment of the benefit under this Section 4.03 shall
begin as of the same date that the Beneficiary's benefit
under the Retirement plan is scheduled to commence. The
amount payable under this Section 4.03 also shall be
determined as of the date that the Beneficiary's benefit
under the Retirement Plan is scheduled to commence. The
benefit payable under this Section 4.03 shall be computed
and paid in the same form as the benefit payable to the
Beneficiary under the Retirement Plan.
<PAGE>
ARTICLE V
GUARANTEES
The Company has only a contractual obligation to make
payments of the benefits described in Articles III and IV.
All benefits are to be satisfied solely out of the general
corporate assets of the Company which shall remain subject
to the claims of its creditors. No assets of the Company
will be segregated or committed to the satisfaction of its
obligations to any Participant or Beneficiary under this
Plan.
<PAGE>
ARTICLE VI
TERMINATION OF EMPLOYMENT
6.01. No Right To Employment
The Plan does not in any way limit the right of the
Company or an Affiliate at any time and for any reason to
terminate the Participant's employment or such Participant's
status as an Eligible Employee. In no event shall the Plan,
by its terms or by implication, constitute an employment
contract of any nature whatsoever between the Company or an
Affiliate and a Participant.
6.02. Termination Of Employment
A Participant who ceases to be an Eligible Employee
or whose employment with the Company and its Affiliates is
terminated either with or without cause, for reasons other
than death, Retirement or Total and Permanent Disability
shall immediately cease to be a Participant under this Plan
and shall forfeit all rights under this Plan. Further, in
no event shall an individual who was a Participant but who
is not a Participant at the time of such individual's death,
Retirement or Total and Permanent Disability, be entitled
to any benefit under the Plan. A Participant on authorized
leave of absence from the Company or an Affiliate shall not
be deemed to have terminated employment or lost his status
as an Eligible Employee for the duration of such leave of
absence.
6.03. Change In Control
Notwithstanding any contrary Plan provision, in the
event the employment of a Participant who is in the employ
of the Company or an Affiliate on a Control Change Date is
thereafter terminated (for reasons other than as a result
of acts of theft, embezzlement, fraud, or moral turpitude),
whether or not he is a Participant at the time of his
termination, he shall be fully vested in a benefit payable
under Article III and IV, as applicable, as of the date his
employment is terminated. A Participant who following a
Control Change Date voluntarily terminates employment within
sixty (60) days after (i) he does not receive salary
increases, bonuses, and incentive awards comparable to the
increases, bonuses and awards that he received in prior years
or that other executives in comparable positions receive in
the current year; or (ii) his compensation or employment-
related benefits are reduced; or (iii) his status, title(s),
offices, places of employment, working conditions, or
management responsibilities are diminished (other than
changes in reporting or management responsibilities to
reflect sound practices commonly followed by enterprises
comparable to the Company employing Participant or required
by applicable federal or state law) or within sixty days
after the last in a series of such events will be deemed to
have terminated under circumstances requiring full vesting
under this Section 6.03.
6.04. Reemployment
A Participant who ceases to be an employee of the
Company and who is subsequently reemployed by the Company
shall not accrue any additional benefits on account of such
later service for periods in which he is not a Participant.
<PAGE>
ARTICLE VII
TERMINATION, AMENDMENT OR MODIFICATION OF PLAN
7.01. Plan Amendment Or Termination
Except as otherwise specifically provided, the Company
reserves the right to terminate, amend or modify this Plan,
wholly or partially, at any time and from time to time. Such
right to terminate, amend or modify the Plan shall be
exercised for the Company by its Board of Directors.
7.02. Notice Requirements
(a) Section 7.01 notwithstanding, no action to
terminate the Plan shall be taken except upon written notice
to each Participant to be affected thereby, which notice
shall be given not less than thirty (30) days prior to such
action.
(b) Any notice which shall be or may be given under
the Plan shall be in writing and shall be mailed by United
States mail, postage prepaid. If notice is to be given to
the Company, such notice shall be addressed to it at its
principal executive office in Richmond, Virginia; addressed
to the attention of the Corporate Secretary. If notice is
to be given to a Participant, such notice shall be addressed
to the Participant at his last known address.
7.03. Limitation On Amendment, Termination, Etc.
The rights of the Company set forth in Section 7.01
are subject to the condition that neither its Board of
Directors nor the Committee shall take any action to
terminate the Plan, decrease the benefit that would become
payable or is payable, as the case may be, with respect to
or on behalf of a Participant, or to revoke or rescind an
individual's designation as a Participant after a Control
Change Date or after the Participant's death, Retirement or
Total and Permanent Disability.
7.04. Effect Of Termination
Except as provided in Sections 6.03, 7.01 and 7.03,
upon the termination of this Plan by the Board of Directors,
the Plan shall no longer be of any further force or effect,
and neither the Company nor any Participant shall have any
further obligation or right under this Plan. Subject to the
limitations in Sections 6.03, 7.01 and 7.03, the rights of
any individual who was a Participant and whose designation
as a Participant is revoked or rescinded by the Committee
shall cease upon such action.
<PAGE>
ARTICLE VIII
OTHER BENEFITS AND AGREEMENTS
The benefits provided for a Participant and his
Beneficiary under the Plan are in addition to any other
benefits available to such Participant under any other plan
or program of the Company for its employees, and, except as
may otherwise be expressly provided for, the Plan shall
supplement and shall not supersede, modify or amend any other
plan or program of the Company in which a Participant is
participating.
<PAGE>
ARTICLE IX
RESTRICTIONS ON TRANSFER OF BENEFITS
No right or benefit under the Plan shall be subject
to anticipation, alienation, sale, assignment, pledge,
encumbrance or charge, and any attempt to do so shall be
void. No right or benefit hereunder shall in any manner be
liable for or subject to the debts, contracts, liabilities,
or torts of the person entitled to such benefit. If any
Participant or Beneficiary under the Plan should become
bankrupt or attempt to anticipate, alienate, sell, assign,
pledge, encumber or charge any right to a benefit hereunder,
then such right or benefit, in the discretion of the
Committee, shall cease and terminate, and, in such event,
the Committee may hold or apply the same or any part thereof
for the benefit of such Participant or Beneficiary, his or
her spouse, children, or other dependents, or any of them,
in such manner and in such portion as the Committee may deem
proper.
<PAGE>
ARTICLE X
ADMINISTRATION OF THE PLAN
10.01. The Committee
The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee may
adopt such rules and regulations as may be necessary to carry
out the purposes hereof. The Committee's interpretation and
construction of any provision of the Plan shall be final and
conclusive.
10.02. Indemnification
The Company shall indemnify and save harmless each
member of the Committee against any and all expenses and
liabilities arising out of his membership on the Committee,
excepting only expenses and liabilities arising out of his
own willful misconduct. Expenses against which a member of
the Committee shall be indemnified hereunder shall include
without limitation, the amount of any settlement or judgment,
costs, counsel fees, and related charges reasonably incurred
in connection with a claim asserted, or a proceeding brought
or settlement thereof. The foregoing right of
indemnification shall be in addition to any other rights to
which any such member may be entitled.
10.03. Power of the Committee
In addition to the powers hereinabove specified, the
Committee shall have the power to compute and certify the
amount and kind of benefits from time to time payable to
Participants and their Beneficiaries under the Plan, to
authorize all disbursements for such purposes, and to
determine whether a Participant is entitled to a benefit
under Section 3.02 or 4.02.
10.04. Information
To enable the Committee to perform its functions, the
Company shall supply full and timely information to the
Committee on all matters relating to the compensation of all
Participants, their Retirement, death or other cause for
termination of employment, and such other pertinent facts
as the Committee may require.
<PAGE>
ARTICLE XI
MISCELLANEOUS
11.01. Binding Effect
The Plan shall be binding upon the Company and its
successors and assigns; subject to the powers set forth in
Article VII, and upon a Participant, his Beneficiary, and
either of their assigns, heirs, executors and administrators.
11.02. Governing Law
To the extent not preempted by federal law, the Plan
shall be governed and construed under the laws of the
Commonwealth of Virginia as in effect at the time of their
adoption and execution, respectively.
11.03. Gender; Singular and Plural
Masculine pronouns wherever used shall include
feminine pronouns and the use of the singular shall include
the plural.
Exhibit 10.14
SAVINGS PLAN BENEFIT RESTORATION PLAN FOR EMPLOYEES
OF
TREDEGAR INDUSTRIES, INC.
Effective October 1, 1993
<PAGE>
INTRODUCTION
ARTICLE I
DEFINITIONS
1.01. Account. . . . . . . . . . . . . . . . . . . . . . . . . I-1
1.02. Affiliate. . . . . . . . . . . . . . . . . . . . . . . . I-1
1.03. Alternate Payee. . . . . . . . . . . . . . . . . . . . . I-1
1.04. Beneficiary. . . . . . . . . . . . . . . . . . . . . . . I-1
1.05. Board of Directors . . . . . . . . . . . . . . . . . . . I-2
1.06. Code . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
1.07. Committee. . . . . . . . . . . . . . . . . . . . . . . . I-2
1.08. Company. . . . . . . . . . . . . . . . . . . . . . . . . I-2
1.9. Company Contribution . . . . . . . . . . . . . . . . . . I-2
1.10. Earnings . . . . . . . . . . . . . . . . . . . . . . . . I-2
1.11. Employee . . . . . . . . . . . . . . . . . . . . . . . . I-2
1.12. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . I-3
1.13. Family Member. . . . . . . . . . . . . . . . . . . . . . I-3
1.14. Highly Compensated . . . . . . . . . . . . . . . . . . . I-3
1.15. Matching Contribution. . . . . . . . . . . . . . . . . . I-4
1.17. Member . . . . . . . . . . . . . . . . . . . . . . . . . I-4
1.18. Payroll Period . . . . . . . . . . . . . . . . . . . . . I-4
1.19. Permanent and Total Disability . . . . . . . . . . . . . I-4
1.20. Plan . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
1.21. Plan Year. . . . . . . . . . . . . . . . . . . . . . . . I-4
1.22. Qualified Domestic Relations Order . . . . . . . . . . . I-4
1.23. Savings Plan . . . . . . . . . . . . . . . . . . . . . . I-6
1.24. Surviving Spouse . . . . . . . . . . . . . . . . . . . . I-6
1.25. Trust Agreement. . . . . . . . . . . . . . . . . . . . . I-6
1.26. Trust Fund . . . . . . . . . . . . . . . . . . . . . . . I-6
1.27. Trustee. . . . . . . . . . . . . . . . . . . . . . . . . I-6
1.28. Valuation Date . . . . . . . . . . . . . . . . . . . . . I-6
ARTICLE II ELIGIBILITY AND MEMBERSHIP
2.01. Eligibility Requirements . . . . . . . . . . . . . . . .II-1
2.02. Membership in the Plan . . . . . . . . . . . . . . . . .II-1
2.03. Reemployment . . . . . . . . . . . . . . . . . . . . . .II-1
ARTICLE III ALLOCATION
3.01. Establishment of Accounts. . . . . . . . . . . . . . . III-1
3.02. Crediting of Company Contributions . . . . . . . . . . III-1
3.03. Allocation of Company Contributions. . . . . . . . . . III-2
ARTICLE IV CONTRIBUTIONS
4.01. Company Contributions. . . . . . . . . . . . . . . . . .IV-1
4.02. Member Contributions . . . . . . . . . . . . . . . . . .IV-1
ARTICLE V VALUATION AND ACCOUNTING
5.01. Credits to Bookkeeping Accounts. . . . . . . . . . . . . V-1
ARTICLE VI DISTRIBUTION
6.01. Plan Termination, Death, Permanent and Total
Disability . . . . . . . . . . . . . . . . . . . . . . .VI-1
6.02. Other Separation . . . . . . . . . . . . . . . . . . . .VI-1
6.03. Qualified Domestic Relations Order Distributions . . . .VI-1
6.04. Form of Distribution . . . . . . . . . . . . . . . . . .VI-2
6.05. Federal Income Tax Withholding . . . . . . . . . . . . .VI-2
6.06. Discharge of Obligation. . . . . . . . . . . . . . . . .VI-2
ARTICLE VII ADMINISTRATION
7.01. Appointment of Named Fiduciary and Plan Administrator. VII-1
7.02. Plan Administrator . . . . . . . . . . . . . . . . . . VII-1
7.03. Employee Savings Plan Committee. . . . . . . . . . . . VII-2
7.05. Benefit Claims Review Procedure. . . . . . . . . . . . VII-3
7.06. Administrative Costs . . . . . . . . . . . . . . . . . VII-4
ARTICLE VIII AMENDMENT AND TERMINATION OF THE PLAN
8.01. Amendment of the Plan. . . . . . . . . . . . . . . . .VIII-1
8.02. Termination of the Plan. . . . . . . . . . . . . . . .VIII-1
ARTICLE IX MERGER AND CONSOLIDATION OF THE PLAN
ARTICLE X GENERAL PROVISIONS
10.01. Return of Company Contributions. . . . . . . . . . . . . X-1
10.02. No Guaranty of Employment. . . . . . . . . . . . . . . . X-1
10.03. Payments to Minors and Incompetents. . . . . . . . . . . X-1
10.04. Non-Alienation of Benefits . . . . . . . . . . . . . . . X-1
10.05. Headings and Subheadings . . . . . . . . . . . . . . . . X-2
10.06. Use of Masculine and Feminine; Singular and Plural . . . X-2
10.07. Unclaimed Benefits . . . . . . . . . . . . . . . . . . . X-2
10.08. Beneficiary Designation. . . . . . . . . . . . . . . . . X-2
10.09. Errors and Omissions . . . . . . . . . . . . . . . . . . X-3
ARTICLE XI ADOPTION OF PLAN
<PAGE>
INTRODUCTION
The Savings Plan Benefit Restoration Plan for Employees of Tredegar
Industries, Inc. was adopted effective October 1, 1993. The purpose of the
Plan is to supplement the benefits payable to certain employees under the
Savings Plan for the Employees of Tredegar Industries, Inc. by restoring
benefits that would be available to such employees but for the application of
certain Internal Revenue Code limitations. The Company has determined that
the adoption of the Benefit Restoration Plan will assist it in attracting and
retaining those employees whose abilities and experience will contribute to
its continued success.
The Company intends for the Benefit Restoration Plan to be an individual
account plan within the meaning of section 3(34) of the Employee Retirement
Income Security Act of 1974, as amended. The Company further intends for the
Plan to be funded through a trust to which Company contributions are deductible.
All questions arising in the construction and administration of the Plan must
be resolved in a manner that is consistent with that intent.
<PAGE>
ARTICLE I
DEFINITIONS
1.01. Account means the account or bookkeeping record reflecting a Member's
interest in the Plan. A Member may have several Accounts in the Plan.
SEE ALSO Bookkeeping Account and Distribution Account.
1.02. Affiliate means any corporation which, when considered with Tredegar
Industries, Inc., would constitute a controlled group of corporations within
the meaning of Code section 1563(a), determined without regard to Code
sections 1563(a)(4) and 1563(e)(3)(C) or any entity, whether or not incorporated
which, when considered with the Tredegar Industries, Inc., would constitute
a controlled group in accordance with Code section 414(c) and regulations
promulgated thereunder.
1.03. Alternate Payee, for purposes of Plan sections 1.22 and 6.03, means
a Member's spouse, former spouse, child, or other dependent who is recognized
by a domestic relations order as having a right to receive all or a portion
of the benefits payable under the Plan with respect to such Member.
1.04. Beneficiary means the Member's Surviving Spouse unless such spouse has
consented or does consent in writing to the Member's election of a different
Beneficiary. The spouse's consent must be in writing, must acknowledge the
effect of the Member's designation or change in designation, and must be
witnessed by a notary public. If spousal consent is not obtained, such Member's
Beneficiary shall be his spouse. If the Company is satisfied that spousal
consent may not be obtained because the Member has no spouse, because the spouse
cannot be located, or because of such other circumstances as applicable regula-
tions may prescribe, the Member may name any Beneficiary he desires and from
time to time change his designated Beneficiary without such Beneficiary's
consent. With the Member's Surviving Spouse's consent, Beneficiary means the
person or entity specified by a Member on forms prescribed by the Company for
that purpose. If a Member does not designate a Beneficiary or if the designated
Beneficiary should predecease the Member or is not in existence on the date
of the Member's death, then Beneficiary shall mean the first surviving class
of the following successive preference Beneficiaries: The Member's (a) widow
or widower; (b) surviving children equally; (c) surviving parents equally; (d)
surviving brothers and sisters equally; or (e) the executor(s) or administra-
tor(s) of the Member's estate. The preceding sentences to the contrary
notwithstanding, Beneficiary means an Alternate Payee to the extent that a
Qualified Domestic Relations Order recognizes the Alternate Payee as having
a right to receive all or a portion of any benefits payable under the Plan.
1.05. Board of Directors means the Board of Directors of Tredegar Industries,
Inc.
1.06. Code means the Internal Revenue Code of 1986, as amended. References
to specific sections of the Code shall include those sections and any comparable
sections of future legislation that modify, amend, supplement, supersede or
recodify such sections.
1.07. Committee means the Employee Savings Plan Committee appointed under
the Savings Plan as described in Plan section 7.03.
1.08. Company means Tredegar Industries, Inc., and all of its Affiliates,
subsidiaries and divisions except for those Affiliates, subsidiaries and
divisions whose employees or segments thereof have not been designated to be
included in this Plan. Where only a segment of an Affiliate's, subsidiary's
or division's employees has been designated for coverage hereunder, "Company"
shall apply to such Affiliate, subsidiary or division only as it relates to
such entity's employees eligible for coverage. Any action required to be taken
by a Company may be taken by the Board of Directors or by the Executive Com-
mittee of the Board of Directors.
1.9. Company Contribution means the Company's contribution to a Member's
Distribution Account as provided in Plan section 4.01.
1.10. Earnings means for purposes of Plan section 1.14, for any relevant
period, an individual's wages, salaries for personal services (such as profes-
sional services), and other amounts received from the Company for personal
services actually rendered. Earnings include, but are not limited to,
commissions paid to salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips, bonuses, and
other amounts permissibly included according to Treasury regulations. Earnings
do not include deferred compensation, gain from the exercise of stock options,
and distributions that receive special tax benefits and are excluded from the
base for computing those statutory limits.
1.11. Employee means any individual who is paid from the Company's payroll
and eligible to participate in the Savings Plan, excluding any individual
retained by the Company as an independent contractor or consultant or any
individual described in Code section 414 (leased employees) and any individual
employed by the Company on a temporary or casual basis.
1.12. ERISA means the Employee Retirement Income Security Act of 1974, as
amended. References to specific sections of ERISA shall include those sections
and any comparable sections of future legislation that modify, amend,
supplement, supersede or recodify such sections.
1.13. Family Member means a member of the family of a five-percent owner or
of a Highly Compensated Employee in the group consisting of the ten Highly
Compensated Employees paid the greatest Earnings from the Company during the
Plan Year. For purposes of this section, the term "family" means, with respect
to any Employee, such Employee's spouse and lineal ascendants or descendants
and the spouse of such lineal ascendants or descendants. Except as otherwise
specified in regulations, a Family Member is not considered to be an Employee
separate from the Employee whose status under this Plan cause the individual
to be a Family Member.
1.14. Highly Compensated refers to an Employee who during the current or
immediately preceding Plan Year
(a) was at any time a five-percent owner;
(b) received Earnings from the Company in excess of $75,000 (or such
higher dollar limit as the Secretary of the Treasury announces at the same time
and in the same manner as the cost-of-living adjustments applicable to the
limitations under Code section 415(d)) during that Plan Year;
(c) received Earnings from the Company in excess of $50,000 (or such
higher dollar limit as the Secretary of the Treasury announces at the same time
and in the same manner as the cost-of-living adjustments applicable to the
limitations under Code section 415(d)) during that Plan Year and was in the
top 20% of the Employees in Earnings during that Plan Year; or
(d) was at any time an officer of the Company and received during that
Plan Year Earnings that exceeded 150% of the dollar amount in effect under Code
section 415(c)(1)(A).
For purposes of this section, at least one officer of the Company must be
treated as a Highly Compensated Employee, regardless of Earnings. If at least
three officers meet the Earnings figure, no more than ten percent of the
Employees may be treated as such an officer. In no event may the Plan treat
more than fifty Employees as such officers. For purposes of this section,
Earnings will be determined without regard to Code sections 125, 402(e)(3),
402(h)(1)(B), and in the case of employer contributions made pursuant to a
salary reduction agreement, without regard to Code section 403(b). The deter-
minations made under this section must be made in conformity with the rules
in Code section 414(q) and the related Treasury regulations. According to Code
section 414(q)(6)(A)(ii), any Earnings paid to a Family Member (and any
applicable contribution or benefits on behalf of such individual) must be
treated as if it were paid to (or on behalf of) the relevant Highly Compensated
Employee for that Plan Year. If an employee is not described in (b), (c) or
(d) for the preceding year, he shall not be treated as described in (b), (c),
or (d) for the current year unless he is a member of the group consisting of
the 100 employees of the Company paid the greatest Earnings during the current
year.
1.15. Matching Contribution means the Company's Contribution to the Savings
Plan on behalf of a Member as described in sections 3.08 and 3.11(d) of the
Savings Plan.
1.16. Matching Contribution Account means the portion of a Member's account
attributable to Matching Contributions under the Savings Plan as described in
section 3.01 of the Savings Plan.
1.17. Member means an eligible Employee who satisfies the requirements of
Article II.
1.18. Payroll Period means the interval of employment for which a Member's
periodic pay checks are normally issued.
1.19. Permanent and Total Disability means the incapacity of an Employee as
described in section 1.36 of the Savings Plan.
1.20. Plan means the Savings Plan Benefit Restoration Plan for Employees of
Tredegar Industries, Inc.
1.21. Plan Year means the annual period beginning on January 1st and ending
on the following December 31st.
1.22. Qualified Domestic Relations Order means a judgment, decree, order or
approval of a property settlement agreement, that
(a) relates to the provision of child support, alimony payments, or
marital property rights to an Alternate Payee;
(b) is made pursuant to a state domestic relations or community property
law;
(c) creates or recognizes the right of an Alternate Payee to receive
all or a portion of the benefit payable with respect to the Member under this
Plan or that assigns to an Alternate Payee the right to receive all or a portion
of the benefits payable to the Member under the Plan;
(d) clearly specifies (i) the name and last known mailing address (if
available) of the Member and the name and mailing address of each Alternate
Payee, unless the Company has reason to know the address independently of the
order; (ii) the amount or percentage of the Member's benefits to be paid by
the Plan to each Alternate Payee or the manner in which such amount or
percentage is to be determined; (iii) the number of payments or period to which
the order applies; and (iv) the name of the Plan to which the order applies;
(e) does not require the Plan to provide any type or form of benefit,
or any option, not otherwise provided under the Plan;
(f) does not require the Plan to provide increased benefits; and
(g) does not require the payment of benefits to an Alternate Payee that
are required to be paid to another Alternate Payee under another order
determined previously to be a Qualified Domestic Relations Order.
A Qualified Domestic Relations Order may provide for payments to begin
as soon as practicable after the date of entry of the order regardless of
whether the Member has terminated employment as of that date. If the Member
dies before that date, the Alternate Payee is entitled to benefits only if the
order requires survivor benefits to be paid. In the case of such order, the
amount to be paid to the Alternate Payee is computed using the benefit that
would be payable to the Member if he had terminated employment immediately prior
to the date such payment is to be made. The payment of benefits with respect
to a Member who has not yet terminated employment is not considered to violate
the prohibition against providing increased benefits.
1.23. Savings Plan means the Savings Plan for the Employees of Tredegar
Industries, Inc., effective July 1, 1989, as now and hereafter amended.
1.24. Surviving Spouse means the person to whom a Member was married on his
death.
1.25. Trust Agreement means the Trust Agreement entered into between the
Company and a Trustee in conjunction with the Plan.
1.26. Trust Fund means the assets of the Plan held by the Trustee.
1.27. Trustee means a bank or trust company designated by the Board of
Directors.
1.28. Valuation Date means the last business day of a calendar month.
<PAGE>
ARTICLE II
ELIGIBILITY AND MEMBERSHIP
2.01. Eligibility Requirements
(a) Each individual who is a Highly Compensated Employee and a
participant in the Savings Plan on October 1, 1993, shall, without further
requirement, be a Member of the Plan.
(b) Each individual who is or becomes a Highly Compensated Employee
shall become a Member of the Plan on the date that he becomes a participant
in the Savings Plan.
2.02. Membership in the Plan
(a) An application to enroll in the Plan is not required, but each
Employee and Member must correctly disclose to the Administrator all requested
information necessary for the administration of the Plan.
(b) A Member shall continue to be a Member of the Plan until the date
that (i) he is no longer a Highly Compensated Employee, (ii) he is no longer
eligible to participate in the Savings Plan and (iii) he is no longer entitled
to benefits under the Plan.
2.03. Reemployment
A Member who terminates his employment with the Company and its Affiliates
and is reemployed as an Employee may become a Member in the Plan immediately
upon his reemployment, subject to the provisions of Plan section 2.02.
<PAGE>
ARTICLE III
ALLOCATION
3.01. Establishment of Accounts
The Administrator shall establish and maintain a separate Bookkeeping
Account and Distribution Account for each Member of the Plan. As required for
appropriate record-keeping, the Administrator may establish and name additional
Accounts or sub-accounts for each Member.
3.02. Crediting of Company Contributions
As soon as practicable after the end of each Payroll Period, the Company
shall credit to the Member's Bookkeeping Account an amount equal to the
difference between (a) and (b) below:
(a) The Matching Contribution that would have been allocated to the
Member's account under the Savings Plan for the Payroll Period based on the
Member's actual Pre-Tax and After-Tax Elections under the Savings Plan for that
Payroll Period without regard to the following limitations:
(1) The limitations imposed by Code section 401(a)(17) on the amount
of the Member's Base Pay that may be taken into account under the Savings
Plan as provided in section 1.09 of the Savings Plan.
(2) The limitations imposed by Code sections 401(k) and 401(m) on the
Member's Actual Deferral Percentages and Contribution Percentages,
respectively, under the Savings Plan as described in sections 3.07 and
3.11 of the Savings Plan.
(3) The limitations imposed by Code section 415 on the amount of Annual
Additions that may be allocated to the Member's account under the Savings
Plan as provided in Article VIII of the Savings Plan.
(b) The Matching Contributions that are actually allocated to the
Member's account under the Savings Plan for the Payroll Period based on his
After-Tax and Pre-Tax Contributions made to the Plan for that Payroll Period.
For purposes of this subsection, the terms "Base Pay," "After-Tax
Contributions," "Pre-Tax Contributions" "Actual Deferral Percentages,"
"Contribution Percentages" and "Annual Additions" shall have the meanings set
forth in Article I of the Savings Plan.
3.03. Allocation of Company Contributions
Company Contributions made on behalf of a Member shall be allocated to
the Member's Distribution Account as soon as practicable after such
contributions are made as provided in Article IV.
<PAGE>
ARTICLE IV
CONTRIBUTIONS
4.01. Company Contributions
(a) As soon as practicable after a Member's account balance under the
Savings Plan is distributed pursuant to section 7.02, 7.03 or 7.04 of the
Savings Plan, the Company shall contribute to the Plan on behalf of the Member
an amount equal to the balance of his vested Bookkeeping Account, valued as
of the Valuation Date coincident with or immediately preceding the date of
distribution to the Member or his Beneficiary, as the case may be, under the
Savings Plan.
(b) In the event that the Plan is required to make payments to an Alter-
nate Payee pursuant to a Qualified Domestic Relations Order prior to the date
that the Member terminates employment, the Company shall contribute to the Plan
an amount equal to the value of the Member's vested Bookkeeping Account awarded
to the Alternate Payee under the Qualified Domestic Relations Order as of the
Valuation Date immediately preceding the date of payment specified in the order.
The value of the Member's vested Bookkeeping Account as of the applicable
Valuation Date shall be reduced by any amounts contributed by the Company on
behalf of the Alternate Payee.
(c) In the event that the Plan is terminated, the Company shall contrib-
ute on behalf of each Member an amount equal to the balance of his Bookkeeping
Account valued as of the Valuation Date coincident with or immediately preceding
the date the Plan termination becomes effective.
4.02. Member Contributions
Members shall not be required or permitted to make contributions to the
Plan.
<PAGE>
ARTICLE V
VALUATION AND ACCOUNTING
5.01. Credits to Bookkeeping Accounts
Amounts shall be credited to a Member's Bookkeeping Account in whole and
fractional shares of Tredegar Industries, Inc. common stock based on the shares
that would have been purchased with such amounts and allocated to the Member's
Matching Contribution Account under the Savings Plan. Additional amounts shall
be credited to the Member's Bookkeeping Account to the extent that cash
dividends paid on such shares of stock would have been reinvested in Tredegar
Common Stock Fund under the Savings Plan.
5.02. Valuation of Bookkeeping Accounts
(a) Each Member's Bookkeeping Account shall be valued, pursuant to the
provisions of Plan section 5.01 as of each Valuation Date, using the fair market
value of the investment funds under the Savings Plan as reported in writing
by the trustee for the Savings Plan.
(b) As of each Valuation Date, the value of a Member's Bookkeeping Ac-
count shall be adjusted to reflect what would have been its share of income,
gains and losses under the Savings Plan based on the investment of Matching
Contributions allocated to the Member's account under the Savings Plan. The
value of the Member's Bookkeeping Account shall be adjusted to reflect cash
dividends that would have been accrued or paid on shares of Tredegar Industries,
Inc. common stock credited to such Bookkeeping Account as if held in the
Member's Matching Contribution Account under the Savings Plan as well as
charges, expenses and realized gains or losses that would have been allocated
to such shares of stock under the Savings Plan.
<PAGE>
ARTICLE VI
DISTRIBUTION
6.01. Plan Termination, Death, Permanent and Total Disability
In the event of termination of the Savings Plan or a Member's termination
of employment by reason of death, Permanent and Total Disability, or retirement,
the Plan shall pay the Member or his Beneficiary, as the case may be, the total
value of the Member's Distribution Account as of the Valuation Date next follow-
ing the date that the Member's account balance under the Savings Plan is dis-
tributed pursuant to section 7.02, 7.03 or 7.04 of the Savings Plan.
6.02. Other Separation
(a) In the event a Member terminates employment for reasons other than
death, retirement, or Permanent and Total Disability, the Plan shall pay the
Member the value of his Distribution Account that represents the value of his
vested Bookkeeping Account as of the Valuation Date next following the date
that such Member receives his vested account balance under the Savings Plan
pursuant to Savings Plan section 7.03.
(b) A Member shall become vested in his Bookkeeping Account at the same
time and in the same manner as he becomes vested in his Matching Contribution
Account under the terms of the Savings Plan.
(c) A distribution cannot be made pursuant to this section, if, at the
time of the distribution, the Member is again employed by the Company, unless
the distribution is by reason of Plan termination.
6.03. Qualified Domestic Relations Order Distributions
Despite any other Plan provisions to the contrary, the Administrator must
comply with the terms of a Qualified Domestic Relations Order. Payment will
be made to the Alternate Payee in the manner specified by the Qualified Domestic
Relations Order and as soon as practicable after the payment date specified
in the Qualified Domestic Relations Order; provided, however, that in no event
shall a distribution pursuant to this section exceed the value of the Member's
vested Distribution Account as of the Valuation Date coincident with or
immediately preceding the date of distribution. Unless a contrary result is
specified by the Qualified Domestic Relations Order, if the amount awarded to
the Alternate Payee pursuant to a Qualified Domestic Relations Order does not
exceed $3,500 as of the Valuation Date coincident with or immediately preceding
the date such amount becomes payable, that amount will be paid to the Alternate
Payee from the Member's Distribution Account as soon as practicable following
the date the Administrator determines that the domestic relations order is a
Qualified Domestic Relations Order.
6.04. Form of Distribution
Payment shall be made from the Plan to a Member, Beneficiary or Alternate
Payee in single cash sums.
6.05. Federal Income Tax Withholding
Members and, if applicable, Beneficiaries shall be provided with proper
notice and election forms for the purpose of withholding Federal income tax
from distributions from the Plan in accordance with Code section 3405.
6.06. Discharge of Obligation
Payment of all or a portion of the value of the Member's Distribution
Account under this Article shall discharge the Company's obligation to the
Member, his Beneficiary or Alternate Payee with respect to the corresponding
value of the Member's vested Bookkeeping Account under the Plan.
<PAGE>
ARTICLE VII
ADMINISTRATION
7.01. Appointment of Named Fiduciary and Plan Administrator
Tredegar Industries, Inc., shall be the Administrator and Named Fiduciary
of the Plan and shall be responsible for the operation and administration of
the Plan except to the extent its duties are allocated to and assumed by persons
or entities hereunder.
7.02. Plan Administrator
(a) To the extent required by law, the Administrator shall establish
a funding policy and method to carry out the objectives of the Plan.
(b) The Administrator shall prepare such reports at such times and file
such reports at such places as may be required by Federal statutes and
regulations.
(c) Upon written request of any Member or Beneficiary eligible to
receive benefits under the Plan, the Administrator shall furnish him a copy
of the latest updated summary plan description, latest annual report and a copy
of the Plan. The Administrator may make a reasonable charge for the costs of
furnishing such copies.
(d) The Administrator shall maintain, on a plan or calendar year basis,
employee and other such records as are necessary for the successful operation
of the Plan and shall supply such full and timely information for all matters
relating to the Plan as the Committee or Trustee may require for the effective
discharge of their respective duties.
(e) The Administrator shall receive all applications for benefits and
shall establish rules and procedures to be followed by Members and Beneficiaries
in filing such applications and for furnishing and verifying all data which
may be required in order to establish their rights to benefits in accordance
with the Plan. Upon receipt of an application for benefits, the Administrator
shall determine all facts which are necessary to establish the right of an
applicant to benefits and the amount thereof. All approved benefits shall be
paid at the direction of the Administrator. Such payments shall be made in
accordance with the Administrator's written directions setting forth the amount
of such payments and the specific manner in which such payments are to be made.
In carrying out its duties hereunder, the Administrator shall at all times rely
on the construction and specific interpretations of the Plan as determined by
the Committee.
7.03. Employee Savings Plan Committee
(a) The Employee Savings Plan Committee appointed by, and serving at
the pleasure of, the Board of Directors of Tredegar Industries, Inc., pursuant
to section 9.03 of the Savings Plan shall have the powers and duties with
respect to the Plan as described in this Plan section.
(b) The Committee shall make such rules and regulations as it deems
necessary for operation of the Plan, shall determine all questions arising in
the administration, interpretation and application of the Plan, review claims
for benefits which have been denied, and shall perform all other functions which
may be assigned to it by the Plan or the Administrator. Notwithstanding the
powers granted hereunder, the Committee shall have no power to modify in any
way any provision of the Plan.
(c) A member of the Committee who is also a Member of the Plan shall
abstain from any action which specifically affects him as a Member of the Plan
other than an action which affects all Members of the Plan. In the event of
abstention, matters shall be decided by the remaining members of the Committee.
Nothing herein shall prevent any member of the Committee who is also a Member
of the Plan from receiving any benefit to which he may be entitled, so long
as the benefit is computed and paid on a basis that is consistently applied
to all other Members. The Committee may engage agents to assist it in its
duties, and may consult with counsel, who may be counsel for the Company, with
respect to the meaning or construction of this document and its obligations
hereunder, or with respect to any action, proceeding, or question of law related
thereto.
7.04. Trustee
The Board of Directors shall have the power to appoint one or more
Trustees, to remove a Trustee at its discretion upon sixty (60) days' written
notice unless a shorter period is agreed to, to appoint a successor to any
Trustee who has resigned, has been removed, or has ceased to serve for any other
reason, and to appoint a co-Trustee with the consent of the Trustee then
serving. The Trustee may resign at any time upon sixty (60) days' written
notice to the Company unless a shorter period is agreed to. The appointment
of any Trustee or co-Trustee shall become effective upon the Trustee's or co-
Trustee's acceptance of the appointment in writing. Each Trustee shall hold
and invest the assets of the Plan under a Trust established pursuant to a Trust
Agreement between the Company and the Trustee. Each Trustee shall further carry
out all duties assigned to it by the Plan or the applicable Trust Agreement.
7.05. Benefit Claims Review Procedure
(a) Claims for benefits under the Plan may be submitted to the
Administrator or such person as the Administrator may designate in writing who
shall have the initial responsibility for determining the eligibility of any
Member or Beneficiary for benefits. Such claims for benefits shall be made
in writing and shall set forth the facts which such Member or Beneficiary
believes to be sufficient to entitle him to the benefit claimed. The
Administrator may adopt forms for the submission of claims for benefits in which
case all claims for benefits shall be filed on such forms.
(b) Upon receipt of a claim, the Administrator must respond in writing
within ninety (90) days. If necessary, the Administrator's first notice must
indicate any special circumstances requiring an extension of time for the
Administrator's decision. The extension notice must indicate the date by which
the Administrator expects to give a decision. An extension of time for
processing may not exceed ninety (90) days after the end of the initial ninety
(90) day period.
(c) If the written claim for a Plan benefit is wholly or partially
denied or the claimant has had no response, the claimant or his duly authorized
representative, at the sole expense of the claimant, may appeal the denial
within sixty (60) days of the date of the denial or the expiration of the time
period provided in subsection (b) to the:
Manager of Employee Benefits
Tredegar Industries, Inc.
1100 Boulders Parkway
Richmond, Virginia 23225
An adverse notice must be written in a manner calculated to be understood by
the claimant and must include (i) each reason for denial; (ii) specific
references to the pertinent provisions of the Plan or related documents on which
the denial is based; (iii) a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why that material or information is needed; and (iv) appropriate information
about the steps to be taken if the claimant wishes to submit the claim for
review.
(d) In pursuing his appeal the claimant or his representative:
(1) may request in writing that the Employee Savings Plan Committee
review the denial;
(2) may review pertinent documents; and
(3) may submit issues and comments in writing.
(e) The decision on review shall be made within sixty (60) days;
provided that the sixty (60) day period may be extended for an additional sixty
(60) days by written notice to the claimant setting forth the reasons for the
extension. The decision on review shall be made in writing, shall include
specific reasons for the decision, shall be written in a manner calculated to
be understood by the claimant and shall contain specific references to the
pertinent Plan provisions on which the decision is based.
7.06. Administrative Costs
All reasonable costs incurred in the administration of the Plan, excluding
legal fees and recordkeeping charges, shall be paid from the Trust Fund. No
Employee of the Company or an Affiliate shall be entitled to compensation for
his services with respect to the Plan other than his normal compensation
received as an employee of the Company or an Affiliate, but he shall be entitled
to reimbursement for his reasonable expenses incurred in the administration
of the Plan.
7.07. Fiduciary Discretion
In discharging the duties assigned to it under the Plan, the Committee
and each other fiduciary with respect to the Plan has the discretion to
interpret the Plan; adopt, amend and rescind rules and regulations pertaining
to its duties under the Plan; and to make all other determinations necessary
or advisable for the discharge of its duties under the Plan. Each fiduciary's
discretionary authority is absolute and exclusive if exercised in a uniform
and nondiscriminatory manner with respect to similarly situated individuals.
The express grant in the Plan of any specific power to a fiduciary with respect
to any duty assigned to it under the Plan must not be construed as limiting
any power or authority of the fiduciary to discharge its duties. A fiduciary's
decision is final and conclusive unless it is established that the fiduciary's
decision constituted an abuse of its discretion.
<PAGE>
ARTICLE VIII
AMENDMENT AND TERMINATION OF THE PLAN
8.01. Amendment of the Plan
The Company shall have the right by action of the Board of Directors to
modify, alter or amend the Plan in whole or in part to the extent allowed by
law; provided that the duties, powers and liabilities of the Trustee shall not
be increased without its written consent; provided further that any such action
shall not, in any way, adversely affect the benefits of individuals who have
terminated their employment under the Plan prior to the effective date of such
action, or of their Beneficiaries, nor shall it adversely affect amounts
credited to Members prior to the effective date of such action. No amendment,
modification or alteration shall have the effect of revesting in the Company
any part of the principal or income of the Trust Fund.
8.02. Termination of the Plan
The Company expects to continue this Plan indefinitely, but continuance
is not assumed as a contractual obligation and the Company reserves the right
to terminate the Plan at any time. Upon termination of the Plan, the rights
of the then Members in their Bookkeeping Accounts shall be nonforfeitable and
as soon as practicable thereafter the Company shall contribute on behalf of
each Member an amount equal to the value of his Bookkeeping Account. Each
Member shall be entitled to receive the value of his Distribution Account in
the manner described in Plan section 6.01.
<PAGE>
ARTICLE IX
MERGER AND CONSOLIDATION OF THE PLAN
In the event of a merger or consolidation of the Plan with another plan
or the transfer of assets or liabilities from the Plan to another plan, the
balance in each Member's Account immediately after such event shall be equal
to the balance in his Account immediately prior to such event.
<PAGE>
ARTICLE X
GENERAL PROVISIONS
10.01. Return of Company Contributions
This Plan has been created for, where applicable, the exclusive purpose
of providing benefits to the Members and their Beneficiaries. The Plan shall
be interpreted in a manner consistent with applicable provisions of ERISA.
Company contributions to the Plan may be returned to the Company (1) within
one year of the date such funds are contributed if the contribution is made
by reason of a mistake of fact or (2) to the extent of the disallowance of a
tax deduction for such contribution and within one year of such disallowance,
if the contribution is conditioned on its deductibility.
10.02. No Guaranty of Employment
The Plan shall not be deemed to constitute a contract between the Company
and any Member or to be consideration or an inducement for the employment of
any Member of the Company. Nothing contained in the Plan shall be deemed to
give any Member the right to be retained in the service of the Company or to
interfere with the rights of the Company to discharge or to terminate the
service of any Member at any time without regard to the effect such discharge
or termination may have on any rights under the Plan.
10.03. Payments to Minors and Incompetents
If a Member or Beneficiary entitled to receive any benefits hereunder is
a minor or is deemed so by the Administrator or is adjudged to be legally
incapable of giving valid receipt and discharge for such benefits, benefits
will be paid to such person as the Administrator might designate. Such payments
shall, to the extent made, be deemed a complete discharge of any liability for
such payment under the Plan.
10.04. Non-Alienation of Benefits
(a) To the extent permitted by law, no benefit payable under the Plan
will be subject in any manner to anticipation, assignment, garnishment, or
pledge; and any attempt to anticipate, assign, garnish or pledge the same will
be void and no such benefits will be made in any manner liable for or subject
to the debts, liabilities, engagements or torts of any Members.
(b) Despite any other Plan provisions to the contrary, the Administrator
must comply with the terms of a Qualified Domestic Relations Order. The Plan
is not liable for any payments pursuant to a domestic relations order until
the Administrator has received the order and determined that it is a Qualified
Domestic Relations Order. The Administrator must establish reasonable written
procedures for determining the qualified status of a domestic relations order
and for administering distributions under a Qualified Domestic Relations Order.
The Administrator must promptly notify the Member and each Alternate Payee of
the receipt of a domestic relations order and of the procedures for determining
its qualified status.
10.05. Headings and Subheadings
The headings and subheadings in this Plan have been inserted for
convenience of reference only and are to be ignored in any construction of the
provisions hereof.
10.06. Use of Masculine and Feminine; Singular and Plural
In the construction of the Plan the masculine shall include the feminine
and the singular the plural in all cases where such meanings are indicated by
the context.
10.07. Unclaimed Benefits
If the Administrator, or the Trustee with the assistance of the
Administrator, cannot make payment of any amount to a Member or Beneficiary
within five (5) years after such amount becomes payable because the identity
or whereabouts of such individual cannot be ascertained, the Administrator,
at the end of such five (5) year period, will direct that the amounts which
would have been payable to such Member or Beneficiary be segregated by the Trus-
tee and thereafter dealt with according to the laws of the Commonwealth of
Virginia relating to abandoned intangible personal property held in a fiduciary
capacity.
10.08. Beneficiary Designation
At the time of enrollment in the Plan, each Member, with the consent of
his spouse pursuant to Plan section 1.04, if applicable, must designate a
Beneficiary to receive settlement of his Plan account in the event of his death
during employment. A Member, with the consent of his spouse pursuant to Plan
section 1.04, if applicable, may, from time to time, change a Beneficiary or
Beneficiaries under the Plan. In the event that no designated Beneficiary is
surviving at the time of the Member's death, settlement under the Plan will
be made as provided in Plan section 1.04.
10.09. Errors and Omissions
It shall be the responsibility of those individuals and entities charged
with the administration of the Plan to see that it is administered in accordance
with its terms so long as it is not in conflict with ERISA. In the event an
innocent error or omission is discovered in the operation or administration
of the Plan, which in the judgment of the Committee would cost more to correct
than is warranted by the error or omission and which in such Committee's
judgment did not result in discrimination in operation, in favor of the
prohibited group of officers, shareholders, and highly compensated employees,
then, to the extent such adjustment will not in such Committee's judgment result
in such prohibited group, the Committee deems necessary or desirable to correct
the error or omission, including but not limited to the authorization of
additional Company contributions designed, in a manner consistent with the
goodwill intended to be engendered by the Plan, to put Members in the same rela-
tive position they would have been in but for such error or omission.
<PAGE>
ARTICLE XI
ADOPTION OF PLAN
As evidence of its adoption of the Plan herein constituted, Tredegar
Industries, Inc., has caused this instrument to be signed by its duly authorized
officer this _____ day of __________, 1993.
TREDEGAR INDUSTRIES, INC.
By ____________________________
EXHIBIT 11 - COMPUTATIONS OF EARNINGS PER SHARE
Tredegar Industries, Inc. and Subsidiaries
(In thousands, except per-share amounts)
<TABLE>
For years ended December 31 1993 1992 1991
<S> <C> <C> <C>
Income from continuing operations $ 3,723 $ 9,517 $2,519
Income from discontinued operations 6,784 5,795 3,104
Net income before extraordinary item and cumulative
effect of changes in accounting principles 10,507 15,312 5,623
Extraordinary item -- loan prepayment premium (1,115) -- --
Changes in accounting principles 150 -- --
Net income $ 9,542 $15,312 $5,623
Earnings per share as reported:
Income from continuing operations $ .34 $ .88 $ .24
Income from discontinued operations .63 .53 .28
Net income before extraordinary item and cumulative
effect of changes in accounting principles .97 1.41 .52
Extraordinary item (.10) -- --
Changes in accounting principles .01 -- --
Net income $ .88 $ 1.41 $ .52
PRIMARY EARNINGS PER SHARE:
Shares issuable upon the assumed exercise
of outstanding stock options (1) 34 34 --
Weighted average common shares outstanding
during period 10,895 10,894 10,894
Weighted average common shares and common
stock equivalents 10,929 10,928 10,894
Primary earnings per share (2) $ .87 $ 1.40 $ .52
FULLY DILUTED EARNINGS PER SHARE:
Shares issuable upon the assumed exercise
of outstanding stock options (3) 38 35 --
Weighted average common shares outstanding
during period 10,895 10,894 10,894
Weighted average common shares and common
stock equivalents 10,933 10,929 10,894
Fully diluted earnings per share (2) $ .87 $ 1.40 $ .52
</TABLE>
(1) Computed using the average market price during the period.
(2) Common stock equivalents had an immaterial dilutive effect.
(3) Computed using the market price at the end of the related period since
such price was higher than the average market price during the related
period.
TREDEGAR INDUSTRIES
OFFICERS AND OPERATING
DIRECTORS CORPORATE STAFF MANAGEMENT
John D. Gottwald* John D. Gottwald Plastics
President President
Tredegar Industries, Inc. Chief Executive Officer Tredegar
Richmond, Virginia Chairman, Executive Film Products
Committee Anthony J. Rinaldi
Richard W. Goodrum* President
Executive Vice President Richard W. Goodrun
Tredegar Industries, Inc. Executive Vice President Tredegar Molded
Richmond, Virginia Chief Operating Officer Products
William L. Driggers
Norman A. Scher* Norman A. Scher President
Executive Vice President Executive Vice President
Tredegar Industries, Inc. Chief Financial Officer Fiberlux, Inc.
Richmond, Virginia Treasurer Ralph J. Vasami
President
Austin Brockenbrough, III Michael W. Giancaspro
Founding Partner and Vice President, Metal Products
Managing Director Corporate Planning
Lowe, Brockenbrough, Aluminum Extrusions
Tierney & Tatterstall, Steven M. Johnson Douglas R. Monk
Inc. Vice President, President
Richmond, Virginia Corporate Developement
Brudi, Inc.
Phyllis Cothran Frederick P. Woods Wayne W. Bostad
President and Chief Vice President, President
Operating Officer Personnel
Blue Cross & Blue Shield Energy
of Virginia Edward A. Cunningham
Richmond, Virginia Director, Corporate The Elk Horn Coal
Communications and Corporation and
Bruce C. Gottwald Investor Relations Tredegar Oil & Gas
President and Chief David D. Reed
Executive Officer D. Andrew Edwards President
Ethyl Corporation Controller
Richmond, Virginia Other
Lawrence J. Scott
Floyd D. Gottwald, Jr. Director, Audit APPX Software, Inc.
Chairman of the Board of Stephen A. Andersen
Directors Nancy M. Taylor President
Ethyl Corporation Corporate Counsel
Richmond, Virginia Secretary
Andre B. Lacy F. Case Whittemore
President Director,
LDI Management, Inc. Risk Management
Indianapolis, Indiana
James F. Miller
Investment Banker
Paine Webber, Inc.
New York, New York
Emmett J. Rice
Retired Member
Board of Governors
Federal Reserve System
Washington, D.C.
W. Thomas Rice
Former Chairman of the Board
Seaboard Coast Line
Industries, Inc.
Richmond, Virginia
*Member of the Executive Committee
<TABLE>
Five-Year Summary
Tredegar Industries, Inc., and Subsidiaries
Years Ended December 31 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
(In thousands, except per-share data)
Results of Operations [(a) & (b)]:
Net sales $449,208 $445,229 $439,186 $505,884 $594,919
Other (expense) income, net (387) 226 745 861 152
448,821 445,455 439,931 506,745 595,071
Cost of goods sold 379,286 370,652 373,429 450,843 522,020
Selling, general and administrative
expenses 47,973 48,130 49,764 54,457 49,388
Research and development expenses 9,141 5,026 4,541 4,850 4,129
Interest expense (c) 5,044 5,615 7,489 7,101 3,777
Unusual items 452(d) 90(e) 721(f) 32,915(g) -
441,896 429,513 435,944 550,166 579,314
Income (loss) from continuing operations
before income taxes 6,925 15,942 3,987 (43,421) 15,757
Income taxes 3,202 6,425 1,468 (14,734) 6,335
Income (loss) from continuing operations 3,723 9,517 2,519 (28,687) 9,422
Income from discontinued operations (h) 6,784 5,795 3,104 4,001 7,852
Net income (loss) before extraordinary
item and cumulative effect of changes
in accounting principles 10,507 15,312 5,623 (24,686) 17,274
Extraordinary item-prepayment premium on
extinguishment of debt (net of tax) (1,115) - - - -
Cumulative effect of changes in
accounting for postretirement benefits
other than pensions (net of tax) and
income taxes 150 - - - -
Net income (loss) $ 9,542 $ 15,312 $ 5,623 ($ 24,686) $ 17,274
Share Data:
Earnings (loss) per share (b):
Continuing operations $ .34 $ .88 $ .24 ($ 2.54) $ .79
Discontinued operations (h) .63 .53 .28 .35 .65
Before extraordinary item and
cumulative effect of changes
in accounting principles .97 1.41 .52 (2.19) 1.44
Net income (loss) .88 1.41 .52 (2.19) 1.44
Equity per share 15.52 14.91 13.79 13.52 15.69
Return on average equity (i) 6% 10% 4% (15)% 7%
Cash dividends declared per share .24 .24 .24 .24 .12
Weighted average shares outstanding 10,895 10,894 10,894 11,296 11,993
Closing market price per share:
High 18.00 18.63 10.75 15.75 17.63
Low 12.50 10.00 6.38 7.00 12.88
End of year 15.00 15.50 10.00 7.38 15.88
Total return to shareholders (j) (2)% 57% 39% (52)% 37%
Financial Position and Other Data:
Total assets $353,383 $354,910 $335,415 $339,114 $361,046
Working capital 62,064 56,365 60,841 73,180 77,646
Current ratio 2.1:1 2.0:1 2.1:1 2.2:1 2.7:1
Unleveraged after-tax earnings
(loss) ( k) 14,132 19,203 10,753 (19,639) 20,059
Capital employed:
Debt 97,000 101,500 100,000 100,000 100,000
Shareholders' equity 169,088 162,397 150,223 147,261 185,061
Total 266,088 263,897 250,223 247,261 285,061
Average 264,993 257,060 248,742 266,161 281,687
Return on average capital employed (l) 5.3% 7.5% 4.3% (7.4)% 7.1%
Debt as % of total capitalization 36% 38% 40% 40% 35%
Depreciation (continuing operations) 23,117 21,963 24,089 23,641 21,822
Amortization of intangibles
(continuing operations) 2,706 914 1,113 764 762
Capital expenditures (continuing
operations) 16,480 20,705 21,360 34,799 40,212
Acquisitions and other investments 5,699 17,622 25,654 - 2,997
Gross margin as % of net sales
(continuing operations) 15.6% 16.8% 15.0% 10.9% 12.3%
Effective income tax rate
(continuing operations) 46% 40% 37% 34% 40%
Refer to Notes to Financial Tables on page 26.
</TABLE>
RESULTS OF OPERATIONS
Summary
Net income for 1993 declined 38% to $9.5 million, or $.88 per share, compared
with $15.3 million, or $1.41 per share, in 1992. As described in Note (b) to
Notes to Financial Tables on page 26, results for 1993 and 1992 include several
special items that affect the comparability of operating results between years.
Excluding these items, net income for 1993 declined 35% to $10.3 million, or
$.95 per share, compared with $15.8 million, or $1.46 per share, in 1992. The
lower operating results are due primarily to losses from new business
development activities included in the Other segment (primarily investments in
high-technology businesses, including APPX Software, Inc., Molecumetics, Ltd.
and Emisphere Technologies, Inc.), and lower volume and higher operating costs
related to unused capacity in Film Products and Molded Products, partially
offset by improved results in the Metal Products segment. Ongoing operations
from the Other segment contributed net losses of $6.6 million ($.60 per share)
and $1.4 million ($.12 per share) in 1993 and 1992, respectively.
Net income for 1992 increased to $15.3 million, or $1.41 per share, compared
with $5.6 million, or $.52 per share, in 1991. Excluding special items (see Note
(b) to Notes to Financial Tables on page 26), net income for 1992 increased by
$9.7 million to $15.8 million, or $1.46 per share, compared with $6.1 million,
or $.56 per share in 1991. The improvement in operating results in 1992 was led
by turnarounds in Aluminum Extrusions and Molded Products.
In July 1993, Film Products announced the closing of its Fremont, California,
plant and the consolidation of capacity at its new plant in Tacoma, Washington.
The Fremont plant is expected to close by May 1994. No provision for the
shutdown was recorded in 1993 since the estimated net realizable value of the
facility exceeds the total of its carrying value and expected shutdown and
disposal costs. In January 1994, Film Products announced its intention to sell
or close its Flemington, New Jersey, plant in order to exit the non-strategic,
conventional films business (single layer, blown polyethylene film used
primarily for general purpose industrial packaging). A pretax loss of $1.8
million was accrued at the end of 1993 to cover the expected loss on the
disposal of this facility.
During the third quarter of 1993, Molded Products acquired the assets of
Polestar Plastics, Inc., thereby gaining access to growing medical and
electronics markets for its products.
In the fourth quarter of 1993, Tredegar recorded a provision of $.9 million for
the decentralization and downsizing of certain corporate functions.
In November 1993, Tredegar announced that it is pursuing the sale of its coal
subsidiary, The Elk Horn Coal Corporation ("Elk Horn"). Assuming Elk Horn can be
sold on terms agreeable to Tredegar, the sale is expected to be completed by
mid-1994, and a gain is expected to be recognized. In addition, in February
1994, Tredegar sold its remaining oil and gas properties for approximately $8
million. This transaction resulted in a gain of approximately $6.1 million ($3.9
million after taxes), which will be recognized in 1994. As a result of the
potential sale of Elk Horn and the sale of Tredegar's remaining oil and gas
properties, the Energy segment is reported as discontinued operations.
Accordingly, information about results of operations, financial condition, cash
flows and industry segments has been reclassified where appropriate. Combined
financial statements for the Energy segment are presented in Note 2 of Notes to
Financial Statements on page 33.
Results from continuing operations are not indicative of future performance
because they exclude income that would be generated from reinvestment of
divestiture proceeds. Tredegar expects to use these proceeds to repay
outstanding borrowings under its revolving credit agreement, with remaining
proceeds invested until other opportunities, in existing businesses or
elsewhere, are identified.
1993 Compared with 1992
Revenues
Net sales from continuing operations increased 1% in 1993,
compared with 1992. Metal Products sales improved significantly due primarily
to higher volume in Aluminum Extrusions. Plastics revenues declined,
particularly in Molded Products. For more information, see Net Sales by Industry
Segment on page 19.
Operating Costs and Expenses
Tredegar's gross profit margin for continuing operations decreased to 15.6% in
1993 from 16.8% in 1992 due to lower volume and higher costs related to unused
capacity in Film Products and Molded Products, and the inclusion of APPX
Software in 1993 results. The unfavorable effect of these items on gross margin
was partially offset by the impact of higher volumes and manufacturing
efficiencies, including lower scrap rates and customer returns, in
Aluminum Extrusions.
Selling, general and administrative expenses for continuing operations decreased
slightly in 1993 due to cost-reduction efforts, partially offset by the
inclusion in 1993 of APPX Software.
Research and development expenses increased to $9.1 million in 1993 from $5
million in 1992 due to higher spending at Molecumetics (Tredegar's research
subsidiary involved in the synthesis of peptide mimetics used in rational drug
design); software development costs at APPX Software; and ongoing product
development efforts in Film Products.
Unusual items in 1993 of $.5 million include estimated costs related to the
closing of the Film Products plant in Flemington, New Jersey ($1.8 million),
and the reorganization of corporate functions ($.9 million), partially offset
by a gain on the sale of Tredegar's remaining investment in Emisphere ($2.3
million).
Interest Expense
Interest expense has been allocated between continuing operations and
discontinued operations based on relative capital employed (see Note 2 of
Notes to Financial Statements on page 33). Interest expense for continuing
operations declined 10% in 1993 due to lower interest rates and lower average
consolidated debt outstanding. The weighted average interest rate on
consolidated debt outstanding was 5.6% for the year, compared with 6.1% in
1992. Average consolidated debt outstanding during these periods totaled $95.8
million and $101.3 million, respectively.
Income Taxes
The effective tax rate for continuing operations in 1993 was 46%, compared with
40% in 1992. The increase was primarily due to an adjustment of deferred income
taxes for the 1% increase in the federal income tax rate in 1993, a higher
effective state income tax rate, and an increase in non-deductible goodwill
amortization, partially offset by the research and development tax credit. See
Note 16 of Notes to Financial Statements on page 38 for details on effective
tax rates.
Discontinued Operations
Energy segment net sales increased 2% to $33.4 million in 1993 from $32.9
million in 1992. The increase was driven by higher coal trading and gas
revenues, partially offset by lower coal royalties and slightly lower coal
sales volume.
Operating profit increased 8% to $11 million from $10.2 million due primarily to
gains totaling $1.4 million on the sale of certain oil and gas properties,
partially offset by a $.4 million charge for Elk Horn's required annual
contribution to fund medical and death benefits for assigned miners and
dependents under the Coal Industry Retiree Health Benefit Act of 1992
(see Note 2 of Notes to Financial Statements on page 33) .
Interest expense allocated to the Energy segment was approximately $.7 million
in 1993 and 1992 as a result of higher average capital employed, offset by
lower interest rates. The effective tax rate declined to 34.7% in 1993 from
39.6% in 1992 due to relatively higher percentage depletion.
Extraordinary Item
On June 16, 1993, Tredegar paid a prepayment premium to an institutional lender
in the amount of $1.8 million ($1.1 million after taxes) to refinance its $35
million, 8.6% fixed-rate debt that was due in September 1994. The new note
carries a fixed rate of 7.2% and matures in June 2003. Annual principal
payments of $5 million will begin in 1997.
Accounting Changes
Tredegar provides postretirement life insurance and health care benefits for
certain groups of employees. Tredegar and retirees share in the cost of
postretirement health care benefits, with employees retiring after July 1,
1993, receiving a fixed subsidy from Tredegar to cover a portion of their
health care premiums. Effective January 1, 1993, Tredegar adopted Statement of
Financial Accounting Standards ("SFAS") No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." SFAS No. 106 requires recognition
of the cost of postretirement benefits during the employees' service periods.
Previously, such expenses were accounted for on a cash basis. Tredegar elected
to immediately recognize the liability for prior years' service as the
cumulative effect of a change in accounting principle. Accordingly, in the first
quarter of 1993, Tredegar recorded an unfunded, accumulated postretirement
benefit obligation of $6.7 million and a noncurrent, deferred income tax
benefit of $2.5 million, resulting in an after-tax charge of $4.2 million.
Effective January 1, 1993, Tredegar adopted SFAS No. 109,
"Accounting for Income Taxes." SFAS No. 109 requires the asset and liability
method of accounting for deferred income taxes, whereby enacted statutory tax
rates are applied to the differences between the financial reporting and
tax bases of assets and liabilities. The cumulative effect of this change in
accounting principle was a reduction in deferred income taxes and a
corresponding increase in net income of $4.3 million in the first
quarter of 1993.
1992 Compared With 1991
Revenues
Net sales from continuing operations in 1992 increased 1% over 1991. Sales
increases in Metal Products were partially offset by sales declines in
Plastics. Metal Products benefited from higher sales in Aluminum Extrusions
and the inclusion of a full year of Brudi, Inc., sales in 1992
(Brudi was acquired in April 1991). The sales decline in Plastics was primarily
due to the divestiture, in the fourth quarter of 1991, of Molded Products'
beverage closure business. See Net Sales by Industry Segment on page 19 for
more information.
Operating Costs and Expenses
Tredegar's gross profit margin from continuing operations increased to 16.8% in
1992 from 15% in 1991 due to higher profits in Aluminum Extrusions and Molded
Products, partially offset by lower profits in Film Products. Aluminum
Extrusions' profits improved due to lower unit conversion costs, reflecting
higher sales and production volumes and internal improvements. The increase in
Molded Products' profits resulted primarily from restructuring efforts. The
decline in Film Products' profits was due to higher domestic unit conversion
costs, reflecting lower sales and production volume, partially offset by higher
profits from foreign operations.
Selling, general and administrative expenses for continuing operations decreased
3% in 1992 due to divestitures, restructuring-related cost reductions and a
continued focus on internal improvements.
Research and development expense increased to $5 million in 1992 from $4.5
million in 1991 due to product development projects in the Plastics segment and
research and development of certain new technologies.
Unusual items in 1992 include the accelerated write-off of certain goodwill
associated with the restructuring of Molded Products ($1.2 million),
partially offset by the gain on the sale of a portion of Tredegar's investment
in Emisphere ($1.1 million).
Interest Expense
Interest expense allocated to continuing operations declined 25%, or $1.9
million, in 1992 due to lower average interest rates and lower
average debt levels. Weighted average interest rates on consolidated debt
outstanding during 1992 and 1991 were 6.1% and 7.2%, respectively. Average
consolidated debt outstanding during these periods totaled $101.3 million and
$117.7 million, respectively.
Income Taxes
The effective tax rate for continuing operations in 1992 was 40%, compared with
37% in 1991. The increase was primarily due to lower tax benefits attributable
to the foreign sales corporation partially offset by a lower effective state
income tax rate. See Note 16 of Notes to Financial Statements on page 38 for
details regarding effective tax rates.
Discontinued Operations
Energy segment net sales declined 4%, to $32.9 million in 1992 from $34.3
million in 1991, due primarily to lower coal volume and lower oil and gas
revenues resulting from the termination of the horizontal drilling partnership
in 1991. Lower coal volume was partially offset by improved royalty rates,
improved prices in the coal sales business and higher minimum royalty
income. Mild weather and industry over-capacity relative to demand contributed
to coal volume declines.
Operating profit increased by $4.6 million or 81%, to $10.2 million from $5.6
million, due primarily to the termination in 1991 of the horizontal drilling
partnership and the elimination of related operating losses as well as improved
coal trading income.
Interest expense allocated to the Energy segment declined to $.7 million in 1992
from $.8 million in 1991 due to lower average interest rates, partially offset
by higher average capital employed.
The effective tax rate in 1992 increased to 39.6% from 36.4% in 1991 due
primarily to lower percentage depletion.
FINANCIAL CONDITION
Assets
Total assets at December 31, 1993, were $353.4 million, a decrease of $1.5
million from December 31, 1992. Net assets of discontinued operations increased
to $31 million from $29.8 million in 1992 due to higher coal trading
inventories. Total assets of continuing operations decreased $2.7 million.
The current ratio remained strong at 2.1 to 1 and 2.0 to 1 as of December 31,
1993 and 1992, respectively.
Liabilities
Total liabilities decreased 4% to $184.3 million at December 31, 1993, due
primarily to lower deferred income taxes caused by the adoption of SFAS No. 109
and reductions in consolidated long-term debt and accrued costs related to
divestitures, partially offset by an increase in other noncurrent liabilities
due to the adoption of SFAS No. 106 and the acquisition of Polestar.
Consolidated debt decreased to $97 million in 1993 from $101.5 million in 1992.
Consolidated debt at December 31, 1993, consisted of $35 million maturing in
2003 with annual principal payments of $5 million beginning in 1997 and a fixed
annual interest rate of 7.2%, and $62 million borrowed under variable-rate
agreements with various maturities and an average interest rate of 4.2%. The
weighted average interest rate on debt as of December 31, 1993 and 1992 was
5.3% and 6.1%, respectively. This overall decline is due to lower rates on both
fixed-rate and variable-rate credit arrangements. Debt as a percentage of total
capitalization was 36% at December 31, 1993, compared with 38% at December 31,
1992. See Note 10 of Notes to Financial Statements on page 35 for details
of credit agreements.
Shareholders' Equity
Shareholders' equity increased to $169.1 million at December 31, 1993,
reflecting consolidated net income of $9.5 million and dividends declared of
$2.6 million. The total market capitalization of Tredegar's 10.9 million common
shares decreased to $163.4 million at December 31, 1993, from $168.9 million at
December 31, 1992, due to a lower stock price at year end.
Tredegar has not purchased shares of its capital stock since 1990. In 1989 and
1990, Tredegar purchased an aggregate of 1.1 million shares of its capital stock
in the open market and in privately negotiated transactions at an average price
of $12.76 per share. Tredegar may make stock purchases, up to an aggregate of
3.2 million shares, under a standing authorization from the Board of Directors
at prices management deems appropriate.
Cash Flows
Net cash provided by continuing operating activities decreased to $17.6 million
in 1993 from $30.9 million in 1992 due to lower operating results and
additional working capital investment to support higher sales at the end of
the year. Net cash used in 1993 for the prepayment premium on extinguishment of
debt was $1.1 million. Net cash provided by discontinued operating activities
increased to $4.3 million in 1993 from $.5 million in 1992 due to lower
incremental working capital investment in the coal trading business.
Net cash used in investing activities of continuing operations
declined to $14.2 million in 1993 from $29.8 million in 1992 as a result of
lower capital expenditures and lower spending for acquisitions. Proceeds from
asset disposals totaled $8.6 million in 1993 and $9.2 million in 1992. Lower
capital expenditures for continuing operations in 1993 were primarily due to
unused capacity in Film Products and Molded Products as a result of unfavorable
market conditions and higher spending for capacity expansions in Film Products
from 1989 through 1992. Net cash was provided by investing activities of
discontinued operations in 1993 due to the sale for $1.7 million of certain oil
and gas properties, partially offset by capital expenditures.
In 1993, overall net cash provided by consolidated operating activities
exceeded net cash used in consolidated investing activities by $7.9 million,
which was sufficient to pay dividends of $3.3 million and to repay $4.5 million
of debt.
Net cash provided by continuing operating activities declined to $30.9 million
in 1992 from $34.9 million in 1991 due primarily to divestiture-related working
capital liquidations in 1991. Net cash provided by discontinued operating
activities declined to $.5 million in 1992 from $6.6 million in 1991 due to
additional investment in coal working capital in 1992 to support expansion of
the coal trading business.
Net cash used in investing activities of continuing operations declined to $29.8
million in 1992 from $35.7 million in 1991 due to lower spending on
acquisitions. In 1991, the net cash used in investing activities of discontinued
operations totaling $5 million was primarily due to the purchase of coal
reserves. During 1992, capital expenditures returned to a normal level for
supporting existing Energy segment operations.
In 1992, overall net cash provided by consolidated operating activities
exceeded capital expenditures and dividends by $7.8 million. This excess cash
flow, combined with proceeds from asset disposals, net borrowings and cash
available from 1991, funded acquisitions and other investments of $17.6
million.
In 1991, overall cash flows from operations were $41.5 million, up from $34.6
million in 1990. Cash flows from operations in 1991 exceeded capital
expenditures and dividends by $12.3 million, permitting Tredegar to pay down
debt incurred to finance the Brudi acquisition. Proceeds from the sale of
businesses and other property disposals allowed Tredegar to liquidate all
additional debt incurred in 1991, and end the year with $100 million
in long-term debt.
Normal operating cash requirements over the next 3-5 years are expected to be
met from continuing operations. Tredegar expects that proceeds from the
possible sale of its energy businesses will be used to repay outstanding
borrowings under its revolving credit agreement, with remaining proceeds
invested until other opportunities, in existing businesses or elsewhere, are
identified. The amount and timing of any additions to capital will depend on
Tredegar's specific cash requirements and the cost of such capital.
Net Sales by Industry Segment
1993 Compared With 1992
Plastics net sales decreased 7% in 1993 due to lower sales in Film Products and
significantly lower revenues in Molded Products. Film Products 1993 sales were
down due primarily to lower volume in industrial films, domestic disposable
permeable films, domestic disposable backsheet film supplied to private-label
manufacturers, and the discontinuance of certain unprofitable agricultural
product lines, partially offset by higher sales volume from foreign operations
and domestic disposable backsheet film supplied to The Procter & Gamble Company
("P&G").
Film Products is the largest U.S. supplier of embossed and permeable films for
disposable personal products. In each of the last three years, this class of
products accounted for more than 20% of the consolidated revenues of Tredegar.
Film Products supplies embossed films for use as backsheet in such disposable
products as baby diapers and adult incontinent products, feminine hygiene
products and hospital underpads. Film Products' primary customer
for embossed films for backsheet is P&G, the leading disposable diaper
manufacturer.
Film Products also supplies permeable films to P&G for use as liners in adult
incontinent products, feminine hygiene products and hospital underpads. In
addition, P&G purchases molded plastic products from Molded Products. P&G and
Tredegar have had a successful, long-term relationship based on cooperation,
product innovation and continuous process improvement. The loss or significant
reduction of business associated with P&G would have a material adverse effect
on Tredegar's business.
Molded Products sales declined due primarily to significantly lower technical
services revenues and lower volume in tooling and packaging and industrial
products, partially offset by the inclusion of Polestar since its acquisition
effective July 31, 1993.
<TABLE>
Net Sales By Industry Segment
Tredegar Industries, Inc., and Subsidiaries
Industry Segment (a) 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
(In thousands)
Plastics:
Ongoing operations (m) $255,524 $274,606 $281,613 $273,983 $271,514
Plants closed and
businesses sold - - - 10,717(n) 25,535
255,524 274,606 281,613 284,700 297,049
Metal Products:
Ongoing operations 190,690 170,623 157,573 193,347 228,563
Plants closed and
businesses sold - - - 27,837(n) 69,307
190,690 170,623 157,573 221,184 297,870
Other (o) 2,994 - - - -
Total continuing
operations (p) 449,208 445,229 439,186 505,884 594,919
Discontinued operations (h) 33,431 32,859 34,283 40,702 41,787
Total $482,639 $478,088 $473,469 $546,586 $636,706
Refer to Notes to Financial Tables on page 26.
</TABLE>
Metal Products sales increased 12% in 1993 due primarily to higher volume in
Aluminum Extrusions. Improved economic conditions and efforts to increase volume
with new and existing customers contributed to the improvement.
Net sales reported under the Other segment are primarily APPX Software revenues.
1992 Compared With 1991
Plastics net sales declined 2% in 1992 due primarily to the divestiture of
Molded Products' beverage closure business in the fourth quarter of 1991. Film
Products sales in 1992 declined slightly compared with record sales in 1991.
Domestic disposable volume declined due to reduced customer market share. For
Film Products overall, lower domestic volumes were partially offset by higher
average selling prices and higher sales volume from foreign operations.
Excluding beverage closure sales for 1991, Molded Products showed a slight
improvement in sales for 1992, reflecting higher sales volume and average
prices.
Metal Products sales increased 8% in 1992 due primarily to significantly higher
volume in Aluminum Extrusions and a full year of Brudi sales (acquired in April
1991). Higher sales volume in Aluminum Extrusions resulted from increased
capacity and orders for wood-clad window and automobile after-market products,
improved economic conditions, increased focus on targeted customers and
customer response to lower average prices. The decline in average selling prices
reflected lower aluminum costs.
<TABLE>
OPERATING PROFIT BY INDUSTRY SEGMENT
Tredegar Industries, Inc., and Subsidiaries
Industry Segment (a) 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
(In thousands)
Plastics:
Ongoing operations $22,649 $27,749 $23,638 $13,202 $23,484
Plants closed and
businesses sold - - - (1,799)(n) 953
Unusual items (1,815)(d) (1,182)(e) (721)(f) (2,831)(g) -
20,834 26,567 22,917 8,572 24,437
Metal Products:
Ongoing operations 8,141 4,693 (2,377) (1,713) 2,880
Plants closed and
businesses sold - - - (3,304)(n) (2,021)
Unusual items - - - (30,084)(g) -
8,141 4,693 (2,377) (35,101) 859
Other (o):
Ongoing operations (9,704) (1,865) - - -
Unusual items 2,263(d) 1,092(e) - - -
(7,441) (773) - - -
Operating profit (loss) 21,534 30,487 20,540 (26,529) 25,296
Interest expense (c) 5,044 5,615 7,489 7,101 3,777
Corporate expenses, net 9,565(d) 8,930 9,064 9,791 5,762
Income (loss) from
continuing
operations before
income taxes 6,925 15,942 3,987 (43,421) 15,757
Income taxes 3,202 6,425 1,468 (14,734) 6,335
Income (loss) from
continuing operations 3,723 9,517 2,519 (28,687) 9,422
Income from discontinued
operations (h) 6,784 5,795 3,104 4,001 7,852
Net income (loss) before
extraordinary item and
cumulative effect of
changes in accounting
principles (b) $10,507 $15,312 $ 5,623 ($24,686) $17,274
Refer to Notes to Financial Tables on page 26.
</TABLE>
Operating Profit By Industry Segment
Segment operating profit includes certain charges for general and administrative
expenses incurred at the corporate level. These charges are readily identifiable
with each industry segment. However, segment operating profit excludes corporate
charges that, by their nature, cannot be identified with or assigned to an
industry segment.
1993 Compared With 1992
Plastics segment operating profit declined $5.7 million, or 22%, from 1992 due
to unusual items (see applicable references to Notes to Financial Tables) and
lower profits from ongoing operations in both Film Products and Molded
Products. A major cause of the decline in operating results in Film Products
was lower-than-expected demand for industrial films, disposable permeable films
for domestic markets and disposable backsheet film for private-label diaper
manufacturers. In recent years, Film Products has invested in new capacity and
printing capabilities aimed at meeting anticipated customer needs. These
expected sales have not materialized and, as such, the costs associated with
these investments have reduced profitability. Also, the commercialization of
Monax Plus packaging films is taking longer than expected. In response to the
changing competitive environment, Tredegar is exiting the conventional films
business through the planned divestiture of its Flemington, New Jersey, plant;
consolidating manufacturing capacity with the planned disposal of its Fremont,
California, facility; and cutting costs and seeking new avenues to sales
growth.
Reduced demand from manufacturers of branded consumer products has also
affected results in Molded Products. Molded Products operating profit declined
due to lower volume, especially lower tooling and technical sales, and higher
conversion costs. The decline was partially offset by the inclusion of Polestar
results since July 31, 1993, the effective date of acquisition.
Metal Products operating profit increased significantly in 1993, driven by a
11% increase in volume in Aluminum Extrusions. Operating profits were also up as
a result of Aluminum Extrusions' successful efforts to improve manufacturing
efficiency, including lower scrap rates and customer returns, and lower selling,
general and administrative costs.
Tredegar's overall results continue to be adversely affected by operating
losses at APPX Software and spending at Molecumetics. Expenses in these areas
have been higher than expected. In addition, software revenues are not
developing as quickly as anticipated. The resulting losses were partially
offset by pretax gains of $2.3 million realized on the sale of Tredegar's
remaining investment in Emisphere common stock. Ongoing activities resulted in
an operating loss of $9.7 million in 1993. Looking forward, it is anticipated
that these activities will continue to generate losses in the near term.
1992 Compared With 1991
Plastics segment operating profit increased $3.7 million in 1992 due to higher
profits in Molded Products, partially offset by lower profits in Film Products
and the $1.2 million accelerated write-off of certain goodwill associated with
the Molded Products restructuring. The significant increase in Molded Products
operating profit is primarily due to restructuring efforts. Film Products
operating profit declined as a result of lower domestic sales in
disposables and related higher unit conversion costs, partially offset by higher
sales from foreign operations.
Metal Products operating profit in 1992 increased by $7.1 million over 1991,
reflecting significantly higher sales volume and lower unit conversion costs in
Aluminum Extrusions. Internal improvements, including lower administrative
costs, also contributed to higher profits.
The Other segment reflects research and development efforts at Molecumetics and
other new technologies, partially offset by a pretax gain of $1.1 million
realized on the sale of a portion of Emisphere common stock.
<TABLE>
IDENTIFIABLE ASSETS BY INDUSTRY SEGMENT
Tredegar Industries, Inc., and Subsidiaries
Industry Segment (a) 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
(In thousands)
Plastics $171,070 $170,066 $162,762 $176,282 $167,564
Metal Products 120,454 122,109 121,416 116,391 144,228
Other (o) 15,247 16,856 3,334 750 -
Identifiable assets 306,771 309,031 287,512 293,423 311,792
Net assets held for
sale (q) 3,605 4,330 13,600 13,908 -
General corporate 12,031 11,745 9,947 8,937 4,071
Net assets of discontinued
operations (h) 30,976 29,804 24,356 22,846 45,183
Total $353,383 $354,910 $335,415 $339,114 $361,046
Refer to Notes to Financial Tables on page 26.
</TABLE>
Identifiable Assets By Industry Segment
The amounts reported as identifiable assets are total assets of all
subsidiaries and divisions in each segment. Identifiable assets in the Other
segment represent primarily APPX Software, Molecumetics and investments in
Emisphere common stock as well as certain other investments. General corporate
assets are primarily corporate property, plant and equipment. Net assets
held for sale, primarily land and buildings held for sale related to closed
facilities, are shown separately at estimated net realizable value.
Identifiable assets by industry segment were $306.8 million at December 31,
1993, a decrease of approximately $2.3 million from 1992. The increase in the
Plastics segment was primarily due to the acquisition of Polestar. The decrease
in Metal Products was attributable to depreciation in excess of capital
spending and asset disposals, partially offset by higher inventories and
receivables to support higher sales. The decrease in Other segment
identifiable assets was primarily due to depreciation and amortization in
excess of capital spending and the sale of Emisphere common stock, partially
offset by new investments totaling $.6 million and the write-up of certain
intangibles to their pretax amounts under SFAS No. 109.
Identifiable assets by industry segment were $309 million at December 31, 1992,
an increase of $21.5 million from 1991 identifiable assets. The increase is
primarily Film Products' investment in the new Tacoma facility, and the
acquisition of APPX Software at the end of 1992. The decrease in net assets held
for sale resulted primarily from the sale of the Pittsfield, Massachusetts,
tooling facility in the fourth quarter of 1992. The increase in the assets of
Plastics and Metal Products reflected the acquisitions of Folium Plasticos
Especiais and Fielden Engineers, Ltd., respectively.
DEPRECIATION AND AMORTIZATION BY INDUSTRY SEGMENT
Tredegar Industries, Inc., and Subsidiaries
Industry Segment (a) 1993 1992 1991 1990 1989
(In thousands)
Plastics $15,315 $13,996 $15,682 $13,602 $12,217
Metal Products 7,512 8,178 8,831 10,236 10,262
Other (o) 2,311 - - - -
Subtotal 25,138 22,174 24,513 23,838 22,479
General corporate 685 703 689 567 105
Total continuing
operations 25,823 22,877 25,202 24,405 22,584
Discontinued
operations (h) 747 765 5,777 3,981 5,747
Total $26,570 $23,642 $30,979 $28,386 $28,331
Refer to Notes to Financial Tables on page 26.
Depreciation and Amortization By Industry Segment
Segment depreciation and amortization increased to $25.1 million from $22.2
million in 1992 due to the Other segment (APPX Software and Molecumetics) and
higher depreciation in Film Products as a result of starting up the Tacoma,
Washington, plant in 1993. Metal Products had lower depreciation due to lower
levels of spending in 1992 and 1991. The Other segment includes primarily
amortization of intangibles acquired in the acquisition of APPX Software.
In 1992, total segment depreciation and amortization declined $2.3 million as
Molded Products and Aluminum Extrusions had lower depreciation due to
restructuring and lower levels of capital spending in 1992 and 1991.
Maintenance and repairs of property, plant and equipment were $17.3 million,
$17.9 million and $19.4 million in 1993, 1992 and 1991, respectively. The
decreases reflect fewer plants and the modernization of remaining
plants.
Capital Expenditures By Industry Segment
Segment capital expenditures in 1993 were $14 million, down from $20.4 million
in 1992. Plastics capital expenditures decreased due to unused capacity in Film
Products and Molded Products as a result of unfavorable market conditions and
higher spending for capacity expansions in Film Products from 1989 through 1992.
Capital spending in Metal Products declined as a result of relatively higher
capital spending in prior years. The Other segment reflects capital spending at
APPX Software and Molecumetics. Acquisitions and other investments in 1993
include primarily Polestar.
Segment capital expenditures in 1992 were $20.4 million, down slightly from
1991. Plastics segment expenditures reflect the addition of capacity in Film
Products, including the Tacoma, Washington, plant. These expenditures were
offset by lower spending in Molded Products. Metal Products capital
requirements were significantly lower than in prior years as major projects
were completed. Other expenditures were primarily related to leasehold
improvements and equipment purchases at the Molecumetics research laboratory.
Acquisitions in 1992 include APPX Software, Folium Plasticos Especiais (plastic
film) and Fielden Engineers (materials handling). In early 1992, Tredegar
exercised its right to acquire additional shares of Emisphere common stock
which were sold at a gain in 1993.
<PAGE>
CAPITAL EXPENDITURES BY INDUSTRY SEGMENT
Tredegar Industries, Inc., and Subsidiaries
Industry Segment (a) 1993 1992 1991 1990 1989
(In thousands)
Plastics $9,810 $15,655 $12,952 $24,145 $28,720
Metal Products 2,386 3,320 7,985 9,509 8,707
Other (o) 1,844 1,414 - - -
Subtotal 14,040 20,389 20,937 33,654 37,427
General corporate 2,440 316 423 1,145 2,785
Total continuing
operations 16,480 20,705 21,360 34,799 40,212
Discontinued operations (h) 417 341 5,233 4,918 3,140
Total capital
expenditures 16,897 21,046 26,593 39,717 43,352
Acquisitions and other
investments 5,699 17,622 25,654 - 2,997
Total capital
expenditures,
acquisitions
and investments $22,596 $38,668 $52,247 $39,717 $46,349
Refer to Notes to Financial Tables on page 26.
<PAGE>
<TABLE>
SELECTED QUARTERLY FINANCIAL DATA (a)
Tredegar Industries, Inc., and Subsidiaries
First Quarter Second Quarter Third Quarter Fourth Quarter
<S> <C> <C> <C> <C>
(In thousands, except
per-share amounts)
(Unaudited)
1993
Net sales:
Continuing operations $111,198 $108,042 $113,922 $116,046
Discontinued operations (h) 7,998 7,933 8,281 9,219
Total 119,196 115,975 122,203 125,265
Gross profit (continuing
operations) 17,184 16,574 18,095 18,069
Operating profit:
Continuing operations 6,226 4,802 5,821 4,685
Discontinued operations (h) 2,932 3,404 2,114 2,587
Total 9,158 8,206 7,935 7,272
Income from continuing operations 1,710 674 1,145 194
Income from discontinued
operations (h) 1,841 2,154 1,162 1,627
Net income before extraordinary
item and cumulative effect of
changes in accounting principles 3,551 2,828 2,307 1,821
Net income (r) 3,701 1,713 2,307 1,821
Earnings per share:
Income from continuing operations .16 .06 .10 .02
Income from discontinued
operations (h) .17 .20 .11 .15
Before extraordinary item and
cumulative effect of changes
in accounting principles .33 .26 .21 .17
Net income (r) .34 .16 .21 .17
Shares used to compute earnings
per share 10,895 10,895 10,895 10,895
1992
Net sales:
Continuing operations $109,824 $108,938 $117,699 $108,768
Discontinued operations (h) 8,431 8,391 7,893 8,144
Total 118,255 117,329 125,592 116,912
Gross profit (continuing
operations) 18,861 17,910 18,502 19,304
Operating profit:
Continuing operations 6,492 7,872 7,858 8,265
Discontinued operations (h) 2,564 2,530 2,506 2,649
Total 9,056 10,402 10,364 10,914
Income from continuing operations 1,318 2,395 2,682 3,122
Income from discontinued
operations (h) 1,451 1,417 1,419 1,508
Net income (r) 2,769 3,812 4,101 4,630
Earnings per share:
Income from continuing operations .12 .22 .25 .29
Income from discontinued
operations (h) .13 .13 .13 .14
Net income (r) .25 .35 .38 .43
Shares used to compute earnings
per share 10,894 10,894 10,894 10,894
Refer to Notes to Financial Tables on page 26.
</TABLE>
Notes to Financial Tables
(a) Certain prior-period amounts have been reclassified to conform to the
current-year presentation.
(b) Net income (loss) and earnings (loss) per share, adjusted for special items
affecting the comparability of operating results between years, are
presented below:
<TABLE>
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Net income (loss)
as reported $9,542 $15,312 $5,623 ($24,686) $17,274
After-tax effects of
special items:
Extraordinary charge 1,115 - - - -
Income related to
cumulative
effect of
accounting changes (150) - - - -
Unusual charges related
to continuing operations 246 502 447 24,424 665
Impact on deferred taxes
of 1% increase in federal
income tax rate
(including $177 relating
to discontinued
operations) 525 - - - -
Unusual (income) charge
related to discontinued
operations (938) - - 3,242 (273)
Pro forma charge
related to
the spin-off
(including $570
relating to
discontinued
operations) - - - - (6,021)
Net income as adjusted
for special items 10,340 15,814 6,070 2,980 11,645
Income from
discontinued
operations as
adjusted for special
items (6,023) (5,795) (3,104) (7,243) (7,009)
Net income (loss) from
continuing operations
as adjusted for special
items $4,317 $10,019 $2,966 ($4,263) $4,636
Earnings (loss) per
share:
As reported $ .88 $1.41 $ .52 ($2.19) $ 1.44
As adjusted for
special items $ .95 $1.46 $ .56 $ .26 $ .97
From continuing
operations as
adjusted for special $ .40 $ .92 $ .27 ($ .38) $ .39
</TABLE>
Included in the above amounts are net losses from ongoing operations of the
Other segment (primarily investments in new businesses and related research)
of $6,568 ($.60 per share) and $1,349 ($.12 per share) in 1993 and 1992,
respectively.
(c) Interest expense has been allocated between continuing and discontinued
operations based on relative capital employed. See Note 2 of Notes to
Financial Statements on page 33.
(d) Unusual items in 1993 include estimated costs related to the closing of
a Film Products plant in Flemington, New Jersey ($1,815), and the reorga-
nization of corporate functions ($900), partially offset by the gain on the sale
of Tredegar's remaining investment in Emisphere Technologies, Inc. ($2,263).
(e) Unusual items in 1992 include the accelerated write-off of certain
goodwill associated with the restructuring of Molded Products ($1,182)
partially offset by the gain on the sale of a portion of an investment in
Emisphere Technologies, Inc. ($1,092).
(f) Unusual items in 1991 include costs related to plant closings in Molded
Products ($4,412) offset by a credit ($2,797) related to management's
decision to continue operating the vinyl extrusions business, and the gain on
the sale of Molded Products' beverage closure business ($894).
(g) Unusual items in 1990 include costs related to divestitures and
reorganization, including results of operations from August 1. The Metal
Products segment also includes provisions for environmental review and cleanup
and costs related to certain legal proceedings for ongoing operations.
(h) In the fourth quarter of 1993, Tredegar announced that it is pursuing
the sale of its coal subsidiary, The Elk Horn Coal Corporation. On February 4,
1994, Tredegar sold its remaining oil and gas properties. As a result of these
events, Tredegar is reporting its Energy segment as discontinued operations.
Results of continuing operations are not indicative of the results to be
expected in the future since they exclude income that would be generated from
the reinvestment of divestiture proceeds. See Note 2 of Notes to Financial
Statements on page 33.
(i) Return on average equity is equal to net income per share divided by
average equity per share.
(j) Total return to shareholders is computed as the sum of the change in
stock price during the year plus dividends per share, divided by the stock price
at the beginning of the year.
(k) Unleveraged after-tax earnings (loss) are net income (loss) plus after-
tax interest expense.
(l) Return on average capital employed is unleveraged after-tax earnings
(loss) divided by average capital employed.
(m) Net sales include sales to P&G totaling $145,631, $145,560 and $154,953
in 1993, 1992 and 1991, respectively.
(n) Includes results to August 1.
(o) In 1993, Tredegar began reporting its business development activities,
primarily investments in high-technology businesses (APPX Software, Inc.,
Molecumetics, Ltd. and Emisphere Technologies, Inc.), as a separate industry
segment.
(p) Export sales totaled $52,642, $48,566 and $49,595 in 1993, 1992 and
1991, respectively. The majority of these export sales were made by the
Plastics segment.
(q) Net assets held for sale include zero, $1,721 and $9,600 in current
assets and $3,605, $2,609 and $4,000 in noncurrent assets in 1993, 1992 and
1991, respectively.
(r) Quarterly net income and earnings per share, adjusted for special items
affecting the comparability of operating results between quarters, are
presented below:
First Second Third Fourth
Quarter Quarter Quarter Quarter
1993
Net income $2,326 $1,705 $2,832 $3,477
Earnings per share .21 .16 .26 .32
1992
Net income 3,951 3,812 4,101 3,950
Earnings per share .36 .35 .38 .37
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of Tredegar Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Tredegar
Industries, Inc., and Subsidiaries ("Tredegar") as of December 31, 1993 and
1992, and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three years in the period ended December 31,
1993. These financial statements are the responsibility of Tredegar's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Tredegar as of
December 31, 1993 and 1992, and the consolidated results of their operations
and their cash flows for each of the three years in the period ended December
31, 1993, in conformity with generally accepted accounting principles.
As discussed in Notes 14 and 16 to the consolidated financial statements,
effective as of the beginning of 1993, Tredegar changed its method of accounting
for postretirement benefits other than pensions to conform with Statement of
Financial Accounting Standards No. 106 and its method of accounting for income
taxes to conform with Statement of Financial Accounting Standards No. 109.
COOPERS & LYBRAND
Richmond, Virginia
January 17, 1994, except for the information presented in Note 2,
for which the date is February 4, 1994.
Management's Report on the Financial Statements
Tredegar's management has prepared the financial statements and related notes
appearing on pages 28 through 39 in conformity with generally accepted
accounting principles. In so doing, management makes informed judgments and
estimates of the expected effects of events and transactions. Financial data
appearing elsewhere in this annual report are consistent with these financial
statements.
Tredegar maintains a system of internal controls to provide reasonable, but not
absolute, assurance of the reliability of the financial records and the
protection of assets. The internal control system is supported by written
policies and procedures, careful selection and training of qualified
personnel and an extensive internal audit program.
These financial statements have been audited by Coopers & Lybrand, independent
certified public accountants. Their audit was made in accordance with
generally accepted auditing standards and included a review of Tredegar's
internal accounting controls to the extent considered necessary to determine
audit procedures.
The Audit Committee of the Board of Directors, composed of outside directors
only, meets with management, internal auditors and the independent
accountants to review accounting, auditing and financial reporting matters. The
independent accountants are appointed by the Board on recommendation of the
Audit Committee, subject to shareholder approval.
<PAGE>
(table page 28)
CONSOLIDATED STATEMENTS OF INCOME
Tredegar Industries, Inc., and Subsidiaries
Years Ended December 31 1993 1992 1991
(In thousands, except
per-share amounts)
Revenues:
Net sales $449,208 $445,229 $439,186
Other (expense) income, net (387) 226 745
Total 448,821 445,455 439,931
Costs and expenses:
Cost of goods sold 379,286 370,652 373,429
Selling, general and
administrative 47,973 48,130 49,764
Research and development 9,141 5,026 4,541
Interest 5,044 5,615 7,489
Unusual items 452 90 721
Total 441,896 429,513 435,944
Income from continuing
operations before
income taxes 6,925 15,942 3,987
Income taxes 3,202 6,425 1,468
Income from continuing
operations 3,723 9,517 2,519
Income from discontinued
operations 6,784 5,795 3,104
Net income before extraordinary
item and cumulative effect of
changes in accounting
principles 10,507 15,312 5,623
Extraordinary item-prepayment
premium on extinguishment of
debt (net of income tax benefit
of $685) (1,115) - -
Cumulative effect of changes in
accounting for:
Postretirement benefits other
than pensions (net of income
tax benefit of $2,545) (4,150) - -
Income taxes 4,300 - -
Net income $9,542 $15,312 $5,623
Earnings per share:
Continuing operations $ .34 $ .88 $ .24
Discontinued operations .63 .53 .28
Before extraordinary item
and cumulative effect
of changes in accounting
principles .97 1.41 .52
Extraordinary item (.10) - -
Cumulative effect of changes
in accounting principles .01 - -
Net income $ .88 $ 1.41 $ .52
See accompanying notes to financial statements.
<PAGE>
(table page 29)
CONSOLIDATED BALANCE SHEETS
Tredegar Industries, Inc., and Subsidiaries
December 31 1993 1992
(In thousands, except share amounts)
Assets
Current assets:
Accounts and notes receivable $ 70,173 $ 62,137
Inventories 34,211 31,358
Deferred income taxes 11,555 14,515
Prepaid expenses and other 881 4,207
Net assets held for sale - 1,721
Total current assets 116,820 113,938
Property, plant and equipment, at cost:
Land and land improvements 7,194 5,368
Buildings 46,608 46,839
Machinery and equipment 270,131 259,151
Total property, plant and equipment 323,933 311,358
Less accumulated depreciation and amortization 188,531 171,595
Net property, plant and equipment 135,402 139,763
Other assets and deferred charges 24,456 26,828
Goodwill and other intangibles 45,729 44,577
Net assets of discontinued operations 30,976 29,804
Total assets $353,383 $354,910
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 19,376 $ 16,977
Accrued expenses 35,380 40,596
Total current liabilities 54,756 57,573
Long-term debt 97,000 101,500
Deferred income taxes 23,108 32,646
Other noncurrent liabilities 9,431 794
Total liabilities 184,295 192,513
Commitments and contingencies
Shareholders' equity:
Common stock (no par value):
Authorized-50,000,000 shares;
Issued and outstanding-10,894,904 shares 170,140 170,131
Foreign currency translation adjustment (283) (39)
Retained earnings (deficit) (769) (7,695)
Total shareholders' equity 169,088 162,397
Total liabilities and shareholders' equity $353,383 $354,910
See accompanying notes to financial statements.
<PAGE>
(table page 30)
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Tredegar Industries, Inc., and Subsidiaries
Retained Foreign Total
Common Stock Earnings Currency Shareholders'
Years ended December 31, 1993, 1992 and 1991 Shares Amount (Deficit) Translation Equity
<S> <C> <C> <C> <C> <C>
(In thousands, except share and per-share data)
Balance December 31, 1990 10,894,357 $170,131 ($23,399) $529 $147,261
Net income - - 5,623 - 5,623
Cash dividends declared ($.24 per share) - - (2,615) - (2,615)
Foreign currency translation adjustment - - - (46) (46)
Balance December 31, 1991 10,894,357 170,131 (20,391) 483 150,223
Net income - - 15,312 - 15,312
Cash dividends declared ($.24 per share) - - (2,616) - (2,616)
Issued upon exercise of SARs 44 - - - -
Foreign currency translation adjustment - - - (522) (522)
Balance December 31, 1992 10,894,401 170,131 (7,695) (39) 162,397
Net income - - 9,542 - 9,542
Cash dividends declared ($.24 per share) - - (2,616) - (2,616)
Issued upon exercise of SARs 503 9 - - 9
Foreign currency translation adjustment - - - (244) (244)
Balance December 31, 1993 10,894,904 $170,140 ($769) ($283) $169,088
See accompanying notes to financial statements.
</TABLE>
<PAGE>
(table page 31)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Tredegar Industries, Inc., and Subsidiaries
Years Ended December 31 1993 1992 1991
(In thousands)
Cash flows from operating activities:
Continuing operations:
Income from continuing operations $ 3,723 $ 9,517 $ 2,519
Adjustments for noncash items:
Depreciation 23,117 21,963 24,089
Amortization of intangibles 2,706 914 1,113
Write-off of goodwill and
intangibles - 1,576 -
Deferred income taxes (1,418) (98) 1,099
Accrued pension income and
postretirement benefits (621) (1,086) (1,447)
Loss (gain) on divestitures and
sale of businesses 1,815 - (2,820)
Gain on sale of investments (2,263) (1,092) -
Changes in assets and liabilities,
net of effects from acquisitions:
Accounts and notes receivable (7,194) 723 10,337
Inventories (2,480) 113 6,424
Prepaid expenses 3,347 (1,609) 3,556
Accounts payable and accrued
expenses (1,701) 1,602 (7,273)
Other, net (1,435) (1,595) (2,671)
Net cash provided by continuing
operating activities 17,596 30,928 34,926
Net cash used for extraordinary item (1,115) - -
Net cash provided by discontinued
operating activities 4,318 536 6,579
Net cash provided by
operating activities 20,799 31,464 41,505
Cash flows from investing activities:
Continuing operations:
Capital expenditures (16,480) (20,705) (21,360)
Acquisitions (net of $398, $294 and
$1,898 cash acquired in 1993,
1992 and 1991, respectively) (5,099) (15,922) (23,254)
Investments (600) (1,700) (2,400)
Proceeds from sales of investments 5,263 1,992 -
Property disposals 3,373 4,025 2,220
Proceeds from sales of businesses - 3,167 9,123
Other, net (613) (661) (68)
Net cash used in investing
activities
of continuing operations (14,156) (29,804) (35,739)
Discontinued operations:
Capital expenditures (417) (341) (5,233)
Property disposals 1,711 152 248
Net cash provided by (used
in) investing activities of
discontinued operations 1,294 (189) (4,985)
Net cash used in investing
activities (12,862) (29,993) (40,724)
Cash flows from financing activities:
Dividends paid (3,270) (2,616) (2,615)
Net (decrease) increase in borrowings (4,500) 1,500 -
Other, net (167) (855) 44
Net cash used in financing
activities (7,937) (1,971) (2,571)
Decrease in cash and cash equivalents - (500) (1,790)
Cash and cash equivalents at
beginning of year - 500 2,290
Cash and cash equivalents at
end of year $ - $ - $ 500
Supplemental cash flow information:
Interest payments (net of amount
capitalized) $ 8,332 $ 6,331 $8,333
Income tax payments (refunds), net $ 6,673 $ 8,051 ($2,489)
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Tredegar Industries, Inc., and Subsidiaries
(Dollars in thousands, except per-share amounts)
1. Summary of Significant Accounting Policies
Organization and Operations. Tredegar Industries, Inc., and subsidiaries
("Tredegar") became an independent company on July 10, 1989, when Ethyl
Corporation ("Ethyl") spun off its plastics, aluminum and energy businesses.
During 1993, Tredegar acquired Polestar Plastics, Inc., a custom molder of
precision plastic parts for the medical and electronics markets. During 1992,
Tredegar acquired APPX Software, Inc. (formerly Kennedy & Company) (software),
Folium Plasticos Especiais (plastic film) and Fielden Engineers, Ltd.
(materials handling). These acquisitions were accounted for using the purchase
method; accordingly, the assets and liabilities of the acquired entities have
been recorded at their estimated fair value at the date of acquisition. The
excess of the purchase price over the estimated fair value of the identifiable
net assets acquired is being amortized on a straight-line basis over
periods from 7 to 15 years. The operating results of entities acquired have
been included in the Consolidated Statements of Income since the
date of acquisition.
Basis of Presentation and Principles of Consolidation. The consolidated
financial statements include accounts and operations of Tredegar and all of its
subsidiaries. Intercompany accounts and transactions within Tredegar have been
eliminated. Certain previously reported amounts have been reclassified to
conform to the 1993 presentation.
Cash Equivalents. Cash equivalents consist of cash in excess of daily operating
requirements invested in marketable securities with maturities of three months
or less.
Inventories. Inventories are stated at the lower of cost or market, with cost
principally determined on the last-in, first-out ("LIFO") basis. Other
inventories are stated on either the weighted average cost or the first-in,
first-out basis. Cost elements included in work-in-process and finished goods
inventories are raw materials, direct labor and manufacturing overhead.
Property, Plant and Equipment. Accounts include costs of
assets constructed or purchased, related delivery and installation costs and
interest incurred on significant capital projects during their construction
periods. Expenditures for renewals and betterments also are capitalized, but
expenditures for repairs and maintenance are expensed as incurred. The cost and
accumulated depreciation applicable to assets retired or sold are removed from
the respective accounts, and gains or losses thereon are included in
income.
Property, plant and equipment includes capitalization of interest incurred on
capital projects of $320, $607 and $813 in 1993, 1992 and 1991, respectively.
Depreciation is computed primarily by the straight-line method based on the
estimated useful lives of the assets. Depletion of coal mineral rights and
development costs are computed by the unit-of-production method based on
estimated proven recoverable reserves.
Tredegar follows the successful efforts method of accounting for its oil and gas
exploration and production activities whereby (i) geological and geophysical
costs are expensed as incurred, and (ii) exploratory drilling
costs that result in the discovery of proved reserves and development costs,
including development of dry holes, are capitalized. Depletion of producing oil
and gas properties is computed by the unit-of-production method based on an
estimate of proved recoverable oil and gas reserves. Leasehold costs of
unproved properties are capitalized and amortized on a composite basis at rates
based on past experience and average lease life.
Goodwill and Other Intangibles. Goodwill acquired prior to November 1, 1970
($19,879), is not being amortized. Goodwill acquired subsequently ($19,764,
$19,946 and $18,043 at December 31, 1993, 1992 and 1991, respectively, net of
accumulated amortization), is amortized on a straight-line basis over periods
from 7 to 40 years. Other intangibles ($6,086, $4,752 and $519 at December 31,
1993, 1992 and 1991, respectively, net of accumulated amortization), consisting
primarily of proprietary software technology acquired and the cost of certain
non-competition agreements, are being amortized on a straight-line basis over
periods from 5 to 7 years.
Pension Plans. Annual costs of pension plans are determined
actuarially in compliance with Statement of Financial Accounting
Standards ("SFAS") No. 87, "Employers Accounting for Pensions."
Tredegar's policy is to fund its pension plans at amounts not less than the
minimum requirements of the Employee Retirement Income
Security Act of 1974.
Postretirement Benefits Other Than Pensions. Effective January 1, 1993,
Tredegar adopted SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." SFAS No. 106 requires recognition of the cost of
postretirement benefits during the employees' service periods. Previously, such
expenses were accounted for on a cash basis. Tredegar elected to immediately
recognize the liability for prior years' service as the cumulative effect
of a change in accounting principle. Accordingly, in the first quarter of 1993
Tredegar recorded an unfunded, accumulated postretirement benefit obligation of
$6,695 and a noncurrent, deferred income tax benefit of $2,545, resulting in an
after-tax charge of $4,150. Tredegar's current policy is to fund related
benefits when claims are incurred.
Postemployment Benefits. Tredegar periodically provides certain postemployment
benefits purely on a discretionary basis. Accordingly, under SFAS No.
112, "Employers Accounting for Postemployment Benefits," related costs for these
programs are accrued when it is probable that such benefits will be paid. All
other postemployment benefits are either accrued under current benefit plans or
are not material to Tredegar's financial position or results of operations.
Income Taxes. Effective January 1, 1993, Tredegar adopted SFAS No. 109,
"Accounting for Income Taxes." SFAS No. 109 requires the asset and liability
method of accounting for deferred income taxes, whereby enacted statutory tax
rates are applied to the differences between the financial reporting and tax
bases of assets and liabilities. The cumulative effect of this change in
accounting principle was a reduction in deferred income taxes and a
corresponding increase in net income of $4,300 in the first quarter of 1993.
Deferred income taxes were determined under Accounting Principles Board Opinion
No. 11 prior to 1993.
Deferred income taxes arise from temporary differences between financial and
income tax reporting of various items, principally depreciation and accruals for
employee benefits, divestitures, plant shutdowns and environmental remediation.
Software Development Costs. Tredegar, through APPX
Software, a wholly owned subsidiary, is involved in the development and sale of
computer software. Software development costs are accounted for in accordance
with SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed." This statement requires that all costs incurred
to establish the technological feasibility of a computer software product to be
sold, leased or otherwise marketed be considered research and development
costs. Such costs are expensed as incurred. Once technological feasibility is
established, all software development and production costs are capitalized and
subsequently reported at the lower of unamortized cost or net realizable value.
Capitalization is discontinued once software is available for sale or lease.
Capitalized costs are amortized based on current and anticipated future revenues
for each product over periods not exceeding 5 years, with an annual minimum
equal to the straight-line amortization over the estimated remaining life of
the product.
Capitalized software costs are included in "Other assets and deferred charges"
and totaled $433 and $561 at December 31, 1993 and 1992, respectively.
Earnings Per Share. Earnings per share is computed using the weighted average
number of shares of common stock outstanding during the period. For the periods
presented, stock options have an immaterial dilutive effect. The number of
shares used in computing earnings per share were 10,894,802, 10,894,370 and
10,894,357 in 1993, 1992 and 1991, respectively.
2. Discontinued Operations
In November 1993, Tredegar announced that it is pursuing the sale of its coal
subsidiary, The Elk Horn Coal Corporation ("Elk Horn"). Assuming Elk Horn
can be sold on terms agreeable to Tredegar, the sale is expected to be
completed by mid-1994, and a gain is expected to be recognized. In addition, on
February 4, 1994, Tredegar sold its remaining oil and gas properties for
approximately $8,000. This transaction resulted in a gain of approximately
$6,100 ($3,900 after income taxes), which will be recognized in 1994. As a
result of the potential sale of Elk Horn and the sale of Tredegar's remaining
oil and gas properties, the Energy segment is being reported as discontinued
operations. Accordingly, information about results of operations, financial
condition, cash flows and industry segments has been reclassified
where appropriate.
Results from continuing operations are not indicative of future performance
because they exclude income that would be generated from reinvestment of
divestiture proceeds. Tredegar expects to use these proceeds to repay
outstanding borrowings under its revolving credit agreement, with remaining
proceeds invested until opportunities, in existing businesses or elsewhere,
are identified.
The combined statements of income and net assets of the
discontinued Energy segment are presented below:
Combined Statements of Income
Discontinued Energy Segment (Unaudited)
Years Ended December 31 1993 1992 1991
Revenues:
Net sales $33,431 $32,859 $34,283
Other expenses, net (13) (2) (8)
Total 33,418 32,857 34,275
Costs and expenses:
Cost of goods sold 20,381 19,355 25,276
Selling, general &
administrative 3,424 3,253 3,333
Interest allocated 653 661 785
Unusual items (1,424) - -
Total 23,034 23,269 29,394
Income from discontinued operations
before income taxes 10,384 9,588 4,881
Income taxes 3,600 3,793 1,777
Income from
discontinued operations $ 6,784 $ 5,795 $ 3,104
Combined Statement of Net Assets
Discontinued Energy Segment (Unaudited)
December 31 1993 1992
Current assets:
Accounts and notes receivable $ 6,173 $ 6,910
Inventories 6,695 3,763
Total current assets 12,868 10,673
Property, plant and equipment:
Land and land improvements 2,477 2,428
Buildings 471 470
Machinery and equipment 930 982
Coal lands 29,502 22,846
Oil and gas properties 8,782 9,152
Total property, plant & equipment 42,162 35,878
Less accumulated depreciation and
depletion 12,958 12,750
Net property, plant and equipment 29,204 23,128
Deferred income taxes - 1,499
Other assets and deferred charges 184 158
Total assets 42,256 35,458
Current liabilities:
Accounts payable 1,653 2,259
Accrued expenses 3,308 2,640
Total current liabilities 4,961 4,899
Deferred income taxes 5,434 -
Other noncurrent liabilities 885 755
Total liabilities 11,280 5,654
Net assets of discontinued operations $30,976 $29,804
Transactions between Tredegar and the Energy segment are reflected in the
combined financial statements as though they are settled immediately and there
are no amounts due to or from Tredegar at the end of any period. All of the
Energy segment's full-time employees participate in Tredegar's noncontributory
defined benefit plan for salaried employees. These employees also participate
in Tredegar's welfare (medical, life and disability) and savings plans.
Accordingly, related costs have been allocated to discontinued operations.
Interest expense was allocated to discontinued operations based upon the ratio
of the Energy segment's capital employed (net assets) to Tredegar's consolidated
capital employed.
For federal income tax purposes, results of the Energy segment's operations have
been included in Tredegar's consolidated tax return. The Energy segment's
provision for income taxes represents its allocated share of Tredegar's income
tax expense. The allocated share approximates income tax expense that would have
been incurred had the Energy segment (i) filed a separate consolidated tax
return, and (ii) separately computed income taxes in accordance with SFAS No.
109 in 1993 and Accounting Principles Board Opinion No. 11 prior to 1993.
Unusual items totaling $1,424 in 1993 include gains on the sale of certain oil
and gas properties. The significant changes in coal lands and deferred income
taxes from December 31, 1992 to December 31, 1993, were due to the write-up of
coal lands to their pretax amount in accordance with SFAS No. 109.
Under a new law (the Coal Industry Retiree Health Benefit Act of 1992) (the
"Act"), assigned operators (former employers) are responsible for a portion of
the funding of medical and death benefits of certain retired miners and
dependents of the United Mine Workers of America. Elk Horn was notified in
October 1993 that it is responsible for 57 retirees and 143 dependents
under the Act. In accordance with applicable pronouncements, premiums of $371
have been charged to Elk Horn's operating results in 1993. Based upon an
actuarial valuation, Tredegar estimates that the present value of the
unfunded obligation amounts to approximately $6,000 ($3,720 after income taxes).
Should Tredegar sell Elk Horn and retain the obligations under the Act, the
expected gain will be reduced accordingly.
3. Industry Segments
See pages 19 to 24 for net sales, operating profit, identifiable assets
and related information about Tredegar's industry segments that are presented
for the years 1989-1993. The discussion of segment information is unaudited.
4. Accounts and Notes Receivable
Accounts and notes receivable consist of:
December 31 1993 1992
Trade, less allowance for doubtful accounts
and sales returns of $3,216 and $3,291
in 1993 and 1992 $69,051 $61,213
Other 1,122 924
Total $70,173 $62,137
5. Inventories
Inventories consist of the following:
December 31 1993 1992
Finished goods $ 5,735 $ 4,699
Work-in-process 5,298 4,380
Raw materials 15,497 15,132
Stores, supplies and other 7,681 7,147
Total $34,211 $31,358
Inventories stated on the LIFO basis amounted to $15,044 and $15,748 at December
31, 1993 and1992, respectively, which are below replacement costs by
approximately $10,590 and $10,564, respectively.
6. Net Assets Held For Sale
Included in "Other assets and deferred charges" are net assets held for sale,
primarily land and buildings related to closed facilities, totaling $3,605 and
$2,609 as of December 31, 1993 and 1992, respectively. Such assets are stated at
estimated net realizable value and are expected to be sold over the next 1 to 2
years. At December 31, 1992, current assets included net assets held for sale
totaling $1,721, which were sold during 1993.
7. Investments
On February 15, 1991, Tredegar, through a subsidiary, entered into a Stock and
Warrant Purchase Agreement (the "Agreement") with Emisphere Technologies,
Inc. ("Emisphere"), a pharmaceutical research and development organization that
is developing an oral delivery system for drugs currently administered by
injection. Pursuant to the Agreement, during 1991 and 1992, Tredegar purchased
428,571 unregistered shares of Emisphere common stock for $7 per share.
Tredegar also purchased 112,500 registered shares of Emisphere common stock for
$8 per share in 1991. In total, Tredegar acquired 541,071 shares of Emisphere's
common stock for $3,900.
In 1992, Tredegar sold its 112,500 registered shares for $1,992 and recognized a
pretax gain of $1,092 ($680 after income taxes). In 1993, Tredegar sold its
remaining 428,571 shares for $5,263 and recognized a pretax gain of $2,263
($1,410 after income taxes). In total, Tredegar received $7,255 for its $3,900
investment in Emisphere common stock, resulting in a pretax gain of $3,355
($2,090 after income taxes).
As of December 31, 1993, Tredegar, through a subsidiary, owned 5% of a venture
capital limited partnership. Tredegar's total capital commitment is $2,000, with
$800 invested as of December 31, 1993. Additional contributions of $1,200 are
expected to be made over the next two years but will not exceed $667 in any 12-
month period.
8. Goodwill and Other Intangibles
Goodwill and other intangibles, and the related accumulated amortization, are as
follows:
December 31 1993 1992
Goodwill and other intangibles $60,185 $53,135
Additions 3,858 8,626
Write-offs & disposals - (1,576)
Subtotal 64,043 60,185
Accumulated amortization (18,314) (15,608)
Net $45,729 $44,577
9. Accrued Expenses
Accrued expenses consist of the following:
December 31 1993 1992
Workmen's compensation and disabilities $ 6,094 $ 5,597
Payrolls, related taxes and medical and
other benefits 6,036 7,098
Vacation 5,298 5,332
Environmental 4,293 5,909
Divestitures 2,709 5,812
Other 10,950 10,848
Total $35,380 $40,596
10. Debt and Credit Agreements
Long-term debt consists of:
December 31 1993 1992
Borrowings under short-term variable-
rate credit arrangements $ 6,000 $ 6,500
Variable-rate revolving loan due in 1996 20,000 24,000
Variable-rate term loan due in 1997 35,000 35,000
7.2% note to institutional lender due
in 2003 35,000 -
8.6% note to institutional lender - 35,000
Other 1,000 1,000
Total $97,000 $101,500
At December 31, 1993 and 1992, $6,000 and $6,500, respectively, were borrowed
under short-term credit arrangements at average interest rates of 3.8% and
5.1%, respectively. The balances outstanding in each year were classified as
long-term debt in accordance with Tredegar's intention and ability to refinance
such obligations on a long-term basis.
On June 16, 1993, Tredegar paid a $1,800 ($1,115 after income taxes) prepayment
premium to an institutional lender to refinance its $35,000, 8.6% fixed-rate
debt that was due in September 1994. The new note carries a fixed rate of 7.2%
and matures in June 2003. Annual principal payments of $5,000 will begin in
1997. Tredegar estimates that the carrying value of its fixed-rate note
approximated its fair value at December 31, 1993.
During the third quarter of 1993, Tredegar's variable-rate revolving credit
agreement was amended to increase the maximum debt allowed under such agreement
from $150,000 to $180,000. The maturity date under the agreement was extended by
one year to June 16, 1996. The agreement provides for a commitment fee of .375%
on the unused amount. The agreement also provides for extensions of the
maturity date in one-year increments. The interest rate on the revolving loan
was 4% and 4.4% at December 31, 1993 and 1992, respectively.
During 1992, Tredegar borrowed $35,000 under a variable-rate term loan due on
June 7, 1997. The interest rate on the term loan was 4.4% and 4.9% at December
31, 1993 and 1992, respectively.
The weighted average interest rate on all variable-rate loans outstanding
during the year was 4.2% in 1993, compared with 4.9% in 1992.
Tredegar's loan agreements contain restrictions, among others, on the payment
of cash dividends. At December 31, 1993, $37,415 was available for cash
dividend payments.
11. Shareholder Rights Agreement
Pursuant to a Rights Agreement dated as of June 15, 1989 (as amended), between
Tredegar and American Stock Transfer and Trust Company as Rights Agent (the
"Rights Agreement"), one Right is attendant to each share of Tredegar common
stock. Each Right entitles the registered holder to purchase from Tredegar
one one-hundredth of a share of Participating Cumulative Preferred Stock,
Series A (the "Preferred Stock"), at an exercise price of $50 (the "Purchase
Price"). The Rights will become exercisable, if not earlier redeemed, only if
a person or group acquires 10% or more of the outstanding shares of Tredegar
common stock or announces a tender offer, the consummation of which would
result in ownership by a person or group of 10% or more of Tredegar common
stock. Any action by a person who, together with his associates and affiliates,
owned 10% or more of the outstanding shares of Tredegar common stock on
July 10, 1989, cannot cause the Rights to become exercisable.
Each holder of a Right, upon the occurrence of certain events, will become
entitled to receive, upon exercise and payment of the Purchase Price, Preferred
Stock (or in certain circumstances, cash, property or other securities of
Tredegar or a potential acquirer) having a value equal to twice the amount of
the Purchase Price.
The Rights will expire on June 30, 1999.
12. Stock Option Plans
Tredegar has two stock option plans whereby stock options may be granted to
purchase a specified number of shares of Tredegar common stock at a price not
less than the fair market value on the date of grant and for a term not to
exceed 10 years. In addition to the stock options, recipients may also be
granted stock appreciation rights ("SARs") and restricted stock.
Activity for 1991-1993 is shown at the bottom of this page.
At December 31, 1993 and 1992, options to purchase 452,352 and 247,473 shares,
respectively, were exercisable and 752,900 and 761,900 shares, respectively,
were available for grant.
<TABLE>
Stock Option Plan Information Number of Shares Option Price
Options SARs Per Share Aggregate
<S> <C> <C> <C> <C>
Outstanding at December 31, 1990 351,100 351,100 $16.7045 $5,865
Lapsed in 1991 (47,600) (47,600) $16.7045 (795)
Outstanding at December 31, 1991 303,500 303,500 $16.7045 5,070
Granted in 1992 210,000 192,000 $12.125 to $17.00 2,627
Lapsed in 1992 (25,400) (25,400) $16.7045 (424)
SARs exercised in 1992 (1,500) (1,500) $16.7045 (25)
Outstanding at December 31, 1992 486,600 468,600 $12.125 to $17.00 7,248
Granted in 1993 20,000 - $12.875 258
Lapsed in 1993 (11,000) (11,000) $16.7045 (184)
SARs exercised in 1993 (6,000) (6,000) $12.125 to $16.7045 (89)
Outstanding at December 31, 1993 489,600 451,600 $12.125 to $17.00 $7,233
</TABLE>
13. Rental Expense and Contractual Commitments
Rental expense was $2,936, $2,026 and $1,539 for 1993, 1992 and 1991,
respectively. Rental commitments under all noncancelable operating leases
as of December 31, 1993, are as follows:
1994 $ 2,883
1995 2,535
1996 1,930
1997 1,112
1998 974
Remainder 2,475
Total $11,909
Contractual obligations for plant construction and purchases of real property
and equipment amounted to approximately $2,029 and $2,062 at December 31, 1993
and 1992, respectively.
14. Retirement Plans & Other Postretirement Benefits
Tredegar has noncontributory defined benefit plans covering most employees. The
plans for salaried and hourly employees currently in effect are based on a
formula using the participant's years of service and compensation or using the
participant's years of service and a dollar amount. Plan assets consist
principally of common stock and U.S. government and corporate obligations.
The components of net pension income for Tredegar's plans for 1993, 1992 and
1991 are as follows:
1993 1992 1991
Return on plan assets:
Actual return $18,557 $7,509 $18,000
Expected return greater
(lower) than actual (8,097) 2,327 (8,191)
Expected return 10,460 9,836 9,809
Amortization of transition asset 1,231 1,231 1,235
Service cost (benefits earned
during the year) (3,072) (3,139) (2,953)
Interest cost on projected
benefit obligation (6,515) (6,104) (5,685)
Amortization of prior service costs (805) (738) (729)
Curtailment loss recognized - - (230)
Net pension income $ 1,299 $ 1,086 $ 1,447
The following table presents a reconciliation of the funded status of Tredegar's
pension plans at December 31, 1993, 1992 and 1991, to prepaid pension expense:
1993 1992 1991
Plan assets at fair value $130,603 $116,587 $111,714
Actuarial present value
of benefit obligations:
Accumulated benefit obligation
(including vested benefits of
$85,828, $65,400 and
$60,437, respectively) (89,221) (68,469) (63,868)
Projected compensation
increase (11,225) (15,209) (15,470)
Projected benefit obligation (100,446) (83,678) (79,338)
Plan assets in excess of projected
benefit obligation 30,157 32,909 32,376
Unrecognized net gain (11,736) (14,475) (15,508)
Unrecognized transition asset
being amortized principally
over 16 years (6,687) (7,918) (9,149)
Unrecognized prior service costs
being amortized 5,464 5,631 6,273
Prepaid pension expense $17,198 $16,147 $13,992
Prepaid pension expense of $17,198 and $16,147 is included in "Other assets and
deferred charges" in the consolidated balance sheets at December 31, 1993 and
1992, respectively.
Net pension income and plan obligations are calculated using assumptions of
discount rates on projected benefit obligations, rates of projected increases in
compensation, and expected rates of return on plan assets. The discount rate on
projected benefit obligations was assumed to be 7% at December 31, 1993, and 8%
at December 31, 1992 and 1991. The rate of projected compensation increase was
assumed to be 5% at December 31, 1993, and 5.5% at December 31, 1992 and 1991.
The expected long-term rate of return on plan assets was assumed to be 9% each
year. Net pension income is determined using assumptions as of the beginning of
each year. Funded status is determined using assumptions as of the end of each
year.
In December 1993, Tredegar established a non-qualified supplemental pension plan
covering certain employees. The plan is designed to restore all or a part of the
pension benefits that would have been payable to designated participants from
Tredegar's principal pension plans if it were not for limitations imposed by
income tax regulations. The projected benefit obligation relating to this
unfunded plan ($612 at December 31, 1993) is being amortized over the average
remaining working life of participants in the plan (approximately $100
annually).
In addition to providing pension benefits, Tredegar provides postretirement life
insurance and health care benefits for certain groups of employees. Tredegar and
retirees share in the cost of postretirement health care benefits, with
employees retiring after July 1, 1993, receiving a fixed subsidy from Tredegar
to cover a portion of their health care premiums. Effective January 1, 1993,
Tredegar adopted SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" (see Note 1 on page 32). In accordance with the
new standard, prior years' financial statements have not been restated.
Previously, such expenses were accounted for on a cash basis.
The components of net periodic postretirement benefit cost are
as follows:
1993
Service cost (benefits earned during the year) $186
Interest cost on accumulated postretirement
benefit obligation 492
Net postretirement benefit cost $678
The following table presents a reconciliation of the funded status of Tredegar's
postretirement life insurance and health care benefit plans at December 31, 1993
and January 1, 1993, to accrued postretirement benefit cost:
1993 1993
Plan assets at fair value $ - $ -
Accumulated postretirement benefit
obligation (APBO):
Retirees (3,001) (3,411)
Other fully eligible participants (2,408) (1,749)
Other active participants (1,755) (1,535)
Total APBO (7,164) (6,695)
APBO in excess of plan assets (7,164) (6,695)
Unrecognized gain (52) -
Accrued postretirement benefit cost ($7,216) ($6,695)
Accrued postretirement benefit cost of $7,216 is included in "Other noncurrent
liabilities" in the consolidated balance sheet at December 31, 1993.
The discount rate used in determining the accumulated postretirement benefit
obligation was 7% at December 31, 1993, and 8% at January 1, 1993. The rate of
annual pay increase for life insurance benefits was assumed to be 5% at December
31, 1993, and 5.5% at January 1, 1993. A 14% and 11.2% annual rate of increase
in the per-capita cost of covered health care benefits was assumed at December
31, 1993, for the indemnity and managed care plans, respectively. A 15% and 12%
annual rate of increase in the per-capita cost of covered health care benefits
was assumed at January 1, 1993, for the indemnity and managed care plans,
respectively. The rates were assumed to decrease gradually to 6% and 5%,
respectively, in year 2002 and remain at that level thereafter. Net
postretirement benefit cost is determined using assumptions as of the beginning
of each year. Funded status is determined using assumptions as of the end of
each year.
If the health care cost trend rate assumptions were changed by 1%, the
accumulated postretirement benefit obligation as of December 31, 1993,
would be changed by approximately $25. The effect of this change on the sum of
the service cost and interest cost components of net periodic postretirement
benefit cost for 1993 would be immaterial.
15. Savings Plan
Tredegar has a savings plan whereby eligible employees may voluntarily
contribute a percentage of their compensation. Under the provisions of the plan,
Tredegar matches a portion of the employee's contribution to the plan with
shares of Tredegar common stock. Contributions accrued by Tredegar in 1993,
1992 and 1991, amounted to $2,146, $1,818 and $2,121, respectively.
16. Income Taxes
Effective January 1, 1993, Tredegar adopted SFAS No. 109, "Accounting for Income
Taxes," which requires use of the asset and liability method of accounting for
deferred income taxes (see Note 1 on page 32). As permitted under the new
standard, prior years' financial statements have not been restated. Deferred
income taxes were determined under Accounting Principles Board Opinion No. 11
for years prior to 1993.
Income from continuing operations before income taxes and
income taxes are as follows:
1993 1992 1991
Income from continuing operations
before income taxes:
Domestic $4,460 $13,307 $3,252
Foreign 2,465 2,635 735
Total $6,925 $15,942 $3,987
Current income taxes:
Federal $2,190 $ 5,423 ($621)
State 759 919 849
Foreign 1,671 181 141
Total 4,620 6,523 369
Deferred income taxes:
Federal (848) (378) 1,520
State (197) (222) (537)
Foreign (721) 502 116
Adjustment for 1% increase in
federal statutory rate 348 - -
Total (1,418) (98) 1,099
Total income taxes $3,202 $ 6,425 $1,468
The significant differences between the U.S. federal statutory rate and the
effective income tax rate for continuing operations are as follows:
Percent of Income from Continuing
Operations Before Income Taxes
Years Ended December 31 1993 1992 1991
Income tax expense at federal
statutory rate 35.0 34.0 34.0
State taxes, net of federal
income tax benefit 5.3 2.9 5.2
Foreign Sales Corporation (3.1) (3.6) (13.6)
Adjustment of deferred income
taxes for 1% increase in
federal statutory rate 5.0 - -
Research and development tax
credit (5.8) - -
Goodwill amortization 5.1 1.0 3.8
Accelerated write-off of
certain goodwill - 2.5 -
Other items, net 4.7 3.5 7.4
Effective income tax rate 46.2 40.3 36.8
Deferred income taxes result from temporary differences between financial and
income tax reporting of various items. The source of these differences and the
tax effects for continuing operations were as follows:
1993 1992 1991
Depreciation ($2,002) $1,176 ($1,461)
Divestitures, plant shutdowns
and environmental accruals 1,229 (846) 2,992
Employee benefits 309 (132) (310)
Other items, net (954) (296) (122)
Total ($1,418) ($98) $1,099
Deferred tax liabilities and deferred tax assets as of December 31, 1993 and
January 1, 1993, reflecting the adoption of SFAS No. 106 and 109, are as
follows:
December 31, January 1,
1993 1993
Deferred tax liabilities:
Depreciation $16,982 $18,984
Pensions 6,642 5,854
Other 2,442 3,776
Total deferred tax liabilities 26,066 28,614
Deferred tax assets:
Employee benefits 7,899 7,420
Environmental accruals 1,697 2,174
Divestitures 1,279 2,031
Inventory 1,441 1,332
Allowance for doubtful accounts and
sales returns 1,169 1,201
Alternative minimum tax credit
carryforward 524 732
Other 504 601
Total deferred tax assets 14,513 15,491
Net deferred tax liability $11,553 $13,123
Included in the balance sheet at December 31,1993:
Noncurrent deferred tax liabilities
in excess of assets $23,108
Current deferred tax assets in excess
of liabilities 11,555
Net deferred tax liability $11,553
17. Unusual Items
In 1993, unusual items totaling $452 include estimated costs related to the
planned disposal of a Film Products plant in Flemington, New Jersey ($1,815),
and the reorganization of corporate functions ($900), partially offset by a gain
on the sale of Tredegar's remaining investment in Emisphere ($2,263) (see Note 7
on page 35).
In 1992, unusual items totaling $90 include the accelerated write-off of certain
goodwill associated with the restructuring of Molded Products ($1,182) partially
offset by the gain on the sale of a portion of Tredegar's investment in
Emisphere ($1,092) (see Note 7 on page 35).
In 1991, the decisions to close the Pomona, California, and LaGrange, Kentucky,
Molded Products plants and to sell the Pittsfield, Massachusetts, tooling plant
resulted in unusual charges to earnings totaling $4,412. Management's decision
in 1991 to continue to operate Fiberlux resulted in a $2,797 reversal of the
unusual charge accrued in 1990. In addition, a gain on the sale of the
Molded Products beverage closure business of $894 is reflected in unusual items
in 1991.
18. Contingencies
Tredegar is involved in various stages of investigation and clean up relating
to environmental matters at certain of its plant locations. Where management
has determined the nature and scope of any required environmental cleanup
activity, estimates of cleanup costs have been obtained and accrued. As
management continues its efforts to assure compliance with environmental laws
and regulations, additional contingencies may be identified. If additional
contingencies are identified, it is management's practice to determine the
nature and scope of such contingencies, obtain and accrue the estimated cost of
remediation, and begin remediation. While it is not possible to predict the
course of ongoing environmental compliance activities, management does not
currently believe that additional costs that could arise from such activities
will have a material adverse effect on Tredegar's financial position; however,
such costs could have a material adverse effect on quarterly or annual
operating results when resolved in a future period.
Tredegar is involved in various other legal actions arising in the normal
course of business. After taking into consideration legal counsels' evaluation
of such actions, management believes that Tredegar has sufficiently accrued for
possible losses and that these actions will not have a material adverse effect
on Tredegar's financial position; however, the resolution of such actions in a
future period could have a material adverse effect on quarterly or annual
operating results at that time.
Tredegar Industries, Inc., is a diversified manufacturer of plastics and metal
products. Tredegar also has interests in energy, computer software and rational
drug design research.
Annual Meeting
The annual meeting of shareholders of Tredegar Industries, Inc., will be held on
Thursday, May 26, 1994, beginning at 9:00 a.m. E.D.T. at the Atlanta Airport
Hilton and Towers in Atlanta, Georgia. Formal notices of the annual meeting,
proxies and proxy statements will be mailed to shareholders on or before March
31.
Corporate Headquarters
1100 Boulders Parkway
Richmond, Virginia 23225
804-330-1000
Number of Employees
Approximately 3,500
Counsel
Hunton & Williams
Richmond, Virginia
Independent Accountants
Coopers & Lybrand
Richmond, Virginia
Stock Listing
New York Stock Exchange
Ticker Symbol: TG
Transfer Agent and Registrar
American Stock Transfer & Trust Company
New York, New York
Inquiries
Inquiries concerning stock transfers, dividend reinvestment, consolidating
accounts, changes of address, or lost or stolen stock certificates should be
directed to:
American Stock Transfer & Trust Company
Shareholder Services Department
40 Wall Street - 46th Floor
New York, New York 10005
Telephone: 212-936-5100
All other inquiries should be directed to:
Tredegar Industries, Inc.
Corporate Communications Department
1100 Boulders Parkway
Richmond, Virginia 23225
Telephone: 804-330-1044
Dividend Information
During 1993 and 1992, the Board of Directors declared quarterly dividends of
$.06 per share, or $.24 per share on an annual basis. All decisions with
respect to payment of dividends will be made by the Tredegar Board of Directors
based upon Tredegar's earnings, financial condition, anticipated cash needs and
such other considerations as the Board deems relevant. See Note 10 of Notes to
The Financial Statements on page 35 for details of restrictions on dividends.
Market Prices of Common Stock and Shareholder Data
The following table shows the reported high and low closing prices of
Tredegar's common stock by quarter for the past two years.
1993 1992
High Low High Low
First Quarter 18 15 14 1/2 10
Second Quarter 16 3/8 13 18 1/4 13 3/8
Third Quarter 13 7/8 12 1/2 18 5/8 13 5/8
Fourth Quarter 15 3/8 12 7/8 16 3/4 13 1/2
Tredegar has no preferred stock outstanding.
There were 10,895,611 shares of common stock held by 8,165 shareholders of
record on January 31, 1994.
Plants, Facilities and Offices
Corporate Headquarters:
Richmond, Virginia
Tredegar Film Products:
Carbondale, Pennsylvania
Flemington, New Jersey
Fremont, California
LaGrange, Georgia
Manchester, Iowa
New Bern, North Carolina
Tacoma, Washington
Terre Haute, Indiana (2)
(plant and technical center)
Kerkrade, the Netherlands
Sao Paulo, Brazil
Molded Products:
Alsip, Illinois
Excelsior Springs, Missouri
South Grafton, Massachusetts
St. Petersburg, Florida (3)
(2 plants and technical center)
Phillipsburg, Pennsylvania
State College, Pennsylvania
Fiberlux:
Pawling, New York
Purchase, New York (headquarters)
South Bend, Indiana
Aluminum Extrusions:
Carthage, Tennessee
Kentland, Indiana
Newnan, Georgia
Brudi:
Ridgefield, Washington
Kelso, Washington
Adelaide, Australia
Halifax, United Kingdom
Elk Horn Coal:
Prestonsburg, Kentucky
APPX Software, Inc.:
Richmond, Virginia
Molecumetics, Ltd.:
Bellevue, Washington
Exhibit 21
TREDEGAR INDUSTRIES, INC.
Virginia
Jurisdiction
Name of Subsidiary of Incorporation
APPX Software, Inc. Virginia
The William L. Bonnell Company, Inc. Georgia
Brudi, Inc. Oregon
Brudi Limited United Kingdom
Buck Coal, Inc. Virginia
Capitol Products Corporation Pennsylvania
The Elk Horn Coal Corporation West Virginia
Elk Horn Coal Sales Corporation Virginia
The Elk Horn Corporation West Virginia
Fiberlux, Inc. Virginia
Idlewood Properties, Inc. Virginia
Massie Tool, Mold & Die, Inc. Florida
Molecumetics Institute, Ltd. Virginia
Molecumetics, Ltd. Virginia
Polestar Plastics Manufacturing Company Virginia
Ram Processing, Inc. Virginia
Swing-Shift Brudi Pacific Pty Ltd Queensland Australia
Tredegar Brasil Industria de
Plasticos Ltda. Brazil
Tredegar Development Corporation Virginia
Tredegar Exploration, Inc. Virginia
Tredegar Film Products, B.V. Netherlands
Tredegar Foreign Sales Corporation U.S. Virgin Islands
Tredegar Investments, Inc. Virginia
Tredegar Molded Products Company Virginia
Virginia Techport, Inc. Virginia
EXHIBIT 23.1
CONSENT OF COOPERS & LYBRAND
We consent to the incorporation by reference in the registration statements
of Tredegar Industries, Inc. on Form S-3 (File No. 33-57268) and on Forms S-8
(File No. 33-29582, File No. 33-31047, File No. 33-47800 and File No. 33-
50276) of our report dated January 17, 1994 (except for the information
presented in Note 2, for which the date is February 4, 1994), on our audits
of the consolidated financial statements of Tredegar Industries, Inc. and
Subsidiaries as of December 31, 1993 and 1992, and for each of the three
years in the period ended December 31, 1993, which report appears on page 27
of the 1993 Annual Report to Shareholders of Tredegar Industries, Inc. and
our report dated January 17, 1994 on the financial statement schedules, which
report appears on page S-2 of this Form 10-K.
COOPERS & LYBRAND
Richmond, Virginia
March 11, 1994
