SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 16, 1994
Tredegar Industries, Inc.
(Exact name of Registrant as Specified in Charter)
Virginia 1-10258 54-1497771
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) 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
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On August 16, 1994, Tredegar Industries, Inc. ("Tredegar" or
the "Company") disposed of its 97% owned coal subsidiary, The Elk
Horn Coal Corporation ("Elk Horn"). Elk Horn is primarily a
mineral holding company that leases coal reserves to coal producers
and sells coal produced by contract miners. Pen Holdings, Inc.
("Pen") acquired Elk Horn through the merger of Pen's wholly-owned
subsidiary, PHI Acquisition Corp., with and into Elk Horn. Pen
paid an aggregate merger consideration of $61.8 million in cash, of
which Tredegar received $59.9 million. In addition, Tredegar
received $9.2 million in consideration for assuming certain
liabilities of Elk Horn. Pen was a coal customer of Elk Horn.
Item 5. Other Events.
On August 29, 1994, Tredegar announced that its Board of
Directors had authorized a "Dutch auction" tender offer for up to
one million shares of Tredegar common stock at a price range of
$17.00 to $19.00. A copy of the press release is attached hereto
as Exhibit 99.2 and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(b) Pro Forma Financial Information
Introduction to Pro Forma Consolidated Financial Information
Set forth below is pro forma consolidated financial
information with respect to the Company. Historical financial
information was excerpted or derived from the audited financial
statements contained in the Company's 1993 Annual Report on Form
10-K and from the unaudited financial statements contained in the
Company's Quarterly Report on Form 10-Q for the period ended June
30, 1994, as amended. The historical information below is
qualified in its entirety by reference to such reports and the
financial information and related notes contained therein.
The accompanying pro forma consolidated financial statements
do not reflect the pro forma effects of the "Dutch auction" tender
offer referred to in Item 5 above. Such effects will be disclosed
on the Schedule 13E-4 to be filed with the Securities and Exchange
Commission in connection with such offer.
On February 4, 1994, the Company sold its remaining oil and
gas properties and on August 16, 1994, the Company disposed of its
interest in Elk Horn (collectively referred to hereinafter as the
"Energy Businesses"). The Energy Businesses have been previously
reported in the Company's historical financial statements as
discontinued operations.
<PAGE>
The pro forma consolidated balance sheet presents the
financial position of the Company as of June 30, 1994 assuming that
the Company on that date (i) disposed of its interest in Elk Horn,
(ii) repaid certain borrowings and obtained new revolving credit
facilities, and (iii) invested remaining funds in cash equivalents.
The pro forma consolidated statements of income present the
results of continuing operations for the Company for the six and
twelve months ended June 30, 1994, and the year ended December 31,
1993, assuming that at the beginning of each period shown, the
Company (i) disposed of its interest in the Energy Businesses and
(ii) repaid certain borrowings and obtained new revolving credit
facilities. In accordance with Securities and Exchange Commission
rules and regulations, no pro forma interest income is recognized
in the pro forma statements of income for funds invested in cash
equivalents.
The pro forma financial information of the Company is
unaudited and does not purport to be indicative of the future
results or financial position of the Company or the net income and
financial position that would actually have been attained had the
pro forma transactions occurred on the dates or for the periods
indicated. See note (i) of the notes to pro forma financial
statements for income and earnings per share from continuing
operations adjusted for special items affecting the comparability
of operating results among periods.
<PAGE>
<TABLE>
Tredegar Industries, Inc.
Pro Forma Consolidated Balance Sheet(a)
June 30, 1994
(In Thousands)
(Unaudited)
<CAPTION>
Pro Forma Pro
ASSETS Historical Adjustments Forma
<S> <C> <C> <C>
Cash and cash equivalents $ 4,608 $17,550 (b) $ 22,158
Accounts and notes receivable 74,210 74,210
Inventories 31,308 31,308
Deferred income taxes 11,111 11,111
Prepaid expenses and other 1,104 1,104
Total current assets 122,341 17,550 139,891
Property, plant and equipment, at cost 324,265 324,265
Less accumulated depreciation and
amortization 194,797 194,797
Net property, plant and equipment 129,468 - 129,468
Other assets and deferred charges 26,162 150 (b) 26,312
Goodwill and other intangibles 35,950 35,950
Net assets of discontinued operations 21,983 (21,983) (c)
Total assets $335,904 $(4,283) $331,621
LIABILITIES AND
SHAREHOLDERS' EQUITY
Accounts payable $ 25,078 $ - $ 25,078
Accrued expenses 36,581 36,581
Income taxes payable 2,673 2,673
Total current liabilities 64,332 - 64,332
Long-term debt 70,500 (35,000) (b) 35,500
Deferred income taxes 19,071 (2,230) (d) 16,841
Other noncurrent liabilities 9,692 6,194 (d) 15,886
Total liabilities 163,595 (31,036) 132,559
Shareholder's equity:
Common stock, no par value 165,839 165,839
Foreign currency translation
adjustment 84 84
Retained earnings 6,386 26,753 (e) 33,139
Total shareholders' equity 172,309 26,753 199,062
Total liabilities and shareholders'
equity $335,904 $(4,283) $331,621
See accompanying notes to pro forma financial statements.
</TABLE>
<PAGE>
<TABLE>
Pro Forma Consolidated Statements of Income (a)
(In Thousands Except Per-Share Amounts)
(Unaudited)
<CAPTION>
For the Six Months Ended For the Last Twelve Months Ended For the Year Ende
June 30, 1994 June 30, 1994 December 31, 1993
Pro Pro Pro
Forma Pro Forma Pro Forma P
Historical Adjust.(f) Forma(f) Historical Adjust.(f) Forma(f) Historical Adjust.(f) Fo
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $243,907 $243,907 $473,875 $473,875 $449,208 $44
Other (expense) income, net (71) $ (209)(d) (280) 4 $ (418)(d) (414) (387) $ (418)(d)
243,836 (209) 243,627 473,879 (418) 473,461 448,821 (418) 44
Cost of goods sold 204,934 204,934 398,738 398,738 379,286 37
Selling, general & administrative
expenses 23,554 23,554 46,821 46,821 47,973 4
Research & development expenses 3,766 3,766 8,732 8,732 9,141
Interest expense 2,343 (825)(g) 1,518 4,832 (1,816)(g) 3,016 5,044 (1,917)(g)
Unusual items(i) 9,521 9,521 12,236 12,236 452
244,118 (825) 243,293 471,359 (1,816) 469,543 441,896 (1,917) 43
Income (loss) from continuing
operations before income taxes (282) 616 334 2,520 1,398 3,918 6,925 1,499
Income taxes(i) 1,737 240 (h) 1,977 3,200 545 (h) 3,745 3,202 585 (h)
Income (loss) from continuing
operations(i) $ (2,019) $ 376 $ (1,643) $ (680) $ 853 $ 173 $ 3,723 $ 914 $
Earnings (loss) per share from
continuing operations (i) $ (0.19) $ 0.04 $ (0.15) $ (0.06) $ 0.08 $ 0.02 $ 0.34 $ 0.09 $
Shares used to compute earnings
(loss) per share 10,808 10,808 10,808 10,852 10,852 10,852 10,895 10,895 1
See accompanying notes to pro forma financial statements.
</TABLE>
<PAGE>
Notes to Pro Forma Financial Statements
(Unaudited)
(a) The pro forma financial information presented does not purport
to be indicative of the future results or financial position
of the Company or the net income and financial position that
would actually have been attained had the pro forma
transactions occurred on the dates or for the periods
indicated. See note (i) for income and earnings per share
from continuing operations adjusted for special items
affecting the comparability of operating results among
periods.
(b) Pro forma adjustments at June 30, 1994 to other assets and
deferred charges, long-term debt and cash and cash equivalents
are as follows:
<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
Net operating cash flow (cash flows from
operating and investing activities) realized
from Elk Horn's operations from July 1,
1994 to August 16, 1994 $ 1,773
After-tax proceeds received from the
disposition of the Company's interest
in Elk Horn on August 16, 1994 50,927
Cash flow provided to the Company by Elk
Horn subsequent to June 30, 1994 52,700
Transaction costs capitalized in other assets
and deferred charges related to two new
revolving credit agreements entered into on
August 18 and 19, 1994 (150)
Prepayment on August 19, 1994 of variable-
rate term loan due June 7, 1997 (35,000)
Pro forma increase in cash and cash equivalents $17,550
</TABLE>
In accordance with the Company's policy, cash balances in
excess of operating needs are invested in marketable
securities with maturities of less than one year that have a
quality rating of at least A-2/P-2 or AA/Aa. Excess cash
arising from the disposition of the Company's interest in Elk
Horn has been invested in marketable securities with
maturities of less than thirty days. These funds are expected
to be used to fund the Company's tender offer with any
remaining funds invested until opportunities, in existing
businesses or elsewhere, are identified.
The two new revolving credit agreements permit the Company to
borrow up to $235 million with $200 million maturing on August
18, 1998 and $35 million maturing on August 19, 1999. In
connection with these new agreements, the Company terminated
its $180 million facility that was due June 16, 1996 (no
amounts borrowed). The new agreements provide for interest to
be charged at a base rate (generally the London Interbank
Offered Rate) plus a spread that is dependent on the Company's
quarterly debt to total capitalization ratio. Facility fees
are also charged on the $235 million commitment amount. The
weighted average spreads and facility fees charged under the
new agreements at various debt to total capitalization levels
are as follows:
(Basis Points)
Facility
Debt to Total Capitalization Ratio Spread Fee
Less than or equal to 35% 31.1 19.7
Greater than 35% and less than
or equal to 50% 39.6 23.6
Greater than 50% 49.3 26.5
The Company's remaining debt outstanding of $35.5 million
consists primarily of a $35 million, 7.2% note due 2003 (six-
year average remaining maturity at June 30, 1994).
(c) The pro forma adjustment to net assets of discontinued
operations at June 30, 1994 reflects the divestiture of Elk
Horn's net assets. The Company's remaining oil and gas
properties were sold on February 4, 1994.
(d) In accordance with applicable accounting pronouncements, the
pro forma consolidated balance sheet reflects a $6.2 million
adjustment to other noncurrent liabilities for the recognition
of the estimated present value of the unfunded obligation
under the Coal Industry Retiree Health Benefit Act of 1992
(the "Act") assumed by the Company under the provisions of the
merger agreement relating to the disposition of Elk Horn.
Under 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.
The pro forma consolidated balance sheet also reflects a $2.2
million related adjustment to deferred income taxes for the
estimated tax benefit the Company will receive on the present
value of the unfunded obligation.
The estimated annual interest cost at 7% on the present value
of the unfunded obligation is reflected as a pro forma
adjustment to other (expense) income, net.
<PAGE>
(e) Pro forma adjustments to shareholders' equity at June 30, 1994
are as follows:
(In Thousands)
Net income recognized from Elk Horn's operations
from July 1, 1994 to August 16, 1994 $ 1,013
After-tax gain recognized from the Company's
disposition of its interest in Elk Horn on
August 16, 1994 25,740
Total shareholders' equity pro forma adjustments
at June 30, 1994 $26,753
(f) In accordance with Securities and Exchange Commission rules
and regulations, no pro forma interest income is recognized in
the pro forma statements of income for funds invested in cash
equivalents. Had such income been recognized assuming an
investment in AAA-rated tax-exempt securities with maturities
of less than 30 days, pro forma net income would have been
increased by approximately $.2 million, $.4 million and $.3
million for the six months and twelve months ended June 30,
1994, and the year ended December 31, 1993, respectively [see
notes (g) and (i)].
(g) The adjustments to interest expense reflect the pro forma
interest cost savings comprised of the following:
<TABLE>
<CAPTION>
(In Thousands)
For the Last
For the Six Twelve For the
Months Months Year
Ended Ended Ended
6/30/94 6/30/94 12/31/93
<S> <C> <C> <C>
Savings from repayment of debt
and new credit agreements
[see note (b)] $1,113 $2,442 $2,608
Reallocation of interest cost
historically allocated to
the Energy Businesses for
financial reporting
purposes (269) (588) (653)
Amortization of transaction
costs ( 19) ( 38) ( 38)
Pro forma interest cost savings $ 825 $1,816 $1,917
</TABLE>
Pro forma interest cost savings were computed using the
following pro forma average cash flows:
<TABLE>
<CAPTION>
(In Thousands)
For the Last
For the Six Twelve For the
Months Months Year
Ended Ended Ended
6/30/94 6/30/94 12/31/93
<S> <C> <C> <C>
Average net operating cash
flow and after-tax proceeds
realized from the operations
and disposition of the
Company's interest in
the Energy Businesses from
the beginning of the period
to August 16, 1994 $ 62,166 $ 66,091 $ 71,418
Average variable-rate debt
outstanding assumed repaid
during the period (44,232) (52,457) (60,207)
Average cash flows assumed invested
in cash equivalents during the
period [see note (f)] $ 17,934 $ 13,634 $ 11,211
(h) Pro forma income tax adjustments are recognized at an assumed
combined state and federal income tax rate of approximately
39%.
<PAGE>
(i) Income (loss) and earnings (loss) per share from continuing
operations, adjusted for special items affecting the
comparability of operating results among periods, are
presented below:
</TABLE>
<TABLE>
<CAPTION>
(In Thousands
Except Per-Share Amounts)
For the Last
For the Six Twelve For the
Months Months Year
Ended Ended Ended
6/30/94 6/30/94 12/31/93
<S> <C> <C> <C>
Historical income (loss) from
continuing operations as reported $(2,019) $ (680) $3,723
Historical after-tax effects of
special items:
Write-off of APPX Software, Inc.
intangibles 7,642 7,642
Charges associated with the
disposal of a Film Products
plant in Flemington, NJ 1,107 1,107
Charges associated with reorgani-
zation of corporate functions 549 549
Impact on deferred taxes of 1%
increase in the federal income
tax rate 348 348
Gain on the sale of Emisphere
Technologies, Inc. common stock (1,410)
Historical income from continuing
operations as adjusted for
special items 5,623 8,966 4,317
Pro forma and other adjustments:
Reflected in the statements
of income 376 853 914
Interest income [see note (f)] 240 358 284
Pro forma income from continuing
operations as adjusted for
special items and interest
income $ 6,239 $10,177 $5,515
Earnings (loss) per share from
continuing operations:
Historical:
As reported $ (0.19) $ (0.06) $ 0.34
As adjusted for special items 0.52 0.83 0.40
Pro forma:
As presented in the statements
of income (0.15) 0.02 0.43
As adjusted for special items
and interest income 0.58 0.94 0.51
</TABLE>
<PAGE>
(c) Exhibits.
Exhibit No.
99.1 Agreement of Merger by and among Tredegar
Investments, Inc., The Elk Horn Coal Corporation,
Pen Holdings, Inc. and PHI Acquisition Corp. made
as of June 22, 1994 (filed as Exhibit 10 to
Tredegar's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994, as amended, and
incorporated herein by reference). (Schedules and
exhibits omitted; Registrant agrees to furnish a
copy of any schedule or exhibit to the Securities
and Exchange Commission upon request.)
99.2 Press Release dated August 29, 1994 regarding
announcement of "Dutch auction" tender offer by
Tredegar.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
TREDEGAR INDUSTRIES, INC.
Date: August 31, 1994 By: /s/ N. A. Scher
Norman A. Scher
Executive Vice President
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
99.1 Agreement of Merger by and among Tredegar Investments,
Inc., The Elk Horn Coal Corporation, Pen Holdings, Inc.
and PHI Acquisition Corp. made as of June 22, 1994 (filed
as Exhibit 10 to Tredegar's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1994, as amended, and
incorporated herein by reference). (Schedules and
exhibits omitted; Registrant agrees to furnish a copy of
any schedule or exhibit to the Securities and Exchange
Commission upon request.)
99.2 Press Release dated August 29, 1994 regarding
announcement of "Dutch auction" tender offer by Tredegar.
FOR IMMEDIATE RELEASE
TREDEGAR ANNOUNCES SELF-TENDER OFFER
RICHMOND, Va., Aug. 29, 1994 -- The board of directors of
Tredegar Industries (NYSE:TG) today authorized a "Dutch auction"
self-tender offer for up to one million shares of the company's
common stock. The tender price range will be $17 to $19 per
share. The offer will commence next week with the distribution
of the offering materials. The offer will be subject to the
terms and conditions that will be described in the offering
materials.
As of Aug. 29, Tredegar had 10,587,625 shares of common
stock outstanding. The closing price for Tredegar common stock
today was $16 3/8.
Under terms of a Dutch auction offer, shareholders are given
an opportunity to specify prices, within a stated price range, at
which they are willing to tender their shares. Upon receipt of
the tenders, the offering company will select a final price that
enables it to purchase up to the stated amount of shares from
those shareholders who agreed to sell at or below the company-
selected price.
Tredegar said the offer will give shareholders who are
considering the sale of all or a portion of their shares an
opportunity to determine the price, within a range, at which they
are willing to sell. If Tredegar agrees to purchase their
shares, sellers will avoid the normal transaction costs
associated with market sales. The company is not making any
recommendation to its shareholders regarding the tendering of
shares.
The dealer manager for the offer will be Goldman, Sachs &
Co. and the information agent will be Georgeson & Co.
Tredegar Industries is a diversified manufacturer of
plastics and metal products.
