AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 16, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the
Securities Exchange Act of 1934)
TREDEGAR INDUSTRIES, INC.
(Name of Issuer)
TREDEGAR INDUSTRIES, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, NO PAR VALUE PER SHARE
(Title of Class of Securities)
89465010
(CUSIP Number of Class of Securities)
NANCY M. TAYLOR, ESQ.
GENERAL COUNSEL AND SECRETARY
TREDEGAR INDUSTRIES, INC.
1100 BOULDERS PARKWAY
RICHMOND, VIRGINIA 23225
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) Filing Statement)
COPIES TO:
C. PORTER VAUGHAN, III, ESQ.
HUNTON & WILLIAMS
RIVERFRONT PLAZA, EAST TOWER
951 EAST BYRD STREET
RICHMOND, VIRGINIA 23219
JANUARY 16, 1998
(Date Tender Offer First Published,
Sent or Given to Security Holders)
CALCULATION OF FILING FEE
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TRANSACTION VALUE* AMOUNT OF FILING FEE
$81,250,000 $16,250.00
</TABLE>
* Calculated solely for the purpose of determining the filing fee, based
upon the purchase of 1,250,000 shares at $65.00 per share in accordance
with Rule 0-11.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) The issuer of the securities to which this Schedule 13E-4 relates is
Tredegar Industries, Inc., a Virginia corporation (the "Company"), and the
address of its principal executive office is 1100 Boulders Parkway, Richmond,
Virginia 23225.
(b) This Schedule 13E-4 relates to the offer by the Company to purchase
1,250,000 shares (or such lesser number of shares as are properly tendered) of
its common stock (the "Shares"), 12,388,495 of which Shares were outstanding as
of January 13, 1998, at prices not in excess of $65.00 nor less than $58.00 net
per Share in cash upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated January 16, 1998 (the "Offer to Purchase"), and in the
related Letter of Transmittal (or similar materials distributed to participants
in the Company's dividend reinvestment and stock purchase plan, employee stock
purchase plan or employee savings plan), which together constitute the "Offer,"
copies of which are attached as Exhibit (a)(1) and (a)(2), respectively, and
incorporated herein by reference. Executive officers and directors of the
Company may participate in the Offer on the same basis as the Company's other
shareholders, although the Company has been advised that no director or
executive officer of the Company intends to tender any Shares pursuant to the
Offer. The information set forth in "Introduction" and "The Offer -- Section 1,
Number of Shares; Proration" of the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in "Introduction" and the "The
Offer -- Section 8, Price Range of Shares; Dividends" of the Offer to Purchase
is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "The Offer -- Section 9, Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(j) The information set forth in "Introduction" and "The
Offer -- Section 9, Source and Amount of Funds," "The Offer -- Section 2,
Purpose of the Offer; Certain Effects of the Offer," "The Offer -- Section 11,
Interest of Directors and Officers; Transactions and Arrangements Concerning
Shares" and "The Offer -- Section 12, Effects of the Offer on the Market for
Shares; Registration under the Exchange Act" of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "The Offer -- Section 11, Interest of
Directors and Officers; Transactions and Arrangements Concerning Shares" and
Schedule A, "Certain Transactions Involving Shares," of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The information set forth in "Introduction" and "The Offer -- Section 9,
Source and Amount of Funds," "The Offer -- Section 2, Purpose of the Offer;
Certain Effects of the Offer" and "The Offer -- Section 11, Interest of
Directors and Officers; Transactions and Arrangements Concerning Shares" of the
Offer to Purchase is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction" and "The Offer -- Section 16,
Fees and Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "The Offer -- Section 10, Certain
Information Concerning the Company" of the Offer to Purchase is incorporated
herein by reference, the information set forth on pages 34 through 49 of the
Company's Annual Report to Shareholders incorporated by reference into the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, filed
as Exhibit (g)(1) hereto, is incorporated herein by reference, and the
information set forth on pages 2 through 7 of the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997, filed as Exhibit (g)(2)
hereto, is incorporated herein by reference.
1
<PAGE>
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in "The Offer -- Section 13, Certain Legal
Matters; Regulatory Approvals" of the Offer to Purchase is incorporated herein
by reference.
(c) The information set forth in "The Offer -- Section 12, Effects of the
Offer on the Market for Shares; Registration under the Exchange Act" of the
Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in the Offer to Purchase and Letter of
Transmittal is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Form of Offer to Purchase, dated January 16, 1998.
(2) Form of Letter of Transmittal (including Certification of Taxpayer
Identification Number on Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(6) Form of Memorandum, dated January 16, 1998, to Participants in the
Tredegar Industries, Inc. Dividend Reinvestment and Stock Purchase Plan.
(7) Form of Memorandum, dated January 16, 1998, to Participants in the
Savings Plan for the Employees of Tredegar Industries, Inc.
(8) Form of Memorandum, dated January 16, 1998, to Participants in the
Tredegar Industries, Inc. Employee Stock Purchase Plan.
(9) Text of Press Release issued by the Company, dated January 14, 1998.
(10) Form of Summary Advertisement, dated January 16, 1998.
(11) Form of Letter to Shareholders of the Company, dated January 16,
1998, from John D. Gottwald, President and Chief Executive Officer of
the Company.
(12) Form of Letter to Participants in the Tredegar Industries, Inc.
Dividend Reinvestment and Stock Purchase Plan, dated January 16, 1998,
from John D. Gottwald, President and Chief Executive Officer of the
Company.
(13) Form of Letter to Participants in the Savings Plan for the
Employees of Tredegar Industries, Inc., dated January 16, 1998, from
John D. Gottwald, President and Chief Executive Officer of the Company.
(14) Form of Letter to Participants in the Tredegar Industries, Inc.
Employee Stock Purchase Plan, dated January 16, 1998, from John D.
Gottwald, President and Chief Executive Officer of the Company.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 34 through 49 of the Company's Annual Report to Shareholders
incorporated by reference into the Company's Annual Report on Form 10-K
for the year ended December 31, 1996.
(2) Pages 2 through 7 of the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997.
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule 13E-4 is true, complete and
correct.
January 16, 1998
TREDEGAR INDUSTRIES, INC.
By: /s/Norman A. Scher
-------------------------
Norman A. Scher
Executive Vice President
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
<S> <C>
(a)(1) Form of Offer to Purchase, dated January 16, 1998.
(2) Form of Letter of Transmittal (including Certification of Taxpayer Identification Number on
Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(6) Form of Memorandum, dated January 16, 1998, to Participants in the Tredegar Industries, Inc.
Dividend Reinvestment and Stock Purchase Plan.
(7) Form of Memorandum, dated January 16, 1998, to Participants in the Savings Plan for the
Employees of Tredegar Industries, Inc.
(8) Form of Memorandum, dated January 16, 1998, to Participants in the Tredegar Industries, Inc.
Employee Stock Purchase Plan.
(9) Text of Press Release issued by the Company, dated January 14, 1998.
(10) Form of Summary Advertisement, dated January 16, 1998.
(11) Form of Letter to Shareholders of the Company, dated January 16, 1998, from John D. Gottwald,
President and Chief Executive Officer of the Company.
(12) Form of Letter to Participants in the Tredegar Industries, Inc. Dividend Reinvestment and Stock
Purchase Plan, dated January 16, 1998, from John D. Gottwald, President and Chief Executive
Officer of the Company.
(13) Form of Letter to Participants in the Savings Plan for the Employees of Tredegar Industries,
Inc., dated January 16, 1998, from John D. Gottwald, President and Chief Executive Officer of
the Company.
(14) Form of Letter to Participants in the Tredegar Industries, Inc. Employee Stock Purchase Plan,
dated January 16, 1998, from John D. Gottwald, President and Chief Executive Officer of the
Company.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 34 through 49 of the Company's Annual Report to Shareholders incorporated by reference
into the Company's Annual Report on Form 10-K for the year ended December 31, 1996.
(2) Pages 2 through 7 of the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997.
</TABLE>
4
EXHIBIT (A)(1)
<PAGE>
TREDEGAR INDUSTRIES, INC.
OFFER TO PURCHASE FOR CASH UP TO
1,250,000 SHARES OF ITS COMMON STOCK (INCLUDING
THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT IN EXCESS OF $65.00
NOR LESS THAN $58.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 13, 1998, UNLESS THE OFFER IS EXTENDED.
Tredegar Industries, Inc., a Virginia corporation (the "Company"), hereby
invites its shareholders to tender shares of its Common Stock, no par value per
share (the "Shares") (including the associated Preferred Stock Purchase Rights
(the "Rights") issued pursuant to the rights agreement, dated as of June 15,
1989, as amended (the "Rights Agreement"), between the Company and the Rights
Agent named therein), at prices not in excess of $65.00 nor less than $58.00 per
Share in cash, as specified by shareholders tendering their Shares, upon the
terms and subject to the conditions set forth herein and in the related Letter
of Transmittal (or similar materials distributed to participants in the
Company's dividend reinvestment plan, employee savings plan or employee stock
purchase plan), which together constitute the "Offer". Unless the Company
redeems the Rights, a tender of Shares will constitute a tender of the
associated Rights. Unless the context requires otherwise, all references herein
to Shares shall include the associated Rights. The Company will determine the
single per Share price, not in excess of $65.00 nor less than $58.00 per Share,
net to the seller in cash (the "Purchase Price"), that it will pay for Shares
properly tendered pursuant to the Offer, taking into account the number of
Shares so tendered and the prices specified by tendering shareholders. The
Company will select the lowest Purchase Price that will allow it to buy
1,250,000 Shares (or such lesser number of Shares as are properly tendered at
prices not in excess of $65.00 nor less than $58.00 per Share). All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, subject to the terms and the conditions
of the Offer, including the proration and conditional tender provisions. All
Shares acquired in the Offer will be acquired at the Purchase Price. The Company
reserves the right, in its sole discretion, to purchase more than 1,250,000
Shares pursuant to the Offer. See Section 15.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED, BUT IS
SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
The Shares are listed and traded on the New York Stock Exchange, Inc. (the
"NYSE"). On January 13, 1998, the last full trading day on the NYSE prior to the
announcement of the Offer, the closing per Share sales price as reported on the
NYSE Composite Tape was $58.94. On January 15, 1998, the last full trading day
on the NYSE prior to the commencement of the Offer, the closing per Share sales
price as reported on the NYSE Composite Tape was $64.00. SHAREHOLDERS ARE URGED
TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE SECTION 8.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED UNANIMOUSLY THE OFFER.
HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED. THE COMPANY
HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO
TENDER ANY SHARES PURSUANT TO THE OFFER.
IMPORTANT
Any shareholder wishing to tender all or any part of his or her Shares
should either (a) complete and sign a Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
either mail or deliver it with any required signature guarantee and any other
required documents to American Stock Transfer & Trust Company (the
"Depositary"), and either mail or deliver the stock certificates for such Shares
to the Depositary (with all such other documents) or tender such Shares pursuant
to the procedure for book-entry tender set forth in Section 3, or (b) request a
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such shareholder. Holders of Shares registered in the name of a
broker, dealer, commercial bank, trust company or other nominee should contact
such person if they desire to tender their Shares. Any shareholder who desires
to tender Shares and whose certificates for such Shares cannot be delivered to
the Depositary or who cannot comply with the procedure for book-entry transfer
or whose other required documents cannot be delivered to the Depositary, in any
case, by the expiration of the Offer must tender such Shares pursuant to the
guaranteed delivery procedure set forth in Section 3.
TO PROPERLY TENDER SHARES, SHAREHOLDERS MUST COMPLETE THE SECTION OF THE
LETTER OF TRANSMITTAL RELATING TO THE PRICE AT WHICH THEY ARE TENDERING SHARES.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent or to the Dealer Manager at
their respective addresses and telephone numbers set forth on the back cover of
this Offer to Purchase.
THE DEALER MANAGER FOR THE OFFER IS:
SCHRODER & CO. INC.
THE DATE OF THIS OFFER TO PURCHASE IS JANUARY 16, 1998
<PAGE>
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY OR THE DEALER MANAGER AS TO WHETHER SHAREHOLDERS SHOULD
TENDER OR REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS
NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE DEALER MANAGER.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
SUMMARY................................................................................................................. S-1
INTRODUCTION............................................................................................................ 1
THE OFFER............................................................................................................... 2
1. Number of Shares; Proration.......................................................................... 2
2. Purpose of the Offer; Certain Effects of the Offer................................................... 4
3. Procedures for Tendering Shares...................................................................... 4
4. Withdrawal Rights.................................................................................... 7
5. Purchase of Shares and Payment of Purchase Price..................................................... 8
6. Conditional Tender of Shares......................................................................... 9
7. Certain Conditions of the Offer...................................................................... 9
8. Price Range of Shares; Dividends..................................................................... 11
9. Source and Amount of Funds........................................................................... 11
10. Certain Information Concerning the Company........................................................... 12
11. Interest of Directors and Officers; Transactions and Arrangements Concerning Shares.................. 19
12. Effects of the Offer on the Market for Shares; Registration under the Exchange Act................... 21
13. Certain Legal Matters; Regulatory Approvals.......................................................... 21
14. Certain Federal Income Tax Consequences.............................................................. 21
15. Extension of Offer; Termination; Amendment........................................................... 23
16. Fees and Expenses.................................................................................... 24
17. Miscellaneous........................................................................................ 24
SCHEDULE A Certain Transactions Involving Shares................................................................ A-1
</TABLE>
<PAGE>
SUMMARY
THIS GENERAL SUMMARY IS SOLELY FOR THE CONVENIENCE OF THE COMPANY'S
SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT AND
MORE SPECIFIC DETAILS IN THIS OFFER TO PURCHASE.
<TABLE>
<S> <C>
PURCHASE PRICE................ The Company will select a single Purchase Price which will be not more than $65.00 nor less
than $58.00 per Share. All Shares purchased by the Company will be purchased at the Purchase
Price even if tendered at or below the Purchase Price. Each shareholder desiring to tender
Shares must specify in the Letter of Transmittal the minimum price (not more than $65.00 nor
less than $58.00 per Share) at which such shareholder is willing to have his or her Shares
purchased by the Company.
NUMBER OF SHARES TO BE
PURCHASED................... 1,250,000 Shares (or such lesser number of Shares as are properly tendered).
HOW TO TENDER SHARES.......... See Section 3. Call the Information Agent, the Dealer Manager or consult your broker for
assistance.
BROKERAGE COMMISSIONS......... None.
STOCK TRANSFER TAX............ None, if payment is made to the registered holder.
EXPIRATION AND PRORATION
DATES....................... Friday, February 13, 1998 at 12:00 Midnight, New York City time, unless extended by the
Company.
PAYMENT DATE.................. As soon as practicable after the termination of the Offer.
POSITION OF THE COMPANY AND
ITS DIRECTORS............... Neither the Company nor its Board of Directors makes any recommendation to any shareholder as
to whether to tender or refrain from tendering Shares.
WITHDRAWAL RIGHTS............. Tendered Shares may be withdrawn at any time until 12:00 Midnight, New York City time, on
Friday, February 13, 1998, unless the Offer is extended by the Company, and, unless previously
purchased, after 12:00 Midnight, New York City time, on Monday, March 16, 1998. See Section 3.
ODD LOTS...................... There will be no proration of Shares tendered by any shareholder owning beneficially less than
100 Shares as of January 15, 1998 who tenders all such Shares prior to the Proration Date and
who checks the "Odd Lots" box in the Letter of Transmittal.
FURTHER DEVELOPMENTS REGARDING
THE OFFER................... Call the Information Agent or the Dealer Manager or consult your broker.
</TABLE>
S-1
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF TREDEGAR INDUSTRIES, INC.:
INTRODUCTION
Tredegar Industries, Inc., a Virginia corporation (the "Company"), invites
its shareholders to tender shares of its Common Stock, no par value per share
(the "Shares"), at prices not in excess of $65.00 nor less than $58.00 per
Share, as specified by shareholders tendering their Shares, upon the terms and
subject to the conditions set forth herein and in the related Letter of
Transmittal (or similar materials distributed to participants in the Company's
dividend reinvestment plan, employee savings plan or employee stock purchase
plan), which together constitute the "Offer". The Company will determine the
single per Share price, not in excess of $65.00 nor less than $58.00 per share,
net to the seller in cash (the "Purchase Price"), that it will pay for Shares
properly tendered pursuant to the Offer, taking into account the number of
Shares so tendered and the prices specified by tendering shareholders. The
Company will select the lowest Purchase Price that will allow it to buy
1,250,000 shares (or such lesser number of Shares as are properly tendered). All
Shares acquired in the Offer will be acquired at the Purchase Price. All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, upon the terms and subject to the
conditions of the Offer, including the proration and conditional tender
provisions. Shares tendered at prices in excess of the Purchase Price and shares
not purchased because of proration or conditional tender will be returned. The
Company reserves the right, in its sole discretion, to purchase more than
1,250,000 Shares pursuant to the Offer. See Section 15.
THIS OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM NUMBER OF
SHARES BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
Upon the terms and subject to the conditions of the Offer, if at the
expiration of the Offer more than 1,250,000 Shares are properly tendered at or
below the Purchase Price and not withdrawn, the Company will buy Shares first
from all Odd Lot Holders (as defined in Section 1) who properly tender all their
Shares at or below the Purchase Price and then on a PRO RATA basis from all
other shareholders who properly tender at prices at or below the Purchase Price
(and did not withdraw them prior to the expiration of the Offer). See Section 1.
All stock certificates representing Shares not purchased pursuant to the Offer,
including Shares tendered at prices greater than the Purchase Price and not
withdrawn and Shares not purchased because of proration or conditional tenders,
will be returned at the Company's expense to the shareholders who tendered such
Shares.
The Purchase Price will be paid net to the tendering shareholder in cash
for all Shares purchased. Tendering shareholders will not be obligated to pay
brokerage commissions, solicitation fees or, subject to Instruction 7 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Company. A tendering shareholder who holds securities with such shareholder's
broker may be required by such broker to pay a service charge or other fee.
HOWEVER, ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE, SIGN
AND RETURN TO THE DEPOSITARY THE FORM W-9 THAT IS INCLUDED WITH THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF
31% OF THE GROSS PROCEEDS PAYABLE TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO
THE OFFER. SEE SECTION 3. The Company will pay all fees and expenses of Schroder
& Co. Inc. (the "Dealer Manager"), American Stock Transfer & Trust Company (the
"Depositary") and Georgeson & Company Inc. (the "Information Agent") incurred in
connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MAKING
OF THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
THEIR SHARES. EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES
AND, IF SO, HOW MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE
TENDERED. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE
OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
Shareholders who are participants in the Tredegar Industries, Inc. Dividend
Reinvestment and Stock Purchase Plan (the "Dividend Reinvestment Plan") may
instruct American Stock Transfer & Trust Company, as administrator under the
Dividend Reinvestment Plan, to tender part or all of the Shares attributed to
such participant's account and in each case must specify the price or prices at
which such Shares are to be tendered. See Section 3.
The Savings Plan for the Employees of Tredegar Industries, Inc. (the
"Savings Plan") holds Shares (approximately 10.9% of the outstanding Shares) in
accounts for participants of the Savings Plan. Wachovia Bank, N.A. (the "Savings
Plan
1
<PAGE>
Trustee") serves as trustee for the Savings Plan. Under the terms of the Savings
Plan, a participant may instruct the Savings Plan Trustee to tender all or part
of certain Shares allocated to one or more of the participant's accounts and in
such case must specify the price at which such Shares are to be tendered. See
Section 3. The special Odd Lot purchase rules described below do not apply to
any Shares held in a Savings Plan account. See Section 1.
The Tredegar Industries, Inc. Employee Stock Purchase Plan (the "Stock
Purchase Plan") holds Shares in accounts for participants of the Stock Purchase
Plan. American Stock Transfer & Trust Company (the "Stock Purchase Plan
Custodian") serves as custodian for the Stock Purchase Plan. Under the terms of
the Stock Purchase Plan, a participant may instruct the Stock Purchase Plan
Custodian to tender all or part of certain Shares allocated to one or more of
the participant's accounts and in such case must specify the price at which such
Shares are to be tendered. See Section 3.
As of January 13, 1998, the Company had issued and outstanding 12,388,495
Shares and had reserved 1,259,215 Shares for issuance upon exercise of
outstanding stock options. The 1,250,000 Shares that the Company is offering to
purchase pursuant to the Offer represent approximately 10.1% of the outstanding
Shares. The Shares are listed and traded on the New York Stock Exchange, Inc.
(the "NYSE") under the symbol "TG". On January 13, 1998, the last full trading
day on the NYSE prior to the announcement of the Offer, the closing per Share
sales price as reported on the NYSE Composite Tape was $58.94. On January 15,
1998, the last full trading day on the NYSE prior to the commencement of the
Offer, the closing per Share sales price as reported on the NYSE Composite Tape
was $64.00. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES. See Section 8.
THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase up to 1,250,000 Shares or such lesser number of Shares as are properly
tendered (and not withdrawn in accordance with Section 4) prior to the
Expiration Date (as defined below) at prices not in excess of $65.00 nor less
than $58.00 net per Share in cash. The term "Expiration Date" means 12:00
Midnight, New York City time, on Friday, February 13, 1998, unless and until the
Company, in its sole discretion, shall have extended the period of time during
which the Offer will remain open, in which event the term "Expiration Date"
shall refer to the latest time and date at which the Offer, as so extended by
the Company, shall expire. See Section 15 for a description of the Company's
right to extend, delay, terminate or amend the Offer. The Company reserves the
right to purchase more than 1,250,000 Shares pursuant to the Offer. In
accordance with applicable regulations of the Securities and Exchange Commission
(the "Commission"), the Company may purchase pursuant to the Offer an additional
amount of Shares not to exceed 2% of the outstanding Shares without amending or
extending the Offer. See Section 15. In the event of an over-subscription of the
Offer as described below, Shares tendered at or below the Purchase Price prior
to the Expiration Date will be subject to proration, except for Odd Lots as
explained below. The proration period also expires on the Expiration Date.
The Company will select the lowest Purchase Price that will allow it to buy
1,250,000 Shares (or such lesser number of Shares as are properly tendered at
prices not in excess of $65.00 nor less than $58.00 per Share). All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, subject to the terms and the conditions
of the Offer, including the proration and conditional tender provisions. All
Shares purchased in the Offer will be purchased at the Purchase Price.
THE OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM NUMBER OF
SHARES, BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
In accordance with Instruction 5 of the Letter of Transmittal, shareholders
desiring to tender Shares must specify the price, not in excess of $65.00 nor
less than $58.00 per Share, at which they are willing to sell their Shares to
the Company. As promptly as practicable following the Expiration Date, the
Company will, in its sole discretion, determine the Purchase Price that it will
pay for Shares properly tendered pursuant to the Offer and not withdrawn, taking
into account the number of Shares tendered and the prices specified by tendering
shareholders. The Company intends to select the lowest Purchase Price, not in
excess of $65.00 nor less than $58.00 net per Share in cash, that will enable it
to purchase 1,250,000 Shares (or such lesser number of Shares as are properly
tendered) pursuant to the Offer. Shares properly tendered pursuant to the Offer
at or below the Purchase Price and not withdrawn will be purchased at the
Purchase Price, subject to the terms and conditions of the Offer, including the
proration and conditional tender provisions. All Shares tendered and not
purchased pursuant to the Offer, including Shares tendered at prices in excess
of the Purchase Price and Shares not purchased because of proration or
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conditional tender, will be returned to the tendering shareholders at the
Company's expense as promptly as practicable following the Expiration Date.
PRIORITY OF PURCHASERS. Upon the terms and subject to the conditions of the
Offer, if more than 1,250,000 Shares have been properly tendered at prices at or
below the Purchase Price and not withdrawn prior to the Expiration Date, the
Company will purchase properly tendered Shares on the basis set forth below:
(a) FIRST, all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Holder (as defined below) who:
(1) tenders all Shares beneficially owned by such Odd Lot Holder at
a price at or below the Purchase Price (tenders of less than
all Shares owned by such shareholder will not qualify for this
preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed
Delivery; and
(b) SECOND, after purchase of all of the foregoing Shares, all Shares
conditionally tendered in accordance with Section 6, for which the
condition was satisfied, and all other Shares tendered properly
and unconditionally at prices at or below the Purchase Price and
not withdrawn prior to the Expiration Date, on a PRO RATA basis
(with appropriate adjustments to avoid purchases of fractional
Shares) as described below; and
(c) THIRD, if necessary, Shares conditionally tendered, for which the
condition was not satisfied, at or below the Purchase Price and
not withdrawn prior to the Expiration Date, selected by random lot
in accordance with Section 6.
ODD LOTS. For purposes of the Offer, the term "Odd Lots" shall mean all
Shares properly tendered prior to the Expiration Date at prices at or below the
Purchase Price and not withdrawn by any person (an "Odd Lot Holder") who owned,
beneficially or of record, as of the close of business on January 15, 1998, an
aggregate of fewer than 100 Shares (and so certified in the appropriate place on
the Letter of Transmittal and, if applicable, on the Notice of Guaranteed
Delivery). In order to qualify for this preference, an Odd Lot Holder must
tender all such Shares in accordance with the procedures described in Section 3.
As set forth above, Odd Lots will be accepted for payment before proration, if
any, of the purchase of other tendered Shares. This preference is not available
to partial tenders or to beneficial or record holders of an aggregate of 100 or
more Shares, even if such holders have separate accounts or certificates
representing fewer than 100 Shares. By accepting the Offer, an Odd Lot Holder
would not only avoid the payment of brokerage commissions but also would avoid
any applicable odd lot discounts in a sale of such holder's Shares. Any
shareholder wishing to tender all of such shareholder's Shares pursuant to this
Section should complete the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery.
The Company also reserves the right, but will not be obligated, to purchase
all Shares duly tendered by any shareholder who tendered all Shares owned,
beneficially or of record, at or below the Purchase Price and who, as a result
of proration, would then own, beneficially or of record, an aggregate of fewer
than 100 Shares. If the Company exercises this right, it will increase the
number of Shares that it is offering to purchase by the number of Shares
purchased through the exercise of the right.
The special Odd Lot purchase rules described above do not apply to any
Shares held in a Savings Plan account.
PRORATION. In the event that proration of tendered Shares is required, the
Company will determine the proration factor as soon as practicable following the
Expiration Date. Proration for each shareholder tendering Shares, other than Odd
Lot Holders, shall be based on the ratio of the number of Shares tendered by
such shareholder to the total number of Shares tendered by all shareholders,
other than Odd Lot Holders, at or below the Purchase Price, subject to the
conditional tender provisions described in Section 6. Because of the difficulty
in determining the number of Shares properly tendered (including Shares tendered
by guaranteed delivery procedures, as described in Section 3) and not withdrawn,
and because of the odd lot procedure, the Company does not expect that it will
be able to announce the final proration factor or to commence payment for any
Shares purchased pursuant to the Offer until approximately five NYSE trading
days after the Expiration Date. The preliminary results of any proration will be
announced by press release as promptly as practicable after the Expiration Date.
Shareholders may obtain such preliminary information from the Information Agent
or the Dealer Manager and may be able to obtain such information from their
brokers.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of Shares and will be furnished to brokers, banks and similar
persons whose names, or the names of whose nominees, appear on the Company's
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shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
The Company is making the Offer because the Board of Directors believes
that, given the Company's business, assets and prospects and the current market
price of the Shares, the purchase of the Shares is an attractive use of the
Company's funds. Projected future cash flows are expected to be adequate for
normal operations and debt service.
The Offer provides shareholders who are considering a sale of all or a
portion of their Shares with the opportunity to determine the price or prices
(not in excess of $65.00 nor less than $58.00 per Share) at which they are
willing to sell their Shares and, subject to the terms and conditions of the
Offer, to sell those Shares for cash without the usual transaction costs
associated with market sales. In addition, shareholders owning fewer than 100
Shares whose Shares are purchased pursuant to the Offer not only will avoid the
payment of brokerage commissions but also will avoid any applicable odd-lot
discounts payable on a sale of their Shares in a NYSE transaction. The Offer
also allows shareholders to sell a portion of their Shares while retaining a
continuing equity interest in the Company if they so desire. Shareholders who
determine not to accept the Offer will realize a proportionate increase in their
relative equity interest in the Company, and thus in the Company's future
earnings and assets, subject to increased risks arising from higher leverage
resulting from the purchase of Shares by the Company, and subject to the
Company's right to issue additional Shares and other equity securities in the
future.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF
SUCH SHAREHOLDER'S SHARES AND NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN
THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE
PRICE OR PRICES AT WHICH TO TENDER.
The Company may in the future purchase additional Shares on the open
market, in private transactions, through tender offers or otherwise. Any such
purchase may be on the same terms or on terms which are more or less favorable
to shareholders than the terms of the Offer. However, Rule 13e-4 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), prohibits the
Company and its affiliates from purchasing any Shares, other than pursuant to
the Offer, until at least ten business days after the Expiration Date. Any
possible future purchases by the Company will depend on many factors, including
the market price of the Shares, the results of the Offer, the Company's business
and financial position and general economic and market conditions.
Shares the Company acquires pursuant to the Offer will be restored to the
status of authorized and unissued Shares and will be available for the Company
to issue without further shareholder action (except as required by applicable
law or the rules of the NYSE or any other securities exchange on which the
Shares are listed) for purposes including, but not limited to, the acquisition
of other businesses, the raising of additional capital for use in the Company's
business and the satisfaction of obligations under existing or future employee
benefit plans. The Company has no current plans for reissuance of the Shares
repurchased pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
PROPER TENDER OF SHARES. For Shares to be tendered properly pursuant to the
Offer, (a) the certificates for such Shares (or confirmation of receipt of such
Shares pursuant to the procedures for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) including any required signature guarantees
and any other documents required by the Letter of Transmittal, must be received
prior to 12:00 Midnight, New York City time, on the Expiration Date by the
Depositary at its address set forth on the back cover of this Offer to Purchase
or (b) the tendering shareholder must comply with the guaranteed delivery
procedure set forth below. IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER OF
TRANSMITTAL, SHAREHOLDERS DESIRING TO TENDER SHARES PURSUANT TO THE OFFER MUST
PROPERLY INDICATE IN THE SECTION CAPTIONED "PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED" ON THE LETTER OF TRANSMITTAL THE PRICE (IN
MULTIPLES OF $0.25) AT WHICH THEIR SHARES ARE BEING TENDERED. Shareholders who
desire to tender Shares at more than one price must complete a separate Letter
of Transmittal for each price at which Shares are tendered, provided that the
same Shares cannot be tendered (unless properly withdrawn previously in
accordance with the terms of the Offer) at more than one price. IN ORDER TO
PROPERLY TENDER
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SHARES, ONE AND ONLY ONE PRICE BOX MUST BE CHECKED IN THE APPROPRIATE SECTION ON
EACH LETTER OF TRANSMITTAL.
In addition, Odd Lot Holders who tender all such Shares must complete the
box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery, in order to qualify for the preferential
treatment available to Odd Lot Holders as set forth in Section 1.
SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee is
required (i) if the Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this Section 3, shall include any
participant in The Depository Trust Company or Philadelphia Depository Trust
Company (collectively, the "Book-Entry Transfer Facilities") whose name appears
on a security position listing as the owner of the Shares) tendered therewith
and such holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal; or (ii) if Shares are tendered for the account of a firm or
other entity that is a member in good standing of the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guaranteed
Program or the Stock Exchange Medallion Program (each such entity being
hereinafter referred to as an "Eligible Institution"). See Instruction 1 of the
Letter of Transmittal. If a certificate for Shares is registered in the name of
a person other than the person executing a Letter of Transmittal, or if payment
is to be made, or Shares not purchased or tendered are to be issued, to a person
other than the registered holder, then the certificate must be endorsed or
accompanied by an appropriate stock power, in either case, signed exactly as the
name of the registered holder appears on the certificate, or stock power
guaranteed by an Eligible Institution.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates for such Shares (or a timely confirmation of a book-entry transfer
of such Shares into the Depositary's account at a Book-Entry Transfer Facility
as described above), a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal. THE METHOD OF DELIVERY OF ALL DOCUMENTS,
INCLUDING CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF
DELIVERY IS BY MAIL, THEN REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED.
BOOK-ENTRY DELIVERY. The Depositary will establish an account with respect
to the Shares for purposes of the Offer at each Book-Entry Transfer Facility
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in a Book-Entry Transfer Facility's
system may make book-entry delivery of the Shares by causing such facility to
transfer Shares into the Depositary's account in accordance with the Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may be
effected through a book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, either (i) a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) with any required
signature guarantees or an Agent's Message, and any other required documents
must, in any case, be transmitted to and received by the Depositary at its
address set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or (ii) the guaranteed delivery procedure described below must
be followed. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary, which states that such
Book-Entry Transfer Facility has received an express acknowledgement from the
participant in such Book-Entry Transfer Facility tendering the Shares that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Company may enforce such agreement against such
participant.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING EQUAL TO 31% OF THE GROSS PAYMENTS MADE TO SHAREHOLDERS FOR SHARES
PURCHASED PURSUANT TO THE OFFER, EACH SHAREHOLDER WHO DOES NOT OTHERWISE
ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH
THE SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER ("TIN") AND PROVIDE
CERTAIN OTHER INFORMATION BY COMPLETING THE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL. In addition, the Internal Revenue Service (the "Service") may
impose a penalty on a tendering shareholder who fails to provide a correct TIN.
Certain shareholders (including, among others, all corporations and certain
foreign shareholders) are not subject to backup withholding. Foreign
shareholders (as defined below) may be required to submit Form W-8, certifying
non-United States status, to avoid backup withholding. See Instructions 14 and
15 of the Letter of Transmittal. For a discussion of certain federal income tax
consequences to tendering shareholders, see Section 14.
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WITHHOLDING FOR FOREIGN SHAREHOLDERS. Even if a foreign shareholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold federal income taxes equal to 30% of the gross payments payable to
a foreign shareholder or his agent unless the Depositary determines that an
exemption from or a reduced rate of withholding is available pursuant to a tax
treaty or an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business in
the United States (as defined in applicable Treasury Regulations). For this
purpose, a "foreign shareholder" is a beneficial owner of shares that is not a
"U.S. Holder." A U.S. Holder is a beneficial owner that is (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any State,
including the District of Columbia, (iii) an estate the income of which is
subject to United States federal income taxation regardless of the source of
such income or (iv) a trust if a United States court is able to exercise primary
supervision over administration of the trust and one or more United States
fiduciaries have authority to control all substantial decisions of the trust. In
order to obtain an exemption from or a reduced rate of withholding pursuant to a
tax treaty, a foreign shareholder must deliver to the Depositary a properly
completed Form 1001. In order to obtain an exemption from withholding on the
grounds that the gross proceeds paid pursuant to the Offer are effectively
connected with the conduct of a trade or business within the United States, a
foreign shareholder must deliver to the Depositary a properly completed Form
4224. The Depositary will determine a shareholder's status as a foreign
shareholder and eligibility for a reduced rate of, or an exemption from,
withholding by reference to any outstanding certificates or statements
concerning eligibility for a reduced rate of, or exemption from, withholding
(E.G., Form 1001 or Form 4224) unless facts and circumstances indicate that such
reliance is not warranted. A foreign shareholder may be eligible to obtain a
refund of all or a portion of any tax withheld if such shareholder meets one of
the three tests for sale treatment described in Section 14 or is otherwise able
to establish that no tax or a reduced amount of tax is due. Backup withholding
generally will not apply to amounts subject to the 30% or treaty-reduced rate of
withholding. Foreign shareholders are urged to consult their tax advisors
regarding the application of federal income tax withholding, including
eligibility for a withholding tax reduction or exemption and refund procedures.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share certificates cannot be delivered to the
Depositary prior to the Expiration Date (or the procedures for book-entry
transfer cannot be completed on a timely basis) or if time will not permit all
required documents to reach the Depositary prior to the Expiration Date, such
Shares may nevertheless be tendered, provided that all of the following
conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives by hand, mail, telegram or facsimile
transmission, prior to the Expiration Date, a properly completed and
duly executed Notice of Guaranteed Delivery substantially in the form
the Company has provided with this Offer to Purchase (specifying the
price at which the Shares are being tendered), including (where
required) a signature guarantee by an Eligible Institution; and
(c) the certificates for all tendered Shares, in proper form for transfer
(or confirmation of book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities),
together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) and any required
signature guarantees or other documents required by the Letter of
Transmittal, are received by the Depositary within three NYSE trading
days after the date of receipt by the Depositary of such Notice of
Guaranteed Delivery.
If any tendered Shares are not purchased, or if less than all Shares
evidenced by a shareholder's certificates are tendered, certificates for
unpurchased Shares will be returned as promptly as practicable after the
expiration or termination of the Offer or, in the case of Shares tendered by
book-entry transfer at a Book-Entry Transfer Facility, such Shares will be
credited to the appropriate account maintained by the tendering shareholder at
the appropriate Book-Entry Transfer Facility, in each case without expense to
such shareholder.
DIVIDEND REINVESTMENT PLAN. A shareholder participating in the Dividend
Reinvestment Plan who wishes to have American Stock Transfer & Trust Company,
who administers the Dividend Reinvestment Plan, tender Shares held in such
participant's account in the Dividend Reinvestment Plan should so indicate by
completing the separate election form included with the memorandum furnished to
such participants. THE PARTICIPANTS IN THE DIVIDEND REINVESTMENT PLAN MAY NOT
USE THE LETTER OF TRANSMITTAL TO DIRECT THE TENDER OF DIVIDEND REINVESTMENT PLAN
SHARES, BUT MUST USE THE SEPARATE ELECTION FORM ENCLOSED WITH THE MEMORANDUM TO
PARTICIPANTS IN THE TREDEGAR INDUSTRIES, INC. DIVIDEND REINVESTMENT AND STOCK
PURCHASE PLAN. DIVIDEND REINVESTMENT PLAN PARTICIPANTS ARE URGED TO READ THE
SEPARATE ELECTION FORM AND RELATED MATERIALS CAREFULLY. ANY DIVIDEND
REINVESTMENT PLAN SHARES TENDERED BUT NOT PURCHASED WILL BE RETURNED TO THE
PARTICIPANT'S DIVIDEND REINVESTMENT PLAN ACCOUNT.
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If a participant tenders all of his or her Dividend Reinvestment Plan
Shares and all such Shares are purchased by the Company pursuant to the Offer,
such tender will be deemed to be authorization and written notice to American
Stock Transfer & Trust Company of termination of such shareholder's
participation in the Dividend Reinvestment Plan.
SAVINGS PLAN. Participants in the Savings Plan who wish to have the Savings
Plan Trustee tender all or part of the Shares allocated to their accounts should
so indicate by completing, executing and returning to the Savings Plan Trustee
the election form included with the memorandum furnished to such participants.
THE PARTICIPANTS IN THE SAVINGS PLAN MAY NOT USE THE LETTER OF TRANSMITTAL TO
DIRECT THE TENDER OF THE SAVINGS PLAN SHARES, BUT MUST USE THE SEPARATE ELECTION
FORM ENCLOSED WITH THE MEMORANDUM TO PARTICIPANTS IN THE SAVINGS PLAN FOR THE
EMPLOYEES OF TREDEGAR INDUSTRIES, INC. SAVINGS PLAN PARTICIPANTS ARE URGED TO
READ THE SEPARATE ELECTION FORM AND RELATED MATERIALS CAREFULLY. ANY SAVINGS
PLAN SHARES TENDERED BUT NOT PURCHASED WILL BE RETURNED TO THE PARTICIPANT'S
SAVINGS PLAN ACCOUNT.
STOCK PURCHASE PLAN. Participants in the Stock Purchase Plan who wish to
have the Stock Purchase Plan Custodian tender all or part of the Shares
allocated to their accounts should so indicate by completing, executing and
returning to the Stock Purchase Plan Custodian the election form included with
the memorandum furnished to such participants. THE PARTICIPANTS IN THE STOCK
PURCHASE PLAN MAY NOT USE THE LETTER OF TRANSMITTAL TO DIRECT THE TENDER OF THE
STOCK PURCHASE PLAN SHARES, BUT MUST USE THE SEPARATE ELECTION FORM ENCLOSED
WITH THE MEMORANDUM TO PARTICIPANTS IN THE TREDEGAR INDUSTRIES, INC. EMPLOYEE
STOCK PURCHASE PLAN. STOCK PURCHASE PLAN PARTICIPANTS ARE URGED TO READ THE
SEPARATE ELECTION FORM AND RELATED MATERIALS CAREFULLY. ANY STOCK PURCHASE PLAN
SHARES TENDERED BUT NOT PURCHASED WILL BE RETURNED TO THE PARTICIPANT'S STOCK
PURCHASE PLAN ACCOUNT.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of Shares
to be accepted, the price to be paid for Shares to be accepted and the validity,
form, eligibility (including time of receipt) and acceptance of any tender of
Shares will be determined by the Company, in its sole discretion, and its
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders of any Shares that it determines
are not in appropriate form or the acceptance for payment of or payment for
which may be unlawful. The Company also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender with
respect to any particular Shares or any particular shareholder. No tender of
Shares will be deemed to have been properly made until all defects or
irregularities have been cured by the tendering shareholder or waived by the
Company. None of the Company, the Dealer Manager, the Depositary, the
Information Agent or any other person shall be obligated to give notice of any
defects or irregularities in tenders, nor shall any of them incur any liability
for failure to give any such notice.
TENDERING SHAREHOLDER'S REPRESENTATION AND WARRANTY; COMPANY'S ACCEPTANCE
CONSTITUTES AN AGREEMENT. A tender of Shares pursuant to any of the procedures
described above will constitute the tendering shareholder's acceptance of the
terms and conditions of the Offer, as well as the tendering shareholder's
representation and warranty to the Company that (a) such shareholder has a net
long position in the Shares being tendered within the meaning of Rule 14e-4
promulgated by the Commission under the Exchange Act and (b) the tender of such
Shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person,
directly or indirectly, to tender Shares for such person's own account unless,
at the time of tender and at the end of the proration period or period during
which Shares are accepted by lot (including any extensions thereof), the person
so tendering (i) has a net long position equal to or greater than the amount of
(x) Shares tendered or (y) other securities convertible into or exchangeable or
exercisable for the Shares tendered and will acquire such Shares for tender by
conversion, exchange or exercise and (ii) will deliver or cause to be delivered
such Shares in accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a tender on behalf
of another person. The Company's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the tendering
shareholder and the Company upon the terms and conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company pursuant to the Offer, may also be withdrawn
at any time after 12:00 Midnight, New York City time, on Monday, March 16, 1998.
For a withdrawal to be effective, a notice of withdrawal must be in
written, telegraphic or facsimile transmission form and must be received in a
timely manner by the Depositary at its address set forth on the back cover of
this Offer to Purchase. Any such notice of withdrawal must specify the name of
the tendering shareholder, the name of the registered holder, if different from
that of the person who tendered such Shares, the number of Shares tendered and
the number of Shares to be withdrawn. If the certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the release of such certificates, the tendering shareholder must also
submit the serial numbers shown on the particular
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certificates for Shares to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution (except in the case of
Shares tendered by an Eligible Institution). If Shares have been tendered
pursuant to the procedure for book-entry tender set forth in Section 3, the
notice of withdrawal also must specify the name and the number of the account at
the applicable Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with the procedures of such facility. None of the
Company, the Dealer Manager, the Depositary, the Information Agent or any other
person shall be obligated to give notice of any defects or irregularities in any
notice of withdrawal nor shall any of them incur liability for failure to give
any such notice. All questions as to the form and validity (including time of
receipt) of notices of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding.
Withdrawals may not be rescinded and any Shares withdrawn will thereafter
be deemed not properly tendered for purposes of the Offer unless such withdrawn
Shares are properly retendered prior to the Expiration Date by again following
one of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain tendered Shares on behalf of the Company, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, as promptly as
practicable following the Expiration Date, the Company (i) will determine the
Purchase Price it will pay for the Shares properly tendered and not withdrawn
prior to the Expiration Date, taking into account the number of Shares so
tendered and the prices specified by tendering shareholders, and (ii) will
accept for payment and pay for (and thereby purchase) Shares properly tendered
at prices at or below the Purchase Price and not withdrawn prior to the
Expiration Date. For purposes of the Offer, the Company will be deemed to have
accepted for payment (and therefore purchased) Shares that are tendered at or
below the Purchase Price and not withdrawn (subject to the proration and
conditional tender provisions of the Offer) only when, as and if it gives oral
or written notice to the Depositary of its acceptance of such Shares for payment
pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, promptly
following the Expiration Date the Company will accept for payment and pay a
single per Share Purchase Price for 1,250,000 Shares (subject to increase or
decrease as provided in Section 15) or such lesser number of Shares as are
properly tendered at prices not in excess of $65.00 nor less than $58.00 per
Share and not withdrawn as permitted in Section 4.
The Company will pay for Shares purchased pursuant to the Offer by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering shareholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date; however, the Company does not expect to be able to
announce the final results of any proration and commence payment for Shares
purchased until approximately five NYSE trading days after the Expiration Date.
Certificates for all Shares tendered and not purchased, including all Shares
tendered at prices in excess of the Purchase Price and Shares not purchased due
to proration or conditional tender, will be returned (or, in the case of Shares
tendered by book-entry transfer, such Shares will be credited to the account
maintained with the Book-Entry Transfer Facility by the participant therein who
so delivered such Shares) to the tendering shareholder at the Company's expense
as promptly as practicable after the Expiration Date without expense to the
tendering shareholders. Under no circumstances will interest on the Purchase
Price be paid by the Company by reason of any delay in making payment. In
addition, if certain events occur, the Company may not be obligated to purchase
Shares pursuant to the Offer. See Section 7.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if unpurchased Shares are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered in
the name of any person other than the person signing the Letter of Transmittal,
the amount of all stock transfer taxes, if any (whether imposed on the
registered holder or such other person), payable on account of the transfer to
such person will be deducted from the Purchase Price unless satisfactory
evidence of the payment of the stock transfer taxes, or exemption therefrom, is
submitted. See Instruction 7 of the Letter of Transmittal.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN
AND RETURN TO THE DEPOSITARY THE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF
31% OF THE GROSS
8
<PAGE>
PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE
SECTION 3. ALSO SEE SECTION 3 REGARDING FEDERAL INCOME TAX CONSEQUENCES FOR
FOREIGN SHAREHOLDERS.
6. CONDITIONAL TENDER OF SHARES. Under certain circumstances set forth in
Section 1 above, the Company may prorate the number of Shares purchased pursuant
to the Offer. As discussed in Section 14, the number of Shares to be purchased
from a particular shareholder might affect the tax consequences to such
shareholder of such purchase and such shareholder's decision whether to tender.
Accordingly, a shareholder may tender Shares subject to the condition that a
specified minimum number, if any, must be purchased, and any shareholder wishing
to make such a conditional tender should so indicate in the box captioned
"Conditional Tender" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery. It is the tendering shareholder's responsibility
to calculate such minimum number of Shares and each shareholder is urged to
consult his or her own tax advisor. If the effect of accepting tenders on a PRO
RATA basis is to reduce the number of Shares to be purchased from any
shareholder below the minimum number so specified, such tender will
automatically be deemed withdrawn, except as provided in the next paragraph, and
Shares tendered by such shareholder will be returned as soon as practicable
after the Expiration Date.
However, if so many conditional tenders would be deemed withdrawn that the
total number of Shares to be purchased falls below 1,250,000 Shares, then to the
extent feasible, the Company will select enough of such conditional tenders,
which would otherwise have been deemed withdrawn, to purchase such desired
number of Shares. In selecting among such conditional tenders, the Company will
select by random lot and will limit its purchase in each case to the designated
minimum number of Shares to be purchased. Conditional tenders will be selected
by lot only from shareholders who tender all of their Shares.
A tender of shares is not a taxable transaction for a Savings Plan
participant. Accordingly, Savings Plan participants may not make a conditional
tender.
IN THE EVENT OF PRORATION, ANY SHARES TENDERED PURSUANT TO A CONDITIONAL
TENDER FOR WHICH THE MINIMUM REQUIREMENTS ARE NOT SATISFIED MAY NOT BE ACCEPTED
AND THEREBY DEEMED WITHDRAWN.
7. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, purchase or pay for any Shares tendered, and may
terminate or amend the Offer or may postpone the acceptance for payment of, or
the purchase of and the payment for Shares tendered, subject to Rule 13e-4(f)
under the Exchange Act, if at any time on or after January 16, 1998 and prior to
the time of payment for any such Shares (whether any Shares have theretofore
been accepted for payment, purchased or paid for pursuant to the Offer) any of
the following events shall have occurred (or shall have been determined by the
Company to have occurred) that, in the Company's sole judgment in any such case
and regardless of the circumstances giving rise thereto (including any action or
omission to act by the Company), makes it inadvisable to proceed with the Offer
or with such acceptance for payment or payment:
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person,
domestic or foreign, before any court, authority, agency or tribunal
that directly or indirectly (i) challenges the making of the Offer, the
acquisition of some or all of the Shares pursuant to the Offer or
otherwise relates in any manner to the Offer, or (ii) in the Company's
sole judgment, could materially and adversely affect the business,
condition (financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, or otherwise materially
impair in any way the contemplated future conduct of the business of
the Company or any of its subsidiaries or materially impair the
contemplated benefits of the Offer to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the
Company or any of its subsidiaries, by any court or any authority,
agency or tribunal that, in the Company's sole judgment, would or might
directly or indirectly (i) make the acceptance for payment of, or
payment for, some or all of the Shares illegal or otherwise restrict or
prohibit consummation of the Offer; (ii) delay or restrict the ability
of the Company, or render the Company unable, to accept for payment or
pay for some or all of the Shares; (iii) materially impair the
contemplated benefits of the Offer to the Company; or (iv) materially
and adversely affect the business, condition (financial or other),
income, operations or prospects of
9
<PAGE>
the Company and its subsidiaries, taken as a whole, or otherwise
materially impair in any way the contemplated future conduct of the
business of the Company or any of its subsidiaries;
(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities
exchange or in the over-the-counter market; (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States; (iii) the commencement of a war, armed hostilities
or other international or national calamity directly or indirectly
involving the United States; (iv) any limitation (whether or not
mandatory) by any governmental, regulatory or administrative agency or
authority on, or any event that, in the Company's sole judgment, might
affect, the extension of credit by banks or other lending institutions
in the United States; (v) any significant decrease in the market price
of the Shares or any change in the general political, market, economic
or financial conditions in the United States or abroad that could, in
the sole judgment of the Company, have a material adverse effect on the
Company's business, operations or prospects or the trading in the
Shares; (vi) in the case of any of the foregoing existing at the time
of the commencement of the Offer, a material acceleration or worsening
thereof; or (vii) any decline in either the Dow Jones Industrial
Average or the Standard and Poor's Index of 500 Industrial Companies by
an amount in excess of 10 percent measured from the close of business
on January 15, 1998;
(d) a tender or exchange offer with respect to some or all of the Shares
(other than the Offer), or a merger or acquisition proposal for the
Company, shall have been proposed, announced or made by another person
or shall have been publicly disclosed, or the Company shall have
learned that (i) any person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act), other than the Savings Plan or members
of the Gottwald family (see Section 11), shall have acquired or
proposed to acquire beneficial ownership of more than five percent of
the outstanding Shares, or any new group shall have been formed that
beneficially owns more than five percent of the outstanding Shares; or
(e) any change or changes shall have occurred in the business, financial
condition, assets, income, operations, prospects or stock ownership of
the Company or its subsidiaries that, in the Company's judgment, is or
may be material to the Company or its subsidiaries.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition, and may be waived by
the Company, in whole or in part, at any time and from time to time in its sole
discretion. The Company's failure at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Company concerning the events described above
will be final and binding."
10
<PAGE>
8. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and traded on
the NYSE. The following table sets forth, for the periods indicated, the high
and low closing per Share sales prices on the NYSE Composite Tape as compiled
from published financial sources and the cash dividends paid per Share in each
such fiscal quarter:
<TABLE>
<CAPTION>
FISCAL YEAR HIGH LOW DIVIDENDS
- ----------------------------------------------------------------------------------------------- ------ ------ ---------
<S> <C> <C> <C>
1996:
1st Quarter............................................................................. 25.88 20.50 .06
2nd Quarter............................................................................. 35.00 24.25 .06
3rd Quarter............................................................................. 34.38 29.00 .06
4th Quarter............................................................................. 45.38 34.25 .06
1997:
1st Quarter............................................................................. 42.50 37.63 .08
2nd Quarter............................................................................. 56.38 40.25 .08
3rd Quarter............................................................................. 72.25 52.63 .08
4th Quarter............................................................................. 73.94 63.19 .09
1998:
1st Quarter (through January 15, 1998).................................................. 64.56 57.00 .09
</TABLE>
On January 13, 1998, the last full trading day on the NYSE prior to the
announcement of the Offer, the closing per Share sales price on the NYSE
Composite Tape was $58.94. On January 15, 1998, the last full trading day on the
NYSE prior to the commencement of the Offer, the closing per Share sales price
on the NYSE Composite Tape was $64.00. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
9. SOURCE AND AMOUNT OF FUNDS. The Company intends to use available cash
and cash equivalents to fund the Offer. If necessary, the Company will use
available borrowings under its revolving credit facility to provide additional
funds for the Offer. Assuming that the Company purchases 1,250,000 Shares
pursuant to the Offer at a price of $65.00 per Share, the total amount required
by the Company to purchase such Shares will be $81.25 million, exclusive of
estimated fees and other expenses of $225,000.
The Company has a revolving credit facility that permits it to borrow up to
$275 million (no amounts borrowed at January 16, 1998) pursuant to an agreement
dated as of July 9, 1997 among the Company and the banks named therein
(including The Chase Manhattan Bank, as administrative agent, NationsBank, N.A.,
as documentation agent and Long-Term Credit Bank of Japan, Limited, as co-agent)
and maturing on July 9, 2002. The facility provides for interest to be charged
at a base rate (generally the London Interbank Offered Rate ("LIBOR")) plus a
spread that is dependent on the Company's quarterly debt-to-total capitalization
ratio. A facility fee is also charged under the agreement on the $275 million
commitment amount. The spread and facility fees charged under the agreement at
various debt-to-total capitalization levels are as follows:
<TABLE>
<CAPTION>
(BASIS POINTS)
LIBOR FACILITY
DEBT-TO-TOTAL CAPITALIZATION RATIO SPREAD FEE
- ------------------------------------------------------------------------------------ ----- --------
<S> <C> <C>
Less than or equal to 35%........................................................... 16.50 8.50
Greater than 35% and less than or equal to 50%...................................... 22.50 10.00
Greater than 50%.................................................................... 30.00 15.00
</TABLE>
In addition, a utilization fee of five basis points is charged on the
outstanding principal amount when more than $137.5 million is borrowed under the
agreement.
In the event that the Company does borrow under its revolving credit
facility to fund a portion of the Offer, the Company does not have current plans
or arrangements to repay such borrowings other than by cash generated from
operating and investment activities.
The Company's loan agreements contain restrictions, among others, on the
minimum shareholders' equity required and the maximum debt-to-total
capitalization ratio permitted (60%) (see note (d) of "Notes to Pro Forma
Financial Information" below for the pro forma effects of the Offer on
shareholders' equity in excess of the minimum required and borrowings permitted
under the revolving credit facility at the 60% debt-to-total capitalization
limitation).
11
<PAGE>
10. CERTAIN INFORMATION CONCERNING THE COMPANY.
GENERAL
The Company was formed under the laws of the Commonwealth of Virginia as a
wholly owned subsidiary of Ethyl Corporation ("Ethyl") on June 1, 1988. On July
10, 1989, Ethyl distributed all of the outstanding common stock of the Company
to Ethyl's shareholders. Since July 10, 1989, the Company has been a publicly
held operating company. The Company is engaged directly or through subsidiaries
in the manufacture of plastics and aluminum extrusions and has interests in drug
discovery and other technologies. Additional information concerning the Company
is contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, and the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997. See " -- Additional Information."
CERTAIN FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
The following financial highlights are a summary of selected items from the
"Selected Historical and Pro Forma Financial Information" and should be read in
conjunction with, and not as a substitute for, the more detailed "Selected
Historical and Pro Forma Financial Information":
<TABLE>
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
ENDED DECEMBER 31 ENDED DECEMBER 31
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
Net sales........................................................ $147,632 $126,408 $581,004 $523,551
Net income (a):
Historical..................................................... 16,008 9,280 58,446 45,035
Pro forma for the Offer at $65.00.............................. 15,223 8,543 55,400 42,084
Diluted earnings per share (a):
Historical..................................................... 1.20 .70 4.43 3.44
Pro forma for the Offer at $65.00.............................. 1.27 .71 4.62 3.47
</TABLE>
The significant improvement in operating results in 1997 was due primarily
to higher volume and efficiencies in Film Products and Aluminum Extrusions, and
contract research revenues supporting research and development programs at
Molecumetics. In addition, improved 1997 net income reflected significant
realized net gains from technology-related investments.
- ---------------
(a) Net income and diluted earnings per share, adjusted for unusual items and
technology-related investment net gains affecting the comparability of
operating results among periods and pro forma adjustments, are presented
below (see notes (a) and (b) of "Notes to Pro Forma Financial Information"):
<TABLE>
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
ENDED DECEMBER 31 ENDED DECEMBER 31
------------------ -------------------
1997 1996 1997 1996
------- ------ ------- -------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
Net income as adjusted for unusual items and technology-related
investment net gains:
Historical.......................................................... $13,313 $9,280 $48,124 $35,187
Pro forma for the Offer at $65.00................................... 12,528 8,543 45,078 32,236
Diluted earnings per share as adjusted for unusual items and
technology-related investment net gains:
Historical.......................................................... 1.00 .70 3.65 2.69
Pro forma for the Offer at $65.00................................... 1.04 .71 3.76 2.66
</TABLE>
12
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
Set forth below is certain selected historical and 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 Annual Report on Form 10-K for the year ended
December 31, 1996, the unaudited financial statements contained in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997, and the
financial results for the quarter and year ended December 31, 1997, included in
the Company's recent quarterly report to shareholders. The historical
information below is qualified in its entirety by reference to such reports and
the information contained therein.
The pro forma information on financial position assumes that the Company on
that date used available cash and cash equivalents to purchase 1,250,000 Shares
pursuant to the Offer at prices of $58.00 and $65.00. The pro forma information
on the results of operations for the year and three months ended December 31,
1997, the three months ended December 31, 1996, and the nine months ended
September 30, 1997, assumes that at the beginning of each period shown, the
Company used available cash and cash equivalents to purchase 1,250,000 Shares
pursuant to the Offer at prices of $58.00 and $65.00. The pro forma information
on the results of operations for the year ended December 31, 1996, (i) assumes
that at the beginning of the period the Company used available cash and cash
equivalents and borrowed funds under its revolving credit facility to purchase
1,250,000 Shares pursuant to the Offer at prices of $58.00 and $65.00, and (ii)
repaid assumed borrowings with cash generated during the period. Each period
presented should be treated as a stand-alone period.
The pro forma financial information of the Company is unaudited and does
not purport to be indicative of the future results or the 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 (b) of "Notes to Pro Forma Financial Information"
for net income and diluted earnings per share adjusted for unusual items and
technology-related investment net gains affecting the comparability of operating
results among periods and pro forma adjustments.
13
<PAGE>
TREDEGAR INDUSTRIES, INC.
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER-SHARE AMOUNTS AND RATIOS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE THREE MONTHS ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
PRO FORMA PRO FORMA
------------------------- -------------------------
$58.00/SH. $65.00/SH. $58.00/SH. $65.00/SH.
PURCHASE PURCHASE PURCHASE PURCHASE
HISTORICAL PRICE PRICE HISTORICAL PRICE PRICE
-------- ---------- ---------- -------- ---------- ----------
RESULTS OF OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net sales.................................. $147,632 $ 147,632 $ 147,632 $126,408 $ 126,408 $ 126,408
Other income (expense), net (b)............ 5,314 4,513(a) 4,417(a) 924 173(a) 82(a)
-------- ---------- ---------- -------- ---------- ----------
152,946 152,145 152,049 127,332 126,581 126,490
-------- ---------- ---------- -------- ---------- ----------
Cost of goods sold......................... 114,288 114,288 114,288 99,714 99,714 99,714
Selling, general and administrative
expenses................................. 10,107 10,107 10,107 8,891 8,891 8,891
Research and development expenses.......... 3,503 3,503 3,503 3,546 3,546 3,546
Interest expense........................... 354 354 354 568 568 568
-------- ---------- ---------- -------- ---------- ----------
128,252 128,252 128,252 112,719 112,719 112,719
-------- ---------- ---------- -------- ---------- ----------
Income before income taxes................. 24,694 23,893 23,797 14,613 13,862 13,771
Income taxes............................... 8,686 8,586(a) 8,574(a) 5,333 5,239(a) 5,228(a)
-------- ---------- ---------- -------- ---------- ----------
Net income (b)............................. $ 16,008 $ 15,307 $ 15,223 $ 9,280 $ 8,623 $ 8,543
-------- ---------- ---------- -------- ---------- ----------
Basic earnings per share (b)............... $ 1.30 $ 1.38 $ 1.37 $ .76 $ .79 $ .78
-------- ---------- ---------- -------- ---------- ----------
Diluted earnings per share (b)............. $ 1.20 $ 1.28 $ 1.27 $ .70 $ .71 $ .71
-------- ---------- ---------- -------- ---------- ----------
Shares used to compute:
Basic earnings per share................. 12,338 11,088(a) 11,088(a) 12,227 10,977(a) 10,977(a)
Diluted earnings per share............... 13,260 11,951(a) 11,993(a) 13,192 12,085(a) 12,116(a)
Ratio of earnings to fixed charges (c)..... 30.1x 29.2x 29.1x 16.3x 15.5x 15.4x
</TABLE>
See accompanying notes to pro forma financial information.
14
<PAGE>
TREDEGAR INDUSTRIES, INC.
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER-SHARE AMOUNTS AND RATIOS)
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR
AS OF AND FOR THE YEAR ENDED ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- -----------------------
PRO FORMA PRO FORMA
------------------------- ----------
$58.00/SH. $65.00/SH. $58.00/SH.
PURCHASE PURCHASE PURCHASE
HISTORICAL PRICE PRICE HISTORICAL PRICE
-------- ---------- ---------- -------- ----------
RESULTS OF OPERATIONS:
<S> <C> <C> <C> <C> <C>
Net sales....................................... $581,004 $581,004 $581,004 $523,551 $523,551
Other income (expense), net (b)................. 17,015 13,909(a) 13,535(a) 4,248 1,646(a)
-------- ---------- ---------- -------- ----------
598,019 594,913 594,539 527,799 525,197
-------- ---------- ---------- -------- ----------
Cost of goods sold.............................. 457,946 457,946 457,946 417,270 417,270
Selling, general and administrative
expenses...................................... 37,035 37,035 37,035 39,719 39,719
Research and development expenses............... 13,170 13,170 13,170 11,066 11,066
Interest expense................................ 1,952 1,952 1,952 2,176 2,764(a)
Unusual items (b)............................... (2,250) (2,250) (2,250) (11,427) (11,427)
-------- ---------- ---------- -------- ----------
507,853 507,853 507,853 458,804 459,392
-------- ---------- ---------- -------- ----------
Income before income taxes...................... 90,166 87,060 86,686 68,995 65,805
Income taxes.................................... 31,720 31,332(a) 31,286(a) 23,960 23,406(a)
-------- ---------- ---------- -------- ----------
Net income (b).................................. $ 58,446 $ 55,728 $ 55,400 $ 45,035 $ 42,399
-------- ---------- ---------- -------- ----------
Basic earnings per share (b).................... $ 4.76 $ 5.05 $ 5.02 $ 3.69 $ 3.87
-------- ---------- ---------- -------- ----------
Diluted earnings per share (b).................. $ 4.43 $ 4.67 $ 4.62 $ 3.44 $ 3.50
-------- ---------- ---------- -------- ----------
Shares used to compute:
Basic earnings per share...................... 12,287 11,037(a) 11,037(a) 12,208 10,958(a)
Diluted earnings per share.................... 13,178 11,945(a) 11,982(a) 13,105 12,107(a)
Ratio of earnings to fixed charges (c).......... 25.5x 24.7x 24.6x 19.0x 15.9x
FINANCIAL POSITION:
Assets:
Cash and cash equivalents..................... $120,065 $ 47,340(d) $ 38,590(d) $101,261 $ 28,536(d)
Other current assets.......................... 103,065 103,065 103,065 93,161 93,161
Property, plant and equipment, net............ 100,598 100,598 100,598 90,429 90,429
Other assets and deferred charges............. 67,134 67,134 67,134 36,094 36,094
Goodwill and other intangibles................ 20,075 20,075 20,075 20,132 20,132
-------- ---------- ---------- -------- ----------
Total assets................................ $410,937 $338,212 $329,462 $341,077 $268,352
-------- ---------- ---------- -------- ----------
Liabilities and shareholders' equity:
Total current liabilities..................... $ 72,786 $ 72,786 $ 72,786 $ 61,301 $ 61,301
Long-term debt................................ 30,000 30,000 30,000 35,000 35,000
Deferred income taxes......................... 22,108 22,108 22,108 16,994 16,994
Other noncurrent liabilities.................. 13,497 13,497 13,497 15,237 15,237
Shareholders' equity.......................... 272,546 199,821(d) 191,071(d) 212,545 139,820(d)
-------- ---------- ---------- -------- ----------
Total liabilities and shareholders'
equity.................................... $410,937 $338,212 $329,462 $341,077 $268,352
-------- ---------- ---------- -------- ----------
Ending common and dilutive common equivalent
shares........................................ 13,258 11,962 12,003 13,073 11,950
Book value per common and dilutive common
equivalent share.............................. $ 20.56 $ 16.70 $ 15.92 $ 16.26 $ 11.70
Working capital excluding cash and cash
equivalents................................... $ 30,279 $ 30,279 $ 30,279 $ 31,860 $ 31,860
Debt as a % of total capitalization............. 9.9% 13.1% 13.6% 14.1% 20.0%
<CAPTION>
$65.00/SH.
PURCHASE
PRICE
----------
RESULTS OF OPERATIONS:
<S> <C>
Net sales....................................... $523,551
Other income (expense), net (b)................. 1,555(a)
----------
525,106
----------
Cost of goods sold.............................. 417,270
Selling, general and administrative
expenses...................................... 39,719
Research and development expenses............... 11,066
Interest expense................................ 3,149(a)
Unusual items (b)............................... (11,427)
----------
459,777
----------
Income before income taxes...................... 65,329
Income taxes.................................... 23,245(a)
----------
Net income (b).................................. $ 42,084
----------
Basic earnings per share (b).................... $ 3.84
----------
Diluted earnings per share (b).................. $ 3.47
----------
Shares used to compute:
Basic earnings per share...................... 10,958(a)
Diluted earnings per share.................... 12,138(a)
Ratio of earnings to fixed charges (c).......... 14.6x
FINANCIAL POSITION:
Assets:
Cash and cash equivalents..................... $ 19,786(d)
Other current assets.......................... 93,161
Property, plant and equipment, net............ 90,429
Other assets and deferred charges............. 36,094
Goodwill and other intangibles................ 20,132
----------
Total assets................................ $259,602
----------
Liabilities and shareholders' equity:
Total current liabilities..................... $ 61,301
Long-term debt................................ 35,000
Deferred income taxes......................... 16,994
Other noncurrent liabilities.................. 15,237
Shareholders' equity.......................... 131,070(d)
----------
Total liabilities and shareholders'
equity.................................... $259,602
----------
Ending common and dilutive common equivalent
shares........................................ 11,980
Book value per common and dilutive common
equivalent share.............................. $ 10.94
Working capital excluding cash and cash
equivalents................................... $ 31,860
Debt as a % of total capitalization............. 21.1%
</TABLE>
See accompanying notes to pro forma financial information.
15
<PAGE>
TREDEGAR INDUSTRIES, INC.
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER-SHARE AMOUNTS AND RATIOS)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997
--------------------------------------
PRO FORMA
-------------------------
$58.00/SH. $65.00/SH.
PURCHASE PURCHASE
HISTORICAL PRICE PRICE
-------- ---------- ----------
<S> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales............................................................................. $433,372 $ 433,372 $ 433,372
Other income (expense), net (b)....................................................... 11,701 9,396(a) 9,118(a)
-------- ---------- ----------
445,073 442,768 442,490
-------- ---------- ----------
Cost of goods sold.................................................................... 343,658 343,658 343,658
Selling, general and administrative expenses.......................................... 26,928 26,928 26,928
Research and development expenses..................................................... 9,667 9,667 9,667
Interest expense...................................................................... 1,598 1,598 1,598
Unusual items (b)..................................................................... (2,250) (2,250) (2,250)
-------- ---------- ----------
379,601 379,601 379,601
-------- ---------- ----------
Income before income taxes............................................................ 65,472 63,167 62,889
Income taxes.......................................................................... 23,034 22,746(a) 22,712(a)
-------- ---------- ----------
Net income (b)........................................................................ $ 42,438 $ 40,421 $ 40,177
-------- ---------- ----------
Basic earnings per share (b).......................................................... $ 3.46 $ 3.67 $ 3.65
-------- ---------- ----------
Diluted earnings per share (b)........................................................ $ 3.23 $ 3.38 $ 3.35
-------- ---------- ----------
Shares used to compute:
Basic earnings per share............................................................ 12,271 11,021(a) 11,021(a)
Diluted earnings per share.......................................................... 13,158 11,948(a) 11,984(a)
Ratio of earnings to fixed charges (c)................................................ 24.2x 23.4x 23.3x
</TABLE>
See accompanying notes to pro forma financial information.
16
<PAGE>
NOTES TO PRO FORMA FINANCIAL INFORMATION
(A) PRO FORMA ADJUSTMENTS TO RESULTS OF OPERATIONS FOR THE OFFER.
Pro forma adjustments to results of operations for interest income and
interest expense were computed using the following pro forma average cash flows
and interest rate assumptions:
<TABLE>
<CAPTION>
FOURTH QUARTER TWELVE MONTHS NINE
ENDED DECEMBER 31 ENDED DECEMBER 31 MONTHS
------------------ ------------------ ENDED
1997 1996 1997 1996 9/30/97
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Assumed reduction in actual average interest-bearing cash and
cash equivalent balances............................................. $72,672 $72,675 $72,593 $62,586 $72,566
Assumed increase in average borrowings under revolving
credit facility...................................................... -- -- -- 10,043 --
------- ------- ------- ------- -------
Pro forma impact on average cash flows of the Offer at $58.00.......... 72,672 72,675 72,593 72,629 72,566
Incremental impact on assumed average interest-bearing cash and cash
equivalent balances for the Offer at $65.00.......................... 8,750 8,750 8,750 2,188 8,750
Incremental impact on assumed average borrowings for the Offer at
$65.00............................................................... -- -- -- 6,562 --
------- ------- ------- ------- -------
Pro forma impact on average cash
flows of the Offer at $65.00......................................... $81,422 $81,425 $81,343 $81,379 $81,316
------- ------- ------- ------- -------
Average interest rates used for pro forma adjustments:
Interest income:
Actual yield.................................................... 4.3% 4.0% 4.2% 4.1% 4.2%
Tax-equivalent yield............................................ 5.8% 5.5% 5.7% 5.5% 5.7%
Interest expense (based on the Company's spread under its
revolving credit facility over one-month LIBOR for the
period)......................................................... -- -- -- 5.9% --
</TABLE>
Pro forma average cash flows include a reduction for average dividends
during each period. Pro forma income tax adjustments for interest income were
recognized at an assumed combined effective state and federal income tax rate of
approximately 12.5%, reflecting average tax-exempt interest of approximately 65%
of total interest income. Pro forma income tax adjustments for interest expense
were recognized at an assumed combined state and federal income tax rate of 39%.
Pro forma basic earnings per share was computed by subtracting the
1,250,000 Shares pursuant to the Offer from the weighted average shares
outstanding for the period. The pro forma adjustments to shares used to compute
diluted earnings per share are shown below:
<TABLE>
<CAPTION>
FOURTH QUARTER TWELVE MONTHS NINE
ENDED DECEMBER 31 ENDED DECEMBER 31 MONTHS
------------------ ------------------ ENDED
1997 1996 1997 1996 9/30/97
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Weighted average shares outstanding used to compute basic earnings per
share................................................................ 12,338 12,227 12,287 12,208 12,271
Shares issuable upon the assumed exercise of stock options............. 922 965 891 897 887
------- ------- ------- ------- -------
Shares used to compute diluted earnings per share...................... 13,260 13,192 13,178 13,105 13,158
Pro forma adjustments:
Assumed purchase of Shares in accordance with the Offer.............. (1,250) (1,250) (1,250) (1,250) (1,250)
Incremental potentially dilutive stock
options for the Offer at $58.00................................... (59) 143 17 252 40
------- ------- ------- ------- -------
Total pro forma adjustments for the Offer at $58.00.................. (1,309) (1,107) (1,233) (998) (1,210)
------- ------- ------- ------- -------
Shares used to compute pro forma diluted
earnings per share for the Offer at $58.00........................... 11,951 12,085 11,945 12,107 11,948
Incremental potentially dilutive stock options
for the Offer at $65.00.............................................. 42 31 37 31 36
------- ------- ------- ------- -------
Shares used to compute pro forma diluted earnings per share for the
Offer at $65.00...................................................... 11,993 12,116 11,982 12,138 11,984
------- ------- ------- ------- -------
</TABLE>
17
<PAGE>
(B) UNUSUAL ITEMS AND TECHNOLOGY-RELATED INVESTMENT NET GAINS.
Net income and diluted earnings per share, adjusted for unusual items and
technology-related investment net gains affecting the comparability of operating
results among periods and pro forma adjustments, are presented below:
<TABLE>
<CAPTION>
FOURTH QUARTER TWELVE MONTHS NINE
ENDED DECEMBER 31 ENDED DECEMBER 31 MONTHS
----------------- ------------------ ENDED
1997 1996 1997 1996 9/30/97
------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
Historical net income as reported....................................... $16,008 $9,280 $58,446 $45,035 $42,438
After-tax effect of unusual items:
Redemption of preferred stock received in connection
with the divestiture of Molded Products............................ -- -- (1,440) -- (1,440)
Gain on sale of property in Fremont, CA............................... -- -- -- (1,215) --
Write-off of specialized machinery and equipment due to excess
capacity in certain industrial packaging films..................... -- -- -- 795 --
Combined net gain on the Molded Products
and Brudi divestitures............................................. -- -- -- (8,059) --
------- ------ ------- ------- -------
Historical net income as adjusted for unusual items..................... 16,008 9,280 57,006 36,556 40,998
After-tax effect of technology-related investment net gains............. (2,695) -- (8,882) (1,369) (6,187)
------- ------ ------- ------- -------
Historical net income as adjusted for unusual items and technology-
related investment net gains.......................................... 13,313 9,280 48,124 35,187 34,811
Pro forma adjustments for the Offer at $58.00........................... (701) (657) (2,718) (2,636) (2,017)
------- ------ ------- ------- -------
Pro forma net income as adjusted for unusual items, technology-related
investment net gains and the Offer at $58.00.......................... 12,612 8,623 45,406 32,551 32,794
Incremental after-tax impact of the Offer at $65.00..................... (84) (80) (328) (315) (244)
------- ------ ------- ------- -------
Pro forma net income as adjusted for unusual items, technology-related
investment net gains and the Offer at $65.00.......................... $12,528 $8,543 $45,078 $32,236 $32,550
------- ------ ------- ------- -------
Diluted earnings per share:
As reported........................................................... $ 1.20 $ .70 $ 4.43 $ 3.44 $ 3.23
As adjusted for unusual items and technology-related investment net
gains.............................................................. 1.00 .70 3.65 2.69 2.65
As adjusted for unusual items, technology-related investment net gains
and the Offer at:
$58.00............................................................. 1.06 .71 3.80 2.69 2.74
$65.00............................................................. 1.04 .71 3.76 2.66 2.72
</TABLE>
Technology-related investment net gains (pre-tax) are included in "Other
income (expense), net" in the results of operations.
(C) RATIO OF EARNINGS TO FIXED CHARGES.
The ratio of earnings to fixed charges has been affected by unusual items
and technology-related investment net gains (see note (b)). The pro forma ratios
of earnings to fixed charges at the maximum Offer price of $65.00, as adjusted
for the pretax effects of unusual items and technology-related investment net
gains, are 24.1, 15.4, 20.2, 11.7 and 19.0 for the three months ended December
31, 1997 and 1996, the years ended December 31, 1997 and 1996, and the nine
months ended September 30, 1997, respectively.
18
<PAGE>
(D) PRO FORMA ADJUSTMENTS TO FINANCIAL POSITION FOR THE OFFER.
Pro forma adjustments to shareholders' equity for the Offer at December 31,
1997 and 1996, are as follows:
<TABLE>
<CAPTION>
$58.00/SH. $65.00/SH.
PURCHASE PURCHASE
PRICE PRICE
---------- ----------
<S> <C> <C>
(IN THOUSANDS)
1,250,000 Shares assumed purchased............................... $ 72,500 $ 81,250
Estimated transaction costs...................................... 225 225
---------- ----------
Assumed total cost of Offer...................................... $ 72,725 $ 81,475
---------- ----------
</TABLE>
The Offer was assumed funded on a pro forma basis with available cash and
cash equivalents. The Company's loan agreements contain restrictions, among
others, on the minimum shareholders' equity required and the maximum
debt-to-total capitalization ratio permitted (60%). The pro forma effects of the
Offer on these restrictions are summarized below:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------------------------
PRO FORMA
-------------------------
$58.00/SH. $65.00/SH.
PURCHASE PURCHASE
HISTORICAL PRICE PRICE
-------- ---------- ----------
<S> <C> <C> <C>
(IN THOUSANDS)
Shareholders' equity in excess of minimum required.................. $128,045 $ 55,320 $ 46,570
Borrowings permitted under revolving credit facility ($275 million
committed with no amounts borrowed) at 60% debt-to-total
capitalization limitation......................................... 275,000 269,732 256,607
</TABLE>
ADDITIONAL INFORMATION
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is obligated to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
proxy statements distributed to the Company's shareholders and filed with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 2120, Washington, D.C. 20549; at its
regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and 7 World Trade Center, New York, New York 10048. Copies
of such material may also be obtained by mail, upon payment of the Commission's
customary charges, from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains an internet web site at http://www.sec.gov containing reports, proxy
statements and other information regarding companies that file reports
electronically with the Commission. Such reports, proxy statements and other
information concerning the Company also can be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005, on which the Shares are listed.
11. INTEREST OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING SHARES.
As of January 13, 1998, the Company had issued and outstanding 12,388,495
Shares and had reserved for issuance upon exercise of outstanding stock options
1,259,215 Shares. The 1,250,000 Shares that the Company is offering to purchase
represent approximately 10.1% of the Shares then outstanding. As of January 13,
1998, the Company's directors and executive officers as a group (14 persons)
beneficially owned an aggregate of 3,114,794 Shares representing approximately
23.9% of the outstanding Shares, assuming the exercise by such persons of their
currently exercisable options. As of January 13, 1998, Floyd D. Gottwald, Jr. (a
director of the Company), Bruce C. Gottwald and John D. Gottwald (President,
Chief Executive Officer and a director of the Company), together with members of
their immediate families, including William M. Gottwald (a director of the
Company), (the "Gottwalds"), as a group beneficially owned an aggregate of
4,098,091 Shares representing approximately 32.6% of the outstanding Shares,
assuming the exercise by such persons of their currently exercisable options.
Floyd D. Gottwald, Jr., John D. Gottwald and William M. Gottwald hold in the
aggregate 2,356,715 Shares representing approximately 18.7% of the outstanding
Shares (assuming the exercise by such persons of their currently exercisable
options), which Shares are included in both the number of Shares owned by the
Gottwalds as a group and the directors and executive officers as a group. Each
of the Company's executive officers and directors has advised the Company that
he does not intend to tender any Shares pursuant to the Offer. If the Company
purchases 1,250,000 Shares pursuant to the
19
<PAGE>
Offer, then after the purchase of Shares pursuant to the Offer, the Company's
executive officers and directors as a group would own beneficially approximately
26.5% and the Gottwalds as a group would own beneficially approximately 36.2% of
the outstanding Shares immediately after the Offer, assuming the exercise by
such persons of their currently exercisable options.
Except as set forth in Schedule A, neither the Company, nor any subsidiary
of the Company nor, to the best of the Company's knowledge, any of the Company's
directors or executive officers, nor any affiliates of any of the foregoing, had
any transactions involving the Shares during the 40 business days prior to the
date hereof.
Except for outstanding options to purchase Shares granted from time to time
over recent years to certain employees (including executive officers) of the
Company pursuant to the Company's stock option plans and except as otherwise
described herein, neither the Company nor, to the best of the Company's
knowledge, any of its affiliates, directors or executive officers, is a party to
any contract, arrangement, understanding or relationship with any other person
relating, directly or indirectly, to the Offer with respect to any securities of
the Company including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies, consents or authorizations.
Pursuant to the Rights Agreement, two-thirds of one Right is attendant to
each share of the Company's Common Stock. Rights also are issued with shares
issued after the initial dividend distribution and before the occurrence of
certain specified events as set forth in the Rights Agreement. This summary is
qualified in its entirety by the Rights Agreement which the Company has filed
with the Commission.
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Participating Cumulative Preferred Stock, Series A
(the "Preferred Stock") at an exercise price of $50.00, subject to adjustment
(the "Exercise Price"). Each one one-hundredth of a share of Preferred Stock is
structured to be the equivalent of one share of the Company's common stock.
The Rights presently are attached to certificates representing shares of
the Company's common stock, and no separate certificates evidencing the Rights
(the "Rights Certificates") have been distributed. The Rights will separate from
the shares of the Company's common stock and a distribution of the Rights
Certificates will occur (the "Rights Distribution Date") upon the earlier of (i)
10 days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 10% or more of the outstanding shares (the
"Stock Acquisition Date"), or (ii) 10 business days following the commencement
of a tender offer or exchange offer that would result in a person or group
becoming an Acquiring Person. Until the Rights Distribution Date, the Rights
will be evidenced by the certificates representing shares of the Company's
common stock and are transferred with and only with such certificates.
While each Right initially provides for the acquisition of one
one-hundredth of a share of Preferred Stock at the Exercise Price, the Rights
Agreement provides that if (i) an Acquiring Person purchases 30% or more of the
outstanding shares, (ii) at any time following the Rights Distribution Date the
Company is the surviving corporation in a merger with an Acquiring Person and
its common stock is not changed or exchanged, or (iii) an Acquiring Person
effects a statutory share exchange with the Company after which the Company is
not a subsidiary of any Acquiring Person, proper provision shall be made so that
each holder of a Right will thereafter have the right to receive, upon exercise
and payment of the Exercise Price, Preferred Stock or shares of the Company's
common stock at the option of the Company (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to twice the
amount of the Exercise Price.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination in which the
Company is not the surviving corporation (other than a merger described in the
preceding paragraph), or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right shall thereafter have the
right to receive, upon exercise and payment of the Exercise Price, common stock
of the acquiring company having a value equal to twice the Exercise Price. The
events set forth in this paragraph and in the preceding paragraph are referred
to as the "Triggering Events".
Rights, or any shares of the Company's common stock to which such Rights
are then attached, may not be transferred (i) to any person who is or who upon
completion of the transfer would be, an Acquiring Person, or (ii) to any
affiliate or associate of any such Person. Any Right that is the subject of such
an attempted transfer shall be deemed to be held beneficially by the person who
attempted to make such attempted transfer and shall continue to be exercisable
by such person. Further, to the extent permitted by law, no Rights may be
exercised by an Acquiring Person.
20
<PAGE>
At any time until ten days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right.
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT. The Company's purchase of Shares pursuant to the Offer will reduce
the number of Shares that might otherwise be traded publicly and may reduce the
number of shareholders. Nonetheless, the Company anticipates that there will be
a sufficient number of Shares outstanding and publicly traded following
consummation of the Offer to ensure a continued trading market for the Shares.
Based upon published guidelines of the NYSE, the Company does not believe that
its purchase of Shares pursuant to the Offer will cause the Company's remaining
Shares to be delisted from the NYSE.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using such Shares as collateral. The Company
believes that, following the purchase of Shares pursuant to the Offer, the
Shares will continue to be "margin securities" for purposes of the Federal
Reserve Board's margin regulations.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its shareholders
and the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's shareholders. The Company believes that its
purchase of Shares pursuant to the Offer will not result in the Shares becoming
eligible for deregistration under the Exchange Act.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS. The Company is not aware
of any license or regulatory permit that appears to be material to the Company's
business that might be adversely affected by the Company's acquisition of Shares
as contemplated herein or of any approval or other action by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, that would be required for the acquisition or ownership of Shares by
the Company as contemplated herein. Should any such approval or other action be
required, the Company presently contemplates that such approval or other action
will be sought. The Company is unable to predict whether it may determine that
it is required to delay the acceptance for payment of or payment for Shares
tendered pursuant to the Offering pending the outcome of any such matter. There
can be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that the failure
to obtain any such approval or other action might not result in adverse
consequences to the Company's business. The Company's obligations under the
Offer to accept for payment and pay for Shares is subject to certain conditions.
See Section 7.
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
GENERAL. The federal income tax discussion set forth below summarizes the
principal federal income tax consequences to domestic shareholders of sales of
Shares pursuant to the Offer and is included for general information only. The
discussion does not address all aspects of federal income taxation that may be
relevant to a particular shareholder or any relevant foreign, state, local or
other tax laws. Certain shareholders (including insurance companies, tax-exempt
entities, foreign persons, financial institutions, broker dealers, employee
benefit plans, personal holding companies, persons who hold Shares as a position
in a "straddle" or as part of a "hedging" or "conversion" transaction or other
than as a capital asset, and persons who acquired their Shares upon the exercise
of employee stock options or as compensation) may be subject to special rules
not discussed below. Foreign shareholders should see Section 3 for a discussion
of the applicable United States withholding tax rules. This discussion is based
on laws, regulations, rulings and court decisions currently in effect, all of
which are subject to change, possibly with retroactive effect. The Company has
neither requested nor obtained a written opinion of counsel or a ruling from the
Service with respect to the tax matters discussed below. EACH SHAREHOLDER IS
URGED TO CONSULT AND RELY ON THE SHAREHOLDER'S OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO THE SHAREHOLDER OF SELLING SHARES PURSUANT TO THE
OFFER, INCLUDING THE APPLICATION OF FOREIGN, STATE, LOCAL OR OTHER TAX LAWS.
A sale of Shares pursuant to the Offer will constitute a "redemption" under
the Internal Revenue Code (the "Code"), and will be a taxable transaction for
federal income tax purposes. If the redemption qualifies as a sale of Shares by
a shareholder under Section 302 of the Code, the shareholder will recognize gain
or loss equal to the difference between (i) the cash received pursuant to the
Offer and (ii) the shareholder's tax basis in the Shares surrendered pursuant to
the Offer. If the redemption does not qualify as a sale of Shares under Section
302, the shareholder will not be treated as having sold Shares but will be
treated as having received a dividend taxable as ordinary income in an amount
equal to the cash received pursuant to the Offer. As described below, whether a
redemption qualifies for sale treatment will depend largely on the total number
of the shareholder's Shares (including any Shares constructively owned by the
shareholder) that are purchased. A shareholder desiring to obtain sale treatment
therefore may want to make a conditional tender, as described in Section 6, to
make sure that a minimum number of his Shares (if any) is purchased.
21
<PAGE>
SALE TREATMENT. Under Section 302 of the Code, a redemption of Shares
pursuant to the Offer will be treated as a sale of such Shares for federal
income tax purposes if such redemption (i) results in a "complete redemption" of
all of the shareholder's stock in the Company, (ii) is "substantially
disproportionate" with respect to the shareholder, or (iii) is "not essentially
equivalent to a dividend" with respect to the shareholder. In determining
whether any of these three tests under Section 302 is satisfied, a shareholder
must take into account not only Shares that the shareholder actually owns, but
also any Shares that the shareholder is treated as owning pursuant to the
constructive ownership rules of Section 318 of the Code. Under these rules, a
shareholder generally is treated as owning (i) Shares owned by the shareholder's
spouse, children, grandchildren, and parents, (ii) Shares owned by certain
trusts of which the shareholder is a beneficiary, in proportion to the
shareholder's interest , (iii) Shares owned by any estate of which the
shareholder is a beneficiary, in proportion to the shareholder's interest, (iv)
Shares owned by any partnership or "S corporation" in which the shareholder is a
partner or shareholder, in proportion to the shareholder's interest, (v) Shares
owned by any non-S corporation of which the shareholder owns at least 50% in
value of the stock, in proportion to the shareholder's interest, and (vi) Shares
that the shareholder has an option or similar right to acquire. A shareholder
that is a partnership or S corporation, estate, trust, or non-S corporation is
treated as owning stock owned (as the case may be) by partners or S corporation
shareholders, by estate beneficiaries, by certain trust beneficiaries, and by
50% shareholders of a non-S corporation. Stock constructively owned by a person
generally is treated as being owned by that person for the purpose of
attributing ownership to another person.
A redemption of Shares from a shareholder pursuant to the Offer will result
in a "complete redemption" of all the shareholder's stock in the Company if,
either (i) the Company purchases all of the Shares actually and constructively
owned by the shareholder, or (ii) the shareholder actually owns no Shares after
all transfers of Shares pursuant to the Offer, constructively owns only Shares
owned by certain family members, and the shareholder qualifies to and does waive
(pursuant to Section 302(c)(2) of the Code) constructive ownership of Shares
owned by family members. Any shareholder desiring to waive such constructive
ownership of Shares should consult a tax advisor about the applicability of
Section 302(c)(2).
A redemption of Shares from a shareholder pursuant to the Offer will be
"substantially disproportionate" with respect to the shareholder if the
percentage of Shares actually and constructively owned by the shareholder
compared to all Shares outstanding immediately after all redemptions of Shares
pursuant to the Offer is less than 80% of the percentage of Shares actually and
constructively owned by the shareholder compared to all Shares outstanding
immediately before such redemptions. If exactly 1,250,000 Shares are redeemed
pursuant to the Offer, the number of Shares outstanding after consummation of
the Offer will be approximately 89.9% of the number of Shares currently
outstanding. Consequently, in that case a shareholder must dispose of more than
28.08% (I.E., 1 minus 80% of 89.9%) of the number of Shares the shareholder
actually and constructively owns in order possibly to qualify for a
substantially disproportionate redemption. If the Company were to exercise its
right to purchase an additional 2% of the outstanding Shares, a shareholder
would have to dispose of more than 29.68% (I.E., 1 minus 80% of 87.9%) of the
number of Shares the shareholder actually and constructively owns in order
possibly to qualify for a substantially disproportionate redemption.
A redemption of Shares from a shareholder pursuant to the Offer will be
"not essentially equivalent to a dividend" if pursuant to the Offer, the
shareholder experiences a "meaningful reduction" in his proportionate interest
in the Company, including voting rights, participation in earnings, and
liquidation rights, arising from the actual and constructive ownership of
Shares. The Service has indicated in a published ruling that a very small
reduction (3.3%) in the proportionate interest of a small minority
(substantially less than 1%) shareholder who does not exercise any control over
corporate affairs generally constitutes a "meaningful reduction" in the
shareholder's interest in the company. The fact that a redemption fails to
qualify as a sale pursuant to the other two tests is not taken into account in
determining whether the redemption is "not essentially equivalent to a
dividend." If exactly 1,250,000 Shares are redeemed pursuant to the Offer, the
number of Shares outstanding will be reduced by approximately 10.1%.
Consequently, in that case a shareholder must dispose of more than 10.1% of the
number of Shares the shareholder actually and constructively owns in order to
have any reduction in the shareholder's proportionate stock interest in the
Company. If the Company were to exercise its right to purchase an additional 2%
of the outstanding Shares, a shareholder would have to dispose of more than
12.1% of the number of Shares the shareholder actually and constructively owns
in order to have any reduction in the shareholder's proportionate interest.
Shareholders should be aware that their ability to satisfy any of the
foregoing tests also may be affected by proration pursuant to the Offer.
THEREFORE, UNLESS A SHAREHOLDER MAKES A CONDITIONAL TENDER (SEE SECTION 6), THE
SHAREHOLDER (OTHER THAN AN ODD LOT HOLDER WHO TENDERS ALL OF HIS SHARES AT OR
BELOW THE PURCHASE PRICE) CAN BE GIVEN NO ASSURANCE, EVEN IF HE TENDERS ALL OF
HIS SHARES, THAT THE COMPANY WILL PURCHASE A SUFFICIENT NUMBER OF SUCH SHARES TO
PERMIT HIM TO SATISFY ANY OF THE FOREGOING TESTS. Shareholders also should be
aware that an acquisition or disposition of Shares in the market or otherwise as
part of a plan that includes the shareholder's tender of Shares pursuant to the
Offer might be taken into account in determining whether any of the foregoing
tests is satisfied. Shareholders are urged to consult their own tax
22
<PAGE>
advisors with regard to whether acquisitions from or sales to third parties,
including market sales, and a tender may be so integrated.
If any of the foregoing three tests is satisfied, the shareholder will
recognize gain or loss equal to the difference between the amount of cash
received pursuant to the Offer and the shareholder's tax basis in the Shares
sold. For shareholders who are individuals, estates or trusts, capital gains
generally are subject to a maximum federal income tax rate of (i) 39.6% if, at
the time the Company accepts the Shares for payment, the shareholder held the
Shares for not more than one year, (ii) 28% if the shareholder held such Shares
for more than one year but not more than 18 months at such time and (iii) 20% if
the shareholder held such Shares for more than 18 months at such time. Capital
gains of corporations generally are taxed at the federal income tax rates
applicable to corporate ordinary income.
DIVIDEND TREATMENT. If none of the foregoing three tests under Section 302
of the Code is satisfied, the shareholder generally will be treated as having
received a dividend taxable as ordinary income in an amount equal to the amount
of cash received by the shareholder pursuant to the Offer, to the extent the
Company has sufficient accumulated or current earnings and profits. The Company
expects that its current and accumulated earnings and profits will be sufficient
to cover the amount of any payments pursuant to the Offer that are treated as
dividends.
Dividend income of individuals, estates and trusts generally is subject to
federal income tax at a maximum rate of 39.6%. Dividend income of corporations,
subject to the provisions discussed below, generally is subject to federal
income tax at a maximum rate of 35%. To the extent that the purchase of Shares
from any shareholder pursuant to the Offer is treated as a dividend, the
shareholder's tax basis in any Shares that the shareholder actually or
constructively owns after consummation of the Offer should be increased by the
shareholder's tax basis in the Shares surrendered pursuant to the Offer.
TREATMENT OF DIVIDEND INCOME FOR CORPORATE SHAREHOLDERS. In the case of a
corporate shareholder, if the cash received for Shares pursuant to the Offer is
treated as a dividend, the dividend income may be eligible for the 70%
dividends-received deduction under Section 243 of the Code. The
dividends-received deduction is subject to certain recently amended limitations;
for example, the deduction may not be available if the corporate shareholder
does not satisfy certain holding period requirements with respect to its
tendered Shares or if the Shares are "debt-financed portfolio stock." If a
dividends-received deduction is available, the dividend (having arisen in a
non-PRO RATA redemption) also will be treated as an "extraordinary dividend"
under Section 1059 of the Code. In that case, the corporate shareholder's tax
basis in its remaining Shares (for purposes of determining gain or loss on a
future disposition) generally will be reduced (but not below zero) by the amount
of any "extraordinary dividend" not taxed because of the dividends-received
deduction. Any amount of the "extraordinary dividend" not taxed because of the
dividends-received deduction in excess of the corporate shareholder's tax basis
for the remaining Shares generally will be currently taxable as gain from the
sale of Shares. If a redemption of Shares from a corporate shareholder pursuant
to the Offer is treated as a dividend as a result of the shareholder's
constructive ownership of other Shares that it has an option or other right to
acquire, the portion of the extraordinary dividend not otherwise taxed because
of the dividends-received deduction will reduce the shareholder's basis only in
its Shares sold pursuant to the Offer, and any excess of such non-taxed portion
over such basis will be currently taxable as gain from the sale of Shares.
Corporate shareholders should consult their tax advisors as to the availability
of the dividends-received deduction and the application of Section 1059 of the
Code.
SEE SECTION 3 WITH RESPECT TO THE APPLICATION OF BACKUP FEDERAL INCOME TAX
WITHHOLDING.
15. EXTENSION OF OFFER; TERMINATION; AMENDMENT. The Company expressly
reserves the right, in its sole discretion, at any time and from time to time,
and regardless of whether or not any of the events set forth in Section 7 shall
have occurred or shall be deemed by the Company to have occurred, to extend the
period of time during which the Offer is open and thereby delay acceptance for
payment of, and payment for, any Shares by giving oral or written notice of such
extension to the Depositary and making a public announcement thereof. The
Company also expressly reserves the right, in its sole discretion, to terminate
the Offer and not accept for payment or pay for any Shares not theretofore
accepted for payment or paid for or, subject to applicable law, to postpone
payment for Shares upon the occurrence of any of the conditions specified in
Section 7 hereof by giving oral or written notice of such termination or
postponement to the Depositary and making a public announcement thereof. The
Company's reservation of the right to delay payment for Shares which it has
accepted for payment is limited by Rule 13e-4(f)(5) promulgated under the
Exchange Act, which requires that the Company must pay the consideration offered
or return the Shares tendered promptly after termination or withdrawal of a
tender offer. Subject to compliance with applicable law, the Company further
reserves the right, in its sole discretion, and regardless of whether any of the
events set forth in Section 7 shall have occurred or shall be deemed by the
Company to have occurred, to amend the Offer in any respect (including, without
limitation, by decreasing or increasing the consideration offered in the Offer
to
23
<PAGE>
holders of Shares or by decreasing or increasing the number of Shares being
sought in the Offer). Amendments to the Offer may be made at any time and from
time to time effected by public announcement thereof, such announcement, in the
case of an extension, to be issued no later than 9:00 a.m., New York City time,
on the next business day after the last previously scheduled or announced
Expiration Date. Any public announcement made pursuant to the Offer will be
disseminated promptly to shareholders in a manner reasonably designed to inform
shareholders of such change. Without limiting the manner in which the Company
may choose to make a public announcement, except as required by applicable law,
the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) promulgated under the Exchange Act. These rules require that the
minimum period during which an offer must remain open following material changes
in the terms of the offer or information concerning the offer (other than a
change in price or a change in percentage of securities sought) will depend on
the facts and circumstances, including the relative materiality of such terms or
information. If (i) the Company increases or decreases the price to be paid for
Shares, the number of Shares being sought in the Offer or the Dealer Manager's
soliciting fees and, in the event of an increase in the number of Shares being
sought, such increase exceeds 2% of the outstanding Shares and (ii) the Offer is
scheduled to expire at any time earlier than the expiration of a period ending
on the tenth business day from, and including, the date that such notice of an
increase or decrease is first published, sent or given in the manner specified
in this Section 15, the Offer will be extended until the expiration of such
period of ten business days.
16. FEES AND EXPENSES. The Company has retained Schroder & Co. Inc.
("Schroders") to act as the Dealer Manager in connection with the Offer.
Schroders will receive a fee for their services as Dealer Manager of $0.10 for
each Share purchased by the Company pursuant to the Offer, with a minimum
aggregate fee of $75,000. The Company also has agreed to reimburse Schroders for
certain reasonable out-of-pocket expenses incurred in connection with the Offer,
including fees and expenses of counsel, and to indemnify Schroders against
certain liabilities in connection with the Offer, including liabilities under
the federal securities laws. Schroders has rendered various investment banking
and other advisory services to the Company in the past, for which they have
received customary compensation, and can be expected to render similar services
to the Company in the future.
The Company has retained Georgeson & Company Inc. to act as Information
Agent and American Stock Transfer & Trust Company to act as Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telegraph and personal interviews and may request brokers,
dealers and other nominee shareholders to forward materials relating to the
Offer to beneficial owners. The Information Agent and the Depositary will each
receive reasonable and customary compensation for their respective services,
will be reimbursed by the Company for certain reasonable out-of-pocket expenses
and will be indemnified against certain liabilities in connection with the
Offer, including certain liabilities under the federal securities laws.
No fees or commissions will be payable to brokers, dealers or other persons
(other than fees to the Dealer Manager, the Information Agent and the Depositary
as described above) for soliciting tenders of Shares pursuant to the Offer. The
Company, however, upon request, will reimburse brokers, dealers and commercial
banks for customary mailing and handling expenses incurred by such persons in
forwarding the Offer and related materials to the beneficial owners of Shares
held by any such person as a nominee or in a fiduciary capacity. No broker,
dealer, commercial bank or trust company has been authorized to act as the agent
of the Company, the Dealer Manager, the Information Agent or the Depositary for
purposes of the Offer. The Company will pay or cause to be paid all stock
transfer taxes, if any, on its purchase of Shares except as otherwise provided
in Instruction 7 in the Letter of Transmittal.
17. MISCELLANEOUS. The Company is not aware of any jurisdiction where the
making of the Offer is not in compliance with applicable law. If the Company
becomes aware of any jurisdiction where the making of the Offer is not in
compliance with any valid applicable law, the Company will make a good faith
effort to comply with such law. If, after such good faith effort, the Company
cannot comply with such law, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares residing in such
jurisdiction. In any jurisdiction the securities or blue sky laws of which
require the Offer to be made by a licensed broker or dealer, the Offer is being
made on the Company's behalf by the Dealer Manager or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission an Issuer Tender Offer
Statement on Schedule 13E-4 which contains additional information with respect
to the Offer. Such Schedule 13E-4, including the exhibits and any amendments
thereto, may be examined, and copies may be
24
<PAGE>
obtained, at the same places and in the same manner as is set forth in Section
10 with respect to information concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGER IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE DEALER
MANAGER.
TREDEGAR INDUSTRIES, INC.
JANUARY 16, 1998
25
<PAGE>
SCHEDULE A
CERTAIN TRANSACTIONS INVOLVING SHARES
EXECUTIVE OFFICERS AND DIRECTORS
During the 40 business days prior to January 16, 1998 the transactions
effected in the Shares by the Company's executive officers and directors
included the purchases of Shares by certain executive officers and directors
through the Savings Plan and the Dividend Reinvestment Plan as follows:
(a) Savings Plan transactions during November 1997 and allocated at the end
of December 1997:
<TABLE>
<CAPTION>
PERSONS WHO
EFFECTED NUMBER OF AVERAGE
TRANSACTION SHARES BUY PRICE
- ---------------------------- --------- ---------
<S> <C> <C>
Michael W. Giancaspro 32 $ 65.86
Douglas R. Monk 10 65.86
Anthony J. Rinaldi 20 65.86
Frederick P. Woods 21 65.86
</TABLE>
(b) Dividend Reinvestment Plan transactions during January 1998:
<TABLE>
<CAPTION>
PERSON WHO
EFFECTED NUMBER OF AVERAGE
TRANSACTION SHARES BUY PRICE
- ---------------------------- --------- ---------
<S> <C> <C>
Floyd D. Gottwald, Jr. 71 $64.875
Anthony J. Rinaldi 13 64.875
</TABLE>
The only other transactions effected in the Shares by the Company's
executive officers and directors during such 40 business day period was (i) the
surrender of 712 Shares (valued at $66.50 per Share) by Frederick P. Woods on
November 20, 1997, as payment against the exercise price of options for 11,250
Shares, and (ii) the disposition by gift of 20 Shares by John D. Gottwald on
December 9, 1997.
A-1
<PAGE>
Manually signed photocopies of the Letter of Transmittal will be accepted
from Eligible Institutions. The Letter of Transmittal and certificates for
Shares and any other required documents should be sent or delivered by each
shareholder or his broker, dealer, commercial bank, trust company or nominee to
the Depositary at its address set forth below.
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND/OVERNIGHT DELIVERY:
American Stock Transfer & Trust Co. (Eligible Institutions American Stock Transfer & Trust Co.
40 Wall Street, 46th Floor Only) 40 Wall Street, 46th Floor
New York, NY 10005 (718) 234-5001 New York, NY 10005
(Attention: Reorganization (Attention: Reorganization
Department) CONFIRM BY TELEPHONE: Department)
(718) 921-8200
FOR INFORMATION CALL:
(718) 921-8200
</TABLE>
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent at the telephone numbers and location
listed below. Shareholders may also contact their local broker, dealer,
commercial bank or trust company for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO] GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect
(212) 440-9800
ALL OTHERS CALL TOLL FREE
(800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
SCHRODER & CO. INC.
The Equitable Center
787 Seventh Avenue
New York, New York 10019-6016
(212) 492-6000 (Call Collect)
January 16, 1998
EXHIBIT (A)(2)
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
TREDEGAR INDUSTRIES, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JANUARY 16, 1998
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 13, 1998, UNLESS THE OFFER IS EXTENDED.
TO: AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND/OVERNIGHT DELIVERY:
American Stock Transfer & Trust Co. (Eligible Institutions American Stock Transfer & Trust Co.
Only)
40 Wall Street, 46th Floor (718) 234-5001 40 Wall Street, 46th Floor
New York, NY 10005 New York, NY 10005
(Attention: Reorganization CONFIRM BY TELEPHONE: (Attention: Reorganization
Department) (718) 921-8200 Department)
</TABLE>
FOR INFORMATION CALL:
(718) 921-8200
Delivery of this instrument and all other documents to the address or
transmission of instructions to a facsimile number other than as set forth above
does not constitute a valid delivery.
PLEASE READ THE ENTIRE LETTER
OF TRANSMITTAL, INCLUDING THE ACCOMPANYING INSTRUCTIONS,
CAREFULLY BEFORE CHECKING ANY BOX BELOW.
This Letter of Transmittal is to be used only if (a) certificates for Shares
(as defined below) are to be forwarded herewith or (b) a tender of Shares is
being made concurrently by book-entry transfer to the account maintained by
American Stock Transfer & Trust Company (the "Depositary") at The Depository
Trust Company or Philadelphia Depository Trust Company (hereinafter,
collectively referred to as the "Book-Entry Transfer Facilities") pursuant to
<TABLE>
<CAPTION>
Section 3 of the Offer to Purchase. See Instruction 2.
<S> <C>
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) TENDERED CERTIFICATES
(PLEASE USE PREADDRESSED LABEL OR FILL IN (ATTACH SIGNED ADDITIONAL LIST IF NECESSARY)
EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)
CERTIFICATE NO. OF SHARES* NO. OF SHARES
NUMBER(S) TENDERED**
TOTAL SHARES
TENDERED
Indicate in this box order (by certificate number) which Shares are to be purchased in event of proration. (Attach additional
list if necessary.) *** See Instruction 10.
1st: 2nd: 3rd: 4th: 5th: 6th:
* Does not need to be completed if Shares are tendered by book-entry transfer.
** If you desire to tender fewer than all Shares evidenced by any certificates listed above, please indicate in this column
the number of Shares you wish to tender. Otherwise, all Shares evidenced by such certificates will be deemed to have been
tendered. See Instruction 4.
*** If you do not designate an order, in the event less than all Shares tendered are purchased due to proration, Shares will
be selected for purchase by the Depositary.
</TABLE>
1
<PAGE>
NOTE: SIGNATURE MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
SHARES HELD IN THE TREDEGAR INDUSTRIES, INC. DIVIDEND REINVESTMENT AND STOCK
PURCHASE PLAN (THE "DIVIDEND REINVESTMENT PLAN"), THE SAVINGS PLAN FOR THE
EMPLOYEES OF TREDEGAR INDUSTRIES, INC. (THE "SAVINGS PLAN") OR THE TREDEGAR
INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN (THE "STOCK PURCHASE PLAN") MAY BE
TENDERED ONLY BY SUBMITTING A SEPARATE ELECTION FORM TO THE RESPECTIVE
ADMINISTRATORS AS PROVIDED HEREIN. IF YOU HOLD SHARES IN THE DIVIDEND
REINVESTMENT PLAN, THE SAVINGS PLAN OR THE STOCK PURCHASE PLAN AND OUTSIDE OF
SUCH PLANS, YOU MUST TENDER SUCH SHARES SEPARATELY. THIS LETTER OF TRANSMITTAL
MAY BE USED ONLY FOR TENDERING SHARES NOT HELD IN THE DIVIDEND REINVESTMENT
PLAN, THE SAVINGS PLAN OR THE STOCK PURCHASE PLAN.
SHAREHOLDERS WHO CANNOT DELIVER THE CERTIFICATES FOR THEIR SHARES TO THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE (AS
DEFINED BELOW)) OR WHO CANNOT COMPLETE THE PROCEDURE FOR BOOK-ENTRY TRANSFER ON
A TIMELY BASIS OR WHO CANNOT DELIVER A LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE DEPOSITARY PRIOR TO THE EXPIRATION DATE MUST, IN EACH
CASE, TENDER THEIR SHARES PURSUANT TO THE GUARANTEED DELIVERY PROCEDURE SET
FORTH IN SECTION 3 OF THE OFFER TO PURCHASE. SEE INSTRUCTION 2.
SHAREHOLDERS WHO DESIRE TO TENDER SHARES PURSUANT TO THE OFFER (AS DEFINED
BELOW) AND WHO CANNOT DELIVER THEIR CERTIFICATES FOR THEIR SHARES (OR WHO ARE
UNABLE TO COMPLY WITH THE PROCEDURES FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS)
AND ALL OTHER DOCUMENTS REQUIRED BY THIS LETTER OF TRANSMITTAL TO THE DEPOSITARY
AT OR BEFORE THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE) MAY
TENDER THEIR SHARES ACCORDING TO THE GUARANTEED DELIVERY PROCEDURES SET FORTH IN
SECTION 3 OF THE OFFER TO PURCHASE. SEE INSTRUCTION 2. DELIVERY OF DOCUMENTS TO
ONE OF THE BOOK-ENTRY TRANSFER FACILITIES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
[] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK ENTRY-TRANSFER
FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Check Box of Applicable Book-Entry Facility:
[] The Depository Trust Company
[] The Philadelphia Depository Company
Account Number:
Transaction Code Number:
[] CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
Check Box of Applicable Book-Entry Transfer Facility and Give Account
Number if Delivered by Book-Entry Transfer:
[] The Depository Trust Company
[] Philadelphia Depository Company
Account Number:
2
<PAGE>
<TABLE>
<CAPTION>
ODD LOTS
(SEE INSTRUCTION 8)
<S><C>
To be completed ONLY if the Shares are being tendered by or on behalf of a person owning beneficially or of record, as of
the close of business on January 15, 1998, an aggregate of fewer than 100 Shares. The undersigned either (check one box):
[] was the beneficial or record owner, as of the close of business on January 15, 1998, of an aggregate of fewer than 100
Shares, all of which are being tendered; or
[] is a broker, dealer, commercial bank, trust company, or other nominee that (a) is tendering for the beneficial owner(s)
thereof, Shares with respect to which it is the record holder, and (b) believes, based upon representations made to it by
such beneficial owner(s), that each such person was the beneficial owner, as of the close of business on January 15, 1998,
of an aggregate of fewer than 100 Shares and is tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[] at the Purchase Price (defined below), as the same shall be determined by the Company in accordance with the terms of the
Offer (persons checking this box need not indicate the price per Share below); or
[] at the price per Share indicated below under "Price (in Dollars) per Share at which Shares are being tendered in this
Letter of Transmittal."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
</TABLE>
CONDITIONAL TENDER
(SEE INSTRUCTION 9)
[] check here if tender of Shares is conditional on the Company purchasing all
or a minimum number of the tendered Shares and complete the following:
Minimum number of Shares to be sold:
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
TO AMERICAN STOCK TRANSFER & TRUST COMPANY:
The undersigned hereby tenders to Tredegar Industries, Inc., a Virginia
corporation (the "Company"), the above described shares of the Company's common
stock, no par value per share (the "Shares") (including the associated Preferred
Stock Purchase Rights (the "Rights") issued pursuant to the rights agreement,
dated as of June 15, 1989, as amended, between the Company and the Rights Agent
named therein), at the price per Share indicated in this Letter of Transmittal,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Company's Offer to Purchase, dated January 16, 1998 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer"). Unless the Rights are
redeemed, shareholders must tender two-thirds of one Right for each Share
tendered to effect a valid tender of Shares. Unless separate certificates for
the Rights are issued, a tender of Shares also will constitute a tender of the
associated Rights. Unless the context requires otherwise, all references herein
to Shares shall include the associated Rights.
Subject to and effective upon acceptance for payment of the Shares tendered
hereby in accordance with the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to all the Shares that are being tendered hereby and orders the registration
of all such Shares if tendered by book-entry transfer and hereby irrevocably
constitutes and appoints the Depositary as the true and lawful agent and
attorney-in-fact of the undersigned (with full knowledge that said Depositary
also acts as the agent of the Company) with respect to such Shares with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to:
(a) deliver certificate(s) for such Shares or transfer ownership of
such Shares on the account books maintained by any of the Book-Entry
Transfer Facilities, together in either such case with all accompanying
evidences of transfer and authenticity, to, or upon the order of, the
Company upon receipt by the Depositary, as the undersigned's agent, of the
aggregate Purchase Price (as defined below) with respect to such Shares;
(b) present certificates for such Shares for cancellation and transfer
on the Company's books; and
(c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, subject to the next paragraph, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants to the Company that:
(a) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the instructions hereto will constitute the undersigned's acceptance of
the terms and conditions of the Offer, including the undersigned's
representation and warranty that:
(i) the undersigned has a net long position in Shares or equivalent
securities at least equal to the Shares tendered within the meaning of
Rule 14e-4 under the Securities Exchange Act of 1934, as amended, and
(ii) such tender of Shares complies with Rule 14e-4;
(b) when and to the extent the Company accepts such Shares for
purchase, the Company will acquire good, marketable and unencumbered title
to them, free and clear of all security interests, liens, charges,
encumbrances, conditional sales agreements or other obligations relating to
their sale or transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any
additional documents the Depositary or the Company deems necessary or
desirable to complete the assignment, transfer and purchase of the Shares
tendered hereby; and
(d) the undersigned has read and agrees to all of the terms of the
Offer.
All authorities conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, executors, administrators, successors, assigns,
trustees in bankruptcy, and legal representatives of the undersigned. Except as
stated in the Offer to Purchase, this tender is irrevocable.
4
<PAGE>
The name(s) and address(es) of the registered holder(s) should be printed
above, if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The certificate numbers, the
number of Shares represented by such certificates and the number of Shares that
the undersigned wishes to tender, should be set forth in the appropriate boxes
above. The price at which such Shares are being tendered should be indicated in
the box below.
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single per Share price (not
in excess of $65.00 nor less than $58.00 per Share) net to the seller in cash
(the "Purchase Price") that it will pay for Shares properly tendered and not
withdrawn prior to the Expiration Date pursuant to the Offer, taking into
account the number of Shares so tendered and the prices (in multiples of $0.25)
specified by tendering shareholders. The undersigned understands that the
Company will select the lowest Purchase Price that will allow it to buy
1,250,000 Shares (or such lesser number of Shares as are properly tendered at
prices not in excess of $65.00 nor less than $58.00 per Share) pursuant to the
Offer. The undersigned understands that all Shares properly tendered at prices
at or below the Purchase Price and not withdrawn prior to the Expiration Date
will be purchased at the Purchase Price, upon the terms and subject to the
conditions of the Offer, including its proration and conditional tender
provisions, and that the Company will return all other Shares not purchased
pursuant to the Offer, including Shares tendered at prices greater than the
Purchase Price and not withdrawn prior to the Expiration Date and Shares not
purchased because of proration or conditional tender.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment fewer than all of the Shares tendered hereby. In any such
event, the undersigned understands that certificate(s) for any Shares delivered
herewith but not tendered or not purchased will be returned to the undersigned
at the address indicated above, unless otherwise indicated under the "Special
Payment Instructions" or "Special Delivery Instructions" below. The undersigned
recognizes that the Company has no obligation, pursuant to the Special Payment
Instructions, to transfer any certificate for Shares from the name of its
registered holder, or to order the registration or transfer of Shares tendered
by book-entry transfer, if the Company purchases none of the Shares represented
by such certificate or tendered by such book-entry transfer.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
The check for the aggregate Purchase Price for such of the Shares tendered
hereby as are purchased will be issued to the order of the undersigned and
mailed to the address indicated above, unless otherwise indicated under the
Special Payment Instructions or the Special Delivery Instructions below.
5
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<TABLE>
<CAPTION>
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
<S> <C>
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(SHAREHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE
AT WHICH SHARES ARE TENDERED.)
[] $58.00 [] $59.25 [] $60.50 [] $61.75 [] $63.00 [] $64.25
[] $58.25 [] $59.50 [] $60.75 [] $62.00 [] $63.25 [] $64.50
[] $58.50 [] $59.75 [] $61.00 [] $62.25 [] $63.50 [] $64.75
[] $58.75 [] $60.00 [] $61.25 [] $62.50 [] $63.75 [] $65.00
[] $59.00 [] $60.25 [] $61.50 [] $62.75 [] $64.00
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 11) (SEE INSTRUCTIONS 1, 4, 6, 7 AND 11)
To be completed ONLY if certificates for Shares not tendered
To be completed ONLY if certificates for Shares not or not purchased and/or any check for the Purchase Price of
tendered or not purchased and/or any check for the aggregate Shares purchased, issued in the name of the undersigned, are
Purchase Price of Shares purchased are to be issued in the to be mailed to someone other than the undersigned, or to
name of and sent to someone other than the undersigned. the undersigned at an address other than that shown above.
Mail:
Issue: [] Check to:
[] Check to: [] Certificates to:
[] Certificates to: Name(s):
Name(s): (Please Print)
(Please Print) Address:
Address: (Zip Code)
(Zip Code)
(Taxpayer Identification or Social Security No.)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL SHAREHOLDERS)
(PLEASE COMPLETE AND RETURN THE ENCLOSED FORM W-9)
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on certificate(s) or on a security position listing
or by person(s) authorized to become registered holder(s) by certificate(s) and documents transmitted with this Letter of
Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or
another person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 6.)
Signature(s) of Owner(s)
Dated: , 1998
Name(s):
(Please Print)
Capacity (full title):
Address:
(Include Zip Code)
Area Code(s) and
Telephone Number(s):
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
NAME OF FIRM:
AUTHORIZED SIGNATURE:
NAME:
(Please Print)
Title:
Address:
(Include Zip Code)
Area Code and
Telephone Number:
Dated: , 1998
</TABLE>
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of such Shares) exactly as the name
of the registered holder appears on the certificate tendered with this
Letter of Transmittal and payment and delivery are to be made directly to
such owner unless such owner has completed either the box entitled "Special
Payment Instructions" or "Special Delivery Instructions" above; or
(b) such Shares are tendered for the account of a firm or other entity
that is a member in good standing of the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signatures Guarantee Program
or the Stock Exchange Medallion Program (each such entity, an "Eligible
Institution").
In all other cases, an Eligible Institution must guarantee all signatures
on this Letter of Transmittal. See Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be used only if certificates for
Shares are delivered with it to the Depositary (or such certificates will be
delivered pursuant to a Notice of Guaranteed Delivery previously sent to the
Depositary) or if a tender for Shares is being made concurrently pursuant to the
procedure for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. Certificates for all physically tendered Shares or confirmation of
a book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility of Shares tendered electronically, together in each case with a
properly completed and duly executed Letter of Transmittal or duly executed and
manually signed facsimile of it, or an Agent's Message, and any other documents
required by this Letter of Transmittal, should be mailed or delivered to the
Depositary at the appropriate address set forth herein and must be delivered to
the Depositary on or before the Expiration Date (as defined in the Offer to
Purchase). DELIVERY OF DOCUMENTS TO ONE OF THE BOOK-ENTRY TRANSFER FACILITIES
DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary, which states that such
Book-Entry Transfer Facility has received an express acknowledgement from the
participant in such Book-Entry Transfer Facility tendering the Shares that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Company may enforce such agreement against such
participant.
Shareholders whose certificates are not immediately available or who cannot
deliver certificates for their Shares and all other required documents to the
Depositary before the Expiration Date, or whose Shares cannot be delivered on a
timely basis pursuant to the procedures for book-entry transfer, must, in any
such case, tender their Shares by or through any Eligible Institution by
properly completing and duly executing and delivering a Notice of Guaranteed
Delivery (or facsimile of it) and by otherwise complying with the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to
such procedure, certificates for all physically tendered Shares or book-entry
confirmations, as the case may be, as well as a properly completed and duly
executed Letter of Transmittal (or facsimile of it) or an Agent's Message, and
all other documents required by this Letter of Transmittal, must be received by
the Depositary within three New York Stock Exchange trading days after receipt
by the Depositary of such Notice of Guaranteed Delivery, all as provided in
Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice. For Shares to be tendered validly pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY U.S.
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
8
<PAGE>
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer to Purchase. All tendering shareholders, by execution of
this Letter of Transmittal (or a facsimile of it), waive any right to receive
any notice of the acceptance of their tender.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Shares Tendered" is inadequate, the certificate numbers and/or
the number of Shares should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable to shareholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares that are to be
tendered in the column entitled "Number of Shares Tendered," in the box
captioned "Description of Shares Tendered." In such case, if any tendered Shares
are purchased, a new certificate for the remainder of the Shares (including any
Shares not purchased) evidenced by the old certificate(s) will be issued and
sent to the registered holder(s), unless otherwise specified in either the
"Special Payment Instructions" or "Special Delivery Instructions" box on this
Letter of Transmittal, as soon as practicable after the Expiration Date. Unless
otherwise indicated, all Shares represented by the certificate(s) listed and
delivered to the Depositary will be deemed to have been tendered.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to be
properly tendered, the shareholder MUST check the box indicating the price per
Share at which he or she is tendering Shares under "Price (In Dollars) Per Share
at Which Shares Are Being Tendered" on this Letter of Transmittal. ONLY ONE BOX
MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED, THERE
IS NO PROPER TENDER OF SHARES. A shareholder wishing to tender portions of his
or her Share holdings at different prices must complete a separate Letter of
Transmittal for each price at which he or she wishes to tender each such portion
of his or her Shares. The same Shares cannot be tendered (unless previously
properly withdrawn as provided in Section 4 of the Offer to Purchase) at more
than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS.
(a) If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the certificate(s)
without any change whatsoever.
(b) If the Shares are registered in the names of two or more joint
holders, each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles of it) as there are
different registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered
holder(s) of the Shares listed and transmitted hereby, no endorsement(s) of
certificate(s) representing such Shares or separate stock power(s) are
required unless payment is to be made or the certificate(s) for Shares not
tendered or not purchased are to be issued to a person other than the
registered holder(s). SIGNATURE(S) ON SUCH CERTIFICATE(S) MUST BE
GUARANTEED BY AN ELIGIBLE INSTITUTION. If this Letter of Transmittal is
signed by a person other than the registered holder(s) of the
certificate(s) listed, or if payment is to be made or their certificate(s)
for Shares not tendered or not purchased are to be issued to a person other
than the registered holder(s), the certificate(s) must be endorsed or
accompanied by appropriate stock power(s), in either case signed exactly as
the name(s) of the registered holder(s) appears on the certificate(s), and
the signature(s) on such certificate(s) or stock power(s) must be
guaranteed by an Eligible Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock
power(s) are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing
and must submit proper evidence satisfactory to the Company of their
authority so to act.
7. STOCK TRANSFER TAXES. Except as provided in this Instruction 7, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter of
Transmittal. The Company will pay or cause to be paid any stock transfer taxes
payable on the transfer to it of Shares purchased pursuant to the Offer. If,
however:
9
<PAGE>
(a) payment of the aggregate Purchase Price for Shares tendered hereby
and accepted for purchase is to be made to any person other than the
registered holder(s);
(b) Shares not tendered or not accepted for purchase are to be
registered in the name(s) of any person(s) other than the registered
holder(s); or
(c) tendered certificates are registered in the name(s) of any
person(s) other than the person(s) signing this Letter of Transmittal;
then the Depositary will deduct from such aggregate Purchase Price the amount of
any stock transfer taxes (whether imposed on the registered holder, such other
person or otherwise) payable on account of the transfer to such person, unless
satisfactory evidence of the payment of such taxes or any exemption from them is
submitted.
8. ODD LOTS. As described in Section 1 of the Offer to Purchase, if the
Company is to purchase fewer than all Shares tendered before the Expiration Date
and not withdrawn, the Shares purchased first will consist of all Shares
tendered by any shareholder who each owned of record or owned beneficially, as
of the close of business on January 15, 1998, an aggregate of fewer than 100
Shares, and who tenders all of his or her Shares at or below the Purchase Price
(an "Odd Lot Holder"). This preference will not be available unless the box
captioned "Odd Lots" is completed.
9. CONDITIONAL TENDERS. As described in Sections 1 and 6 of the Offer to
Purchase, shareholders may condition their tenders on all or a minimum number of
their tendered Shares being purchased ("Conditional Tenders"). If the Company is
to purchase less than all Shares tendered before the Expiration Date and not
withdrawn, the Depositary will perform a preliminary proration, and any Shares
tendered at or below the Purchase Price pursuant to a Conditional Tender for
which the condition was not satisfied shall be deemed withdrawn, subject to
reinstatement if such Conditionally Tendered Shares are subsequently selected by
random lot for purchase subject to Sections 1 and 6 of the Offer to Purchase.
Conditional tenders will be selected by lot only from shareholders who tender
all of their Shares. All tendered Shares shall be deemed unconditionally
tendered unless the "Conditional Tender" box is completed. The Conditional
Tender alternative is made available so that a shareholder may assure that the
purchase of Shares from the shareholder pursuant to the Offer will be treated as
a sale of such Shares by the shareholder, rather than the payment of a dividend
to the shareholder, for federal income tax purposes. Odd Lot Shares, which will
not be subject to proration, cannot be conditionally tendered. It is the
tendering shareholder's responsibility to calculate the minimum number of Shares
that must be purchased from the shareholder in order for the shareholder to
qualify for sale (rather than dividend) treatment, and each shareholder is urged
to consult his or her own tax advisor.
IN THE EVENT OF PRORATION, ANY SHARES TENDERED PURSUANT TO A CONDITIONAL
TENDER FOR WHICH THE MINIMUM REQUIREMENTS ARE NOT SATISFIED MAY NOT BE ACCEPTED
AND THEREBY DEEMED WITHDRAWN.
10. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1 of
the Offer to Purchase, shareholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase may
have an effect on the federal income tax treatment of the Purchase Price for the
Shares purchased. See Sections 1 and 14 of the Offer to Purchase.
11. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If certificate(s) for Shares
not tendered or not purchased and/or check(s) are to be issued in the name of a
person other than the signer of the Letter of Transmittal or if such
certificates and/or checks are to be sent to someone other than the person
signing the Letter of Transmittal or to the signer at a different address, the
boxes captioned "Special Payment Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal should be completed as applicable
and signatures must be guaranteed as described in Instruction 1.
12. IRREGULARITIES. All questions as to the number of Shares to be
accepted, the price to be paid therefor and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Company in its sole discretion, which determinations
shall be final and binding on all parties. The Company reserves the absolute
right to reject any or all tenders of Shares it determines not to be in proper
form or the acceptance of which or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer and any defect or irregularity in the
tender of any particular Shares, and the Company's interpretation of the terms
of the Offer (including these instructions) will be final and binding on all
parties. No tender of Shares will be deemed to be properly made until all
defects and irregularities have been cured or waived. Unless waived, any defects
or irregularities in connection with tenders must be cured within such time as
the Company shall determine. None of the Company, the Dealer Manager (as defined
in the Offer to Purchase), the Depositary, the Information Agent
10
<PAGE>
(as defined in the Offer to Purchase) or any other person is or will be
obligated to give notice of any defects or irregularities in tenders and none of
them will incur any liability for failure to give any such notice.
13. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of
Transmittal may be obtained from, the Information Agent or the Dealer Manager at
their respective addresses and telephone numbers set forth at the end of this
Letter of Transmittal or from your broker, dealer, commercial bank or trust
company.
14. FORM W-9 AND FORM W-8. Shareholders other than corporations and certain
foreign persons may be subject to backup federal income tax withholding. Each
tendering shareholder who does not otherwise establish to the satisfaction of
the Depositary an exemption from backup federal income tax withholding is
required to provide the Depositary with a correct taxpayer identification number
("TIN") on Form W-9, which is provided with this Letter of Transmittal. For an
individual, his or her TIN will generally be his or her social security number.
Failure to provide the information requested or to make the certification on the
Form W-9 may subject the tendering shareholder to 31% backup federal income tax
withholding on the payments made to or for the shareholder with respect to
Shares purchased pursuant to the Offer. Failing to furnish a correct TIN may
subject the shareholder to a $50.00 penalty imposed by the Internal Revenue
Service. Providing false information may result in additional penalties. Backup
withholding is not an additional tax. Rather, the tax liability of a person
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained.
Shareholders who are foreign persons should submit Form W-8 to certify that they
are exempt from backup withholding. Form W-8 may be obtained from the
Depositary.
15. WITHHOLDING ON FOREIGN SHAREHOLDERS. Even if a foreign shareholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold federal income taxes equal to 30% of the gross payments payable to
a foreign shareholder or his agent unless the Depositary determines that an
exemption from or a reduced rate of withholding is available pursuant to a tax
treaty or an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business in
the United States (as defined in applicable Treasury Regulations). For this
purpose, a "foreign shareholder" is a shareholder that is not a "U.S. Holder." A
U.S. Holder is a beneficial owner that is (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any State thereof,
including the District of Columbia, (iii) an estate the income of which is
subject to United States federal income taxation regardless of the source of
such income or (iv) a trust if a United States court is able to exercise primary
supervision over administration of the trust and one or more United States
fiduciaries have authority to control all substantial decisions of the trust. In
order to obtain an exemption from or a reduced rate of withholding pursuant to a
tax treaty, a foreign shareholder must deliver to the Depositary a properly
completed Form 1001. In order to obtain an exemption from withholding on the
grounds that the gross proceeds paid pursuant to the Offer are effectively
connected with the conduct of a trade or business within the United States, a
foreign shareholder must deliver to the Depositary a properly completed Form
4224. The Depositary will determine a shareholder's status as a foreign
shareholder and eligibility for a reduced rate of, or an exemption from,
withholding by reference to outstanding certificates or statements concerning
eligibility for a reduced rate of, or exemption from, withholding (E.G., Form
1001 or Form 4224) unless facts and circumstances indicate that such reliance is
not warranted. A foreign shareholder may be eligible to obtain a refund of all
or a portion of any tax withheld if such shareholder meets one of the three
tests for sale treatment described in Section 14 of the Offer to Purchase or is
otherwise able to establish that no tax or a reduced amount of tax is due.
Backup withholding generally will not apply to amounts subject to the 30% or
treaty-reduced rate of withholding. Foreign shareholders are urged to consult
their tax advisors regarding the application of federal income tax withholding,
including eligibility for a withholding tax reduction or exemption and refund
procedures.
16. DIVIDEND REINVESTMENT PLAN. A shareholder participating in the Dividend
Reinvestment Plan who wishes to have American Stock Transfer & Trust Company,
the administrator of the Dividend Reinvestment Plan, tender Shares held in such
participant's account in the Dividend Reinvestment Plan should so indicate by
completing the election form included with the memorandum furnished to such
participants.
THE PARTICIPANTS IN THE DIVIDEND REINVESTMENT PLAN MAY NOT USE THE LETTER
OF TRANSMITTAL TO DIRECT THE TENDER OF DIVIDEND REINVESTMENT PLAN SHARES, BUT
MUST USE THE SEPARATE ELECTION FORM ENCLOSED WITH THE MEMORANDUM TO PARTICIPANTS
IN THE TREDEGAR INDUSTRIES, INC. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN.
DIVIDEND REINVESTMENT PLAN PARTICIPANTS ARE URGED TO READ THE SEPARATE ELECTION
FORM AND
11
<PAGE>
RELATED MATERIALS CAREFULLY. ANY DIVIDEND REINVESTMENT PLAN SHARES TENDERED BUT
NOT PURCHASED WILL BE RETURNED TO THE PARTICIPANT'S DIVIDEND REINVESTMENT PLAN
ACCOUNT.
If a participant tenders all of his or her Dividend Reinvestment Plan
Shares and all such Shares are purchased by the Company pursuant to the Offer,
such tender will be deemed to be authorization and written notice to American
Stock Transfer & Trust Company of termination of such shareholder's
participation in the Dividend Reinvestment Plan.
17. SAVINGS PLAN. Participants in the Savings Plan who wish to have
Wachovia Bank, N.A., as trustee thereof (the "Savings Plan Trustee"), tender all
or part of the Shares allocated to their accounts should so indicate by
completing, executing and returning to the Savings Plan Trustee the election
form included with the memorandum furnished to such participants.
THE PARTICIPANTS IN THE SAVINGS PLAN MAY NOT USE THE LETTER OF TRANSMITTAL
TO DIRECT THE TENDER OF THE SAVINGS PLAN SHARES, BUT MUST USE THE SEPARATE
ELECTION FORM ENCLOSED WITH THE MEMORANDUM TO PARTICIPANTS IN THE SAVINGS PLAN
FOR THE EMPLOYEES OF TREDEGAR INDUSTRIES, INC. SAVINGS PLAN PARTICIPANTS ARE
URGED TO READ THE SEPARATE ELECTION FORM AND RELATED MATERIALS CAREFULLY. ANY
SAVINGS PLAN SHARES TENDERED BUT NOT PURCHASED WILL BE RETURNED TO THE
PARTICIPANT'S SAVINGS PLAN ACCOUNT.
18. STOCK PURCHASE PLAN. Participants in the Stock Purchase Plan who wish
to have American Stock Transfer & Trust Company, as custodian thereof (the
"Stock Purchase Plan Custodian"), tender all or part of the Shares in such
participant's account should so indicate by completing, executing and returning
to the Stock Purchase Plan Custodian the election form included with the
memorandum furnished to such participants.
THE PARTICIPANTS IN THE STOCK PURCHASE PLAN MAY NOT USE THE LETTER OF
TRANSMITTAL TO DIRECT THE TENDER OF THE STOCK PURCHASE PLAN SHARES, BUT MUST USE
THE SEPARATE ELECTION FORM ENCLOSED WITH THE MEMORANDUM TO PARTICIPANTS IN THE
TREDEGAR INDUSTRIES, INC. EMPLOYEE STOCK PURCHASE PLAN. STOCK PURCHASE PLAN
PARTICIPANTS ARE URGED TO READ THE SEPARATE ELECTION FORM AND RELATED MATERIALS
CAREFULLY. ANY STOCK PURCHASE PLAN SHARES TENDERED BUT NOT PURCHASED WILL BE
RETURNED TO THE PARTICIPANT'S STOCK PURCHASE PLAN ACCOUNT.
19. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary by checking the box provided in the box titled
"Description of Shares Tendered" and indicating the number of Shares so lost,
destroyed or stolen. The shareholder will then be instructed by the Depositary
as to the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be prepared until the
procedures for replacing lost, destroyed or stolen certificates have been
followed.
12
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
[Georgeson & Company Inc. logo]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect
(212) 440-9800
ALL OTHERS CALL TOLL FREE
(800) 223-2064
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND/OVERNIGHT DELIVERY:
American Stock Transfer & Trust Co. (Eligible Institutions Only) American Stock Transfer & Trust Co.
40 Wall Street, 46th Floor (718) 234-5001 40 Wall Street, 46th Floor
New York, NY 10005 New York, NY 10005
(Attention: Reorganization (Attention: Reorganization
Department) CONFIRM BY TELEPHONE: Department)
(718) 921-8200
FOR INFORMATION CALL:
(718) 921-8200
</TABLE>
THE DEALER MANAGER FOR THE OFFER IS:
SCHRODER & CO. INC.
The Equitable Center
787 Seventh Avenue
New York, New York 10019-6016
(212) 492-6000 (Call Collect)
IMPORTANT: This Letter of Transmittal or a facsimile hereof (together with
certificates for the Shares being tendered and all other required documents), or
a Notice of Guaranteed Delivery must be received prior to 12:00 Midnight, New
York City time, on the Expiration Date. SHAREHOLDERS ARE ENCOURAGED TO RETURN A
COMPLETED FORM W-9 WITH THEIR LETTER OF TRANSMITTAL.
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Form W-9
(Rev. December 1996) | REQUEST FOR TAXPAYER | GIVE FORM TO THE
| IDENTIFICATION NUMBER AND CERTIFICATION | REQUESTER. DO NOT
Department of the Treasury | | SEND TO THE IRS.
Internal Revenue Service | |
- - ---------------------------------------------------------------------------------------------------------------------------------
Please print Name (If a joint account or you changed your name, see SPECIFIC INSTRUCTIONS on page 2.)
or type
--------------------------------------------------------------------------------------------------------------------
Business name, if different from above. (See SPECIFIC INSTRUCTIONS on page 2.)
--------------------------------------------------------------------------------------------------------------------
Check appropriate box: [ ] Individual/Sole proprietor [ ] Corporation [ ] Partnership [ ] Other >_______________
--------------------------------------------------------------------------------------------------------------------
Address (number, street, and apt. or suite no.) | Requester's name and address (optional)
|
|
----------------------------------------------------------------------|
City, state, and ZIP code |
|
----------------------------------------------------------------------|---------------------------------------------
PART I TAXPAYER IDENTIFICATION NUMBER (TIN) | List account number(s) here (optional)
- - -------------------------------------------------------------------------------------|
Enter your TIN in the appropriate box. For |
individuals, this is your social security number ------------------------------ |
(SSN). However, if you are a resident alien OR a |Social Security Number | |
sole proprietor, see the instructions on page 2. | | | - | - | | | | |
For other entities, it is your employer | | | | | | | | | | |
identification number (EIN). If you do not have a ------------------------------ |---------------------------------------------
number, see HOW TO GET A TIN on page 2. OR | Part II FOR PAYEES EXEMPT FROM BACKUP
NOTE: If the account is in more than one name, -------------------------------- | WITHHOLDING (See the instructions
see the chart on page 2 for guidelines on whose |Employer Identification Number| | on page 2.)
number to enter | | | - | - | | | | | |---------------------------------------------
| | | | | | | | | | | | >
-------------------------------- | >
- - ------------------------------------------------------------------------------
</TABLE>
PART III CERTIFICATION
- - ------------------------------------------------------------------------------
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), AND
2. I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
(IRS) that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS.-You must cross out item 2 above if you have been
notified by the IRS that you are currently subject to backup withholding because
you have failed to report all interest and dividends on your tax return. For
real estate transactions, item 2 does not apply. For mortgage interest paid,
acquisition or abandonment of secured property, cancellation of debt,
contributions to an individual retirement arrangement (IRA), and generally,
payments other than interest and dividends, you are not required to sign the
Certification, but you must provide your correct TIN. (See the instructions on
page 2.)
- - -----------------------------------------------------------------------------
Sign |
Here | Signature> Date>
- - -----------------------------------------------------------------------------
PURPOSE OF FORM.- A person who is required to file an information return with
the IRS must get your correct taxpayer identification number (TIN) to report,
for example, income paid to you, real estate transactions, mortgage interest you
paid, acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA.
Use Form W-9 to give your correct TIN to the person requesting it (the
requester) and, when applicable, to:
1. Certify the TIN you are giving is correct (or you are waiting for a number
to be issued).
2. Certify you are not subject to backup withholding, or
3. Claim exemption from backup withholding if you are an exempt payee.
NOTE: If a requester gives you a form other than a W-9 to request your TIN, you
must use the requester's form if it is substantially similar to this Form W-9.
WHAT IS BACKUP WITHHOLDING?- Persons making certain payments to you must
withhold and pay to the IRS 31% of such payments under certain conditions. This
is called "backup withholding." Payments that may be subject to backup
withholding include interest, dividends, broker and barter exchange
transactions, rents, royalties, nonemployee pay, and certain payments from
fishing boat operators. Real estate transactions are not subject to backup
withholding.
If you give the requester your correct TIN, make the proper certifications,
and report all your taxable interest and dividends on your tax return, payments
you receive will not be subject to backup withholding. Payments you receive WILL
be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS tells the requester that you furnished an incorrect TIN, or
3. The IRS tells you that you are subject to backup withholding because you
did not report all your interest and dividends on your tax return (for
reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to backup
withholding under 3 above (for reportable interest and dividend accounts opened
after 1983 only), or
5. You do not certify your TIN when required. See the Part III instructions on
page 2 for details.
Certain payees and payments are exempt from backup withholding. See the Part
II instructions and the separate INSTRUCTIONS FOR THE REQUESTER OF FORM W-9.
PENALTIES
FAILURE TO FURNISH TIN.- If you fail to furnish your correct TIN to a requester,
you are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.- If you make a
false statement with no reasonable basis that results in no backup withholding,
you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION.- Willfully falsifying
certifications or affirmations may subject you to criminal penalties, including
fines and/or imprisonment.
MISUSE OF TINs.- If the requester discloses or uses TINs in violation of Federal
law, the requester may be subject to civil and criminal penalties.
- - ------------------------------------------------------------------------------
Cat. No. 10231X Form W-9 (Rev. 12-96)
<PAGE>
Form W-9 (Rev. 12-96) Page 2
- - ------------------------------------------------------------------------------
SPECIFIC INSTRUCTIONS
NAME.- If you are an individual, you must generally enter the name shown on your
social security card. However, if you have changed your last name, for instance,
due to marriage, without informing the Social Security Administration of the
name change, enter your first name, the last name shown on your social security
card, and your new last name.
If the account is in joint names, list first and then circle the name of the
person or entity whose number you enter in Part I of the form.
Sole Proprietor.- You must enter your INDIVIDUAL name as shown on your social
security card. You must enter your business, trade, or "doing business as" name
on the BUSINESS NAME line.
Other Entities.- Enter the business name as shown on required Federal tax
documents. This name should match the name shown on the charter or other legal
document creating the entity. You may enter any business, trade, or "doing
business as" name on the business name line.
PART I- TAXPAYER IDENTIFICATION NUMBER (TIN)
You must enter your TIN in the appropriate box. If you are a resident alien and
you do not have and are not eligible to get an SSN, your TIN is your IRS
individual taxpayer identification number (ITIN). Enter it in the social
security number box. If you do not have an ITIN, see HOW TO GET A TIN below.
If you are a sole proprietor and you have an EIN, you may enter either your
SSN or EIN. However, using your EIN may result in unnecessary notices to the
requester.
NOTE: See the chart on this page for further clarification of name and TIN
combinations.
HOW TO GET A TIN.- If you do not have a TIN, apply for one immediately. To apply
for an SSN, get FORM SS-5 from your local Social Security Administration office.
Get FORM W-7 to apply for an ITIN or FORM SS-4 to apply for an EIN. You can get
Forms W-7 and SS-4 from the IRS by calling 1-800-TAX-FORM (1-800-829-3676).
If you do not have a TIN, write "Applied For" in the space for the TIN, sign
and date the form, and give it to the requester. For interest and dividend
payments, and certain payments made with respect to readily tradable
instruments, you will generally have 60 days to get a TIN and give it to the
requester. Other payments are subject to backup withholding.
NOTE: Writing "Applied For" means that you have already applied for a TIN OR
that you intend to apply for one soon.
PART II-FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
Individuals (including sole proprietors) are NOT exempt from backup withholding.
Corporations are exempt from backup withholding for certain payments, such as
interest and dividends. For more information on exempt payees, see the separate
Instructions for the Requester of Form W-9.
If you are exempt from backup withholding, you should still complete this form
to avoid possible erroneous backup withholding. Enter your correct TIN in Part
I, write "Exempt" in Part II, and sign and date the form.
If you are a nonresident alien or a foreign entity not subject to backup
withholding, give the requester a completed FORM W-8, Certificate of Foreign
Status.
PART III-CERTIFICATION
For a joint account, only the person whose TIN is shown in Part I should sign
(when required).
1. INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND
BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. You must give your correct TIN,
but you do not have to sign the certification.
2. INTEREST, DIVIDEND, BROKER, AND BARTER EXCHANGE ACCOUNTS OPENED AFTER 1983
AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item 2 in the certification before signing the form.
3. REAL ESTATE TRANSACTIONS. You must sign the certification. You may cross
out item 2 of the certification.
4. OTHER PAYMENTS. You must give your correct TIN, but you do not have to sign
the certification unless you have been notified that you have previously given
an incorrect TIN. "Other payments" include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services (including payments to
corporations), payments to a nonemployee for services (including attorney and
accounting fees), and payments to certain fishing boat crew members.
5. MORTGAGE INTEREST PAID TO YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY, CANCELLATION OF DEBT, OR IRA CONTRIBUTIONS. You must give your correct
TIN, but you do not have to sign the certification.
PRIVACY ACT NOTICE
Section 6109 of the Internal Revenue Code requires you to give your correct TIN
to persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. The IRS may also
provide this information to the Department of Justice for civil and criminal
litigation and to cities, states, and the District of Columbia to carry out
their tax laws.
You must provide your TIN whether or not you are required to file a tax
return. Payers must generally withhold 31% of taxable interest, dividend, and
certain other payments to a payee who does not give a TIN to a payer. Certain
penalties may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
- - ------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: | GIVE NAME AND SSN OF:
- - ------------------------------------------------------------------
1. Individual | The individual
|
2. Two or more | The actual owner of the
individuals (joint | account or, if combined
account) | funds, the first individual
| on the account(1)
|
3. Custodian account of | The minor(2)
a minor (Uniform Gift |
to Minors Act) |
|
4. a. The usual | The grantor-trustee(1)
revocable savings |
trust (grantor is |
also trustee) |
|
b. So-called trust | The actual owner(1)
account that is not |
a legal or valid trust |
under state law |
|
5. Sole proprietorship | The owner(3)
- - ------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: | GIVE NAME AND EIN OF:
- - ------------------------------------------------------------------
6. Sole proprietorship | The owner(3)
|
7. A valid trust, estate, or | Legal entity(4)
pension trust |
|
8. Corporate | The corporation
|
9. Association, club, | The organization
religious, charitable, |
educational, or other |
tax-exempt |
organization |
|
10. Partnership | The partnership
|
11. A broker or registered | The broker or nominee
nominee |
|
12. Account with the | The public entity
Department of |
Agriculture in the name |
of a public entity (such |
as a state or local |
government, school |
district, or prison) that |
receives agricultural |
program payments |
- - ------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has an SSN, that person's number must be
furnished.
(2) Circle the minor's name and furnish the minor's SSN.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your SSN or EIN (if you have
one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)
NOTE: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
EXHIBIT(A)(3)
<PAGE>
TREDEGAR INDUSTRIES, INC.
NOTICE OF GUARANTEED DELIVERY OF SHARES OF COMMON STOCK
This form or a facsimile hereof must be used to accept the Offer (as
defined below) if:
(a) certificates for shares of common stock, no par value per share
(the "Shares"), of Tredegar Industries, Inc., a Virginia corporation (the
"Company"), cannot be delivered to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Company's Offer to Purchase dated
January 16, 1998, (the "Offer to Purchase")); or
(b) the procedure for book-entry transfer (set forth in Section 3 of
the Offer to Purchase) cannot be completed on a timely basis; or
(c) the Letter of Transmittal (or a facsimile thereof) and all other
required documents cannot be delivered to the Depositary prior to the
Expiration Date.
This form, properly completed and duly executed, may be delivered by hand,
mail or facsimile transmission to the Depositary. See Section 3 of the Offer to
Purchase.
TO: AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND/OVERNIGHT DELIVERY:
American Stock Transfer & Trust Co. (Eligible Institutions Only) American Stock Transfer & Trust Co.
40 Wall Street, 46th Floor (718) 234-5001 40 Wall Street, 46th Floor
New York, NY 10005 New York, NY 10005
(Attention: Reorganization (Attention: Reorganization
Department) CONFIRM BY TELEPHONE: Department)
(718) 921-8200
FOR INFORMATION CALL:
(718) 921-8200
</TABLE>
DELIVERY OF THIS INSTRUMENT TO THE ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
1
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company at the price per Share
indicated in this Notice of Guaranteed Delivery, upon the terms and subject to
the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of both of which is
hereby acknowledged, Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase.
ODD LOTS
To be completed ONLY if the Shares are being tendered by or on behalf of a
person owning beneficially or of record, as of the close of business on January
15, 1998, an aggregate of fewer than 100 Shares. The undersigned either (check
one box):
[ ] was the beneficial or record owner, as of the close of business on
January 15, 1998, of an aggregate of fewer than 100 Shares, all of
which are being tendered; or
[ ] is a broker, dealer, commercial bank, trust company, or other nominee
that (a) is tendering for the beneficial owner(s) thereof, Shares with
respect to which it is the record holder, and (b) believes, based upon
representations made to it by such beneficial owner(s), that each such
person was the beneficial owner, as of the close of business on
January 15, 1998, of an aggregate of fewer than 100 Shares and is
tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[ ] at the Purchase Price, as the same shall be determined by the Company
in accordance with the terms of the Offer (persons checking this box
need not indicate the price per Share below); or
[ ] at the price per Share indicated below under "Price (in Dollars) per
Share at which Shares are being tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
CONDITIONAL TENDER
(SEE INSTRUCTION 9)
[ ] check here if tender of Shares is conditional on the Company
purchasing all or a minimum number of the tendered Shares and complete
the following:
Minimum number of Shares to be sold:_____________________________
2
<PAGE>
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(SHAREHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A
SEPARATE NOTICE OF GUARANTEE FOR EACH PRICE AT WHICH SHARES ARE TENDERED.)
<TABLE>
<S> <C>
[ ] $58.00 [ ] $59.25 [ ] $60.50 [ ] $61.75 [ ] $63.00 [ ] $64.25
[ ] $58.25 [ ] $59.50 [ ] $60.75 [ ] $62.00 [ ] $63.25 [ ] $64.50
[ ] $58.50 [ ] $59.75 [ ] $61.00 [ ] $62.25 [ ] $63.50 [ ] $64.75
[ ] $58.75 [ ] $60.00 [ ] $61.25 [ ] $62.50 [ ] $63.75 [ ] $65.00
[ ] $59.00 [ ] $60.25 [ ] $61.50 [ ] $62.75 [ ] $64.00
</TABLE>
3
<PAGE>
(Please type or print) SIGN HERE
Certificate Nos. (if available): __________________________________
__________________________________ Signature(s)
__________________________________ Dated:____________________________
Name(s)
__________________________________ If Shares will be tendered by
Address(es) book-entry transfer, check one box:
__________________________________
__________________________________ [ ] The Depository Trust Company
Area Code(s) and Telephone Number(s) [ ] The Philadelphia Depository Company
Account Number:__________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned is a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office, branch, or agency in the United States
and represents that: (a) the above-named person(s) "own(s)" the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended, and (b) such tender of Shares complies with
such Rule 14e-4, and guarantees that the Depositary will receive (i)
certificates of the Shares tendered hereby in proper form for transfer, or (ii)
confirmation that the Shares tendered hereby have been delivered pursuant to the
procedure for book-entry transfer (set forth in Section 3 of the Offer to
Purchase) into the Depositary's account at The Depository Trust Company or The
Philadelphia Depository Company, as the case may be, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and any
other documents required by the Letter of Transmittal, all within three New York
Stock Exchange trading days after the date the Depositary receives this Notice
of Guaranteed Delivery.
Authorized Signature:____________________
Name:____________________________________
(Please Print)
Title:___________________________________
Name of Firm:____________________________
Address:_________________________________
_________________________________________
(Including Zip Code)
Area Code and Telephone Number:__________
Date:______________________________, 1998
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE
SENT WITH THE LETTER OF TRANSMITTAL.
4
EXHIBIT (A)(4)
<PAGE>
SCHRODER & CO. INC.
The Equitable Center
787 Seventh Avenue
New York, New York 10019-6016
TREDEGAR INDUSTRIES, INC.
Offer To Purchase For Cash Up To
1,250,000 Shares Of Its Common Stock (Including
The Associated Preferred Stock Purchase Rights)
At A Purchase Price Not In Excess Of $65.00
Nor Less Than $58.00 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 13, 1998, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Tredegar Industries, Inc., a Virginia corporation (the "Company"), has
appointed us to act as Dealer Manager in connection with its offer to purchase
for cash up to 1,250,000 shares of its Common Stock, no par value per share (the
"Shares") (including the associated Preferred Stock Purchase Rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of June 15, 1989, as
amended, between the Company and the Rights Agent named therein), at prices not
in excess of $65.00 nor less than $58.00 per Share, specified by its
shareholders, upon the terms and subject to the conditions set forth in its
Offer to Purchase, dated January 16, 1998, and in the related Letter of
Transmittal (which together constitute the "Offer"). Unless the Rights are
redeemed by the Company, a tender of Shares will also constitute a tender of the
associated Rights. Unless the context requires otherwise, all references herein
to Shares include the associated Rights.
The Company will determine the single per Share price, not in excess of
$65.00 nor less than $58.00 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering shareholders. The Company will select the lowest Purchase Price that
will allow it to buy 1,250,000 Shares (or such lesser number of Shares as are
properly tendered). All Shares acquired in the Offer will be acquired at the
Purchase Price. All Shares properly tendered at prices at or below the Purchase
Price and not withdrawn will be purchased at the Purchase Price, upon the terms
and subject to the conditions of the Offer, including the proration and
conditional tender provisions. Shares tendered at prices in excess of the
Purchase Price and Shares not purchased because of proration will be returned.
The Company reserves the right, in its sole discretion, to purchase more than
1,250,000 Shares pursuant to the Offer. See Sections 1 and 15 of the Offer to
Purchase.
If, prior to the Expiration Date (as defined in the Offer to Purchase),
more than 1,250,000 Shares (or such greater number of Shares as the Company may
elect to purchase) are properly tendered and not withdrawn, the Company will,
upon the terms and subject to the conditions of the Offer, accept Shares for
purchase first from Odd Lot Holders (as defined in the Offer to Purchase) who
properly tender their Shares at or below the Purchase Price and then on a PRO
RATA basis from all other shareholders whose Shares are properly tendered at or
below the Purchase Price and not withdrawn. If any shareholder tenders Shares
and does not wish to have such Shares purchased subject to proration, such
shareholder may tender Shares subject to the condition that a specified minimum
number of Shares (which may be represented by designated stock certificates) or
none of such Shares be purchased. See Sections 1, 3 and 6 of the Offer to
Purchase.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 7 OF THE OFFER TO PURCHASE.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase, dated January 16, 1998;
2. Letter to Clients which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
3. Letter, dated January 16, 1998, from John D. Gottwald, President
and Chief Executive Officer of the Company, to shareholders of the Company;
1
<PAGE>
4. Letter of Transmittal for your use and for the information of your
clients (together with accompanying Form W-9); and
5. Notice of Guaranteed Delivery to be used to accept the Offer if the
Share certificates and all other required documents cannot be delivered to
the Depositary by the Expiration Date or if the procedure for book-entry
transfer cannot be completed on a timely basis.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, FEBRUARY 13, 1998, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any person
for soliciting tenders of Shares pursuant to the Offer other than fees paid to
the Dealer Manager, the Information Agent or the Depositary as described in the
Offer to Purchase. The Company will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to the beneficial owners of Shares held by you as a nominee
or in a fiduciary capacity. The Company will pay or cause to be paid any stock
transfer taxes applicable to its purchase of Shares, except as otherwise
provided in Instruction 7 of the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in Section 3, "The Offer -- Procedure for Tendering Shares,"
of the Offer to Purchase, tenders may be made without the concurrent deposit of
stock certificates or concurrent compliance with the procedure for book-entry
transfer, if such tenders are made by or through a broker or dealer which is a
member firm of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office, branch or agency in the United States. Certificates
for Shares so tendered (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the "Book-Entry Transfer
Facilities" described in the Offer to Purchase), together with a properly
completed and duly executed Letter of Transmittal and any other documents
required by the Letter of Transmittal, must be received by the Depositary within
three New York Stock Exchange trading days after timely receipt by the
Depositary of a properly completed and duly executed Notice of Guaranteed
Delivery.
Any inquiries you may have with respect to the Offer should be addressed to
Schroder & Co. Inc. or to the Information Agent at their respective addresses
and telephone numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
undersigned, telephone in all areas: (212) 492-6000 (collect) or from the
Information Agent, Georgeson & Company Inc., telephone: (800) 223-2064 (toll
free).
Very truly yours,
SCHRODER & CO. INC.
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE DEALER
MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
2
EXHIBIT (A)(5)
<PAGE>
TREDEGAR INDUSTRIES, INC.
Offer To Purchase For Cash Up To
1,250,000 Shares Of Its Common Stock (Including
The Associated Preferred Stock Purchase Rights)
At A Purchase Price Not In Excess Of $65.00
Nor Less Than $58.00 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 13, 1998, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated
January 16, 1998, and the related Letter of Transmittal (which together
constitute the "Offer") in connection with the Offer by Tredegar
Industries, Inc., a Virginia corporation (the "Company"), to purchase up
to 1,250,000 shares of its Common Stock, no par value per share (the
"Shares") (including the associated Preferred Stock Purchase Rights (the
"Rights") issued pursuant to the rights agreement, dated as of June 15,
1989, as amended, between the Company and the Rights Agent named
therein), at prices not in excess of $65.00 nor less than $58.00 per
Share, specified by tendering shareholders, upon the terms and subject
to the conditions set forth in the Offer. Unless the Rights are redeemed
by the Company, a tender of Shares will also constitute a tender of the
associated Rights. Unless the context requires otherwise, all references
herein to Shares include the associated Rights.
The Company will determine the single per Share price, not in
excess of $65.00 nor less than $58.00 per Share, net to the seller in
cash (the "Purchase Price"), that it will pay for Shares properly
tendered pursuant to the Offer, taking into account the number of Shares
so tendered and the prices specified by tendering shareholders. The
Company will select the lowest Purchase Price that will allow it to buy
1,250,000 Shares (or such lesser number of Shares as are properly
tendered). All Shares acquired in the Offer will be acquired at the
Purchase Price. All Shares properly tendered at prices at or below the
Purchase Price and not withdrawn will be purchased at the Purchase
Price, upon the terms and subject to the conditions of the Offer,
including the proration and conditional tender provisions. Shares
tendered at prices in excess of the Purchase Price and Shares not
purchased because of proration will be returned. The Company reserves
the right, in its sole discretion, to purchase more than 1,250,000
Shares pursuant to the Offer. See Sections 1 and 15 of the Offer to
Purchase.
If, prior to the Expiration Date (as defined in the Offer to
Purchase), more than 1,250,000 Shares (or such greater number of Shares
as the Company may elect to purchase) are properly tendered and not
withdrawn, the Company will, upon the terms and subject to the
conditions of the Offer, accept Shares for purchase first from Odd Lot
Holders (as defined in the Offer to Purchase) who properly tender their
Shares at or below the Purchase Price and then on a PRO RATA basis from
all other shareholders whose Shares are properly tendered at or below
the Purchase Price and not withdrawn. If any shareholder tenders Shares
and does not wish to have such Shares purchased subject to proration,
such shareholder may tender Shares subject to the condition that a
specified minimum number of Shares (which may be represented by
designated stock certificates) or none of such Shares be purchased. See
Sections 1, 3 and 6 of the Offer to Purchase.
We are the owner of record of Shares held for your account. As
such, we are the only ones who can tender your Shares, and then only
pursuant to your instructions. WE ARE SENDING YOU THE LETTER OF
TRANSMITTAL FOR YOUR INFORMATION ONLY; YOU CANNOT USE IT TO TENDER
SHARES WE HOLD FOR YOUR ACCOUNT.
1
<PAGE>
Please instruct us as to whether you wish us to tender any or all
of the Shares we hold for your account on the terms and subject to the
conditions of the Offer.
We call your attention to the following:
1. You may tender Shares at prices not in excess of $65.00 nor less
than $58.00 per Share as indicated in the attached Instruction Form, net to
you in cash.
2. You may condition your tender of Shares on the Company purchasing
all or a minimum number of your Shares.
3. You may designate the priority in which your Shares shall be
purchased in the event of proration.
4. The Offer is not conditioned upon any minimum number of Shares
being tendered.
5. The Offer, proration period and withdrawal rights will expire at
12:00 Midnight, New York City time, on Friday, February 13, 1998, unless
the Company extends the Offer.
6. The Offer is for 1,250,000 Shares, constituting approximately 10.1%
of the Shares outstanding as of January 15, 1998.
7. Tendering shareholders will not be obligated to pay any brokerage
commissions, solicitation fees, or, subject to Instruction 7 of the Letter
of Transmittal, stock transfer taxes on the Company's purchase of Shares
pursuant to the Offer.
8. If you beneficially held, as of the close of business on January
15, 1998, an aggregate of fewer than 100 Shares, and you instruct us to
tender on your behalf all such Shares at or below the Purchase Price before
the Expiration Date (as defined in the Offer to Purchase) and check the box
captioned "Odd Lots" in the attached Instruction Form, the Company, upon
the terms and subject to the conditions of the Offer, will accept all such
Shares for purchase before proration, if any, of the purchase of other
Shares properly tendered at or below the Purchase Price.
9. If you wish to tender portions of your Shares at different prices,
you must complete a separate Instruction Form for each price at which you
wish to tender each such portion of your Shares. We must submit separate
Letters of Transmittal on your behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your Instruction Form to us is enclosed.
If you authorize us to tender your Shares, we will tender all such Shares unless
you specify otherwise on the attached Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE OFFER.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, FEBRUARY 13, 1998, UNLESS THE COMPANY EXTENDS THE
OFFER.
As described in Section 1 of the Offer to Purchase, if more than 1,250,000
Shares have been properly tendered at prices at or below the Purchase Price and
not withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase), the Company will purchase properly tendered Shares on the basis set
forth below:
(a) FIRST, all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Holder (as defined below) who:
2
<PAGE>
(1) tenders all Shares beneficially owned by such Odd Lot Holder at
a price at or below the Purchase Price (tenders of less than all Shares
owned by such shareholder will not qualify for this preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) SECOND, after purchase of all of the foregoing Shares, all Shares
conditionally tendered in accordance with Section 6 of the Offer to
Purchase, for which the condition was satisfied, and all other Shares
tendered properly and unconditionally at prices at or below the Purchase
Price and not withdrawn prior to the Expiration Date, on a PRO RATA basis
(with appropriate adjustments to avoid purchases of fractional Shares) as
described in the Section 1 of the Offer to Purchase; and
(c) THIRD, if necessary, Shares conditionally tendered, for which the
condition was not satisfied, at or below the Purchase Price and not
withdrawn prior to the Expiration Date, selected by random lot in
accordance with Section 6 of the Offer to Purchase.
You may condition your tender on the Company purchasing a minimum number of
your tendered Shares. In such case, if as a result of the preliminary proration
provisions in the Offer to Purchase the Company would purchase less than such
minimum number of your Shares, then the Company will not purchase any of your
Shares, except as provided in the next sentence. In such case, if as a result of
conditionally tendered Shares not being purchased the total number of Shares
that would have been purchased is less than 1,250,000, the Company will select,
by random lot, for purchase from shareholders who tender all their Shares,
conditionally tendered Shares for which the condition, based on a preliminary
proration, has not been satisfied. See Section 1 of the Offer to Purchase.
The Offer is being made to all holders of Shares. The Company is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Company becomes aware
of any valid state statute prohibiting the making of the Offer, the Company will
make a good faith effort to comply with such statute. If, after such good faith
effort, the Company cannot comply with such statute, the Offer will not be made
to, nor will tenders be accepted from or on behalf of, holders of Shares in such
state. In those jurisdictions whose securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer shall be deemed
to be made on behalf of the Company by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdictions.
3
<PAGE>
INSTRUCTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF TREDEGAR INDUSTRIES, INC.
Please tender to Tredegar Industries, Inc. (the "Company"), on (our) (my)
behalf, the number of Shares indicated below, which are beneficially owned by
(us) (me) and registered in your name, upon terms and subject to the conditions
contained in the Offer to Purchase of the Company dated January 16, 1998, and
the related Letter of Transmittal, the receipt of both of which is acknowledged.
Number of Shares to be tendered:__________________Shares
ODD LOTS
(SEE INSTRUCTION 8)
[ ] By checking this box the undersigned represents that the undersigned owned,
beneficially or of record, as of the close of business on January 15, 1998,
an aggregate of fewer than 100 Shares and is tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[ ] at the Purchase Price, as the same shall be determined by the Company in
accordance with the terms of the Offer (persons checking this box need not
indicate the price per Share below); or
[ ] at the price per Share indicated below under "Price (in Dollars) per Share
at which Shares are being tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
CONDITIONAL TENDER
[ ] check here if tender of Shares is conditional on the Company purchasing all
or a minimum number of the tendered Shares and complete the following:
Minimum number of Shares to be sold:________________
4
<PAGE>
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(SHAREHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A
SEPARATE INSTRUCTION FORM FOR EACH PRICE AT WHICH SHARES ARE TENDERED.)
<TABLE>
<S> <C>
[ ] $58.00 [ ] $59.25 [ ] $60.50 [ ] $61.75 [ ] $63.00 [ ] $64.25
[ ] $58.25 [ ] $59.50 [ ] $60.75 [ ] $62.00 [ ] $63.25 [ ] $64.50
[ ] $58.50 [ ] $59.75 [ ] $61.00 [ ] $62.25 [ ] $63.50 [ ] $64.75
[ ] $58.75 [ ] $60.00 [ ] $61.25 [ ] $62.50 [ ] $63.75 [ ] $65.00
[ ] $59.00 [ ] $60.25 [ ] $61.50 [ ] $62.75 [ ] $64.00
</TABLE>
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED UNANIMOUSLY THE OFFER.
HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED.
Signature(s):______________________ Address:___________________________
___________________________________ ___________________________________
Name(s):___________________________ (Including Zip Code)
___________________________________
(Please Print)
Area Code and Telephone Number:
___________________________________
___________________________________ Date:________________________, 1998
(Taxpayer Identification or
Social Security Number)
IMPORTANT: SHAREHOLDERS ARE ENCOURAGED TO RETURN A COMPLETED FORM W-9 WITH THEIR
INSTRUCTION FORM.
5
EXHIBIT (A)(6)
<PAGE>
TREDEGAR INDUSTRIES, INC.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
To: Participants in the Tredegar Industries, Inc. Dividend Reinvestment and
Stock Purchase Plan
Re: Tredegar Industries, Inc.'s Offer to Purchase for Cash Up to 1,250,000
Shares of its Common Stock
Date: January 16, 1998
This memorandum is being sent to you because you are a participant in the
Tredegar Industries, Inc. Dividend Reinvestment and Stock Purchase Plan (the
"Dividend Reinvestment Plan").
The Dividend Reinvestment Plan is described in the Plan Prospectus
("Prospectus"). Please refer to the relevant Prospectus for more information
regarding the Dividend Reinvestment Plan.
TREDEGAR INDUSTRIES, INC. IS OFFERING TO PURCHASE SHARES OF ITS COMMON STOCK
Tredegar Industries, Inc. (the "Company") is inviting its shareholders to
tender shares of the Company's common stock, no par value per share (the
"Shares"), for sale directly to the Company. Shareholders are being invited to
tender their Shares at prices not in excess of $65.00 nor less than $58.00 per
Share. The details of the invitation are described in the Company's Offer to
Purchase, dated January 16, 1998 (the "Offer to Purchase"), and this memorandum
(which together constitute the "Offer" for purposes of tendering Shares held in
your Dividend Reinvestment Plan account). Copies of the Offer to Purchase and
certain related materials (excluding the Letter of Transmittal), which are being
sent to the Company's shareholders generally, are enclosed for your review.
The Letter of Transmittal referred to above and in the Offer to Purchase
cannot be used to tender the Shares held in your Dividend Reinvestment Plan
account: the enclosed Election Form for the Dividend Reinvestment Plan is a
substitute for the Letter of Transmittal and must be used to tender Shares in
your Dividend Reinvestment Plan account.
YOUR DECISION WHETHER TO TENDER
As a participant in the Dividend Reinvestment Plan you may direct American
Stock Transfer and Trust Company, the administrator of the Dividend Reinvestment
Plan (the "Administrator"), to tender Shares allocated to your Dividend
Reinvestment Plan account pursuant to the Offer.
HOW TO TENDER SHARES; COMPLETION OF ELECTION FORM
If you wish to direct the Administrator to tender all or part of the Shares
in your Dividend Reinvestment Plan account, you must complete and return the
enclosed Election Form in accordance with the instructions specified on the
Election Form. Before deciding whether or not to tender your Shares, please
carefully read the enclosed materials.
YOUR ELECTION WILL BE EFFECTIVE ONLY IF YOUR PROPERLY COMPLETED ELECTION
FORM IS RECEIVED BY THE ADMINISTRATOR AT ITS ADDRESS SET FORTH ON THE ENCLOSED
RETURN ENVELOPE NO LATER THAN 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY,
FEBRUARY 11, 1998. Election Forms that are received after this deadline, and
Election Forms which are not properly completed, will not be accepted. Examples
of improperly completed Election Forms include Forms which are not signed and
Forms which contain incorrect or incomplete information.
Dividend Reinvestment Plan Participants who desire to tender Shares at more
than one price must complete a separate Election Form for each price at which
Shares are tendered, provided that the same Shares cannot be tendered (unless
properly withdrawn in accordance with the terms of the Offer) at more than one
price. IN ORDER TO PROPERLY TENDER SHARES, ONE AND ONLY ONE PRICE BOX MUST BE
CHECKED IN THE APPROPRIATE SECTION ON EACH ELECTION FORM.
1
<PAGE>
CHANGING YOUR INSTRUCTION TO ADMINISTRATOR
As more fully described in Section 4 of the Offer to Purchase, tenders will
be deemed irrevocable unless withdrawn by the dates specified therein. If you
instruct the Administrator to tender Shares, and you subsequently decide to
change your instructions, you may do so by sending a notice of withdrawal to the
Administrator. The notice of withdrawal will be effective only if it is in
writing and is received by the Administrator AT OR BEFORE 5:00 P.M., NEW YORK
CITY TIME, ON WEDNESDAY, FEBRUARY 11, 1998, at the address set forth on the
enclosed return envelope. Any notice of change of instruction to the
Administrator must specify your name, your social security number, the number of
Shares tendered, and the number of Shares to be withdrawn. Upon receipt of a
timely written notice of change of instruction to the Administrator, previous
instructions to tender with respect to such Shares will be deemed cancelled. If
you later wish to retender Shares, you may call American Stock Transfer & Trust
Company, Plan Administrator at (212) 936-5100 to obtain a new Election Form. Any
new Election Form must be received by the Administrator AT OR BEFORE 5:00 P.M.,
NEW YORK CITY TIME, ON WEDNESDAY, FEBRUARY 11, 1998.
IF YOU HAVE QUESTIONS
If you have any questions about the Offer or any of the other matters
discussed above, please call Georgeson & Company Inc., the Information Agent, at
(800) 223-2064. If you have questions about the Dividend Reinvestment Plan,
please refer to the Prospectus. Additional copies of the Prospectus for the
Dividend Reinvestment Plan may be obtained from the Administrator by contacting
the Shareholder Services Department at (800) 937-5449.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
PARTICIPANT AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. EACH
PARTICIPANT MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES AND, IF
SO, HOW MANY SHARES TO TENDER AND AT WHAT PRICE OR PRICES.
ELECTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF TREDEGAR INDUSTRIES, INC.
Please tender to Tredegar Industries, Inc. (the "Company"), on (our) (my)
behalf, the number of Shares indicated below held in the Tredegar Industries,
Inc. Dividend Reinvestment and Stock Purchase Plan (the "Dividend Reinvestment
Plan"), which are beneficially owned by (us) (me) and held by you under the
Dividend Reinvestment Plan, upon terms and subject to the conditions contained
in the Offer to Purchase of the Company dated January 16, 1998, the receipt of
which is acknowledged.
2
<PAGE>
Number of Shares to be tendered:__________________ Shares
ODD LOTS
(SEE INSTRUCTION 8)
[ ] By checking this box the undersigned represents that the undersigned owned,
beneficially or of record, as of the close of business on January 15, 1998,
an aggregate of fewer than 100 Shares and is tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[ ] at the Purchase Price, as the same shall be determined by the Company in
accordance with the terms of the Offer (persons checking this box need not
indicate the price per Share below); or
[ ] at the price per Share indicated below under "Price (in Dollars) per Share
at which Shares are being tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
CONDITIONAL TENDER
[ ] check here if tender of Shares is conditional on the Company purchasing all
or a minimum number of the tendered Shares and complete the following:
Minimum number of Shares to be sold:___________________
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(PARTICIPANTS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A
SEPARATE ELECTION FORM FOR EACH PRICE AT WHICH SHARES ARE TENDERED.)
<TABLE>
<S> <C>
[ ] $58.00 [ ] $59.25 [ ] $60.50 [ ] $61.75 [ ] $63.00 [ ] $64.25
[ ] $58.25 [ ] $59.50 [ ] $60.75 [ ] $62.00 [ ] $63.25 [ ] $64.50
[ ] $58.50 [ ] $59.75 [ ] $61.00 [ ] $62.25 [ ] $63.50 [ ] $64.75
[ ] $58.75 [ ] $60.00 [ ] $61.25 [ ] $62.50 [ ] $63.75 [ ] $65.00
[ ] $59.00 [ ] $60.25 [ ] $61.50 [ ] $62.75 [ ] $64.00
</TABLE>
3
<PAGE>
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING PARTICIPANT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED UNANIMOUSLY THE OFFER.
HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO PARTICIPANTS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH PARTICIPANT MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED.
Signature(s):________________________ Address:_____________________________
Name(s):_____________________________ _____________________________________
(Please Print) (Including Zip Code)
_____________________________________ Area Code and Telephone Number:______
(Taxpayer Identification or Date:___________________________, 1998
Social Security Number)
IMPORTANT: THIS DIVIDEND REINVESTMENT PLAN PARTICIPANT'S ELECTION FORM (OR A
MANUALLY SIGNED FACSIMILE THEREOF) MUST BE RECEIVED BY THE
ADMINISTRATOR AT OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON
WEDNESDAY, FEBRUARY 11, 1998. PARTICIPANTS ARE ENCOURAGED TO RETURN A
COMPLETED FORM W-9 WITH THEIR ELECTION FORM.
4
EXHIBIT (A)(7)
<PAGE>
SAVINGS PLAN FOR THE EMPLOYEES OF
TREDEGAR INDUSTRIES, INC.
To: Participants in the Savings Plan for the Employees of Tredegar
Industries, Inc.
Re: Tredegar Industries, Inc.'s Offer to Purchase for Cash Up to 1,250,000
Shares of its Common Stock
Date: January 16, 1998
This memorandum is being sent to you because you are a participant in the
Savings Plan for the Employees of Tredegar Industries, Inc. (the "Savings
Plan").
The Savings Plan is described in the Summary Plan Description ("SPD").
Please refer to the Saving Plan SPD for more information.
TREDEGAR INDUSTRIES, INC. IS OFFERING TO PURCHASE SHARES OF ITS COMMON STOCK
Tredegar Industries, Inc. (the "Company") is inviting its shareholders to
tender shares of the Company's common stock, no par value per share (the
"Shares"), for sale directly to the Company. Shareholders are being invited to
tender their Shares at prices not in excess of $65.00 nor less than $58.00 per
Share. The details of the invitation to the Company's shareholders, including
Wachovia Bank, N.A., the trustee for the Savings Plan (the "Trustee") and the
holder of record of the Shares in your Savings Plan account, are described in
the Company's Offer to Purchase, dated January 16, 1998 (the "Offer to
Purchase"), and this memorandum (which together constitute the "Offer" for
purposes of tendering Shares allocated to your Savings Plan account). Copies of
the Offer to Purchase and certain related materials (excluding the Letter of
Transmittal), which are being sent to the Company's shareholders generally, are
enclosed for your review.
The Letter of Transmittal referred to above and in the Offer to Purchase
cannot be used to tender the Shares held in your Savings Plan account: the
enclosed Election Form for the Savings Plan is a substitute for the Letter of
Transmittal and must be used to tender Shares in your Savings Plan account.
Also, please note that if you hold an "odd lot," as described in Section 1 of
the Offer to Purchase, in your Savings Plan account, the special odd lot
purchase rule will not apply to your Shares in the Savings Plan. That is, the
proration provisions that will apply if more than 1,250,000 Shares are properly
tendered (as described in Section 1 of the Offer to Purchase) will apply to any
Shares tendered from the Savings Plan, even if you are an odd lot holder.
YOUR DECISION WHETHER TO TENDER
As a participant in the Savings Plan you may direct the Trustee to tender
Shares allocated to your Savings Plan account pursuant to the Offer.
PARTICIPANTS CONSIDERING TENDERING SHARES FROM THEIR SAVINGS PLAN ACCOUNT SHOULD
REVIEW CAREFULLY THE TAX CONSEQUENCES OF DOING SO. SEE "POTENTIAL TAX
CONSEQUENCES OF TENDERING SHARES" BELOW. ALSO, THE PROCEEDS FROM ANY SALE OF
SHARES FROM YOUR SAVINGS PLAN ACCOUNT WILL NOT BE DISTRIBUTED TO YOU. INSTEAD,
ANY PROCEEDS WILL CONTINUE TO BE HELD IN THE SAVINGS PLAN AND WILL BE REINVESTED
IN THE STABLE VALUE FUND. SEE "REINVESTMENT OF SALE PROCEEDS" BELOW.
HOW TO TENDER SHARES; COMPLETION OF ELECTION FORM
If you wish to direct the Trustee to tender all or part of the eligible
Shares in your Savings Plan account, you must complete and return the enclosed
Election Form in accordance with the instructions specified on the Election
Form. Before deciding whether or not to tender your Shares, please carefully
read the enclosed materials.
YOUR ELECTION WILL BE EFFECTIVE ONLY IF YOUR PROPERLY COMPLETED ELECTION
FORM IS RECEIVED BY THE TRUSTEE AT ITS ADDRESS SET FORTH ON THE ENCLOSED RETURN
ENVELOPE NO LATER THAN 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY, FEBRUARY 11,
1998. Election Forms that are received after this deadline, and Election Forms
which are not properly completed, will not be accepted. Examples of improperly
completed Election Forms include Forms which are not signed and Forms which
contain incorrect or incomplete information. Your decision to tender (or not to
tender) and your reinvestment election are personal decisions you should make
based upon your own personal circumstances and desires.
Savings Plan participants who desire to tender Shares at more than one
price must complete a separate Election Form for each price at which Shares are
tendered, provided that the same Shares cannot be tendered (unless properly
withdrawn in
1
<PAGE>
accordance with the terms of the offer) at more than one price. IN ORDER TO
PROPERLY TENDER SHARES, ONE AND ONLY ONE PRICE BOX MUST BE CHECKED IN THE
APPROPRIATE SECTION ON EACH ELECTION FORM.
SAVINGS PLAN ACCOUNTS. Under the Savings Plan, you may direct the Trustee
to tender all or part of the Shares that are allocated to your account including
Shares that were purchased with Company matching contributions. The label
attached below identifies the number of Shares that were allocated to your
account as of the date indicated. Unallocated Shares (for example, Shares that
were recently purchased by the Trustee) are not subject to your tender
direction. The Trustee will decide whether and, if so, upon what terms,
unallocated Shares will be tendered.
REINVESTMENT OF SALE PROCEEDS
If you direct the Trustee to tender Shares allocated to your account in the
Savings Plan, proceeds from the sale of the Shares will be invested in the
Stable Value Fund. Proceeds from the sale of unallocated Shares will be invested
in the Stable Value Fund, as well. In accordance with the Savings Plan's
investment transfer provisions, you will be able to transfer amounts from the
Stable Value Fund to any other active fund. The first opportunity that you will
have to transfer sale proceeds from the Stable Value Fund to any other active
fund will be effective as of March 31, 1998.
SALE PROCEEDS THAT YOU DIRECT TO BE TRANSFERRED FROM THE STABLE VALUE FUND
TO THE TREDEGAR COMMON STOCK FUND WILL BE USED TO PURCHASE COMMON STOCK AT THE
MARKET PRICE AT THAT TIME. ACCORDINGLY, THE REINVESTMENT PURCHASE PRICE MAY BE
HIGHER THAN THE SALE PRICE. THIS WOULD RESULT IN A DECREASE IN THE NUMBER OF
SHARES CREDITED TO YOUR SAVINGS PLAN ACCOUNT. IT IS ALSO POSSIBLE THAT THE
REINVESTMENT PRICE WILL BE LOWER THAN THE TENDER OFFER SALE PRICE, WHICH WOULD
RESULT IN AN INCREASED NUMBER OF SHARES BEING CREDITED TO YOUR ACCOUNT. THE KEY
POINT IS THAT NO ONE CAN ASSURE YOU WHAT THE REINVESTMENT PRICE WILL BE, SINCE
IT IS DEPENDENT ON MARKET CONDITIONS AT THE TIME. ALSO, BE SURE TO READ THE NEXT
SECTION REGARDING THE POSSIBLE LOSS OF FAVORABLE TAX TREATMENT UNDER THE SAVINGS
PLAN AS A RESULT OF TENDERING SHARES FROM YOUR ACCOUNT.
POTENTIAL TAX CONSEQUENCES OF TENDERING SHARES
Tendering and selling shares from your savings plan account will not be a
taxable transaction. HOWEVER, TENDERING AND SELLING SHARES FROM YOUR SAVINGS
PLAN ACCOUNT NOW COULD RESULT IN THE LOSS OF A FAVORABLE TAX TREATMENT AVAILABLE
WITH RESPECT TO ANY SHARES THAT SUBSEQUENTLY ARE DISTRIBUTED TO YOU FROM THE
SAVINGS PLAN. Shares that you receive in a distribution from the Savings Plan
generally are eligible for favorable tax treatment. Specifically, depending upon
the type of distribution, all or a portion of any "net unrealized appreciation"
on the Shares is not taxable to you until you sell the Shares. If you tender and
sell Shares from your Savings Plan account, any net unrealized appreciation in
the Shares that are sold will be lost. In addition, if the proceeds are
transferred from the Stable Value Fund to the Tredegar Common Stock Fund, the
cost of the Shares in your account will be recalculated to reflect current
market prices of the newly acquired Shares. If your net unrealized appreciation
is lost, the amount of tax that you owe immediately upon receipt of a Savings
Plan distribution may be greater than if you had not tendered and sold your
Shares in the Offer.
CHANGING YOUR INSTRUCTION TO TRUSTEE
As more fully described in Section 4 of the Offer to Purchase, tenders will
be deemed irrevocable unless withdrawn by the dates specified therein. If you
instruct the Trustee to tender Shares, and you subsequently decide to change
your instructions, you may do so by sending a notice of withdrawal to the
Trustee. The notice of withdrawal will be effective only if it is in writing and
is received by the Trustee AT OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON
WEDNESDAY, FEBRUARY 11, 1998, at the address set forth on the enclosed return
envelope. Any notice of change of instruction to the Trustee must specify your
name, your social security number, the number of Shares tendered, whether
employee pre-tax, employee after-tax or employer matching shares, and the number
of Shares to be withdrawn. Upon receipt of a timely written notice of change of
instruction to the Trustee, previous instructions to tender with respect to such
Shares will be deemed cancelled. If you later wish to retender Shares, you may
call Lynn Firebaugh, Manager, Employee Benefits, at (804) 330-1288 to obtain a
new Election Form. Any new Election Form must be received by the Trustee AT OR
BEFORE 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY, FEBRUARY 11, 1998.
TRUSTEE'S LEGAL RESPONSIBILITY
If you affirmatively direct the Trustee concerning your decision to tender
or not tender the Shares allocated to your Savings Plan account, the Trustee
generally must follow your direction.
2
<PAGE>
If you fail to affirmatively direct the Trustee to tender or not tender the
Shares allocated to your Savings Plan account, the Savings Plan provides that
the Shares will not be tendered and that the Trustee has no discretion with
respect to those Shares. The Trustee generally must follow your directions and
the terms of the Savings Plan unless it has well founded reasons for concluding
that doing so would not be consistent with Title I of Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). If the Trustee determines that
following a Participant direction or the terms of the Savings Plan would not be
consistent with Title I of ERISA, it must ignore such direction or Savings Plan
provision and exercise its discretion as Trustee in lieu of such direction or
Savings Plan provision.
IF YOU HAVE QUESTIONS
If you have any questions about the Offer or any of the other matters
discussed above, please call Georgeson & Company Inc., the Information Agent at
(800) 223-2064. If you wish, your inquiry may be made on a confidential basis.
If you have questions about the Savings Plan, please refer to the Savings Plan's
SPD. Additional copies of the SPD for the Savings Plan may be obtained from Lynn
Firebaugh at (804) 330-1288.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
PARTICIPANT AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. EACH
PARTICIPANT MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES AND, IF
SO, HOW MANY SHARES TO TENDER AND AT WHAT PRICE OR PRICES.
ELECTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF TREDEGAR INDUSTRIES, INC.
Please tender to Tredegar Industries, Inc. (the "Company"), on my behalf,
the number of Shares indicated below held in the Savings Plan for the Employees
of Tredegar Industries, Inc. (the "Savings Plan"), which are beneficially owned
by me and held by you under the Savings Plan, upon terms and subject to the
conditions contained in the Offer to Purchase of the Company dated January 16,
1998, the receipt of which is acknowledged. I understand that the label that
follows sets forth the number of Shares allocated to me in the various Savings
Plan accounts.
Number of Shares to be tendered from my Pre-Tax shares account:___________Shares
Number of Shares to be tendered from my After-Tax shares account:_________Shares
Number of Shares to be tendered from my Employer Matching account:________Shares
3
<PAGE>
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(PARTICIPANTS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A
SEPARATE ELECTION FORM FOR EACH PRICE AT WHICH SHARES ARE TENDERED.)
<TABLE>
<S> <C>
[ ] $58.00 [ ] $59.25 [ ] $60.50 [ ] $61.75 [ ] $63.00 [ ] $64.25
[ ] $58.25 [ ] $59.50 [ ] $60.75 [ ] $62.00 [ ] $63.25 [ ] $64.50
[ ] $58.50 [ ] $59.75 [ ] $61.00 [ ] $62.25 [ ] $63.50 [ ] $64.75
[ ] $58.75 [ ] $60.00 [ ] $61.25 [ ] $62.50 [ ] $63.75 [ ] $65.00
[ ] $59.00 [ ] $60.25 [ ] $61.50 [ ] $62.75 [ ] $64.00
</TABLE>
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING PARTICIPANT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED UNANIMOUSLY THE OFFER.
HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO PARTICIPANTS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH PARTICIPANT MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED.
Signature:__________________________ Address:____________________________
Name:_______________________________ ____________________________________
(Please Print) (Including Zip Code)
____________________________________ Area Code and Telephone Number:_____
(Taxpayer Identification or Date:_________________________, 1998
Social Security Number)
IMPORTANT: THIS SAVINGS PLAN PARTICIPANT'S ELECTION FORM (OR A MANUALLY SIGNED
FACSIMILE THEREOF) MUST BE RECEIVED BY THE TRUSTEE AT OR BEFORE 5:00
P.M., NEW YORK CITY TIME, ON WEDNESDAY, FEBRUARY 11, 1998.
4
EXHIBIT (A)(8)
<PAGE>
TREDEGAR INDUSTRIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
To: Participants in the Tredegar Industries, Inc. Employee Stock Purchase Plan
Re: Tredegar Industries, Inc.'s Offer to Purchase for Cash Up to 1,250,000
Shares of its Common Stock
Date: January 16, 1998
This memorandum is being sent to you because you are a participant in the
Tredegar Industries, Inc. Employee Stock Purchase Plan (the "Stock Purchase
Plan").
There is a summary that describes the Stock Purchase Plan. Please refer to
the summary for more information.
TREDEGAR INDUSTRIES, INC. IS OFFERING TO PURCHASE SHARES OF ITS COMMON STOCK
Tredegar Industries, Inc. (the "Company") is inviting its shareholders to
tender shares of the Company's common stock, no par value per share (the
"Shares"), for sale directly to the Company. Shareholders are being invited to
tender their Shares at prices not in excess of $65.00 nor less than $58.00 per
Share. The details of the invitation are described in the Company's Offer to
Purchase, dated January 16, 1998 (the "Offer to Purchase"), and this memorandum
(which together constitute the "Offer" for purposes of tendering Shares held in
your Stock Purchase Plan account). Copies of the Offer to Purchase and certain
related materials (excluding the Letter of Transmittal), which are being sent to
the Company's shareholders generally, are enclosed for your review.
The Letter of Transmittal referred to above and in the Offer to Purchase
cannot be used to tender the Shares held in your Stock Purchase Plan account:
the enclosed Election Form for the Stock Purchase Plan is a substitute for the
Letter of Transmittal and must be used to tender Shares in your Stock Purchase
Plan account.
YOUR DECISION WHETHER TO TENDER
As a participant in the Stock Purchase Plan you may direct American Stock
Transfer and Trust Company, the custodian of the Stock Purchase Plan (the
"Custodian"), to tender Shares allocated to your Stock Purchase Plan account
pursuant to the Offer.
HOW TO TENDER SHARES; COMPLETION OF ELECTION FORM
If you wish to direct the Custodian to tender all or part of the Shares in
your Stock Purchase Plan account, you must complete and return the enclosed
Election Form in accordance with the instructions specified on the Election
Form. Before deciding whether or not to tender your Shares, please carefully
read the enclosed materials.
YOUR ELECTION WILL BE EFFECTIVE ONLY IF YOUR PROPERLY COMPLETED ELECTION
FORM IS RECEIVED BY THE CUSTODIAN AT ITS ADDRESS SET FORTH ON THE ENCLOSED
RETURN ENVELOPE NO LATER THAN 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY,
FEBRUARY 11, 1998. Election Forms that are received after this deadline, and
Election Forms which are not properly completed, will not be accepted. Examples
of improperly completed Election Forms include Forms which are not signed and
Forms which contain incorrect or incomplete information. Your decision to tender
(or not to tender) is a personal decision you should make based upon your own
personal circumstances and desires.
Stock Purchase Plan participants who desire to tender Shares at more than
one price must complete a separate Election Form for each price at which Shares
are tendered, provided that the same Shares cannot be tendered (unless properly
withdrawn in accordance with the terms of the Offer) at more than one price. IN
ORDER TO PROPERLY TENDER SHARES, ONE AND ONLY ONE BOX MUST BE CHECKED IN THE
APPROPRIATE SECTION ON EACH ELECTION FORM.
1
<PAGE>
CHANGING YOUR INSTRUCTION TO CUSTODIAN
As more fully described in Section 4 of the Offer to Purchase, tenders will
be deemed irrevocable unless withdrawn by the dates specified therein. If you
instruct the Custodian to tender Shares, and you subsequently decide to change
your instructions, you may do so by sending a notice of withdrawal to the
Custodian. The notice of withdrawal will be effective only if it is in writing
and is received by the Custodian AT OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON
WEDNESDAY, FEBRUARY 11, 1998, at the address set forth on the enclosed return
envelope. Any notice of change of instruction to the Custodian must specify your
name, your social security number, the number of Shares tendered, and the number
of Shares to be withdrawn. Upon receipt of a timely written notice of change of
instruction to the Custodian, previous instructions to tender with respect to
such Shares will be deemed cancelled. If you later wish to retender Shares, you
may call American Stock Transfer & Trust Company, Plan Custodian at (212)
936-5100 to obtain a new Election Form. Any new Election Form must be received
by the Custodian AT OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY,
FEBRUARY 11, 1998.
IF YOU HAVE QUESTIONS
If you have any questions about the Offer or any of the other matters
discussed above, please call Georgeson & Company Inc., the Information Agent, at
(800) 223-2064. If you have questions about the Stock Purchase Plan, please
refer to the Stock Purchase Plan summary. Additional copies of the summary for
the Stock Purchase Plan may be obtained from Lynn Firebaugh, Manager, Employee
Benefits at (804) 330-1288.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
PARTICIPANT AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. EACH
PARTICIPANT MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES AND, IF
SO, HOW MANY SHARES TO TENDER AND AT WHAT PRICE OR PRICES.
ELECTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF TREDEGAR INDUSTRIES, INC.
Please tender to Tredegar Industries, Inc. (the "Company"), on (our) (my)
behalf, the number of Shares indicated below held in the Tredegar Industries,
Inc. Employee Stock Purchase Plan (the "Stock Purchase Plan"), which are
beneficially owned by (us) (me) and held by you under the Stock Purchase Plan,
upon terms and subject to the conditions contained in the Offer to Purchase of
the Company dated January 16, 1998, the receipt of which is acknowledged.
2
<PAGE>
Number of Shares to be tendered:________________________Shares
ODD LOTS
(SEE INSTRUCTION 8)
[ ] By checking this box the undersigned represents that the undersigned owned,
beneficially or of record, as of the close of business on January 15, 1998,
an aggregate of fewer than 100 Shares and is tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[ ] at the Purchase Price, as the same shall be determined by the Company in
accordance with the terms of the Offer (persons checking this box need not
indicate the price per Share below); or
[ ] at the price per Share indicated below under "Price (in Dollars) per Share
at which Shares are being tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
CONDITIONAL TENDER
[ ] check here if tender of Shares is conditional on the Company purchasing all
or a minimum number of the tendered Shares and complete the following:
Minimum number of Shares to be sold:________________________
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(PARTICIPANTS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE, MUST COMPLETE
A SEPARATE ELECTION FORM FOR EACH PRICE AT WHICH SHARES ARE TENDERED.)
<TABLE>
<S> <C>
[ ] $58.00 [ ] $59.25 [ ] $60.50 [ ] $61.75 [ ] $63.00 [ ] $64.25
[ ] $58.25 [ ] $59.50 [ ] $60.75 [ ] $62.00 [ ] $63.25 [ ] $64.50
[ ] $58.50 [ ] $59.75 [ ] $61.00 [ ] $62.25 [ ] $63.50 [ ] $64.75
[ ] $58.75 [ ] $60.00 [ ] $61.25 [ ] $62.50 [ ] $63.75 [ ] $65.00
[ ] $59.00 [ ] $60.25 [ ] $61.50 [ ] $62.75 [ ] $64.00
</TABLE>
3
<PAGE>
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING PARTICIPANT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED UNANIMOUSLY THE OFFER.
HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO PARTICIPANTS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH PARTICIPANT MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED.
Signature(s):________________________ Address:_____________________________
_____________________________________ _____________________________________
Name(s):_____________________________ (Including Zip Code)
(Please Print)
Area Code and Telephone Number:______
Date:__________________________, 1998
_____________________________________
(Taxpayer Identification or
Social Security Number)
IMPORTANT: THIS STOCK PURCHASE PLAN PARTICIPANT'S ELECTION FORM (OR A
MANUALLY SIGNED FACSIMILE THEREOF) MUST BE RECEIVED BY THE
CUSTODIAN AT OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON
WEDNESDAY, FEBRUARY 11, 1998. PARTICIPANTS ARE ENCOURAGED TO
RETURN A COMPLETED FORM W-9 WITH THEIR ELECTION FORM.
4
EXHIBIT (A)(9)
<PAGE>
FOR IMMEDIATE RELEASE
TREDEGAR ANNOUNCES SELF-TENDER OFFER
RICHMOND, Va., January 14, 1998 -- The board of directors of Tredegar
Industries, Inc. (NYSE:TG) today authorized a "Dutch auction" self-tender offer
for up to 1,250,000 shares of the company's common stock. The tender price range
will be $58.00 to $65.00 per share. The offer is expected to begin on January 16
and is subject to the terms and conditions described in the offering materials.
As of January 12, Tredegar had 12,388,345 shares of common stock
outstanding. The closing price for Tredegar common stock on January 13 was
$58.94.
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 shares. Upon receipt of the tenders, Tredegar 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 purchases 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 is Schroder & Co. and the information
agent is Georgeson & Co.
In a separate news release, Tredegar announced improved fourth-quarter and
year-end earnings for 1997.
Tredegar Industries is a manufacturer of plastics and aluminum extrusions
with interests in drug discovery and other emerging technologies.
EXHIBIT (A)(10)
<PAGE>
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION
OF AN OFFER TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO
PURCHASE AND THE RELATED LETTER OF TRANSMITTAL WHICH ARE BEING
MAILED TO SHAREHOLDERS OF TREDEGAR INDUSTRIES, INC. ON OR ABOUT
JANUARY 16, 1998. WHILE THE OFFER IS BEING MADE TO ALL
SHAREHOLDERS OF THE COMPANY, TENDERS WILL NOT BE ACCEPTED FROM OR
ON BEHALF OF THE SHAREHOLDERS IN ANY JURISDICTION IN WHICH THE
ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF
SUCH JURISDICTION. IN THOSE JURISDICTIONS WHOSE LAWS REQUIRE
THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE
OFFER SHALL BE DEEMED TO BE MADE ON BEHALF OF THE
COMPANY BY SCHRODER & CO. INC. OR ONE OR MORE
REGISTERED BROKERS OR DEALERS LICENSED UNDER THE
LAWS OF SUCH JURISDICTION.
Notice of Offer to Purchase for Cash
by
TREDEGAR INDUSTRIES, INC.
Up To 1,250,000 Shares Of Its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a purchase price not in excess of
$65.00 nor less than $58.00 per share
Tredegar Industries, Inc., a Virginia corporation (the "Company"), invites
shareholders to tender up to 1,250,000 shares of its Common Stock, no par value
per share (the "Shares") (including the associated Preferred Stock Purchase
Rights (the "Rights") issued pursuant to the rights agreement, dated as of June
15, 1989, as amended, between the Company and the Rights Agent named therein),
at prices not in excess of $65.00 nor less than $58.00 per Share in cash, as
specified by such shareholders, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal (which
together constitute the "Offer").
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY,
FEBRUARY 13, 1998, UNLESS THE OFFER IS EXTENDED
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED, BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED UNANIMOUSLY THE OFFER.
HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED. THE COMPANY
HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO
TENDER ANY SHARES PURSUANT TO THE OFFER.
As promptly as practicable following the Expiration Date (as defined
below), the Company will purchase up to 1,250,000 Shares or such lesser number
of Shares as are properly tendered (and not withdrawn in accordance with Section
4 of the Offer to Purchase) prior to the Expiration Date at prices not in excess
of $65.00 nor less than $58.00 net per Share in cash. The term "Expiration Date"
means 12:00 Midnight, New York City time, on Friday, February 13, 1998, unless
and until the Company, in its sole discretion, shall have extended the period of
time during which the Offer will remain open, in which event the term
"Expiration Date" shall refer to the latest time and date at which the Offer, as
so extended by the Company, shall expire.
The Company will select the lowest Purchase Price that will allow it to buy
1,250,000 Shares (or such lesser number of Shares as are properly tendered at
prices not in excess of $65.00 nor less than $58.00 per Share). All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, subject to the terms and the conditions
of the Offer, including the proration and conditional tender provisions. All
Shares purchased in the Offer will be purchased at the Purchase Price. The
Company is making the Offer because the Board of Directors believes that, given
the
<PAGE>
Company's business, assets and prospects and the current market price of the
Shares, the purchase of the Shares is an attractive use of the Company's funds.
Upon the terms and subject to the conditions of the Offer, if more than
1,250,000 Shares have been properly tendered at prices at or below the Purchase
Price and not withdrawn prior to the Expiration Date, the Company will purchase
properly tendered Shares on the following basis: (a) FIRST, all Shares properly
tendered and not withdrawn prior to the Expiration Date by any Odd Lot Holder
(as defined in the Offer to Purchase) who: (1) tenders all Shares beneficially
owned by such Odd Lot Holder at a price at or below the Purchase Price (partial
tenders will not qualify for this preference); and (2) completes the box
captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery; and (b) SECOND, after purchase of all of the
foregoing Shares, all Shares conditionally tendered, for which the condition was
satisfied, and all other Shares tendered properly and unconditionally at prices
at or below the Purchase Price and not withdrawn prior to the Expiration Date,
on a PRO RATA basis (with appropriate adjustments to avoid purchases of
fractional Shares) as described below; and (c) THIRD, if necessary, Shares
conditionally tendered, for which the condition was not satisfied, at or below
the Purchase Price and not withdrawn prior to the Expiration Date, selected by
random lot. The Company also reserves the right, but will not be obligated, to
purchase all Shares duly tendered by any shareholder who tendered all Shares
owned, beneficially or of record, at or below the Purchase Price and who, as a
result of proration, would then own, beneficially or of record, an aggregate of
fewer than 100 Shares. If the Company exercises this right, it will increase the
number of Shares that it is offering to purchase by the number of Shares
purchased through the exercise of the right.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time to extend the period of time during which the Offer
is open and thereby delay acceptance for payment of, and payment for, any Shares
by giving oral or written notice of such extension to the American Stock
Transfer & Trust Company (the "Depositary") and making a public announcement
thereof. In accordance with applicable regulations of the Securities and
Exchange Commission, the Company may purchase pursuant to the Offer an
additional amount of Shares not to exceed 2% of the outstanding Shares without
amending or extending the Offer.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment by the Company
pursuant to the Offer, may also be withdrawn at any time after 12:00 Midnight,
New York City time, on Monday, March 16, 1998. For a withdrawal to be effective,
a notice of withdrawal must be in written, telegraphic or facsimile transmission
form and must be received in a timely manner by the Depositary at its address
set forth on the back cover of the Offer to Purchase. Any such notice of
withdrawal must specify the name of the tendering shareholder, the name of the
registered holder, if different from that of the person who tendered such
Shares, the number of Shares tendered and the number of Shares to be withdrawn.
If the certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the release of such certificates,
the tendering shareholder must also submit the serial numbers shown on the
particular certificates for Shares to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution (except in
the case of Shares tendered by an Eligible Institution). If Shares have been
tendered pursuant to the procedure for book-entry tender set forth in the Offer
to Purchase, the notice of withdrawal also must specify the name and the number
of the account at the applicable Book-Entry Transfer Facility to be credited
with the withdrawn Shares and otherwise comply with the procedures of such
facility.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY TENDERS ARE MADE. The
information required to be disclosed by Rule 13e-4(d)(1) under the Securities
Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is
incorporated herein by reference. The Offer to Purchase and the related Letter
of Transmittal are being mailed to record holders of Shares and are being
furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on the Company's shareholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
Additional copies of the Offer to Purchase and the Letter of Transmittal
may be obtained from the Depositary, the Information Agent or the Dealer Manager
and will be furnished promptly at the Company's expense.
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
[Georgeson & Company Inc. logo]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect
(212) 440-9800
ALL OTHERS CALL TOLL FREE
(800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
SCHRODER & CO. INC.
The Equitable Center
787 Seventh Avenue
New York, New York 10019-6016
(212) 492-6000 (Call Collect)
January 16, 1998
EXHIBIT (A)(11)
<PAGE>
[TREDEGAR INDUSTRIES LOGO]
January 16, 1998
TO OUR SHAREHOLDERS:
Tredegar Industries, Inc. is offering to purchase up to 1,250,000 shares,
or approximately 10.1% of the currently outstanding shares, of its common stock
(the "Shares") from existing shareholders. The price will not be in excess of
$65.00 nor less than $58.00 per Share. Tredegar is conducting the tender offer
through a procedure commonly referred to as a "Dutch auction." This allows you
to select the lowest price within the specified price range at which you are
willing to sell your Shares to Tredegar.
The offer gives shareholders the opportunity to sell their Shares at a
price greater than market prices prevailing prior to announcement of the offer.
On January 13, 1998, the last trading day prior to the announcement of the
offer, the closing price per share for Tredegar's common stock on the New York
Stock Exchange (the "NYSE") was $58.94. On January 15, 1998, the last trading
day prior to the commencement of the offer, the closing price per share for
Tredegar's common stock on the NYSE was $64. In addition, any shareholder whose
Shares are purchased in the offering will receive the total purchase price in
cash and will not incur the usual transaction costs associated with open-market
sales.
ANY SHAREHOLDERS OWNING AN AGGREGATE OF LESS THAN 100 SHARES WHOSE SHARES
ARE PURCHASED PURSUANT TO THE OFFER WILL AVOID THE APPLICABLE ODD LOT DISCOUNTS
PAYABLE ON SALES OF ODD LOTS ON THE NYSE.
Tredegar will pay the same per Share price (the "Purchase Price") for all
Shares it purchases in the offering. If the number of Shares properly tendered
is equal to or less than the number of Shares Tredegar seeks to purchase through
the offer, the Purchase Price will be the highest price of those specified by
tendering shareholders.
If tendering shareholders properly tender more than the number of Shares
Tredegar seeks to purchase through the offer, Tredegar will take into account
the number of Shares so tendered and certain other factors described in the
Offer to Purchase and select the Purchase Price that will allow Tredegar to buy
the number of Shares that it seeks to purchase through the offer. In such
circumstances, Tredegar would not purchase the Shares of any tendering
shareholder who specified a price per Share above the Purchase Price.
All Shares properly tendered at prices at or below the Purchase Price and
not withdrawn on or prior to the Expiration Date (as defined in the Offer to
Purchase) will be purchased at the Purchase Price, net to the seller in cash,
subject to the terms and conditions described in the Offer to Purchase and the
related Letter of Transmittal. Those terms and conditions include, among other
things, provisions relating to possible proration, conditional tenders and the
tender of odd lots. All stock certificates representing Shares that are tendered
and not purchased will be returned promptly to the shareholder.
The offer is explained in detail in the Offer to Purchase and Letter of
Transmittal. I encourage you to read these materials carefully before making any
decision with respect to the offer. If you want to tender your Shares, the
instructions on how to tender Shares are also explained in detail in the
accompanying materials.
Neither Tredegar nor its Board of Directors makes any recommendation to any
shareholder whether to tender all or any Shares.
Sincerely,
/s/ John D. Gottwald
--------------------------
John D. Gottwald
President and Chief Executive Officer
EXHIBIT (A)(12)
<PAGE>
[Tredegar Industries logo]
January 16, 1998
TO PARTICIPANTS IN THE TREDEGAR INDUSTRIES, INC.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Tredegar Industries, Inc. is offering to purchase up to 1,250,000 shares,
or approximately 10.1% of the currently outstanding shares, of its common stock
(the "Shares") from existing shareholders. The price will not be in excess of
$65.00 nor less than $58.00 per Share. As a participant in Tredegar's Dividend
Reinvestment and Stock Purchase Plan, you will be able to tender Shares in your
plan account.
The enclosed memorandum to Dividend Reinvestment Plan participants contains
information regarding the tender offer that is relevant to Dividend Reinvestment
Plan participants. Also enclosed with this letter is the election form that all
Dividend Reinvestment Plan participants must complete and return to the plan
administrator by February 11, 1998, if they wish to tender their Dividend
Reinvestment Plan Shares.
I encourage you to read carefully the memorandum, the election form and the
other enclosed materials, including the Offer to Purchase. Neither Tredegar nor
our Board of Directors makes any recommendation to any Dividend Reinvestment
Plan participant whether to tender all or any Shares in the Dividend
Reinvestment Plan.
As a Dividend Reinvestment Plan participant, you will have the opportunity
to sell your plan Shares at a price greater than market prices prevailing prior
to announcement of the offer. On January 13, 1998, the last trading day prior to
the announcement of the offer, the closing price per share for Tredegar's common
stock on the New York Stock Exchange ("NYSE") was $58.94. On January 15, 1998,
the last trading day prior to the commencement of the offer, the closing price
per share for Tredegar's common stock on the NYSE was $64. Tredegar is
conducting the offer through a procedure commonly referred to as a "Dutch
auction." This procedure allows you to select the lowest price within the
specified price range at which you are willing to sell your Shares to Tredegar.
Tredegar will pay the same per Share price (the "Purchase Price") for all Shares
it purchases in the offering. If the number of Shares properly tendered is equal
to or less than the number of Shares Tredegar seeks to purchase through the
offer, the Purchase Price will be the highest price of those specified by
tendering shareholders.
If tendering shareholders properly tender more than the number of Shares
Tredegar seeks to purchase through the offer, Tredegar will take into account
the number of Shares so tendered and certain other factors described in the
Offer to Purchase and select the Purchase Price that will allow Tredegar to buy
the number of Shares that it seeks to purchase through the offer. In such
circumstances, Tredegar would not purchase the Shares of any tendering
shareholder who specified a price per Share above the Purchase Price.
Sincerely,
/s/ John D. Gottwald
--------------------------
John D. Gottwald
President and Chief Executive Officer
EXHIBIT (A)(13)
<PAGE>
[Tredegar Industries logo]
January 16, 1998
TO PARTICIPANTS IN THE SAVINGS PLAN FOR
THE EMPLOYEES OF TREDEGAR INDUSTRIES, INC.
Tredegar Industries, Inc. is offering to purchase up to 1,250,000 shares,
or approximately 10.1% of the currently outstanding shares, of its common stock
(the "Shares") from existing shareholders. The price will not be in excess of
$65.00 nor less than $58.00 per Share. As a participant in Tredegar's Employee
Savings Plan, you will be able to tender Shares allocated to your Savings Plan
account.
The enclosed memorandum to Savings Plan participants contains information
regarding the tender offer that is relevant to Savings Plan participants. Also
enclosed with this letter is the election form that Savings Plan participants
must complete and return to the plan trustee by February 11, 1998, if they wish
to tender their Savings Plan Shares.
I encourage you to read carefully the memorandum, the election form and the
other enclosed materials, including the Offer to Purchase. Neither Tredegar nor
our Board of Directors makes any recommendation to any Savings Plan participant
whether to tender all or any eligible Shares in the Savings Plan. Each Savings
Plan participant should independently decide whether to tender Shares, taking
into account his or her personal circumstances. Your decision will not affect in
any way the terms of your employment by Tredegar.
As a Savings Plan participant, you will have the opportunity to sell your
eligible plan Shares at a price greater than market prices prevailing prior to
announcement of the offer. On January 13, 1998, the last trading day prior to
the announcement of the offer, the closing price per share for Tredegar's common
stock on the New York Stock Exchange ("NYSE") was $58.94. On January 15, 1998,
the last trading day prior to the commencement of the offer, the closing price
per share for Tredegar's common stock on the NYSE was $64. Tredegar is
conducting the offer through a procedure commonly referred to as a "Dutch
auction." This procedure allows you to select the lowest price within the
specified price range at which you are willing to sell your Shares to Tredegar.
Tredegar will pay the same per Share price (the "Purchase Price") for all Shares
it purchases in the offering. If the number of Shares properly tendered is equal
to or less than the number of Shares Tredegar seeks to purchase through the
offer, the Purchase Price will be the highest price of those specified by
tendering shareholders.
If tendering shareholders properly tender more than the number of Shares
Tredegar seeks to purchase through the offer, Tredegar will take into account
the number of Shares so tendered and certain other factors described in the
Offer to Purchase and select the Purchase Price that will allow Tredegar to buy
the number of Shares that it seeks to purchase through the offer. In such
circumstances, Tredegar would not purchase the Shares of any tendering
shareholder who specified a price per Share above the Purchase Price.
The enclosed Offer to Purchase and accompanying materials contain a
substantial amount of information and may seem complicated. Tredegar has
retained Georgeson & Company as the information agent to provide assistance with
any questions you may have concerning these materials. Please feel free to call
Georgeson at (800) 223-2064.
Sincerely,
/s/ John D. Gottwald
-----------------------------
John D. Gottwald
President and Chief Executive Officer
EXHIBIT (A)(14)
<PAGE>
[Tredegar Industries logo]
January 16, 1998
TO PARTICIPANTS IN THE TREDEGAR INDUSTRIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
Tredegar Industries, Inc. is offering to purchase up to 1,250,000 shares,
or approximately 10.1% of the currently outstanding shares, of its common stock
(the "Shares") from existing shareholders. The price will not be in excess of
$65.00 nor less than $58.00 per Share. As a participant in Tredegar's Employee
Stock Purchase Plan, you will be able to tender Shares in your plan account.
The enclosed memorandum to Employee Stock Purchase Plan participants
contains information regarding the tender offer that is relevant to Employee
Stock Purchase Plan participants. Also enclosed with this letter is the election
form that all Employee Stock Purchase Plan participants must complete and return
to the plan custodian by February 11, 1998, if they wish to tender their
Employee Stock Purchase Plan Shares.
I encourage you to read carefully the memorandum, the election form and the
other enclosed materials, including the Offer to Purchase. Neither Tredegar nor
our Board of Directors makes any recommendation to any Employee Stock Purchase
Plan participant whether to tender all or any Shares in the Employee Stock
Purchase Plan. Each Employee Stock Purchase Plan participant should
independently decide whether to tender Shares, taking into account his or her
personal circumstances. Your decision will not affect in any way the terms of
your employment by Tredegar.
As an Employee Stock Purchase Plan participant, you will have the
opportunity to sell your plan Shares at a price greater than market prices
prevailing prior to announcement of the offer. On January 13, 1998, the last
trading day prior to the announcement of the offer, the closing price per share
for Tredegar's common stock on the New York Stock Exchange ("NYSE") was $58.94.
On January 15, 1998, the last trading day prior to the commencement of the
offer, the closing price per share for Tredegar's common stock on the NYSE was
$64. Tredegar is conducting the offer through a procedure commonly referred to
as a "Dutch auction." This procedure allows you to select the lowest price
within the specified price range at which you are willing to sell your Shares to
Tredegar. Tredegar will pay the same per Share price (the "Purchase Price") for
all Shares it purchases in the offering. If the number of Shares properly
tendered is equal to or less than the number of Shares the Company seeks to
purchase through the offer, the Purchase Price will be the highest price of
those specified by tendering shareholders.
If tendering shareholders properly tender more than the number of Shares
Tredegar seeks to purchase through the offer, Tredegar will take into account
the number of Shares so tendered and certain other factors described in the
Offer to Purchase and select the Purchase Price that will allow Tredegar to buy
the number of Shares that it seeks to purchase through the offer. In such
circumstances, Tredegar would not purchase the Shares of any tendering
shareholder who specified a price per Share above the Purchase Price.
The enclosed Offer to Purchase and accompanying materials contain a
substantial amount of information and may seem complicated. Tredegar has
retained Georgeson & Company as the information agent to provide assistance with
any questions you may have concerning these materials. Please feel free to call
Georgeson at (800) 223-2064.
Sincerely,
/s/ John D. Gottwald
-----------------------------
John D. Gottwald
President and Chief Executive Officer
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, 1996 and
1995, and the related consolidated statements of income, cash flows and
shareholders' equity for each of the three years in the period ended December
31, 1996. 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, 1996 and 1995, and the consolidated results of their operations and
cash flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND, L.L.P.
Richmond, Virginia
January 14, 1997
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
Tredegar Industries, Inc., and Subsidiaries
<TABLE>
<CAPTION>
Years Ended December 31 1996 1995 1994
- - ----------------------------------------------------------------------------------------------------------
(In thousands, except per-share amounts)
<S> <C> <C> <C>
Revenues:
Net sales $523,551 $589,454 $502,208
Other income (expense), net 4,248 (669) (296)
-------- -------- --------
Total 527,799 588,785 501,912
-------- -------- --------
Costs and expenses:
Cost of goods sold 417,270 490,510 419,823
Selling, general and administrative 39,719 48,229 47,978
Research and development 11,066 8,763 8,275
Interest 2,176 3,039 4,008
Unusual items (11,427) (78) 16,494
-------- -------- --------
Total 458,804 550,463 496,578
-------- -------- --------
Income from continuing operations before income taxes 68,995 38,322 5,334
Income taxes 23,960 14,269 3,917
-------- -------- --------
Income from continuing operations 45,035 24,053 1,417
Discontinued Energy segment operations:
Income from Energy segment operations - - 4,220
Gain on disposition of interest in The Elk Horn Coal
Corporation (net of income tax of $16,224) - - 25,740
Gain on sale of remaining oil & gas properties
(net of income tax of $2,121) - - 3,938
Deferred tax benefit on the difference between
financial reporting and income tax basis of
The Elk Horn Coal Corporation - - 3,320
-------- -------- --------
Net income $45,035 $24,053 $ 38,635
=========================================================================================================
Earnings per common and dilutive common equivalent share:
Continuing operations $ 3.44 $ 1.80 $ .09
Discontinued Energy segment operations - - 2.40
-------- -------- --------
Net income $ 3.44 $ 1.80 $ 2.49
=========================================================================================================
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
Tredegar Industries, Inc., and Subsidiaries
December 31 1996 1995
- - ------------------------------------------------------------------------------
(In thousands, except share amounts)
Assets
Current assets:
Cash and cash equivalents $101,261 $ 2,145
Accounts and notes receivable 61,076 71,673
Inventories 17,658 33,148
Income taxes recoverable 2,023 2,179
Deferred income taxes 9,484 14,882
Prepaid expenses and other 2,920 2,375
-------- -------
Total current assets 194,422 126,402
Property, plant and equipment, at cost:
Land and land improvements 4,807 6,713
Buildings 32,590 50,167
Machinery and equipment 222,803 269,646
-------- -------
Total property, plant and equipment 260,200 326,526
Less accumulated depreciation and amortization 169,771 204,074
-------- -------
Net property, plant and equipment 90,429 122,452
Other assets and deferred charges 36,094 35,186
Goodwill and other intangibles 20,132 30,012
-------- -------
Total assets $341,077 $314,052
==============================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 28,814 $ 31,105
Accrued expenses 32,487 38,648
-------- -------
Total current liabilities 61,301 69,753
Long-term debt 35,000 35,000
Deferred income taxes 16,994 22,218
Other noncurrent liabilities 15,237 16,560
-------- -------
Total liabilities 128,532 143,531
Commitments and contingencies (Notes 13 and 18)
Shareholders' equity:
Common stock (no par value):
Authorized 50,000,000 shares;
Issued and outstanding - 12,238,053 shares
in 1996 and 12,176,295 in 1995 113,019 112,908
Foreign currency translation adjustment 499 445
Retained earnings 99,027 57,168
-------- -------
Total shareholders' equity 212,545 170,521
-------- -------
Total liabilities and shareholders' equity $341,077 $314,052
==============================================================================
See accompanying Notes to Financial Statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Tredegar Industries, Inc., and Subsidiaries
<TABLE>
<CAPTION>
Years Ended December 31 1996 1995 1994
- - -----------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Continuing operations:
Income from continuing operations $45,035 $24,053 $ 1,417
Adjustments for noncash items:
Depreciation 20,062 23,256 23,491
Amortization of intangibles 256 579 1,354
Write-off of intangibles - 189 14,394
Deferred income taxes 1,771 1,540 (6,907)
Accrued pension income and postretirement benefits, net (2,582) (2,396) (623)
(Gain) loss on divestitures and property disposals, net (12,715) - 2,100
Write-off of certain industrial packaging film machinery and equipment 1,288 - -
Gain on sale of investments (net of investment losses) (2,139) (34) -
Changes in assets and liabilities, net of effects from divestitures and
acquisitions:
Accounts and notes receivable (4,894) 4,912 (3,075)
Inventories 1,257 4,010 (1,158)
Income taxes recoverable and other prepaid expenses (763) (1,324) (2,349)
Accounts payable and accrued expenses (471) (6,228) 12,311
Other, net (840) 1,071 (1,873)
------- ------ ------
Net cash provided by continuing operating activities 45,265 49,628 39,082
Net cash provided by discontinued Energy segment operating activities - - 3,435
------- ------ ------
Net cash provided by operating activities 45,265 49,628 42,517
Cash flows from investing activities:
Continuing operations:
Capital expenditures (23,960) (25,138) (15,579)
Acquisitions (net of $358 cash acquired) - (3,637) -
Investments (3,138) (1,904) (1,400)
Proceeds from the sale of Molded Products and Brudi 71,598 - -
Proceeds from sale of investments 2,600 1,478 -
Proceeds from property disposals 9,880 1,238 3,519
Other, net (35) 85 186
------- ------- -------
Net cash provided by (used in) investing activities
of continuing operations 56,945 (27,878) (13,274)
Net cash provided by disposals of discontinued Energy segment operations - - 75,393
------- ------- -------
Net cash provided by (used in) investing activities 56,945 (27,878) 62,119
Cash flows from financing activities:
Dividends paid (3,176) (2,286) (2,465)
Net decrease in borrowings - (3,000) (59,000)
Repurchase of Tredegar common stock (2,034) (25,542) (34,105)
Other, net 2,116 2,187 (30)
------- ------- -------
Net cash used in financing activities (3,094) (28,641) (95,600)
Increase (decrease) in cash and cash equivalents 99,116 (6,891) 9,036
Cash and cash equivalents at beginning of period 2,145 9,036 -
------- ------- -------
Cash and cash equivalents at end of period $101,261 $ 2,145 $ 9,036
=============================================================================================================================
Supplemental cash flow information:
Interest payments (net of amount capitalized) $ 2,178 $ 3,041 $ 4,412
Income tax payments, net $ 19,399 $15,102 $26,388
=============================================================================================================================
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Tredegar Industries, Inc., and Subsidiaries
<TABLE>
<CAPTION>
Common Stock Retained Foreign Total
-------------------------- Earnings Currency Shareholders'
Years Ended December 31, 1996, 1995 and 1994 Shares Amount (Deficit) Translation Equity
- - -------------------------------------------------------------------------------------------------------------------------------
(In thousands, except share and per-share data)
<S> <C> <C> <C> <C> <C>
Balance December 31, 1993 10,894,904 $170,140 $ (769) $(283) $169,088
Net income - - 38,635 - 38,635
Cash dividends declared ($.24 per share) - - (2,465) - (2,465)
Repurchases of Tredegar common stock (1,910,239) (34,105) - - (34,105)
Issued upon exercise of stock options 6,000 87 - - 87
Issued upon exercise of SARs 1,593 28 - - 28
Foreign currency translation adjustment - - - 610 610
---------- -------- ------- ----- --------
Balance December 31, 1994 8,992,258 136,150 35,401 327 171,878
Net income - - 24,053 - 24,053
Cash dividends declared ($.24 per share) - - (2,286) - (2,286)
Repurchases of Tredegar common stock (998,197) (25,542) - - (25,542)
Issued upon exercise of stock options (including
related income tax benefits realized
by Tredegar of $341) 118,500 2,158 - - 2,158
Issued upon exercise of SARs 5,723 142 - - 142
Foreign currency translation adjustment - - - 118 118
Three-for-two stock split 4,058,011 - - - -
---------- -------- ------- ----- --------
Balance December 31, 1995 12,176,295 112,908 57,168 445 170,521
Net income - - 45,035 - 45,035
Cash dividends declared ($.26 per share) - - (3,176) - (3,176)
Repurchases of Tredegar common stock (68,947) (2,034) - - (2,034)
Issued upon exercise of stock options (including
related income tax benefits realized by
Tredegar of $800) 130,705 2,145 - - 2,145
Foreign currency translation adjustment - - - 54 54
---------- -------- ------- ----- --------
Balance December 31, 1996 12,238,053 $113,019 $99,027 $499 $212,545
===============================================================================================================================
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Tredegar Industries, Inc., and Subsidiaries
(In thousands, except share and per-share amounts)
1 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Organization and Nature of Operations
Tredegar Industries, Inc., and subsidiaries ("Tredegar" or the "company") is a
diversified manufacturer of plastic films, aluminum extrusions and vinyl
extrusions. Tredegar also has interests in various technologies, including
rational drug design research and computer software. For further description of
Tredegar's products, principal markets and customers, see the products and
market information matrix on pages 2-3, the segment tables on pages 20-22 and
the business segment review on pages 27-30.
During the first quarter of 1996, Tredegar sold all of the outstanding
capital stock of its injection molding subsidiary, Tredegar Molded Products
Company, including Polestar Plastics Manufacturing Company (together "Molded
Products"). During the second quarter of 1996, Tredegar completed the sale of
Brudi, Inc. and its subsidiaries (together "Brudi"). See Note 19 on page 47 for
further information regarding these divestitures.
During the first quarter of 1995, Tredegar acquired a plastic films
business in Argentina. This acquisition was accounted for using the purchase
method; accordingly, the assets and liabilities of the acquired entity have been
recorded at their estimated fair value at the date of acquisition. No goodwill
arose from the acquisition since the estimated fair value of the identifiable
net assets acquired was approximately equal to the purchase price. The operating
results of the entity acquired have been included in the consolidated statements
of income since the date of acquisition.
In August 1994, Tredegar completed the divestiture of its energy
businesses. See Note 19 on page 47 for further information regarding these
discontinued operations.
Basis of Presentation
The consolidated financial statements include the 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 1996 presentation.
On September 28, 1995, Tredegar's Board of Directors declared a
three-for-two stock split payable on January 1, 1996, to shareholders of record
on December 8, 1995. Accordingly, all historical references to the shares used
to compute earnings per share, per-share amounts, stock option data and market
prices of Tredegar's common stock have been restated to reflect the split.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements. Actual results could differ from those estimates.
Revenue Recognition
Revenue from the sale of products is recognized when title and risk of loss have
transferred to the buyer, which is generally when product is shipped.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand in excess of daily operating
requirements and highly liquid investments with maturities of three months or
less when purchased. At December 31, 1996 and 1995, Tredegar had approximately
$101,000 and $2,000, respectively, invested in securities with maturities of one
month or less.
Tredegar's policy permits investment of excess cash in marketable
securities that have the highest credit ratings and maturities of less than one
year. The primary objectives of Tredegar's investment policy are safety of
principal and liquidity.
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.
Aluminum Forward Sales, Purchase and
Futures Contracts
In the normal course of business, Tredegar enters into a combination of forward
purchase commitments and futures contracts to acquire aluminum. Gains and losses
on these contracts are designated and effective as hedges of aluminum price and
margin exposure on forward sales contracts and, accordingly, are recorded as
adjustments to the cost of inventory (see Note 5 on page 41).
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
<PAGE>
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 capitalized interest of $730, $279
and $206 in 1996, 1995 and 1994, respectively. Maintenance and repairs of
property, plant and equipment were $19,018, $20,100 and $19,400 in 1996, 1995
and 1994, respectively.
Depreciation is computed primarily by the straight-line method based on the
estimated useful lives of the assets.
Goodwill and Other Intangibles
There was no goodwill subject to amortization at December 31, 1996. Goodwill
acquired prior to November 1, 1970 ($19,484, $19,484 and $19,629 at December 31,
1996, 1995 and 1994, respectively), is not being amortized and relates to
Tredegar's Aluminum Extrusions business. Goodwill subject to amortization at
December 31, 1995 and 1994 ($9,478 and $9,752, respectively, net of accumulated
amortization) related primarily to Brudi which was sold in the second quarter of
1996 (see Note 8 on page 42 and Note 19 on page 47). Other intangibles ($648,
$1,050, and $1,375 at December 31, 1996, 1995 and 1994, respectively, net of
accumulated amortization) consist primarily of patents and licenses acquired
which are being amortized on a straight-line basis over a period of not more
than 17 years.
Impairment of Long-Lived Assets
Beginning in 1995, the review for the possible impairment of long-lived tangible
and intangible assets is performed in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." For assets to be
held and used in operations, this standard requires that, whenever events
indicate that an asset may be impaired, the entity estimate the future unlevered
cash flows expected to result from the use of the asset and its eventual
disposition. Assets are grouped for this purpose at the lowest level for which
there are identifiable and independent cash flows. If the sum of these
undiscounted cash flows is less than the carrying amount of the asset, an
impairment loss is recognized. Measurement of the impairment loss is based on
the estimated fair value of the asset.
Pension Costs and Postretirement Benefit Costs
Other Than Pensions
Pension costs and postretirement benefit costs other than pensions are accrued
over the period employees provide service to the company in compliance with SFAS
No. 87, "Employers Accounting for Pensions," and SFAS No. 106, "Employers
Accounting for Postretirement Benefits Other Than Pensions" (see Note 14 on page
44). 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 and
to fund postretirement benefits other than pensions 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
Income taxes are recognized during the period in which transactions enter into
the determination of income for financial reporting purposes, with deferred
income taxes being provided at enacted statutory tax rates on the differences
between the financial reporting and tax bases of assets and liabilities (see
Note 16 on page 46). The company accrues U.S. federal income taxes on the
undistributed earnings of its foreign subsidiaries.
Earnings Per Share
Earnings per share is computed using the weighted average number of post-split
shares of common stock outstanding for each period presented.
Prior to 1995, Tredegar excluded common stock equivalents (stock options)
from its computation of earnings per common share due to their immaterial
dilutive effect. Immaterial is defined in this context by Accounting Principles
Board ("APB") Opinion No. 15, "Earnings per Share," as dilution of less than 3%.
As a result of share repurchases and the increase in Tredegar's stock price,
stock options currently outstanding are dilutive in excess of the threshold set
forth in APB Opinion No. 15. Accordingly, shares used to compute earnings per
common and dilutive common equivalent share for 1996 and 1995 include common
stock equivalents of 897,407 and 454,379 shares, respectively. Fully diluted
earnings per common share is not materially different from the earnings per
common and dilutive common equivalent share presented in the consolidated
statements of income. The number of shares used in computing earnings per share
were 13,105,023, 13,370,019 and 15,524,130 in 1996, 1995 and 1994, respectively.
Stock Options
Stock options, stock appreciation rights ("SARs") and restricted stock grants
are accounted for under APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations whereby (i) no compensation cost is
recognized for fixed stock option or restricted stock grants unless the quoted
market price of the stock at the measurement date (ordinarily the date of grant
or award) is in excess of the amount the employee is required to pay and (ii)
compensation cost for SARs is recognized and adjusted up through the date of
exercise or forfeiture based on the estimated number of SARs expected to be
exercised times the difference between the market price of Tredegar's stock and
the amount the employee is required to pay. The company provides additional pro
forma disclosures of the fair-value based method in accordance with SFAS No.
123, "Accounting for Stock-Based Compensation" (see Note 12 on page 42).
<PAGE>
2 BUSINESS SEGMENTS
See pages 20-22 and the related Notes to Financial Tables on page 32 for net
sales, operating profit, identifiable assets and other information about
Tredegar's businesses that are presented for the years 1990-1996. The discussion
of segment information is unaudited.
3 ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable consist of the following:
- - -------------------------------------------------------------------
December 31 1996 1995
Trade, less allowance for doubtful accounts
and sales returns of $3,487 and $5,330
in 1996 and 1995 $ 59,866 $69,618
Other 1,210 2,055
------- -------
Total $ 61,076 $71,673
- - -------------------------------------------------------------------
The decline in accounts and notes receivable during the period is due
primarily to the sale of Molded Products and Brudi during 1996 (see Note 19 on
page 47).
4 INVENTORIES
Inventories consist of the following:
- - -------------------------------------------------------------------
December 31 1996 1995
Finished goods $ 1,677 $ 4,619
Work-in-process 1,782 4,217
Raw materials 7,958 17,946
Stores, supplies and other 6,241 6,366
------- --------
Total $17,658 $33,148
- - -------------------------------------------------------------------
Inventories stated on the LIFO basis amounted to $9,342 and $15,974 at
December 31, 1996 and 1995, respectively, which are below replacement costs by
approximately $13,748 and $14,212, respectively. The decline in inventories
during the period is due primarily to the sale of Molded Products and Brudi
during 1996 (see Note 19 on page 47).
5 ALUMINUM FORWARD SALES, PURCHASE AND
FUTURES CONTRACTS
In the normal course of business, Tredegar enters into fixed-price forward sales
contracts with certain customers for the sale of fixed quantities of aluminum
extrusions at scheduled intervals. In order to hedge its exposure to aluminum
price volatility under these fixed-price arrangements, which generally have a
duration of not more than 12 months, the company enters into a combination of
forward purchase commitments and futures contracts to acquire aluminum, based on
the scheduled deliveries. These contracts involve elements of credit and market
risk that are not reflected on the company's balance sheet, including the risk
of dealing with counterparties and their ability to meet the terms of the
contracts. At December 31, 1996, open fixed-price forward sales contracts,
representing commitments to sell 15.7 million pounds of aluminum in the form of
finished product, were matched with open forward purchase and futures contracts.
The weighted average cost per pound of aluminum on the commitment dates for open
fixed-price forward sales contracts was approximately 71 cents per pound
compared with 73 cents per pound at December 31, 1996. This unrealized loss of 2
cents per pound (approximately $300) was substantially hedged at December 31,
1996, by an unrealized gain of approximately the same amount on the matching
open forward purchase commitments and futures contracts to acquire aluminum.
6 NONOPERATING ASSETS HELD FOR SALE
Included in "Other assets and deferred charges" in the consolidated balance
sheet at December 31, 1995, were nonoperating assets held for sale, primarily
land and buildings related to closed facilities, totaling $6,057. Such assets
were sold in 1996 at amounts approximating their carrying value, except for the
former plastic films site in Fremont, California, which was sold in excess of
its recorded amount (see Note 17 on page 47).
7 INVESTMENTS
During 1996, Tredegar realized a gain of $2,139 ($1,369 after income taxes) on
the sale of its equity investment in Indigo Medical, Inc. ("Indigo") to Johnson
& Johnson. This gain is included in "Other income (expense), net" in the
consolidated statements of income. Indigo is engaged in the development of
catheter-based laser thermotherapy systems to treat enlargement of the prostate.
During 1995, Tredegar recognized a charge of $694 for the write-off of another
medical technology investment. This charge is included in "Selling, general and
administrative" expenses in the consolidated statements of income.
At December 31, 1996 and 1995, Tredegar had technology-related investments
with a cost basis of $6,048 and $3,410, respectively, which represented
ownership (either in the form of limited partnership shares, the stock of
privately held companies or the restricted or unrestricted stock of companies
that recently registered shares in initial public offerings) of less than 20% in
seven separate entities. These investments are included in "Other assets and
deferred charges" in the consolidated balance sheets and each security is
accounted for at the lower of cost or estimated fair value. Management estimates
the fair value of these investments to be in excess of $15,000. However, because
of the inherent uncertainty of the valuations of restricted securities or
securities for which there is no public market, these estimates may differ
significantly from the values that would have been used had a ready market for
the securities existed. Furthermore, the publicly traded stock of emerging,
technology-based companies usually has higher volatility and risk than the U.S.
stock market as a whole.
<PAGE>
8 GOODWILL AND OTHER INTANGIBLES
Goodwill and other intangibles, and the related accumulated amortization, are as
follows:
- - ---------------------------------------------------------------
December 31 1996 1995
Goodwill and other intangibles $50,259 $50,424
Divestitures (see Note 19 on page 47) (9,980) -
Write-offs - (189)
Additions and reclassifications 356 24
------ -------
Subtotal 40,635 50,259
Accumulated amortization (20,503) (20,247)
------- --------
Net $20,132 $30,012
- - ---------------------------------------------------------------
9 ACCRUED EXPENSES
Accrued expenses consist of the following:
- - ---------------------------------------------------------------
December 31 1996 1995
Payrolls, related taxes and medical and
other benefits $13,347 $10,759
Workmen's compensation and disabilities 4,561 6,108
Vacation 4,201 5,397
Plant shutdowns and divestitures 2,061 2,773
Environmental 774 2,341
Other 7,543 11,270
------- ------
Total $32,487 $38,648
- - ---------------------------------------------------------------
10 DEBT AND CREDIT AGREEMENTS
At December 31, 1996 and 1995, Tredegar's debt outstanding consisted of a
$35,000, 7.2% fixed-rate note that matures in June 2003. The first annual
principal payment of $5,000 is due in June 1997 and has been classified as
long-term debt in accordance with Tredegar's ability to refinance such
obligation on a long-term basis. At December 31, 1996, the prepayment value of
the note was $35,900 and Tredegar estimates that an equivalent rate on similar
debt would be 7.3%.
Tredegar also has a revolving credit facility that permits borrowings of up
to $275,000 (no amounts borrowed at December 31, 1996 and 1995). The facility
matures on September 7, 2001, with an annual extension of one year permitted
subject to the approval of participating banks. The facility provides for
interest to be charged at a base rate (generally the London Interbank Offered
Rate) plus a spread that is dependent on Tredegar's quarterly debt-to-total
capitalization ratio. A facility fee is also charged on the $275,000 commitment
amount. The spread and facility fee charged at various debt-to-total
capitalization levels are as follows:
- - --------------------------------------------------------------------
Debt-to-Total (Basis Points)
Capitalization Ratio ------------------------------
Spread Facility Fee
Less than or equal to 35% 17.50 12.50
Greater than 35% and less than
or equal to 50% 25.00 15.00
Greater than 50% 31.25 18.75
- - --------------------------------------------------------------------
In addition, a utilization fee of 10 basis points is charged on the
outstanding principal amount when more than $137,500 is borrowed under the
agreement. The weighted average interest rate on all variable-rate loans
outstanding during 1995 and 1994 was 6.7% and 4.9%, respectively (there were no
such loans outstanding during 1996).
Tredegar's loan agreements contain restrictions, among others, on the
payment of cash dividends and the maximum debt-to-total capitalization ratio
permitted (60%). At December 31, 1996, $82,655 was available for cash dividend
payments, and $275,000 was available to borrow under the 60% debt-to-total
capitalization ratio restriction.
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"), two-thirds of 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 three 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. Options ordinarily vest one year from the date of grant. In
addition to stock options, recipients may also be granted SARs and restricted
stock. No SARs have been granted since 1992 and when granted have been in tandem
with stock options. Generally, the share appreciation that can be realized upon
the exercise of SARs is limited to the fair market value at the date of grant.
As a result, it is more likely that related stock
<PAGE>
options will be exercised rather than SARs when the price of Tredegar's common
stock is in excess of $22.27 per share (Tredegar's closing stock price on
December 31, 1996, was $40.125 per share).
The compensation cost that has been charged against income for SARs was
zero, $984 and $53 in 1996, 1995 and 1994, respectively. Had compensation cost
for the company's stock-based compensation plans been determined based on the
fair value at the grant dates consistent with the method prescribed by SFAS No.
123, the company's income and earnings per common and dilutive common equivalent
share from continuing operations would have been reduced to the pro forma
amounts indicated below:
- - -----------------------------------------------------------------
1996 1995
Income from continuing
operations:
As reported $45,035 $24,053
Pro forma 43,814 23,280
Earnings per common and
dilutive common
equivalent share from
continuing operations:
As reported 3.44 1.80
Pro forma 3.34 1.74
- - -------------------------------------------------------------------
The fair value of each option was estimated as of the grant date using the
Black-Scholes option-pricing model. The assumptions used in this model for
valuing stock options granted during 1996 and 1995 are provided below:
- - --------------------------------------------------------------------
1996 1995
Dividend yield 1.0% 1.3%
Volatility percentage 23.5% 23.8%
Weighted average risk-free
interest rate 5.7% 7.3%
Holding period (years):
Officers 9.4 10.0
Management 4.7 5.2
Others 3.2 3.2
Market price at date of grant:
Officers and management $25.13 $12.50
Others 22.13 11.59
Exercise price for options
granted where exercise
price exceeds market price
(applicable to officers and
management only) 29.00 n/a
- - --------------------------------------------------------------------
Stock options granted during 1996 and 1995, and their estimated fair value at
the date of grant, are provided below:
- - --------------------------------------------------------------------
1996 1995
Stock options granted
(number of shares):
Where exercise price
equals market price:
Officers 40,000 90,000
Management 86,300 117,600
Others 53,300 11,400
Where exercise price
exceeds market price:
Officers 20,000 -
Management 3,000 -
------- -------
Total 202,600 219,000
- - ---------------------------------------------------------------------
Estimated fair value of options
per share at date of grant:
Where exercise price
equals market price:
Officers $10.68 $5.81
Management 7.07 4.05
Others 4.88 2.97
Where exercise price
exceeds market price:
Officers 9.41 n/a
Management 5.55 n/a
Total estimated fair value
of stock options granted 1,502 1,033
- - ---------------------------------------------------------------------
<PAGE>
A summary of the company's stock options outstanding at December 31, 1996, 1995
and 1994, and changes during the years then ended, is presented below:
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------------------
Number of Shares Exercise Price Per Share
--------------------------- ------------------------
Options SARs Weighted
Range Average Aggregate
<S> <C> <C> <C> <C> <C> <C>
Outstanding at 12/31/93 734,400 694,650 $8.09 to $11.34 $ 9.85 $ 7,233
Granted in 1994 579,150 - 10.09 to 16.00 11.41 6,609
Lapsed in 1994 (56,250) (16,500) 8.59 to 11.34 10.10 (568)
Options exercised in 1994 (9,000) (9,000) 8.09 to 11.14 9.67 (87)
SARs exercised in 1994 (40,500) (40,500) 8.09 to 11.14 10.20 (413)
----------- ---------- ------------------------ ------- ---------
Outstanding at 12/31/94 1,207,800 628,650 8.09 to 16.00 10.58 12,774
Granted in 1995 219,000 - 11.59 to 12.50 12.45 2,727
Lapsed in 1995 (10,350) (2,250) 10.09 to 11.59 10.43 (108)
Options exercised in 1995 (177,750) (57,000) 8.09 to 16.00 10.22 (1,817)
SARs exercised in 1995 (49,125) (49,125) 8.09 to 11.14 10.34 (508)
---------- --------- ------------------------ ------- ---------
Outstanding at 12/31/95 1,189,575 520,275 8.09 to 16.00 10.99 13,068
Granted in 1996 202,600 - 22.13 to 29.00 24.78 5,020
Lapsed in 1996 (15,150) - 10.09 to 25.13 15.12 (229)
Options exercised in 1996 (130,705) (60,955) 8.09 to 12.50 10.29 (1,345)
---------- -------- ----------------------- ------- ---------
Outstanding at 12/31/96 1,246,320 459,320 $8.09 to $29.00 $13.25 $16,514
- - ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table summarizes additional information about stock options
outstanding and exercisable at December 31, 1996:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------
Options Outstanding at | Options Exercisable at
December 31, 1996 | December 31, 1996
-------------------------------------------|----------------------------------
Weighted Average |
--------------------------- | Weighted
Remaining | Average
Range of Contractual Exercise | Exercise
Exercise Prices Shares Life (Years) Price | Shares Price
<S> <C> <C> <C> <C> <C>
|
|
$11.14 236,525 2.5 $11.14 | 236,525 $11.14
$ 8.09 to 11.18 228,795 5.2 8.38 | 228,795 8.38
10.09 to 16.00 396,775 7.2 11.93 | 394,108 11.95
11.59 to 12.50 186,675 8.1 12.48 | 148,290 12.47
22.13 to 29.00 197,550 9.1 24.82 | - -
|
$ 8.09 to $29.00 1,246,320 6.4 $13.25 | 1,007,718 $11.02
|
|
- - --------------------------------------------------------------------------------------------------------------------
</TABLE>
Stock options exercisable at December 31, 1995 totaled 883,974 shares. Stock
options available for grant at December 31, 1996 and 1995 totaled 660,600 and
397,800 shares, respectively.
13 RENTAL EXPENSE AND
CONTRACTUAL COMMITMENTS
Rental expense was $2,760, $3,355 and $3,337 for 1996, 1995 and 1994,
respectively. Rental commitments under all noncancelable operating leases as of
December 31, 1996, are as follows.
1997 $1,582
1998 1,610
1999 1,286
2000 1,041
2001 481
Remainder 199
Total $6,199
- - -----------------------------------------
Contractual obligations for plant construction and purchases of real
property and equipment amounted to approximately $3,247 and $4,679 at December
31, 1996 and 1995, respectively.
14 RETIREMENT PLANS AND
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 government and corporate obligations.
<PAGE>
The components of net pension income for Tredegar's plans for 1996, 1995
and 1994 are as follows:
- - ----------------------------------------------------------------
1996 1995 1994
Return on plan assets:
Actual return $22,864 $28,434 $ (572)
Expected return greater
(lower) than actual (10,540) (17,065) 11,494
------- ------- ------
Expected return 12,324 11,369 10,922
Amortization of
transition asset 1,251 1,231 1,231
Service cost (benefits earned
during the year) (2,116) (2,376) (3,016)
Interest cost on projected
benefit obligation (7,631) (7,192) (6,885)
Amortization of prior service
costs and gains or losses (782) (99) (942)
------- ------- ------
Net pension income $ 3,046 $ 2,933 $1,310
- - ----------------------------------------------------------------
The following table presents a reconciliation of the funded status of
Tredegar's pension plans at December 31, 1996, 1995 and 1994, to prepaid pension
expense:
- - ----------------------------------------------------------------------
December 31 1996 1995 1994
Plan assets at fair value $166,582 $147,600 $125,390
Actuarial present value of
benefit obligations:
Accumulated benefit
obligation (including
vested benefits of
$96,561, $90,895 and
$77,858, respectively) (99,219) (93,077) (80,422)
Projected compensation
increase (9,676) (11,097) (9,296)
--------- -------- ---------
Projected benefit obligation (108,895) (104,174) (89,718)
--------- -------- ---------
Plan assets in excess of
projected benefit
obligation 57,687 43,426 35,672
Unrecognized net gain being
amortized (31,486) (21,863) (16,862)
Unrecognized transition asset
being amortized (2,975) (4,226) (5,456)
Unrecognized prior service
costs being amortized 3,658 4,581 5,354
--------- ------- -------
Prepaid pension expense $ 26,884 $21,918 $18,708
- - ----------------------------------------------------------------------
Prepaid pension expense of $26,884 and $21,918 is included in "Other assets
and deferred charges" in the consolidated balance sheets at December 31, 1996
and 1995, respectively.
Net pension income and plan obligations are calculated using assumptions of
discount rates on projected benefit obligations, estimated 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 7.5% at
December 31, 1996, 7.5% at December 31, 1995 and 8.25% at December 31, 1994. The
rate of projected compensation increase and the expected long-term rate of
return on plan assets was assumed to be 5% and 9%, respectively, 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.
Tredegar also has 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 was
$894, $658 and $613 at December 31, 1996, 1995 and 1994, respectively, and
pension expense recognized was approximately $150 annually. This information has
been included in the above pension tables.
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.
The components of net periodic postretirement benefit cost are as follows:
- - ----------------------------------------------------------------------
1996 1995 1994
Service cost (benefits earned
during the year) $(117) $(118) $(177)
Interest cost on accumulated
postretirement benefit
obligation (448) (493) (492)
Recognition of gains (losses) 101 74 (18)
------- ----- ------
Net postretirement
benefit cost $(464) $(537) $(687)
- - ----------------------------------------------------------------------
The following table presents a reconciliation of the funded status of
Tredegar's postretirement life insurance and health care benefit plans at
December 31, 1996, 1995 and 1994, to accrued postretirement benefit cost:
- - -----------------------------------------------------------------------
December 31 1996 1995 1994
Plan assets at fair value $ - $ - $ -
Accumulated postretirement
benefit obligation (APBO):
Retirees (3,283) (3,438) (3,085)
Other fully eligible
participants (1,253) (1,396) (1,593)
Other active
participants (1,769) (1,957) (1,852)
------- ------- -------
Total APBO (6,305) (6,791) (6,530)
------- ------- -------
APBO in excess of plan assets (6,305) (6,791) (6,530)
Unrecognized gain (1,317) (1,219) (1,124)
------- ------- -------
Accrued postretirement
benefit cost $(7,622) $(8,010) $(7,654)
- - -----------------------------------------------------------------------
Accrued postretirement benefit cost of $7,622 and $8,010 is included in
"Other noncurrent liabilities" in the consolidated balance sheets of December
31, 1996 and 1995, respectively.
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.5% at December 31, 1996, 7.5% at December 31, 1995 and
8.25% at December 31, 1994. The rate of annual pay increase for life insurance
benefits was assumed to be 5% each year. The rate of increase in the
<PAGE>
per-capita cost of covered health care benefits for the indemnity plan was
assumed to be 11% at December 31, 1996, 12% at December 31, 1995 and 13% at
December 31, 1994. The rate of increase in the per-capita cost of covered health
care benefits for the managed care plans was assumed to be 8.9% at December 31,
1996, 9.7% at December 31, 1995 and 10.4% at December 31, 1994. The rates for
the per-capita cost of covered health care benefits were assumed to decrease
gradually for the indemnity and managed care plans 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 increased by 1%, the
accumulated postretirement benefit obligation as of December 31, 1996, would
increase by approximately $9. The effect of this increase on the sum of the
service cost and interest cost components of net periodic postretirement benefit
cost for 1996 would be immaterial.
15 SAVINGS PLAN
Tredegar has a savings plan that allows eligible employees to 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. Tredegar also has an unfunded non-qualified
plan that restores matching benefits for employees suspended from the savings
plan due to certain limitations imposed by income tax regulations. Charges
recognized by Tredegar for these plans in 1996, 1995 and 1994 amounted to
$2,348, $2,060 and $2,059, respectively. Tredegar's unfunded liability under the
restoration plan was $1,221 and $723 at December 31, 1996 and 1995,
respectively.
16 INCOME TAXES
Income from continuing operations before income taxes and income taxes are as
follows:
- - --------------------------------------------------------------------
1996 1995 1994
Income from continuing
operations before
income taxes:
Domestic $63,612 $36,494 $2,346
Foreign 5,383 1,828 2,988
------- ------- ------
Total $68,995 $38,322 $5,334
- - ---------------------------------------------------------------------
Current income taxes:
Federal $17,916 $10,050 $8,375
State 2,608 1,996 1,622
Foreign 1,665 683 827
------- ------ -------
Total 22,189 12,729 10,824
------- ------ -------
Deferred income taxes:
Federal 1,105 1,448 (6,741)
State 2 136 (424)
Foreign 664 (44) 258
------ ------ ------
Total 1,771 1,540 (6,907)
------- ------- -------
Total income taxes $23,960 $14,269 $3,917
- - ---------------------------------------------------------------------
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
---------------------------------------
1996 1995 1994
Income tax expense at federal
statutory rate 35.0 35.0 35.0
State taxes, net of federal
income tax benefit 2.5 3.6 14.6
Foreign Sales Corporation (1.6) (1.3) (6.6)
Tax-exempt interest income (.9) - -
Research and development
tax credit (.3) (1.0) (7.5)
Goodwill amortization .1 .2 3.0
Write-off of certain goodwill - .1 31.1
Other items, net (.1) .6 3.8
---- ---- ----
Effective income tax rate 34.7 37.2 73.4
- - ----------------------------------------------------------------------
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 are as follows:
- - ----------------------------------------------------------------------
1996 1995 1994
Depreciation $(2,179) $ (14) $(3,472)
Employee benefits 2,591 499 169
Plant shutdowns, divestitures
and environmental
accruals 409 743 778
Write-offs of certain goodwill
and other intangibles - - (3,643)
Other items, net 950 312 (739)
-------- ----- --------
Total $ 1,771 $1,540 $(6,907)
- - -----------------------------------------------------------------------
<PAGE>
Deferred tax liabilities and deferred tax assets as of December 31, 1996
and 1995, are as follows:
- - -----------------------------------------------------------------------
December 31 1996 1995
Deferred tax liabilities:
Depreciation $8,220 $13,496
Pensions 9,699 8,274
Other 1,368 2,130
------ -------
Total deferred tax liabilities 19,287 23,900
------ -------
Deferred tax assets:
Employee benefits 7,697 8,863
Allowance for doubtful
accounts and sales
returns 1,306 2,005
Inventory 1,170 1,493
Plant shutdowns and
divestitures 752 834
Environmental accruals 294 621
Other 558 2,748
------ ------
Total deferred tax assets 11,777 16,564
------ ------
Net deferred tax liability $7,510 $7,336
- - -----------------------------------------------------------------------
Included in the balance sheet:
Noncurrent deferred tax
liabilities in excess
of assets $16,994 $22,218
Current deferred tax assets
in excess of liabilities 9,484 14,882
------ -------
Net deferred tax liability $ 7,510 $ 7,336
- - -----------------------------------------------------------------------
17 UNUSUAL ITEMS
In 1996, unusual items totaling $11,427 (income, net) include a gain on the sale
of Molded Products ($19,893, see Note 19), a gain on the sale of a former
plastic films manufacturing site in Fremont, California ($1,968), a charge
related to the loss on the divestiture of Brudi ($9,146, see Note 19) and a
charge related to the write-off of specialized machinery and equipment due to
excess capacity in certain industrial packaging films ($1,288).
In 1995, unusual items totaling $78 (income, net) include a gain on the
sale of Regal Cinema shares ($728), a charge related to the restructuring of
APPX Software ($2,400) and a recovery in connection with a Film Products product
liability lawsuit ($1,750). The APPX Software restructuring charge includes
estimated losses on the disposal of assets, severance costs and cost for the
termination of leases and certain contracts. The restructuring, which occurred
in the first quarter of 1995, was aimed at eliminating operating losses. Such
losses were $478 in the first quarter of 1995 and $4,700 in 1994. While new
product development costs have been reduced, APPX Software continues to sell,
maintain and support existing products. During 1996 and for the period April 1
to December 31, 1995 (the post-restructuring periods), APPX Software had an
operating profit of $511 and $382, respectively.
In 1994, unusual items totaling $16,494 include the write-off of certain
Molded Products goodwill ($4,873), costs related to the closing of a Molded
Products plant in Alsip, Illinois ($2,100) and the write-off of goodwill and
other intangibles in APPX Software ($9,521). The goodwill write-off in Molded
Products resulted from continued disappointing results in certain lines of its
business (see Note 19). The write-off in APPX Software in 1994 is the result of
management's determination that income generated by the acquired products would
not be sufficient to recover the unamortized costs associated with the
intangible software assets purchased by Tredegar in December 1992.
18 CONTINGENCIES
Tredegar is involved in various stages of investigation and cleanup 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 ensure 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 estimates of the cost
of remediation, and perform 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 its financial position; however, such
costs could have a material adverse effect on quarterly or annual operating
results 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.
19 DIVESTED AND DISCONTINUED OPERATIONS
On March 29, 1996, Tredegar sold Molded Products to Precise Technology, Inc.
("Precise") for cash consideration of $57,500 ($53,973 after transaction costs).
In addition, Tredegar received unregistered cumulative redeemable preferred
stock of Precise with a face amount of $2,500, which is not currently
marketable. Dividends on the preferred stock are payable quarterly at an annual
rate of 7% beginning June 30, 1996. The preferred stock is redeemable in full on
March 29, 2007, or earlier upon the occurrence of certain events. Both dividends
and redemption are subordinated to other outstanding debt of Precise.
No value has been assigned by Tredegar to the preferred stock received from
Precise due to the uncertainty of redemption. Consistent therewith, dividend
income on such stock is not recognized by Tredegar until received.
During the second quarter of 1996, Tredegar completed the sale of Brudi for
cash consideration of approximately $18,066 ($17,625 after transaction costs).
<PAGE>
Tredegar recognized a gain of $19,893 ($13,725 after income taxes) on the
sale of Molded Products in the first quarter of 1996. The gain was partially
offset by a first-quarter charge of $9,146 ($5,666 after income tax benefits)
related to the loss on the divestiture of Brudi. The Molded Products gain
includes a gain of $2,039 ($1,243 after income taxes) on the curtailment of
participation by Molded Products employees in Tredegar's benefit plans. The
Brudi charge includes a loss accrued of $1,000 ($640 after income tax benefits)
for remaining payments under a noncompetition and secrecy agreement entered into
when Tredegar acquired Brudi on April 1, 1991.
The operating results for Molded Products were historically reported as
part of the Plastics segment on a combined basis with Film Products and
Fiberlux. Likewise, results for Brudi were combined with Aluminum Extrusions and
reported as part of the Metal Products segment. Accordingly, results for Molded
Products and Brudi have been included in continuing operations. Tredegar began
reporting Molded Products and Brudi separately in its segment disclosures in
1995 after announcing its intent to divest these businesses (see pages 20-22).
Additional information on the combined results of operations and net assets of
these businesses is provided below:
Condensed Statements of Income
Molded Products and Brudi Combined
- - --------------------------------------------------------------------------
1996
Through the
(Unaudited) Date Divested 1995 1994
- - ---------------------------------------------------------------------------
Net sales $34,511 $116,745 $105,470
Costs and expenses:
Operating costs
and expenses 33,269 113,805 108,310
Interest allocated 283 899 1,170
Unusual items - - 6,973
------- ------- -------
Total 33,552 114,704 116,453
------- ------- -------
Income (loss) from Molded
Products and Brudi
before income taxes 959 2,041 (10,983)
Income tax (benefit) 423 913 (3,802)
------- ------ --------
Income (loss) from Molded
Products and Brudi $ 536 $ 1,128 $(7,181)
- - ---------------------------------------------------------------------------
Condensed Statements of Net Assets
Molded Products and Brudi Combined
- - ---------------------------------------------------------------------------
As of
Date Divested December 31,
(Unaudited) in 1996 1995
- - ---------------------------------------------------------------------------
Current assets:
Accounts and notes receivable $15,495 $13,964
Inventories 14,233 13,858
Deferred income taxes 1,612 1,476
Prepaid expenses and other 374 82
------ ------
Total current assets 31,714 29,380
------ ------
Net property, plant and equipment 32,832 33,129
Goodwill and other intangibles 9,980 10,174
------ ------
Total assets 74,526 72,683
------ ------
Total current liabilities 9,053 9,108
Deferred income taxes 3,238 2,971
Other noncurrent liabilities 345 460
------ ------
Total liabilities 12,636 12,539
------ ------
Net assets of Molded Products
and Brudi $61,890 $60,144
- - ---------------------------------------------------------------------------
Transactions between Tredegar and Molded Products and Brudi were reflected
as though they were settled immediately and there were no amounts due to or from
Tredegar at the end of any period. All of Molded Products' full-time employees
participated in Tredegar's noncontributory defined benefit plan for salaried
employees. Most of these employees also participated in Tredegar's welfare
(medical, life and disability) and savings plans. Related costs for
participation in these plans were allocated to Molded Products and were included
in the above condensed statements of income. Interest expense was allocated to
Molded Products and Brudi based upon the ratio of their capital employed (net
assets) to Tredegar's consolidated capital employed.
For federal income tax purposes, operating results of Molded Products and
Brudi through the date of disposal were included in Tredegar's consolidated tax
return. Their related provision for income taxes represents their allocated
share of Tredegar's income tax expense. The allocated share approximates income
tax expense that would have been incurred had Molded Products and Brudi
separately filed a consolidated tax return and computed income taxes in
accordance with SFAS No. 109, "Accounting for Income Taxes."
<PAGE>
On August 16, 1994, the Elk Horn Coal Corporation ("Elk Horn"), Tredegar's
97% owned coal subsidiary, was acquired by Pen Holdings, Inc., for an aggregate
consideration of approximately $71,000 ($67,485 after minority interest and
transaction costs). Tredegar realized an after-tax gain on the transaction of
$25,740. In the first quarter of 1994, Tredegar recognized an income tax benefit
of $3,320 on the difference between the financial reporting and income tax basis
of Elk Horn. On February 4, 1994, Tredegar sold its remaining oil and gas
properties for approximately $8,000 and recognized an after-tax gain of $3,938.
The divestiture of Elk Horn completed Tredegar's exit from the Energy segment.
Accordingly, information about the revenues, expenses, income, financial
condition and cash flows of this segment have been presented as discontinued
operations.
In accordance with applicable accounting pronouncements, a $6,194 charge
($3,964 after income tax benefits) was recognized as a reduction to the gain on
the disposal of Elk Horn for the estimated present value of the portion of the
unfunded obligation under the Coal Industry Retiree Health Benefit Act of 1992
(the "Act") assumed by Tredegar in the divestiture transaction. 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 obligation under the Act is reflected
in Tredegar's consolidated balance sheet in "Other noncurrent liabilities." The
net periodic cost of the obligation (interest and the amortization of gains of
$158 in 1996) since the Elk Horn divestiture is reflected in Tredegar's
consolidated statements of income in "Other income (expense), net."
At December 31, 1996 and 1995, the accrued costs for Tredegar's obligation
under the Act were $5,793 and $6,000, respectively, including an unfunded
obligation of $2,943 and $4,703, respectively, and an unrecognized gain of
$2,850 and $1,297, respectively. The discount rate used in determining the
unfunded obligation was 7.5%, 7.5% and 8.25% at December 31, 1996, 1995 and
1994, respectively. The medical premium trend rate was assumed to be 11%, 12%
and 13% at December 31, 1996, 1995 and 1994, respectively, with a gradual
decrease to 6% in year 2004, 6% in year 2004 and 6.75% in year 2003,
respectively, and remaining at that level thereafter. The accrued cost was
determined using assumptions at the end of each period, and the net periodic
cost was determined using assumptions as of the beginning of each period. If the
medical premium trend rate were increased by 1%, the obligation at December 31,
1996, would increase by approximately $167. The effect of this increase on the
annual interest cost component of the net periodic cost would be immaterial.
The condensed statement of income of the discontinued Energy segment is
presented below through August 16, 1994, the date Elk Horn was acquired by Pen
Holdings, Inc.:
Condensed Statement of Income
Discontinued Energy Segment
- - -----------------------------------------------------------------------------
January 1, 1994 to
(Unaudited) August 16, 1994
- - ------------------------------------------------------------------------------
Net sales $19,868
Costs and expenses:
Operating costs and expenses 13,229
Interest allocated 337
--------
Total 13,566
--------
Income from Energy segment
operations before income taxes 6,302
Income taxes 2,082
-------
Income from Energy segment
operations $4,220
- - ------------------------------------------------------------------------------
All of the Energy segment's full-time employees participated in Tredegar's
noncontributory defined benefit plan for salaried employees. These employees
also participated in Tredegar's welfare (medical, life and disability) and
savings plans. Accordingly, related costs were 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
through the date of disposal were 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 separately
filed a consolidated tax return and computed income taxes in accordance with
SFAS No. 109.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
Tredegar Industries, Inc.
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
<CAPTION>
Sept. 30, Dec. 31,
1997 1996
--------- ---------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 114,001 $ 101,261
Accounts and notes receivable 78,456 61,076
Inventories 18,073 17,658
Income taxes recoverable 381 2,023
Deferred income taxes 9,417 9,484
Prepaid expenses and other 4,089 2,920
--------- ---------
Total current assets 224,417 194,422
--------- ---------
Property, plant and equipment, at cost 277,848 260,200
Less accumulated depreciation and amortization 180,419 169,771
--------- ---------
Net property, plant and equipment 97,429 90,429
--------- ---------
Other assets and deferred charges 55,808 36,094
Goodwill and other intangibles 20,086 20,132
========= =========
Total assets $ 397,740 $ 341,077
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 42,392 $ 28,814
Accrued expenses 38,470 32,487
--------- ---------
Total current liabilities 80,862 61,301
Long-term debt 30,000 35,000
Deferred income taxes 18,728 16,994
Other noncurrent liabilities 13,838 15,237
--------- ---------
Total liabilities 143,428 128,532
--------- ---------
Shareholders' equity:
Common stock, no par value 113,051 113,019
Common stock held in trust for savings
restoration plan (744) -
Unrealized gain on available-for-sale securities 3,573 -
Foreign currency translation adjustment 36 499
Retained earnings 138,396 99,027
--------- ---------
Total shareholders' equity 254,312 212,545
--------- ---------
Total liabilities and shareholders' equity $ 397,740 $ 341,077
========= =========
See accompanying notes to financial statements.
</TABLE>
<PAGE> 2
<TABLE>
Tredegar Industries, Inc.
Consolidated Statements of Income
(In Thousands)
(Unaudited)
<CAPTION>
Third Quarter Nine Months
Ended Sept. 30 Ended Sept. 30
------------------- -------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Net sales $155,058 $129,425 $433,372 $397,143
Other income (expense), net 3,798 2,909 11,701 3,324
--------- --------- --------- ---------
Total 158,856 132,334 445,073 400,467
--------- --------- --------- ---------
Costs and expenses:
Cost of goods sold 122,403 103,334 343,658 317,556
Selling, general and administrative 9,438 9,713 26,928 30,828
Research and development 3,220 2,500 9,667 7,520
Interest 456 459 1,598 1,608
Unusual items - (680) (2,250) (11,427)
--------- --------- --------- ---------
Total 135,517 115,326 379,601 346,085
--------- --------- --------- ---------
Income before income taxes 23,339 17,008 65,472 54,382
Income taxes 8,202 6,273 23,034 18,627
--------- --------- --------- ---------
Net income $ 15,137 $ 10,735 $ 42,438 $ 35,755
========= ========= ========= =========
Earnings per common and dilutive common
equivalent share $ 1.14 $ .82 $ 3.23 $ 2.74
========= ========= ========= =========
Shares used to compute earnings per
common and dilutive common equivalent
share 13,254 13,112 13,158 13,047
========= ========= ========= =========
See accompanying notes to financial statements.
</TABLE>
<PAGE> 3
<TABLE>
Tredegar Industries, Inc.
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
<CAPTION>
Nine Months
Ended Sept. 30
-------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 42,438 $ 35,755
Adjustments for noncash items:
Depreciation 13,773 15,231
Amortization of intangibles 39 242
Deferred income taxes 40 (3,530)
Accrued pension income and postretirement
benefits (3,129) (1,752)
Gain on divestitures and property disposals, net (2,250) (12,715)
Write-off of certain industrial packaging
film machinery and equipment - 1,288
Gain on sale of technology-related investments (9,668) (2,139)
Changes in assets and liabilities, net of effects
from divestitures and acquisitions:
Accounts and notes receivable (10,721) (8,972)
Inventories 2,929 1,881
Income taxes recoverable 1,642 2,179
Prepaid expenses and other (1,169) (1,433)
Accounts payable 10,517 8,477
Accrued expenses and income taxes payable 5,569 3,233
Other, net (227) (31)
--------- ---------
Net cash provided by operating activities 49,783 37,714
--------- ---------
Cash flows from investing activities:
Capital expenditures (14,640) (18,726)
Acquisition (13,469) -
Investments (12,987) (1,432)
Proceeds from the sale of investments 10,511 2,600
Property disposals 387 8,801
Proceeds from the sale of Molded Products
and Brudi 2,250 71,598
Other, net (314) (378)
--------- ---------
Net cash (used in) provided by investing
activities (28,262) 62,463
--------- ---------
Cash flows from financing activities:
Dividends paid (3,069) (2,195)
Net decrease in borrowings (5,000) -
Repurchases of Tredegar common stock (1,932) (2,034)
Other, net 1,220 933
--------- ---------
Net cash used in financing activities (8,781) (3,296)
--------- ---------
Increase in cash and cash equivalents 12,740 96,881
Cash and cash equivalents at beginning of period 101,261 2,145
========= =========
Cash and cash equivalents at end of period $ 114,001 $ 99,026
========= =========
See accompanying notes to financial statements.
</TABLE>
<PAGE> 4
TREDEGAR INDUSTRIES, INC.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying consolidated financial
statements of Tredegar Industries, Inc. and Subsidiaries ("Tredegar")
contain all adjustments necessary to present fairly, in all material
respects, Tredegar's consolidated financial position as of September 30,
1997, and the consolidated results of their operations and their cash flows
for the nine months ended September 30, 1997 and 1996. All such adjustments
are deemed to be of a normal recurring nature. These financial statements
should be read in conjunction with the consolidated financial statements
and notes thereto included in Tredegar's Annual Report on Form 10-K for the
year ended December 31, 1996. The results of operations for the nine months
ended September 30, 1997, are not necessarily indicative of the results to
be expected for the full year.
2. Historical net income and earnings per common and dilutive common
equivalent share, adjusted for unusual items and technology-related
investment gains/losses affecting the comparability of operating results,
are presented below:
<TABLE>
<CAPTION>
(In Thousands Except Per-Share Amounts)
Third Quarter Nine Months
Ended Sept. 30 Ended Sept. 30
------------------- -------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Historical net income as reported $ 15,137 $ 10,735 $ 42,438 $ 35,755
After-tax effects of unusual items:
Redemption of preferred stock received in connection
with the divestiture of Molded Products - - (1,440) -
Gain on sale of property in Fremont, CA - (1,215) - (1,215)
Write-off of specialized machinery and equipment due to
excess capacity in certain industrial packaging films - 795 - 795
Combined net gain on the Molded Products and Brudi
divestitures - - - (8,059)
--------- --------- --------- ---------
Historical net income as adjusted for unusual items 15,137 10,315 40,998 27,276
After-tax effect of technology-related investment (gains) losses (2,117) (1,369) (6,187) (1,369)
--------- --------- --------- ---------
Net income as adjusted for unusual items and technology-
related investment gains/losses $ 13,020 $ 8,946 $ 34,811 $ 25,907
========= ========= ========= =========
Earnings per common and dilutive common equivalent share:
As reported $ 1.14 $ .82 $ 3.23 $ 2.74
As adjusted for unusual items 1.14 .79 3.12 2.09
As adjusted for unusual items and technology- related
investment gains/losses .98 .69 2.65 1.99
</TABLE>
<PAGE> 5
3. At September 30, 1997 and December 31, 1996, Tredegar had
technology-related investments with a cost basis of $18.2 million and $6
million, respectively, which represented ownership (either in the form of
limited partnership interests in private venture capital funds, the stock
of privately held companies or the restricted or unrestricted stock of
companies that recently registered shares in initial public offerings) of
less than 20% in 18 and 7 separate entities, respectively. These
investments are included in "Other assets and deferred charges" in the
consolidated balance sheets. Each security directly held in public
companies (common stock listed on NASDAQ) is classified as
available-for-sale and stated at fair value, with unrealized holding gains
or losses excluded from earnings and reported as a net amount in a separate
component of shareholders' equity until realized. Each security held in
private companies (primarily convertible preferred stock) is accounted for
at the lower of cost or estimated fair value. Ownership interests of less
than or equal to 5% in private venture capital funds are accounted for at
the lower of cost or estimated fair value, while ownership interests in
excess of 5% in such funds are accounted for under the equity method.
Management estimates the fair value of technology-related investments to be
approximately $34 million at September 30, 1997. The fair value of
securities directly held in public companies is determined based on closing
price quotations. The fair value of securities directly held in private
companies is estimated by Tredegar management. The fair value of ownership
interests in private venture capital funds is based on management's
estimate of Tredegar's distributable share of fund net assets utilizing,
among others, the general partners' estimate of the fair value of
nonmarketable securities held, closing bid prices of publicly traded
securities held and the formulas for allocating profits, losses and
distributions. Because of the inherent uncertainty of the valuations of
restricted securities or securities for which there is no public market,
estimates of fair value may differ significantly from the values that would
have been used had a ready market for the securities existed. Furthermore,
the publicly-traded stock of emerging, technology-based companies usually
has higher volatility and risk than the U.S. stock market as a whole.
4. In February 1997, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards No. 128, "Earnings per
Share." The standard must be adopted by Tredegar in the fourth quarter of
1997, with all prior periods restated to conform to the new method. Early
application is not permitted. The new standard requires the presentation in
the income statement of basic and diluted earnings per share. In contrast
to primary earnings per share under existing standards, basic earnings per
share excludes common stock equivalents (for example, stock options).
Accordingly, for the periods shown below, under the new requirements basic
earnings per share for Tredegar will be higher than amounts previously
reported, while diluted earnings per share will be the same as amounts
previously reported:
<TABLE>
<CAPTION>
Nine Months Years Ended
Ended Sept. 30 December 31
------------------- -------------------
1997 1996 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Percentage basic earnings per share
higher than earnings per share
as reported 7.2% 6.9% 7.3% 3.5%
Percentage diluted earnings per share
higher (lower) than earnings per share
as reported - - - -
</TABLE>
<PAGE> 6
During the first nine months of 1997, the FASB also issued new
standards affecting disclosures of information about capital structure,
comprehensive income and business segments, none of which should have a
significant impact on Tredegar.
5. On September 30, 1997, Tredegar announced that its William L. Bonnell
subsidiary had agreed in principle to acquire two Canada-based aluminum
extrusion and fabrication plants owned by Reynolds Metals Company. The
plants are located in Ste. Therese, Quebec, and Richmond Hill, Ontario.
Details of the agreement were not disclosed. The proposed acquisition,
which is subject to various conditions, is expected to be completed in
January 1998. The two plants generated sales of about $50 million in 1996.
Both facilities manufacture products used primarily in building and
construction, transportation, electrical, machinery and equipment, and
consumer durables markets.
On May 30, 1997, Tredegar announced that its William L. Bonnell subsidiary
had acquired an aluminum extrusion and fabrication plant in El Campo,
Texas, from Reynolds Metals Company. The El Campo facility, which had sales
of about $45 million in 1996, extrudes and fabricates products used
primarily in transportation, electrical and consumer durables markets. The
acquisition was accounted for using the purchase method; accordingly,
assets acquired and liabilities assumed were recorded at their estimated
fair values at the date of acquisition. No goodwill arose from the
transaction. The operating results for the El Campo facility have been
included in the consolidated statements of income since the date acquired.
6. On July 9, 1997, Tredegar replaced its revolving credit facility dated
September 7, 1995, with a new five-year facility that permits borrowings up
to $275 million. The new facility provides for interest to be charged at a
base rate (which is generally expected to be the London Interbank Offered
Rate ("LIBOR")) plus a spread that is dependent on Tredegar's quarterly
debt-to-total capitalization ratio. A facility fee is also charged on the
$275 million commitment amount. The spread and facility fee charged at
various debt-to-total capitalization levels are as follows:
(Basis Points)
LIBOR Facility
Debt-to-Total Capitalization Ratio Spread Fee
Less than or equal to 35% 16.50 8.50
Greater than 35% and less than or equal
to 50% 22.50 10.00
Greater than 50% 30.00 15.00
In addition, a utilization fee of five basis points is charged on the
outstanding principal amount when more than $137.5 million is borrowed
under the agreement. The new facility contains restrictions similar to the
prior facility including, among others, restrictions on the payments of
cash dividends and the maximum debt-to-total capitalization ratio permitted
(60%). At September 30, 1997, $113.8 million was available for cash
dividend payments and $275 million was available to borrow under the 60%
debt-to-total capitalization ratio restriction.
<PAGE> 7
7. The components of inventories are as follows:
(In Thousands)
Sept. 30 Dec. 31
1997 1996
-------------- --------------
Finished goods $1,765 $ 1,677
Work-in-process 1,580 1,782
Raw materials 7,967 7,958
Stores, supplies and other 6,761 6,241
============== ==============
Total $18,073 $17,658
============== ==============
