===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
AMENDMENT NO. 1
------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 17, 1999
Tredegar Corporation
(Exact Name of Registrant as Specified in Charter)
Virginia 1-10258 54-1497771
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
1100 Boulders Parkway Richmond, Virginia 23225
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (804)-330-1000
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<PAGE>
Item 2. Acquisition or Disposition of Assets
This Amendment No. 1 to the Form 8-K dated May 25, 1999, is being filed
by Tredegar Corporation ("Tredegar") to provide required financial statements
and pro forma financial information related to its acquisition of Exxon Chemical
Company's plastic films business ("Exxon Films") on May 17, 1999. This
acquisition was structured as an asset purchase. This amendment also includes
selected pro forma financial information on the effects of other acquisitions
made by Tredegar from the beginning of 1998 through the acquisition of Exxon
Films.
Information provided in this Form 8-K amendment includes
forward-looking statements based on Tredegar's beliefs, assumptions and
currently available information. Due to potential changes in a variety of
business and economic conditions, actual results may differ materially from
those anticipated in forward-looking statements.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
<TABLE>
<CAPTION>
Page
<S> <C>
Report of independent accountants 3
Statements of income for the: 4
Three months ended March 31, 1999 and 1998 (unaudited) 12
months ended March 31, 1999 (unaudited) Years ended December
31, 1998 and 1997
Statements of net assets as of: 5
March 31, 1999 (unaudited)
December 31, 1998 and 1997
Statements of cash flows for the: 6
Three months ended March 31, 1999 and 1998 (unaudited) 12
months ended March 31, 1999 (unaudited) Years ended December
31, 1998 and 1997
Notes to financial statements (quarterly data and 12 months ended March 31, 7-11
1999, information unaudited)
</TABLE>
2
<PAGE>
(b) Unaudited Pro Forma Financial Information for Tredegar.
<TABLE>
<CAPTION>
Page
<S> <C>
Introduction to pro forma financial information 12-13
Pro forma consolidated statements of income for the acquisition of
Exxon Films for the:
Three months ended March 31, 1999 and 1998 14-15
12 months ended March 31, 1999 16
Year ended December 31, 1998 17
Pro forma consolidated balance sheet for the acquisition of Exxon Films as of 18
March 31, 1999
Other selected pro forma financial information for acquisitions made by
19-22 Tredegar from the beginning of 1998 through May 17, 1999
Notes to pro forma financial information 23-25
</TABLE>
(c) Exhibits.
None.
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of Tredegar Corporation:
In our opinion, the accompanying statements of net assets and the
related statements of income and cash flows present fairly, in all material
respects, the financial position of the films business of Exxon Chemical Company
("Exxon Films"), a division of Exxon Corporation, at December 31, 1998 and 1997,
and the results of its operations and its cash flows for each of the two years
in the period ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
Exxon Films' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Richmond, Virginia
March 4, 1999
3
<PAGE>
<TABLE>
The Films Business of Exxon Chemical Company
Statements of Income
(In Thousands)
<CAPTION>
Three Months 12 Months
Ended March 31 Ended Years Ended
(Unaudited) March 31, December 31
-------------------- 1999 -------------------
1999 1998 (Unaudited) 1998 1997
-------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $ 30,345 $ 25,156 $ 114,327 $ 109,138 $ 107,511
Costs and expenses:
Cost of goods sold 21,700 19,550 84,842 82,692 85,535
Selling, general and administrative 1,702 1,674 7,092 7,064 6,859
Research and development 567 484 2,010 1,927 1,905
Loss on property disposals - - - - 2,644
-------- ----------- ------------ --------- ---------
Total 23,969 21,708 93,944 91,683 96,943
-------- ----------- ------------ --------- ---------
Income before income taxes 6,376 3,448 20,383 17,455 10,568
Income taxes 2,385 1,290 7,623 6,528 3,952
-------- ----------- ------------ --------- ---------
Net income $ 3,991 $ 2,158 $ 12,760 $ 10,927 $ 6,616
======== =========== ============ ========= =========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
<TABLE>
The Films Business of Exxon Chemical Company
Statements of Net Assets
(In Thousands)
<CAPTION>
March 31,
1999 December 31,
(Unaudited) 1998 1997
------------ ------------ ---------
<S> <C> <C> <C>
Assets:
Current assets:
Accounts and notes receivable $ 12,620 $ 11,890 $ 9,820
Inventories 9,709 8,804 5,171
Prepaid expenses and other 230 490 970
----------- ------------ ---------
Total current assets 22,559 21,184 15,961
----------- ------------ ---------
Property, plant and equipment, at cost 100,015 99,527 98,940
Less accumulated depreciation and amortization 35,774 34,891 33,144
----------- ------------ ---------
Net property, plant and equipment 64,241 64,636 65,796
----------- ------------ ---------
Total assets 86,800 85,820 81,757
----------- ------------ ---------
Liabilities:
Current liabilities:
Accounts payable 2,370 2,190 890
Accrued expenses:
Vacation 976 1,122 1,196
Other 220 170 210
----------- ------------ ---------
Total current liabilities 3,566 3,482 2,296
Deferred income taxes 18,489 19,139 17,543
----------- ------------ ---------
Total liabilities 22,055 22,621 19,839
----------- ------------ ---------
Net assets $ 64,745 $ 63,199 $ 61,918
=========== ============ =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
<TABLE>
The Films Business of Exxon Chemical Company
Statements of Cash Flows
(In Thousands)
<CAPTION>
Three Months 12 Months
Ended March 31 Ended Years Ended
(Unaudited) March 31, December 31
-------------------- 1999 -------------------
1999 1998 (Unaudited) 1998 1997
-------- ----------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,991 $ 2,158 $ 12,760 $ 10,927 $ 6,616
Adjustments for noncash items:
Depreciation 1,158 1,142 4,603 4,587 4,634
Deferred income taxes (650) (77) 1,023 1,596 (211)
Loss on property disposals - - - - 2,644
Changes in assets and liabilities:
Accounts and notes receivable (730) (1,440) (1,360) (2,070) 3,200
Inventories (905) (2,909) (1,629) (3,633) (955)
Prepaid expenses and other 260 800 (60) 480 930
Accounts payable 180 820 660 1,300 530
Accrued expenses (96) 30 (240) (114) 92
-------- ----------- ------------ --------- ---------
Net cash provided by operating
activities 3,208 524 15,757 13,073 17,480
-------- ----------- ------------ --------- ---------
Cash flows from investing activities:
Capital expenditures (760) (1,289) (2,774) (3,303) (3,141)
Proceeds from property disposals - - 18 18 446
-------- ----------- ------------ --------- ---------
Net cash used in investing
activities (760) (1,289) (2,756) (3,285) (2,695)
-------- ----------- ------------ --------- ---------
Cash flows from financing activities:
Net (distributions to) contributions
from Exxon Chemical Company (2,448) 765 (13,001) (9,788) (14,785)
-------- ----------- ------------ --------- ---------
Net cash (used in) provided by
financing activities (2,448) 765 (13,001) (9,788) (14,785)
-------- ----------- ------------ --------- ---------
Increase (decrease) in cash - - - - -
Cash at beginning of period - - - - -
-------- ----------- ------------ --------- ---------
Cash at end of period $ - $ - $ - $ - $ -
======== =========== ============ ========= =========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Films Business of Exxon Chemical Company, a Division of Exxon Corporation
(Quarterly Data, 12 Months Ended March 31 1999, Information and Note 6
Unaudited) (In Thousands)
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Organization and Nature of Operations. The films business of Exxon Chemical
Company ("Exxon Films"), a division of Exxon Corporation, manufactures plastic
films primarily used in consumer disposables, paper products packaging and
medical applications. The business has two plants located in Lake Zurich,
Illinois and Pottsville, Pennsylvania. Tredegar Corporation ("Tredegar")
acquired the business on May 17, 1999 (see pages 12-25 for more information).
Basis of Presentation and Transactions with Exxon Corporation. The financial
statements include the accounts and operations of Exxon Films. Intercompany
accounts and transactions within Exxon Films have been eliminated.
Exxon Films engaged in various transactions with Exxon Corporation and
its affiliates that are characteristic of a group of companies under common
control. Exxon Films has no separate capital structure of its own and utilized
Exxon Corporation's centralized treasury system, pursuant to which substantially
all disbursements, including capital expenditures, payroll and other expense
items, were funded by Exxon Corporation. Transactions with Exxon Corporation and
its affiliates were deemed settled immediately and there were no amounts due to
or from Exxon Corporation and its affiliates at the end of any period. The
financial statements include allocations of general corporate expenses incurred
by Exxon Corporation on behalf of Exxon Films. However, these allocations do not
necessarily represent the level of expenses Exxon Films would have incurred had
it operated on a stand-alone basis.
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. The
results of operations for the three months ended March 31, 1999, are not
necessarily indicative of the results to be expected for the full year (see Note
6).
The Financial Accounting Standards Board has issued a new standard
affecting the accounting for derivative instruments and hedging activities. This
standard is not expected to significantly change operating results, financial
condition or disclosures.
The new standard will be adopted in the first quarter of 2001.
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.
7
<PAGE>
Inventories. Inventories are stated at the lower of cost or market, with cost
determined on the last-in, first-out ("LIFO") basis for all inventories except
stores and supplies. The cost of stores and supplies inventories is determined
on the first-in, first-out ("FIFO") basis. Cost elements included in
work-in-process and finished goods inventories are raw materials, direct labor
and manufacturing overhead.
Property, Plant and Equipment. Accounts include costs of assets constructed or
purchased, related delivery and installation costs and interest incurred on
significant capital projects during their construction periods. Expenditures for
renewals and betterments also are capitalized, but expenditures for repairs and
maintenance are expensed as incurred.
Depreciation is computed primarily by the straight-line method based on
the estimated useful lives of the assets as follows:
- --------------------------------------------------------------------------------
March 31,
1999 Depreciation Period
Property, plant and equipment, at cost:
Land $ 63
Buildings and improvements 12,456 30 years
Machinery and equipment 84,749 16 - 20 years
Furniture and fixtures 775 16 years
Computers 1,791 5 - 7 years
Vehicles 181 5 - 8 years
- --------------------------------------------------------------------------------
Total 100,015
Accumulated depreciation 35,774
- --------------------------------------------------------------------------------
Net property, plant and equipment $ 64,241
- --------------------------------------------------------------------------------
Impairment of Long-Lived Assets. For assets to be held and used in operations,
if events indicate that an asset may be impaired, management estimates 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.
Assets to be disposed of are reported at the lower of their carrying
amount or estimated fair value less cost to sell, with an impairment loss
recognized for any write-downs required.
Employee Benefit Plans. Eligible salaried employees of Exxon Films participated
in the benefit plans of Exxon Corporation, including its health and dental
assistance program, defined benefit pension plan, savings plan with company
match, disability plan and life insurance plan. Eligible hourly employees
participated in separate plans covering similar benefits. The estimated costs
for these employee benefit programs have been allocated to Exxon Films and
included in the statements of income.
8
<PAGE>
Income Taxes. Exxon Films is included in Exxon Corporation's consolidated
federal income tax return. Income tax expense for Exxon Films has been
calculated and recognized on a separate return basis. Deferred income taxes
arise from temporary differences between financial reporting and income tax
reporting of various items, principally depreciation, inventories, accrued
vacation and allowance for doubtful accounts.
Earnings Per Share. Earnings per share is not applicable to Exxon Films since
it has no capital structure of its own.
2 MAJOR CUSTOMERS, CREDIT CONCENTRATION AND RECEIVABLES
- --------------------------------------------------------------------------------
A significant portion of Exxon Film's sales are concentrated with four
customers ranked as follows:
- -----------------------------------------------------------------------
1998 1997
------------------------ ------------------------
% of % of
Sales Total Sales Total
- -----------------------------------------------------------------------
Customer rank:
1 $ 15,719 14.4 % $ 15,003 14.0 %
2 14,011 12.8 12,443 11.6
3 13,755 12.6 4,734 4.4
4 12,117 11.1 17,010 15.8
- -----------------------------------------------------------------------
Total $ 55,602 50.9 % $ 49,190 45.8 %
- -----------------------------------------------------------------------
Plastic film supplied to customers ranked 1 and 2 were converted into
materials used in products manufactured by the third customer, The Procter &
Gamble Company (P&G), Tredegar's largest customer. Management performs ongoing
evaluations of customers and generally does not require collateral for trade
receivables. Accounts and notes receivable include an allowance for doubtful
accounts of $280 at March 31, 1999, $280 at December 31, 1998 and $180 at
December 31, 1997.
3 INVENTORIES
- --------------------------------------------------------------------------------
Inventories consist of the following:
- -------------------------------------------------------------------------------
March 31, December 31,
------------------------
1999 1998 1997
- -------------------------------------------------------------------------------
Finished goods $ 2,312 $ 1,750 $ 876
Raw materials and work-in process 5,219 4,866 2,167
- -------------------------------------------------------------------------------
Total finished goods, raw materials and
work-in process inventories stated
at LIFO value 7,531 6,616 3,043
Stores and supplies stated at FIFO value 2,178 2,188 2,128
- -------------------------------------------------------------------------------
Total $ 9,709 $ 8,804 $ 5,171
- -------------------------------------------------------------------------------
Inventories stated on a LIFO basis are below replacement costs by
approximately $5,100 at March 31, 1999, $4,600 at December 31, 1998 and $4,900
at December 31, 1997.
9
<PAGE>
4 INCOME TAXES
- --------------------------------------------------------------------------------
Income before income taxes and income taxes are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Three Months Years Ended
Ended March 31, 12 Mos. December 31,
----------------------- Ended ---------------------
1999 1998 3/31/99 1998 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income before income taxes $ 6,376 $ 3,448 $ 20,383 $ 17,455 $ 10,568
- ---------------------------------------------------------------------------------------------------------
Current income taxes:
Federal $ 2,815 $ 1,268 6,121 $ 4,574 $ 3,860
State 220 99 479 358 303
- ---------------------------------------------------------------------------------------------------------
Total 3,035 1,367 6,600 4,932 4,163
- ---------------------------------------------------------------------------------------------------------
Deferred income taxes:
Federal (603) (72) 949 1,480 (195)
State (47) (5) 74 116 (16)
- ---------------------------------------------------------------------------------------------------------
Total (650) (77) 1,023 1,596 (211)
- ---------------------------------------------------------------------------------------------------------
Total income taxes $ 2,385 $ 1,290 $ 7,623 $ 6,528 $ 3,952
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The effective income tax rate for each period of 37.4% is comprised
principally of the federal income tax rate of 35% and a state income tax rate of
2.7% (net of federal benefit).
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 are as follows:
<TABLE>
- --------------------------------------------------------------------------------------------------------
<CAPTION>
Three Months Years Ended
Ended March 31, 12 Mos December 31,
---------------- Ended ------------------------
1999 1998 3/31/99 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Depreciation $ (113) $ 40 $ 531 $ 684 $ (1,215)
Inventories (592) (79) 408 921 1,039
Accrued vacation 55 - 84 29 (35)
Allowance for doubtful accounts - (38) - (38) -
- --------------------------------------------------------------------------------------------------------
Total $ (650) $ (77) $ 1,023 $ 1,596 $ (211)
- --------------------------------------------------------------------------------------------------------
</TABLE>
Deferred tax assets and liabilities at March 31, 1999 and December 31,
1998 and 1997, are as follows:
10
<PAGE>
5 LOSS ON PROPERTY DISPOSALS
- --------------------------------------------------------------------------------
Loss on property disposals in 1997 of $2,644 relates principally to the
sale of a plastic films plant in Wentzville, Missouri, following the
consolidation of a portion of its business into the Pottsville plant.
6 ANALYSIS OF RECENT OPERATING RESULTS (UNAUDITED)
- --------------------------------------------------------------------------------
Operating profit (income before income taxes) increased to $6,376, a
record level, in the first quarter of 1999 from $3,448 in the first quarter of
1998, due primarily to higher volume of breathable diaper backsheet film and
packaging film supplied to P&G, and lower costs.
Operating profit increased to $17,455 in 1998 from $10,568 in 1997 due
mainly to:
o The loss on property disposals recognized in 1997 (see Note 5)
o Savings from the consolidation of business from the Wentzville plant into
the Pottsville plant (see Note 5)
o The commercialization and ramp-up of breathable diaper backsheet film
supplied to P&G
11
<PAGE>
INTRODUCTION TO PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
Tredegar Corporation (In Thousands)
Set forth below is certain pro forma consolidated financial information
for Tredegar's acquisition of Exxon Films, and other selected pro forma
financial information for acquisitions made by Tredegar from the beginning of
1998 through the acquisition of Exxon Films. Historical financial information on
Tredegar was excerpted or derived from the audited financial statements
contained in our 1998 Annual Report on Form 10-K and the unaudited financial
statements contained in our Quarterly Report on Form 10-Q for the first quarter
of 1999. The historical information below is qualified in its entirety by
reference to such reports.
On May 17, 1999, Tredegar acquired the assets of Exxon Films for cash
consideration of $203,693 (including estimated transaction costs of $3,693)
using borrowed funds. During the 12 months ended March 31, 1999, Exxon Films had
pro forma revenues of $110,999 and generated pro forma EBITDA (earnings before
interest, taxes, depreciation and amortization and excluding potential
synergies) of $24,618. The asset-purchase structure, unlike a stock-purchase
transaction, allows Tredegar to deduct over time the full value of depreciable
fixed assets and intangibles (goodwill). We estimate the present value of these
tax benefits to be worth $28,000 based on the following assumptions:
o A step-up in the basis of depreciable property, plant and equipment and
intangibles of $119,132, which we estimate will be amortized for tax
purposes over 15 years at $7,942 per year (estimated tax benefits of
$2,994 per year assuming a combined federal and state income tax rate of
37.7%)
o A discount rate of 6.65%, our estimated current average cost of debt and
the rate we believe reflects the low risk that future taxable income will
not be sufficient for the ultimate realization of these benefits
The pro forma consolidated statements of income on pages 14-17 (and
related notes) assume that Tredegar acquired Exxon Films at the beginning of
1998. The pro forma consolidated balance sheet on page 18 (and related notes)
assumes that Tredegar acquired Exxon Films on March 31, 1999. The pro forma
information excludes cost reductions, efficiencies and technology enhancements
expected from the integration of Exxon Films into existing operations. Tredegar
expects that, by 2001, the annual ongoing benefits from these synergies will
range from $7,000 - $9,000.
Other selected pro forma financial information on pages 19-22 (and
related notes) assumes that all of Tredegar's acquisitions from the beginning of
1998 through the acquisition of Exxon Films were made at the beginning of 1998.
In addition to Exxon Films, Tredegar acquired:
o The assets of Therics, Inc. ("Therics") on April 8, 1999
o The stock of Canadian-based Exal Aluminum Inc. ("Exal") on June 11, 1998
o Two Canadian-based aluminum extrusion and fabrication plants from Reynolds
Metals Company ("Reynolds") on February 6, 1998
12
<PAGE>
The assets of Therics were acquired for cash consideration of $13,600
(including transaction costs). Before the acquisition, Tredegar owned
approximately 19 percent of Therics. Upon the final liquidation of the former
Therics, Tredegar will have paid approximately $10,220 to effectively acquire
the remaining 81% ownership interest. Therics is developing a new
microfabrication technology that has potential applications in drug delivery and
a variety of other medical markets. The company's primary focus is on
commercializing its TheriForm(TM) technology, a novel process for manufacturing
tablets, capsules and implantables with drug release profiles that are expected
to provide therapeutic advantages over currently available products. Therics
employs 43 people and is part of our Technology Group, which already includes
Molecumetics, our drug discovery subsidiary, and Tredegar Investments, our
venture capital subsidiary. We plan to recognize a nonrecurring charge of $3,458
in the second quarter of 1999 related to the write-off of in-process research
and development acquired. The amount of the charge was determined through an
independent, third-party analysis.
Exal was acquired for $44,106 (including transaction costs), which was
comprised of:
o Cash consideration of $32,887 ($31,790 net of cash acquired)
o 380,172 shares of Class I non-voting preferred shares of Tredegar's Bon
L Canada subsidiary (the "Class I Shares")
The Class I Shares are exchangeable into shares of Tredegar common
stock on a one-for-one basis. Each Class I Share is economically equivalent to
one share of Tredegar common stock and accordingly accounted for in the same
manner. Tredegar funded the cash portion of the purchase price with available
cash on hand. Exal operates aluminum extrusion plants in Pickering, Ontario and
Aurora, Ontario. Both facilities manufacture extrusions for distribution,
transportation, electrical, machinery and equipment, and building and
construction markets. The Pickering facility also produces aluminum logs and
billet for internal use and for sale to customers.
The former Reynolds plants in Canada were acquired for cash
consideration of $29,093 (including transaction costs) using available cash on
hand. The plants are located in Ste-Therese, Quebec, and Richmond Hill, Ontario.
Both facilities manufacture extruded and fabricated aluminum products used
primarily in building and construction, transportation, electrical, machinery
and equipment, and consumer durables markets.
Each acquisition was accounted for using the purchase method, and
related operating results have been included in Tredegar's consolidated
statements of income since the dates acquired. Excluded from the pro forma
results are synergies expected from the integration of acquired and existing
operations. Accordingly, the pro forma financial information does not purport to
be indicative of the future results or the financial position of Tredegar 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. The
pro forma financial information is unaudited.
13
<PAGE>
<TABLE>
Tredegar Corporation
Pro Forma Statement of Income for the Three Months Ended March 31, 1999 (Unaudited)
(In Thousands, Except Per-Share Amounts)
<CAPTION>
Exxon Films Tredegar
---------------------------------------------
Pro Pro Forma
Forma for Exxon
Tredegar Adjust- Pro Films
Historical Historical ments Forma Acquis.
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 179,541 $ 30,345 $ (814)(1) $ 29,531 $ 209,072
Other income (expense), net 259 - - - 259
------------ ------------ ------------- ------------ ------------
Total 179,800 30,345 (814) 29,531 209,331
------------ ------------ ------------- ------------ ------------
Costs and expenses:
Cost of goods sold 140,239 21,700 26 (2) 21,726 161,965
Selling, general and administrative 11,373 1,702 (85)(3) 1,617 12,990
Research and development 4,097 567 - 567 4,664
Amortization of intangibles 87 - 949 (2) 949 1,036
Interest 289 - 3,341 (4) 3,341 3,630
Unusual items - - - - -
------------ ------------ ------------- ------------ ------------
Total 156,085 23,969 4,231 28,200 184,285
------------ ------------ ------------- ------------ ------------
Income (loss) before income taxes 23,715 6,376 (5,045) 1,331 25,046
Income taxes 8,417 2,385 (1,902)(5) 483 8,900
------------ ------------ ------------- ------------ ------------
Net income (loss) $ 15,298 $ 3,991 $ (3,143) $ 848 $ 16,146
============ ============ ============= ============ ============
Earnings per share:
Basic $ .42 $ .44
Diluted .39 .42
Shares used to compute earnings
per share:
Basic 36,724 36,724
Diluted 38,800 38,800
See accompanying notes to pro forma financial information.
</TABLE>
14
<PAGE>
<TABLE>
Tredegar Corporation
Pro Forma Statement of Income for the Three Months Ended March 31, 1998 (Unaudited)
(In Thousands, Except Per-Share Amounts)
<CAPTION>
Exxon Films Tredegar
---------------------------------------------
Pro Pro Forma
Forma for Exxon
Tredegar Adjust- Pro Films
Historical Historical ments Forma Acquis.
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 156,660 $ 25,156 $ (653)(1) $ 24,503 $ 181,163
Other income (expense), net 1,390 - - - 1,390
------------ ------------ ------------- ------------ ------------
Total 158,050 25,156 (653) 24,503 182,553
------------ ------------ ------------- ------------ ------------
Costs and expenses:
Cost of goods sold 123,088 19,550 187 (2) 19,737 142,825
Selling, general and administrative 8,840 1,674 (85)(3) 1,589 10,429
Research and development 3,347 484 - 484 3,831
Amortization of intangibles 8 - 949 (2) 949 957
Interest 394 - 3,341 (4) 3,341 3,735
Unusual items (765) - - - (765)
------------ ------------ ------------- ------------ ------------
Total 134,912 21,708 4,392 26,100 161,012
------------ ------------ ------------- ------------ ------------
Income (loss) before income taxes 23,138 3,448 (5,045) (1,597) 21,541
Income taxes 5,842 1,290 (1,902)(5) (612) 5,230
------------ ------------ ------------- ------------ ------------
Net income (loss) $ 17,296 $ 2,158 $ (3,143) $ (985) $ 16,311
============ ============ ============= ============ ============
Earnings per share:
Basic $ .48 $ .45
Diluted .44 .42
Shares used to compute earnings
per share:
Basic 36,396 36,396
Diluted 39,000 39,000
</TABLE>
See accompanying notes to pro forma financial information.
15
<PAGE>
<TABLE>
Tredegar Corporation
Pro Forma Statement of Income for the 12 Months Ended March 31, 1999 (Unaudited)
(In Thousands, Except Per-Share Amounts)
<CAPTION>
Exxon Films Tredegar
---------------------------------------------
Pro Pro Forma
Forma for Exxon
Tredegar Adjust- Pro Films
Historical Historical ments Forma Acquis.
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 722,677 $ 114,327 $ (3,328)(1) $ 110,999 $ 833,676
Other income (expense), net 2,884 - - - 2,884
------------ ------------ ------------- ------------ ------------
Total 725,561 114,327 (3,328) 110,999 836,560
------------ ------------ ------------- ------------ ------------
Costs and expenses:
Cost of goods sold 570,335 84,842 439 (2) 85,281 655,616
Selling, general and administrative 42,026 7,092 (340)(3) 6,752 48,778
Research and development 15,252 2,010 - 2,010 17,262
Amortization of intangibles 284 - 3,797 (2) 3,797 4,081
Interest 1,213 - 13,548 (4) 13,548 14,761
Unusual items 664 - - - 664
------------ ------------ ------------- ------------ ------------
Total 629,774 93,944 17,444 111,388 741,162
------------ ------------ ------------- ------------ ------------
Income from continuing operations
before income taxes 95,787 20,383 (20,772) (389) 95,398
Income taxes 33,629 7,623 (7,831)(5) (208) 33,421
------------ ------------ ------------- ------------ ------------
Income from continuing operations $ 62,158 $ 12,760 $ (12,941) $ (181) $ 61,977
============ ============ ============= ============ ===========-
Earnings per share from continuing
operations:
Basic $ 1.71 $ 1.70
Diluted 1.61 1.60
Shares used to compute earnings
per share:
Basic 36,377 36,377
Diluted 38,629 38,629
</TABLE>
See accompanying notes to pro forma financial information.
16
<PAGE>
<TABLE>
Tredegar Corporation
Pro Forma Statement of Income for the Year Ended December 31, 1998 (Unaudited)
(In Thousands, Except Per-Share Amounts)
<CAPTION>
Exxon Films Tredegar
---------------------------------------------
Pro Pro Forma
Forma for Exxon
Tredegar Adjust- Pro Films
Historical Historical ments Forma Acquis.
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 699,796 $ 109,138 $ (3,167)(1) $ 105,971 $ 805,767
Other income (expense), net 4,015 - - - 4,015
------------ ------------ ------------- ------------ ------------
Total 703,811 109,138 (3,167) 105,971 809,782
------------ ------------ ------------- ------------ ------------
Costs and expenses:
Cost of goods sold 553,184 82,692 600 (2) 83,292 636,476
Selling, general and administrative 39,493 7,064 (340)(3) 6,724 46,217
Research and development 14,502 1,927 - 1,927 16,429
Amortization of intangibles 205 - 3,797 (2) 3,797 4,002
Interest 1,318 - 13,548 (4) 13,548 14,866
Unusual items (101) - - - (101)
------------ ------------ ------------- ------------ ------------
Total 608,601 91,683 17,605 109,288 717,889
------------ ------------ ------------- ------------ ------------
Income from continuing operations
before income taxes 95,210 17,455 (20,772) (3,317) 91,893
Income taxes 31,054 6,528 (7,831)(5) (1,303) 29,751
------------ ------------ ------------- ------------ ------------
Income from continuing operations $ 64,156 $ 10,927 $ (12,941) $ (2,014) $ 62,142
============ ============ ============= ============ ============
Earnings per share from continuing
operations:
Basic $ 1.77 $ 1.71
Diluted 1.66 1.61
Shares used to compute earnings
per share:
Basic 36,286 36,286
Diluted 38,670 38,670
</TABLE>
See accompanying notes to pro forma financial information.
17
<PAGE>
<TABLE>
Tredegar Corporation
Pro Forma Consolidated Balance Sheet (Unaudited)
March 31, 1999
(In Thousands)
<CAPTION>
Exxon Films Tredegar
---------------------------------------------
Pro Pro Forma
Forma for Exxon
Tredegar Adjust- Pro Films
Historical Historical ments Forma Acquis.
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 27,991 $ - $ - $ - $ 27,991
Accounts and notes receivable 95,509 12,620 - 12,620 108,129
Inventories 33,670 9,709 5,574 (2) 15,283 48,953
Deferred income taxes 8,800 - - - 8,800
Prepaid expenses and other 2,914 230 - 230 3,144
------------ ------------ ------------- ------------ ------------
Total current assets 168,884 22,559 5,574 28,133 197,017
------------ ------------ ------------- ------------ ------------
Property, plant & equipment, at cost 366,655 100,015 (28,441)(2) 71,574 438,229
Less accumulated depreciation and
amortization 205,633 35,774 (35,774)(2) - 205,633
------------ ------------ ------------- ------------ ------------
Net property, plant & equipment 161,022 64,241 7,333 (2) 71,574 232,596
------------ ------------ ------------- ------------ ------------
Venture capital investments 73,311 - - - 73,311
Other assets and deferred charges 43,689 - (6,275)(2) (6,275) 37,414
Goodwill and other intangibles 32,828 - 113,915 (2) 113,915 146,743
------------ ------------ ------------- ------------ ------------
Total assets $ 479,734 $ 86,800 $ 120,547 $ 207,347 $ 687,081
============ ============ ============= ============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 48,673 $ 2,370 $ - $ 2,370 $ 51,043
Accrued expenses 39,786 1,196 88 (2) 1,284 41,070
Income taxes payable 7,100 - - - 7,100
------------ ------------ ------------- ------------ ------------
Total current liabilities 95,559 3,566 88 3,654 99,213
Long-term debt 25,000 - 203,693 (4) 203,693 228,693
Deferred income taxes 26,016 18,489 (18,489)(2) - 26,016
Other noncurrent liabilities 8,121 - - - 8,121
------------ ------------ ------------- ------------ ------------
Total liabilities 154,696 22,055 185,292 207,347 362,043
------------ ------------ ------------- ------------ ------------
Parent company's net investment - 64,745 (64,745)(2) - -
Shareholders' equity:
Common stock, no par value 96,763 - - - 96,763
Common stock held in trust for
savings restoration plan (1,212) - - - (1,212)
Unrealized gain on available-for-
sale securities 1,311 - - - 1,311
Foreign currency translation (2,423) - - - (2,423)
Retained earnings 230,599 - - - 230,599
------------ ------------ ------------- ------------ ------------
Total shareholders' equity 325,038 - - - 325,038
------------ ------------ ------------- ------------ ------------
Total liabilities and
shareholders' equity $ 479,734 $ 86,800 $ 120,547 $ 207,347 $ 687,081
============ ============ ============= ============ ============
</TABLE>
See accompanying notes to pro forma financial information.
18
<PAGE>
<TABLE>
Tredegar Corporation
Other Selected Pro Forma Financial Information for the Three Months Ended March 31, 1999
(Unaudited)
(In Thousands, Except Per-Share Amounts)
<CAPTION>
Pro Forma Adjustments
-------------------------------------------------
Pro Pro
Forma Pro Forma
Exxon Forma Aluminum
Films Therics Extrusion Tredegar
Tredegar Acquisi- Acquisi- Acquisi- Pro
Historical tion (6) tion (7) tions (8) Forma
------------ ---------- - --------- ----------- - -----
<S> <C> <C> <C> <C> <C>
Other financial information
excluding venture capital activities
and unusual items:
Net sales $ 179,541 $ 29,531 $ 24 $ - $ 209,096
Earnings before interest and taxes
(EBIT) 24,070 4,672 (2,046) - 26,696
Earnings before interest, taxes,
depreciation and amortization
(EBITDA) 29,905 7,544 (1,649) - 35,800
Depreciation 5,748 1,923 174 - 7,845
Amortization of intangibles 87 949 223 - 1,259
Capital expenditures 10,075 760 217 - 11,052
Net income:
Manufacturing operations $ 16,095 $ 848 $ - $ - $ 16,943
Technology:
Operating companies (547) - (1,388) - (1,935)
Venture capital investments (250) - - - (250)
Unusual items - - - - -
Discontinued operations - - - - -
------------ ------------ ------------- ------------ ------------
Total $ 15,298 $ 848 $ (1,388) $ - $ 14,758
============ ============ ============= ============ ============
Diluted earnings per share:
Manufacturing operations $ .41 $ .44
Technology:
Operating companies (.01) (.05)
Venture capital investments (.01) (.01)
Unusual items - -
Discontinued operations - -
------------ ------------
Total $ .39 $ .38
============ ============
Shares used to compute diluted
earnings per share 38,800 38,800
</TABLE>
See accompanying notes to pro forma financial information.
19
<PAGE>
<TABLE>
Tredegar Corporation
Other Selected Pro Forma Financial Information for the Three Months Ended March 31, 1998
(Unaudited)
(In Thousands, Except Per-Share Amounts)
Pro Forma Adjustments
-------------------------------------------------
Pro Pro
Forma Pro Forma
Exxon Forma Aluminum
Films Therics Extrusion Tredegar
Tredegar Acquisi- Acquisi- Acquisi- Pro
Historical tion (6) tion (7) tions (8) Forma
------------ ---------- ----------- ----------- - -----
<S> <C> <C> <C> <C> <C>
Other financial information
excluding venture capital activities
and unusual items:
Net sales $ 156,660 $ 24,503 $ 23 $ 28,673 $ 209,859
Earnings before interest and taxes
(EBIT) 20,976 1,744 (2,031) 434 21,123
Earnings before interest, taxes,
depreciation and amortization
(EBITDA) 25,840 4,600 (1,701) 1,193 29,932
Depreciation 4,856 1,907 107 679 7,549
Amortization of intangibles 8 949 223 80 1,260
Capital expenditures 5,704 1,289 316 98 7,407
Net income:
Manufacturing operations $ 14,688 $ (985) $ - $ (149) $ 13,554
Technology:
Operating companies (590) - (1,390) - (1,980)
Venture capital investments 432 - - - 432
Unusual items 2,766 - (2,213) - 553
Discontinued operations - - - - -
------------ ------------ ------------- ------------ ------------
Total $ 17,296 $ (985) $ (3,603) $ (149) $ 12,559
============ ============ ============= ============ ============
Diluted earnings per share:
Manufacturing operations $ .38 $ .34
Technology:
Operating companies (.02) (.05)
Venture capital investments .01 .01
Unusual items .07 .02
Discontinued operations - -
------------ ------------
Total $ .44 $ .32
============ ============
Shares used to compute diluted
earnings per share 39,000 39,380
</TABLE>
See accompanying notes to pro forma financial information.
20
<PAGE>
<TABLE>
Tredegar Corporation
Other Selected Pro Forma Financial Information for the 12 Months Ended March 31, 1999 (Unaudited)
(In Thousands, Except Per-Share Amounts)
<CAPTION>
Pro Forma Adjustments
-------------------------------------------------
Pro Pro
Forma Pro Forma
Exxon Forma Aluminum
Films Therics Extrusion Tredegar
Tredegar Acquisi- Acquisi- Acquisi- Pro
Historical tion (6) tion (7) tions (8) Forma
------------ ---------- - --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Other financial information
excluding venture capital activities
and unusual items:
Net sales $ 722,677 $ 110,999 $ 66 $ 17,126 $ 850,868
Earnings before interest and taxes
(EBIT) 96,627 13,159 (8,975) 1,096 101,907
Earnings before interest, taxes,
depreciation and amortization
(EBITDA) 120,042 24,618 (7,442) 1,568 138,786
Depreciation 23,131 7,662 642 408 31,843
Amortization of intangibles 284 3,797 891 64 5,036
Capital expenditures 38,387 2,774 1,101 255 42,517
Net income:
Manufacturing operations $ 65,344 $ (181) $ - $ 439 $ 65,602
Technology:
Operating companies (2,473) - (6,098) - (8,571)
Venture capital investments (288) - - - (288)
Unusual items (425) - - - (425)
Discontinued operations 4,713 - - - 4,713
------------ ------------ ------------- ------------ ------------
Total $ 66,871 $ (181) $ (6,098) $ 439 $ 61,031
============ ============ ============= ============ ============
Diluted earnings per share:
Manufacturing operations $ 1.69 $ 1.70
Technology:
Operating companies (.06) (.22)
Venture capital investments (.01) (.01)
Unusual items (.01) (.01)
Discontinued operations .12 .12
------------ ------------
Total $ 1.73 $ 1.58
============ ============
Shares used to compute diluted
earnings per share 38,629 38,704
</TABLE>
See accompanying notes to pro forma financial information.
21
<PAGE>
<TABLE>
Tredegar Corporation
Other Selected Pro Forma Financial Information for the Year Ended December 31, 1998 (Unaudited)
(In Thousands, Except Per-Share Amounts)
<CAPTION>
Pro Forma Adjustments
-------------------------------------------------
Pro Pro
Forma Pro Forma
Exxon Forma Aluminum
Films Therics Extrusion Tredegar
Tredegar Acquisi- Acquisi- Acquisi- Pro
Historical tion (6) tion (7) tions (8) Forma
------------ ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Other financial information
excluding venture capital activities
and unusual items:
Net sales $ 699,796 $ 105,971 $ 65 $ 45,799 $ 851,631
Earnings before interest and taxes
(EBIT) 93,533 10,231 (8,960) 1,530 96,334
Earnings before interest, taxes,
depreciation and amortization
(EBITDA) 115,977 21,674 (7,494) 2,761 132,918
Depreciation 22,239 7,646 575 1,087 31,547
Amortization of intangibles 205 3,797 891 144 5,037
Capital expenditures 34,016 3,303 1,200 353 38,872
Net income:
Manufacturing operations $ 63,937 $ (2,014) $ - $ 290 $ 62,213
Technology:
Operating companies (2,516) - (6,100) - (8,616)
Venture capital investments 394 - - - 394
Unusual items 2,341 - (2,213) - 128
Discontinued operations 4,713 - - - 4,713
------------ ------------ ------------- ------------ ------------
Total $ 68,869 $ (2,014) $ (8,313) $ 290 $ 58,832
============ ============ ============= ============ ============
Diluted earnings per share:
Manufacturing operations $ 1.66 $ 1.60
Technology:
Operating companies (.07) (.22)
Venture capital investments .01 .01
Unusual items .06 -
Discontinued operations .12 .12
------------ ------------
Total $ 1.78 $ 1.51
============ ============
Shares used to compute diluted
earnings per share 38,670 38,839
</TABLE>
See accompanying notes to pro forma financial information.
22
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Tredegar Corporation (In Thousands)
(1) Represents adjustment to reclassify freight costs of Exxon Films from
cost of goods sold to net sales consistent with Tredegar's classification system
(2) The pro forma adjustments to cost of goods sold for the acquisition of
Exxon Films are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Three Months 12 Mos. Yr. Ended
Ended March 31, Ended Dec. 31,
------------------------------
1999 1998 3/31/99 1998
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Higher depreciation expense due to the:
Net write-up of property, plant and
equipment to estimated fair value
and the effect of changes to
remaining depreciation lives $ 670 $ 670 $ 2,679 $ 2,679
Estimated depreciation on replacement
computers to resolve Year 2000
information technology issues
(see further discussion below) 95 95 380 380
Expected higher employee benefit
expenses under Tredegar employee
benefit programs 75 75 708 708
Reclass of freight costs to net sales (814) (653) (3,328) (3,167)
- ------------------------------------------------------------------------------------------------------------
Total pro forma adjustment to cost of
goods sold $ 26 $ 187 $ 439 $ 600
- ------------------------------------------------------------------------------------------------------------
</TABLE>
For purposes of allocating the purchase price for Exxon Films among
various assets acquired and liabilities assumed, we have estimated the
respective asset and liability fair values pending completion of final
valuation. As a result of a preliminary valuation, the allocation of the
purchase price to the net assets acquired and goodwill are as follows:
- -------------------------------------------------------------------------------
Estimated net assets of Exxon Films on acquisition date
(balance at March 31, 1999) $ 64,745
Adjustments to reflect net assets at estimated fair value:
Write-up of inventory from LIFO value to estimated
replacement cost 5,574
Write-up of property, plant and equipment to estimated
fair value 7,333
Pension obligation assumed for certain benefit credits granted
to former employees of Exxon Films upon their hiring and
immediate participation in Tredegar's pension plans (6,275)
Other adjustment to accrued liabilities (88)
Elimination of deferred income taxes due to step-up in
tax basis of net assets to estimated fair value 18,489
Goodwill (to be amortized on a straight-line basis over 30 years
at $3,797 per year) 113,915
- -------------------------------------------------------------------------------
Total purchase price and value of net assets acquired $203,693
- -------------------------------------------------------------------------------
23
<PAGE>
The estimated fair value and weighted average remaining useful lives of
property, plant and equipment for Exxon Films are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Estimated Weighted
Average Remaining
Exxon Films Property, Plant and Equipment Amount Useful Life
<S> <C> <C>
Estimated fair value on acquisition date:
Land $ 2,179
Land improvements 413 10.4 years
Buildings 9,300 20 years
Machinery and equipment 58,877 9 years
Furniture and fixtures 339 4.1 years
Computers 371 3.2 years
Vehicles 95 3.7 years
- -----------------------------------------------------------------------------------------------------------
Total 71,574
Estimated net book value of property, plant and equipment for
Exxon Films on acquisition date (balance at March 31, 1999) 64,241
- -----------------------------------------------------------------------------------------------------------
Estimated write-up of property, plant and equipment to
estimated fair value $ 7,333
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The computer systems for Exxon Films are not Year 2000 compliant.
Tredegar plans to replace non-compliant systems (including internal
computer-based information systems, communications equipment and shop floor
machines) and integrate the business into the enterprise-wide systems
infrastructure of Tredegar Film Products. Tredegar expects to complete all
remediation efforts by the end of 1999 at a cost of approximately $1,900, most
of which will be capitalized and amortized over the estimated useful life of
related assets.
(3) The pro forma adjustment to selling, general and administrative expenses
relates to the elimination of salaries and benefits associated with employees of
Exxon Films that were not hired and will not be replaced by Tredegar.
(4) Tredegar borrowed money under its $275,000 revolving credit facility to fund
its acquisition of Exxon Films. The borrowings are currently being rolled over
each month at relatively low floating rates while we review long-term financing
options to maintain our available credit at about $275,000. We are considering
using interest-rate swaps or other derivative instruments to fix the interest
rate for several years on a portion of our acquisition financing.
The pro forma adjustment to interest expense assumes an annual weighted
average interest rate of 6.65% on the total acquisition cost of $203,693. This
rate was determined using market rates as of June 22, 1999, assuming a 50/50
split of floatingand fixed- rate debt with the floating portion priced at 6.02%
and the fixed portion (assumed fixed for 5 years with an interest rate swap)
priced at 7.28%.
(5) The pro forma adjustment to income taxes for the acquisition of Exxon Films
was made at an estimated combined federal and state income tax rate of 37.7%.
Since the acquisition was structured as an asset purchase, goodwill is
deductible for tax purposes on a straight-line basis over 15 years.
24
<PAGE>
(6) The pro forma adjustments for Exxon Films included in the other selected pro
forma financial information presented on pages 19-22 were derived from the
historical and pro forma financial information presented on pages 4-18.
(7) The pro forma adjustments for the purchase of the assets of Therics included
in the other selected pro forma financial information on pages 19-22 were based
on the following:
o Historical operating results of Therics for the periods presented
o An allocation of the purchase price to the assets acquired and
depreciation and amortization rates as follows:
o Assumed interest income foregone by Tredegar on the cash used to fund
the acquisition of 4.9% for the first quarter of 1999, 5.6% for the
first quarter of 1998, 5.43% for the 12 months ended March 31, 1999,
and 5.6% for all of 1998
o An estimated combined federal and state income tax rate of 36% and the
deductibility of intangibles for tax purposes on a straight-line basis
over 15 years
(8) The pro forma adjustments for the aluminum extrusion acquisitions included
in the other selected pro forma financial information on pages 19-22 were
derived from:
o The information contained in our Quarterly Report on Form 10-Q for the
first quarter of 1999
o The information contained in our 1998 Annual Report on Form 10-K
o The related pro forma information contained in our Form 8-K/A filed on
August 19, 1998
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TREDEGAR CORPORATION
Date: June 24, 1999 By: /s/ N. A. Scher
---------------- -----------------------------------
Norman A. Scher
Executive Vice President
