Notes to Financial Statements
December 31, 2018 and 2017
NOTE 1.
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DESCRIPTION OF PLAN
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General
Tredegar Corporation (Tredegar), which is engaged directly in the manufacturing of plastic films and aluminum extrusions, is a Virginia corporation. The Tredegar Corporation Retirement Savings
Plan (Plan) was adopted by the Board of Directors of Tredegar on June 14, 1989 and the Plan was effective as of July 1, 1989.
Effective June 19, 2015, AACOA, Inc. 401(k) Profit Sharing Plan merged into the Tredegar Corporation Retirement Savings Plan. AACOA, Inc. is a wholly owned subsidiary of The William L. Bonnell
Company, Inc. which is a wholly owned subsidiary of Tredegar.
The Plan is subject to Titles I, II and III and is exempt from Title IV of the Employee Retirement Income Security Act of 1974 (ERISA). Title IV of ERISA provides for federally sponsored
insurance for plans that terminate with unfunded benefits. No such insurance is provided to participants in this Plan; however, because the benefits that participants are entitled to receive are always equal to the value of their account
balances, the Plan is always fully funded. The value of a participant’s account may change from time to time. Each participant assumes the risk of fluctuations in the value of his or her account.
The Plan is a defined contribution plan. Information regarding plan benefits and vesting is provided in the Plan and related documents, which are available at Tredegar’s main office at 1100
Boulders Parkway, Richmond, Virginia.
The Plan is administered by the Company. Plan assets were held by Great-West Trust Company, LLC through April 30, 2018. Effective May 1, 2018, Plan assets were transferred to Fidelity Management
Trust Company (“Fidelity”), the new trustee of the Plan.
NOTE 2.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Basis of Accounting
The financial statements of the Plan are prepared on the accrual basis of accounting.
TREDEGAR CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2018 and 2017
NOTE 2.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
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Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results may differ from those estimates.
Investment Valuation and Income Recognition
Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. See Note 4 for discussion of fair value measurements.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net
(depreciation) appreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest.
Interest income is recorded on the accrual
basis.
No allowance for credit losses has been recorded as of December 31, 2018 or 2017. If a participant ceases to make loan repayments and the plan
administrator deems the participant loan to be in default, the
participant loan balance is reduced and a benefit payment is recorded.
Payment of Benefits
Benefits are recorded when paid.
Administrative Expenses
The Plan was responsible for all trustee and investment management fees. Effective July 1, 2017, participants are charged a pro-rated per-participant fee. For the periods July 1, 2017 to April
30, 2018 and May 1, 2018 to December 31, 2018, the per participant fee was $77.00 (0.12%) and $82.00 (0.12%), respectively. To cover additional expenses, for the period July 1, 2017 to April 30, 2018, participants were also charged 0.04% of
annual plan-related expenses. Tredegar also pays for other administrative expenses up to an annual limit of $75,000. Any expenses in excess of this limit are paid by the Plan.
TREDEGAR CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2018 and 2017
NOTE 3.
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CONTRIBUTIONS AND INVESTMENT OPTIONS
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A participant may contribute a percentage of his or her eligible base pay (as defined) ranging from a minimum of 0.1% (one-tenth of one percent) to 75%. Effective May 1, 2018, the minimum
pre-tax elections is 0.5%. The 2018 and 2017 Tredegar matching contribution was $1.00 for every $1.00 a participant contributed up to 5% each payroll period.
With the exception of participants covered under certain collective bargaining agreements, employees are automatically enrolled in the Plan with a pre-tax contribution equal to 3% of base pay
invested in the age appropriate target fund and automatically increased in the succeeding plan year until the contribution level is equal to 5% of base pay. Employees have the choice to waive automatic enrollment as well as automatic increase
and contribute more or less in their choice of investment funds.
Participants direct the investment of their contributions into various investment options offered by the Plan. The Plan currently offers twenty-four (24) mutual funds, one (1) common collective
trust and a self-directed brokerage window as investment options to participants.
All employer matching contributions are allocated according to the participant’s investment direction. If no selection is made, 100% is allocated to the applicable JPMorgan SmartRetirement target
date fund; the Plan’s default funds, based on the participant’s age and an estimated retirement age of 65. The Plan Sponsor may also make an additional discretionary match, to be determined by the Board of Directors. There were no such
discretionary contributions for the years ended December 31, 2018 and 2017, respectively.
TREDEGAR CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2018 and 2017
NOTE
4.
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FAIR VALUE MEASUREMENTS
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Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820,
Fair Value Measurement,
provides the framework for measuring
fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:
Level 1
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the
ability to access.
Level 2
Inputs to the valuation methodology include:
|
•
|
quoted prices for similar assets or liabilities in active markets;
|
|
•
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quoted prices for identical or similar assets or liabilities in inactive markets;
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|
•
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inputs other than quoted prices that are observable for the asset or liability;
|
|
•
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inputs that are derived principally from or corroborated by observable market data by correlation or other means.
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If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation
techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2018 and 2017.
Money Market Fund:
Valued at market price, which is equivalent to $1 per unit.
Mutual funds
: Valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are open-end mutual funds that are registered with
the Securities and Exchange Commission (SEC). These funds are required to publish their daily net asset value (NAV) and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded.
Common stock
: Valued at closing price reported on the active market on which the individual securities are traded.
TREDEGAR CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2018 and 2017
NOTE 4.
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FAIR VALUE MEASUREMENTS, Continued
|
Interest-bearing cash:
Valued at 100% of recorded amount.
Self-directed brokerage account:
Valued at the closing price reported on the active market on which the individual securities are
traded.
Common/collective trust:
A fund that is composed primarily of fully benefit-responsive investment contracts that is valued at the
NAV of units of a bank collective trust. The NAV, as provided by the trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the funds less its liabilities. This
practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV.
The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore,
although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a
different fair value measurement at the reporting date.
The following tables summarize financial assets measured at fair value on a recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy
utilized to measure fair value, as of December 31, 2018 and 2017, respectively:
Assets Measured at Fair Value on a Recurring Basis at December 31, 2018
|
|
|
|
|
|
|
|
|
|
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Level 1
|
|
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Total
|
|
Money market fund
|
|
$
|
516,823
|
|
|
$
|
516,823
|
|
Mutual funds
|
|
|
94,582,283
|
|
|
|
94,582,283
|
|
Common stocks
|
|
|
14,297,299
|
|
|
|
14,297,299
|
|
Self-Directed Brokerage
|
|
|
2,620,047
|
|
|
|
2,620,047
|
|
Total assets in the fair value hierarchy
|
|
$
|
112,016,452
|
|
|
|
112,016,452
|
|
Investments measured at NAV
|
|
|
|
|
|
|
3,951,419
|
|
Total investments at fair value
|
|
|
|
|
|
$
|
115,967,871
|
|
TREDEGAR CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2018 and 2017
NOTE 4.
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FAIR VALUE MEASUREMENTS, Continued
|
Assets Measured at Fair Value on a Recurring Basis at December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Total
|
|
Mutual funds
|
|
$
|
106,562,209
|
|
|
$
|
106,562,209
|
|
Common stocks
|
|
|
21,457,919
|
|
|
|
21,457,919
|
|
Interest-bearing cash
|
|
|
70,857
|
|
|
|
70,857
|
|
Self-Directed Brokerage
|
|
|
1,982,359
|
|
|
|
1,982,359
|
|
Total assets in the fair value hierarchy
|
|
$
|
130,073,344
|
|
|
|
130,073,344
|
|
Investments measured at NAV
|
|
|
|
|
|
|
5,388,010
|
|
Total investments at fair value
|
|
|
|
|
|
$
|
135,461,354
|
|
The Plan did not hold any Level 2 or Level 3 investments as of December 31, 2018 and 2017.
Fair Value of Investments in Entities that Use NAV
The following tables summarize investments measured at fair value based on NAV per share at December 31, 2018 and 2017, respectively.
December 31, 2018
|
Fair Value
|
Unfunded
Commitments
|
Redemption
Frequency
|
Redemption
Notice Period
|
Common Collective Trust - Galliard Retirement Income Fund 45
(1)
|
$ 3,951,419
|
N/A
|
Daily or monthly
|
None or 5 days
|
December 31, 2017
|
Fair Value
|
Unfunded
Commitments
|
Redemption
Frequency
|
Redemption
Notice Period
|
Common Collective Trust - Galliard Retirement Income Fund 45
(1)
|
$ 5,388,010
|
N/A
|
Daily or monthly
|
None or 5 days
|
(1)
Galliard Retirement Income Fund is
an open-end fund incorporated in the United States. The Fund seeks to provide safety of principal, adequate liquidity and competitive yield with low return volatility. The Fund will be invested in the Galliard Managed Income Fund.
TREDEGAR CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2018 and 2017
Employees who leave Tredegar before becoming fully vested in Tredegar contributions forfeit the value of the nonvested portion of the Tredegar contribution account. At December 31, 2018 and
2017, forfeited nonvested accounts available to reduce employer contributions totaled $7,453 and $70,857, respectively. These accounts will be used to reduce future employer contributions. Employee forfeitures were $548 during 2018 and $7,526
during 2017. In 2018 and 2017, employer contributions were reduced by $28,914 and $3,352, respectively, from forfeited nonvested accounts, and $53,133 and $31,552, respectively, were offset to administrative expenses.
NOTE 6.
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RELATED PARTY AND PARTY IN INTEREST TRANSACTIONS
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Certain fees incurred by the Plan for the investment management services are included in net (depreciation) appreciation in fair value of the investment, as they are paid
through revenue sharing, rather than a direct payment.
Certain Plan investments are shares of stock in Tredegar. Tredegar is the plan sponsor as defined by the Plan and, therefore, these transactions qualify as related party
transactions.
The Plan also issues loans to participants, which are secured by the vested balances in the participant’s accounts.
NOTE 7.
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INCOME TAX STATUS
|
The Plan received its latest determination letter on February 28, 2018, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable
requirements of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in
compliance with the applicable requirements of the IRC. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
U.S. GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain tax position that more likely than not
would not be sustained upon examination by the taxing authorities. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits in progress for any periods.
TREDEGAR CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2018 and 2017
NOTE 8.
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RISKS AND UNCERTAINTIES
|
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with
certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts
reported in the statements of net assets available for benefits.
NOTE 9.
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RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
|
|
|
2018
|
|
|
2017
|
|
Net assets available for benefits per financial statements
|
|
$
|
118,775,205
|
|
|
$
|
138,520,777
|
|
Adjustment for deemed distributed loans current year
|
|
|
(21,290
|
)
|
|
|
(13,235
|
)
|
|
|
|
|
|
|
|
|
|
Net assets available for benefits per the Form 5500
|
|
$
|
118,753,915
|
|
|
$
|
138,507,542
|
|
|
|
|
|
|
|
|
|
|
Total (reductions) additions per financial statements
|
|
$
|
712,415
|
|
|
$
|
20,999,694
|
|
Adjustment for deemed distributed loans current year
|
|
|
-
|
|
|
|
(193
|
)
|
|
|
|
|
|
|
|
|
|
Adjustment for corrective distributions current year
|
|
|
214,131
|
|
|
|
107,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income per Form 5500
|
|
$
|
926,546
|
|
|
$
|
21,106,670
|
|
|
|
|
|
|
|
|
|
|
Total deductions per financial statement
|
|
$
|
20,457,987
|
|
|
$
|
11,574,211
|
|
|
|
|
|
|
|
|
|
|
Adjustment for corrective distributions current year
|
|
|
214,131
|
|
|
|
107,169
|
|
|
|
|
|
|
|
|
|
|
Adjustment for deemed distributed loans current year
|
|
|
8,055
|
|
|
|
13,235
|
|
|
|
|
|
|
|
|
|
|
Total expenses per form 5500
|
|
$
|
20,680,173
|
|
|
$
|
11,694,615
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase per financial statements
|
|
$
|
(19,745,572
|
)
|
|
$
|
9,425,483
|
|
|
|
|
|
|
|
|
|
|
Adjustment for deemed distributed loans current year
|
|
|
(8,055
|
)
|
|
|
(13,235
|
)
|
|
|
|
|
|
|
|
|
|
Transfers of assets to the plan current year
|
|
|
-
|
|
|
|
31,155
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per Form 5500
|
|
$
|
(19,753,627
|
)
|
|
$
|
9,443,403
|
|
TREDEGAR CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2018 and 2017
NOTE 10.
|
PLAN TERMINATION
|
Although it has not expressed any intent to do so, Tredegar has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of
ERISA. In the event of Plan termination, participants would become 100% vested in their employer contributions.
NOTE 11.
|
SUBSEQUENT EVENTS
|
The Plan has evaluated all events through the date these financial statements were available to be issued. The Plan has determined that the events discussed below require disclosure pursuant to
the FASB ASC.
Effective January 1, 2019, the Plan was amended to make the Plan a safe harbor 401k and all regular after-tax contributions were eliminated. Also, an additional annual plan related expense of
0.03% was added as a per participant pro-rated fee to help offset plan expenses.