•Tredegar’s performance is influenced by costs incurred by its operating companies, including, for example, the cost of raw materials and energy. These costs include ~~without limitation,~~ the cost of aluminum (the raw material on which Aluminum Extrusions primarily depends), resin (the raw material on which PE Films primarily depends), PTA and MEG (the raw materials on which Flexible Packaging Films primarily depends), ~~aluminum (the raw material on which Aluminum Extrusions primarily depends),~~ natural gas (the principal fuel necessary for Aluminum Extrusions’ plants to operate), electricity, diesel fuel and ~~diesel fuel. Resin, aluminum~~paint. Aluminum, resin and natural gas prices are ~~extremely~~ volatile as shown in the charts in ~~the~~ Quantitative and Qualitative Disclosures~~section.~~ in Item 7. The Company continues to face inflationary pressures stemming from the COVID-19 operating environment, including notable increases in costs for raw materials, labor and freight. Additionally, geopolitical tensions, including deteriorating relations between the United States and Russia

resulting from the current situation involving Russia and Ukraine, could result in economic sanctions, tariffs, import-export restrictions and retaliatory actions that all have the potential to adversely impact the cost of raw materials and energy. The Company attempts to mitigate the effects of increased costs through price increases and contractual pass-through provisions, but there are no assurances that higher prices can effectively be passed through to customers or that Tredegar will be able to offset fully or on a timely basis the effects of higher raw material and energy costs through price increases or pass-through arrangements. Further, the Company’s cost control efforts may not be sufficient to offset any increases in raw material, energy or other costs.

•Material disruptions at one of the Company’s major manufacturing facilities could negatively impact financial results. Tredegar believes it has implemented measures to minimize the risks of disruption at its facilities. However, a disruption could occur as a result of any number of events: an equipment failure with repairs requiring long lead times, labor stoppages or shortages, cybersecurity attacks, utility disruptions, constraints on the supply or delivery of critical raw materials, and severe weather conditions, including potential flooding at the Aluminum Extrusions facility located in Carthage, TN. A material disruption in one of the Company’s operating locations could negatively impact production and the Company’s consolidated financial condition, results of operations and cash flows.

•Tredegar has an underfunded defined benefit (pension) plan. Tredegar sponsors a pension plan that covers certain hourly and salaried employees in the U.S. The plan was closed to new participants in 2007, and substantially frozen to benefit accruals for active participants in 2014. As of January 31, 2018, the plan no longer accrued benefits associated with crediting employees for service, thereby freezing all future benefits under the plan. On February 10, 2022, Tredegar announced the initiation of a process to terminate and settle its frozen defined benefit pension plan, which could take up to 24 months to complete. In connection therewith, on February 9, 2022, the Company borrowed funds under its revolving credit agreement to contribute $50 million to the pension plan (the “Special Contribution”) to reduce its underfunding and as part of a program within the pension plan to hedge or fix the expected future contributions that will be needed by the Company through the settlement process. As of December 31, 2021 (and before the Special Contribution), the plan was underfunded under U.S. generally accepted accounting principles (“GAAP”) measures by $69.5 million. The Company estimates that, with the Special Contribution, there will be no required minimum contributions to the pension plan until final settlement. The ultimate settlement benefit obligation may differ from the projected benefit obligation (“PBO”) of $314 million as of December 31, 2021, depending on market factors for buyers of pension obligations at the time of settlement. Additionally, factors that could cause actual future contributions by the Company to settle the pension plan to differ from expectations include, without limitation, the change in the values of pension plan assets and liabilities up through initiating hedging activities to fix underfunding amounts and assumptions thereafter relating to differences between the ultimate settlement benefit obligation and the PBO, census data, administrative costs, the effectiveness of hedging activities and discounts required to liquidate non-public securities held by the plan.

•Noncompliance with any of the covenants in the Company’s $375 million revolving credit facility, as amended on December 1, 2020, which matures in June 2024, could result in all debt under the agreement outstanding at such time becoming due and limiting the Company’s borrowing capacity, which could have a material adverse effect on its consolidated financial condition and liquidity. The credit agreement governing Tredegar’s revolving credit facility contains restrictions and financial covenants that, if violated, could restrict the Company’s operational and financial flexibility. Failure to comply with these covenants could result in an event of default, which if not cured or waived, would result in all outstanding debt under the credit facility at such time becoming due, which could have a material adverse effect on the Company’s consolidated financial condition and liquidity.

•A failure in the Company’s information technology systems as a result of cybersecurity attacks or other causes could negatively affect Tredegar’s business. The Company depends on information technology (“IT”) to record and process customers’ orders, manufacture and ship products in a timely manner, secure its production processes and know-how, maintain the financial accuracy of its business records and maintain personally identified information of its employees. An IT system failure due to computer viruses, internal or external security breaches, cybersecurity attacks or other malicious causes could disrupt our operations and prevent us from being able to process transactions with our customers, operate our manufacturing facilities and properly report transactions in a timely manner. Increased global IT security threats and cyber-crime pose a potential risk to the security and availability of the Company’s IT systems, networks and services, including those that are managed, hosted, provided or used by third parties, as well as to the confidentiality, availability and integrity of the Company’s data. Additionally, increased cybersecurity risk arises due to certain employees working remotely during the COVID-19 pandemic. To date, interruptions of the Company’s IT systems have been infrequent and have not had a material impact on the Company’s operations. A significant protracted failure of or security breach of the IT systems, networks or service providers the Company relies upon, or a loss or disclosure of business or other sensitive information, or personally identified information, as a result of a cybersecurity incident or other cause, could result in substantial costs to the Company, damage to the Company’s reputation, regulatory enforcement actions and lawsuits and could adversely affect the Company’s results of operations, financial condition or cash flows.

•The Company has identified material weaknesses in its internal control over financial reporting. The Company’s failure to establish and maintain effective internal control over financial reporting and to maintain effective disclosure controls and procedures increases the risk of a material misstatement in its consolidated financial statements, and its failure to meet its reporting and financial obligations, could, in turn, have a negative impact on its financial condition. Maintaining effective internal control over financial reporting is an integral part of producing reliable financial statements. As discussed in Item 9A. “Controls and Procedures” of this Form 10-K (“Item 9A”), the Company’s management concluded that the Company’s internal control over financial reporting was not effective for the periods referred to therein as a result of certain deficiencies that were determined to constitute material weaknesses in the Company’s internal control over financial reporting.

~~Tredegar may~~Under standards established by the Public Company Accounting Oversight Board, a material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be ~~able~~prevented or detected on a timely basis. Under the criteria set forth in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission, a material weakness in the design of monitoring controls indicates that the Company has not sufficiently developed and/or documented internal controls by which management can review and oversee the Company’s financial information to ~~successfully integrate strategic acquisitions.~~ ~~Acquisitions, including our recent acquisition~~detect and correct material errors or that the personnel responsible for performing the review did not have the sufficient skill set or knowledge of ~~Futura, involve special risks, including, without limitation, meeting revenue, margin, working capital~~the subject matter to perform a proper assessment.

The Company is in the process of making certain changes in its internal control over financial reporting to remediate the material weaknesses as described in Item 9A. The implementation of the material aspects of this plan began in the second quarter of 2019 with the continuous significant assistance and ~~capital expenditure expectations~~support of a well-known outside consultant, and, while meaningful progress has been made, completion has been delayed by the COVID-19 pandemic, turnover in positions relevant to internal controls and the need for additional training. As the Company continues to evaluate and work to improve its internal control over financial reporting and disclosure controls and procedures, management may determine to take additional measures to address control deficiencies or modify the remediation plan. The Company cannot provide assurance, however, as to when it will remediate all such weaknesses, nor can it be certain of whether additional actions will be required or the costs of any such actions. Moreover, the Company cannot provide assurance that ~~substantially drive valuation, diversion~~additional material weaknesses will not arise in the future.

See Item 9A for details regarding the numerous activities in the remediation plan that were completed through the fourth quarter of 2021 and the remaining activities that are scheduled for completion in the first half of 2022, in anticipation of conducting management’s testing beginning in the first half of 2022. The material weaknesses cannot be considered remediated until the applicable controls have operated for a sufficient period of time and ~~attention from existing businesses,~~management has concluded, through testing, that these controls are operating effectively.

The material weaknesses discussed in Item 9A did not result in material misstatements of the ~~potential assumption~~Company’s financial statements as of ~~unanticipated liabilities~~ and ~~contingencies~~for the years ended December 31, 2021, 2020 and ~~potential difficulties~~2019 or in ~~integrating acquired businesses~~the intervening interim periods during those respective years. Any failure to remediate the material weaknesses, or the development of new material weaknesses in its internal control over financial reporting, could result in material misstatements in the Company’s consolidated financial statements and ~~achieving anticipated operational improvements. Acquired businesses may not achieve expected results.~~

cause it to fail to meet its reporting and financial obligations, which in turn could have a negative impact on its financial condition.

•Tredegar is subject to ~~various~~current and future governmental regulation, including environmental laws and regulations, and could become exposed to material liabilities and costs associated with such ~~laws.~~regulation. The Company is subject to ~~various environmental obligations~~regulation by local, state, federal and ~~could become subject to additional obligations in the future. Changes in environmental~~foreign governmental authorities. New laws and regulations, or ~~their application,~~changes to existing laws, including ~~but not limited to,~~ those relating to environmental matters (including global climate change and plastic products), and privacy matters, could subject Tredegar to significant additional capital expenditures, ~~and~~ operating ~~expenses.~~expenses or other compliance costs. Moreover, future developments in federal, state, local and international ~~environmental~~ laws and regulations, including environmental laws, are difficult to predict. Environmental laws and privacy restrictions have become and are expected to continue to become increasingly strict. As a result, Tredegar expects to be subject to new environmental and privacy laws and regulations. However, any such changes are uncertain and, therefore, it is not possible for the Company to predict with certainty the amount of additional capital expenditures or operating expenses that could be necessary for compliance with respect to any such changes.

The Company is subject to the U.S. Foreign Corrupt Practices Act, Brazilian anti-corruption laws and similar anti-bribery laws in other jurisdictions, which generally prohibit companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business. Although we have policies and procedures designed to facilitate compliance with these laws and regulations, our employees, contractors and agents may take actions in violation of our policies. Any such violation, even if prohibited by our policies, could adversely affect our business and/or our reputation. See Government Regulationin ~~“Item~~Item 1. ~~Business”~~“Business” of this Form 10-K for a further discussion of this risk factor.

~~Material disruptions at one~~•The transition away from the use of the ~~Company’s major manufacturing facilities could~~London interbank offered rate ("LIBOR") settings as an interest rate benchmark may negatively impact our debt agreements and financial ~~results.~~ ~~Tredegar believes its facilities are operated in compliance with applicable local laws~~position, results of operations and ~~regulations and~~liquidity. On March 5, 2021, the United Kingdom’s Financial Conduct Authority published the dates that the ~~Company has implemented measures~~use of LIBOR as an index for commercial loans will be phased out. Foreign currency indices, including the British pound, the Euro, and Swiss franc, along with the U.S. dollar 1-week and 2-month settings ceased after December 31, 2021. Also, after June 30, 2023, the remaining U.S. dollar settings will cease. Our most significant exposure to ~~minimize~~LIBOR relates to our revolving domestically held credit facility, which may be negatively impacted by renegotiated terms and costs of indebtedness associated with the ~~risks~~latter of ~~disruption at its facilities. Such a disruption could~~these transition dates. In addition, the overall financial markets may be disrupted as a result of the replacement of LIBOR, which could have an adverse effect on our cost of capital and our financial position. We continue to monitor the LIBOR transition and will work to minimize any ~~number~~impact.

Risks Related to Aluminum Extrusions

•Sales volume and profitability of ~~events, including but~~Aluminum Extrusions is cyclical and seasonal and highly dependent on economic conditions of end-use markets in the U.S., particularly in the construction sector. Aluminum Extrusions’ end-use markets can be cyclical and subject to seasonal swings in volume and have been adversely impacted during the COVID-19 pandemic. Because of the capital-intensive nature and level of fixed costs inherent in the aluminum extrusions business, the percentage drop in earnings before interest, taxes, depreciation and amortization (“EBITDA”) from ongoing operations in a cyclical downturn will likely exceed the percentage drop in volume. In addition, during an economic slowdown, excess industry capacity often drives increased pricing pressure in many end-use markets as competitors seek to protect their position with key customers. Any benefits associated with cost reductions and productivity improvements may not ~~limited to: an equipment~~be sufficient to offset the adverse effects on profitability from pricing and margin pressure and higher bad debts (including a greater chance of loss associated with customers defaulting on fixed-price forward sales contracts) that usually accompany a downturn. In addition, higher energy costs can reduce profits unless offset by price increases or cost reductions and productivity improvements.

•The failure to successfully implement the new enterprise resource planning and manufacturing execution systems could adversely impact the Aluminum Extrusions business and results of operations. On January 28, 2022, Aluminum Extrusions obtained approval from the Board to engage in the implementation project of a new enterprise resource planning and manufacturing execution systems (“ERP/MES”) across all locations of the Aluminum Extrusions business. The ERP/MES project is expected to cost $28 million over a two-year time span. The implementation of these systems is a major undertaking from a financial, management, and personnel perspective. The implementations may prove to be more difficult, costly, or time consuming than expected, and there can be no assurance that these systems will be beneficial to the extent anticipated. Any disruptions, delays or deficiencies in the design and implementation of the new systems could adversely affect our financial position, results of operations and cash flows; additionally, any disruptions, delays or deficiencies could adversely affect our remediation efforts with ~~repairs requiring long lead times, labor stoppages~~respect to the effectiveness of our internal controls over financial reporting.

•Failure to prevent competitors from evading anti-dumping and countervailing duties, or ~~shortages, utility disruptions, constraints~~a reduction in such duties, could adversely impact Aluminum Extrusions. Chinese and other overseas manufacturers continue to try to evade the anti-dumping and countervailing orders to avoid duties. Effective April 25, 2017, the anti-dumping duty and countervailing duty orders on aluminum extrusions were extended for a period of five years. The orders will be reviewed again beginning in March 2022. A failure by, or the inability of, U.S. trade officials to curtail the evasion of these duties, or the potential reduction of applicable duties pursuant to annual administrative reviews of the orders by the Department of Commerce, could have a material adverse effect on the ~~supply or delivery of critical raw materials, and severe weather conditions. A material disruption in one of the Company’s operating locations could negatively impact production and its consolidated~~ financial condition, results of operations and cash ~~flows.~~

flows of Aluminum Extrusions.

~~An information technology system failure may adversely affect~~•The duty-free importation of goods allowed under the ~~business.~~ Tredegar relies on information technology systems to transact its business. An information technology system failure due to computer viruses, internal or external security breaches, cybersecurity attacks, power interruptions, hardware failures, fire, natural disasters, human error,United States-Mexico-Canada Agreement (“USMCA”), or other ~~causes~~free trade agreements or duty-preference regimes, could ~~disrupt its operation~~result in lower demand for aluminum extrusions made in the U.S., which could materially and ~~prevent it~~negatively affect Aluminum Extrusions’ business and results of operations. In March 2018, the U.S. imposed tariffs of 10% on aluminum ingot and semi-finished aluminum imported into the U.S. from ~~being~~certain countries, including countries from which Aluminum Extrusions has historically sourced aluminum products. In September 2019, the U.S., Canada and Mexico entered into the USMCA. As a result of the 10% tariffs on aluminum ingot imported to the U.S. and the duty-free importation of goods allowed under USMCA or other trade agreement regimes or duty-preference programs, aluminum extrusions from outside the United States that are able to ~~process transactions~~take advantage of duty-preference programs upon importation into the United States made in Canada and Mexico are free of the 10% tariff and can now be imported into and sold in the U.S. at very competitive prices. This could result in lower demand for aluminum extrusions made in the U.S., which could materially and negatively affect Aluminum Extrusions’ business and results of operations.

•The markets for Aluminum Extrusions’ products are highly competitive with ~~its~~ product quality, service, delivery performance and price being the principal competitive factors. Aluminum Extrusions has approximately 1,370

customers ~~operate its manufacturing facilities, and properly report transactions~~that are in a variety of end-use markets within the broad categories of building and construction, distribution, automotive and other transportation, machinery and equipment, electrical and consumer durables. No single Aluminum Extrusions’ customer exceeds 4% of consolidated net sales. Future success and prospects depend on Aluminum Extrusions’ ability to provide superior service, high quality products, timely ~~manner. A significant, protracted information technology system failure may adversely affect Tredegar’s results~~delivery and competitive pricing to retain existing customers and participate in overall industry cross-cycle growth. Failure in any of ~~operations, financial condition, or cash flows.~~

~~An inability~~these areas could lead to ~~renegotiate~~a loss of customers, which could have an adverse material effect on the ~~Company’s collective bargaining agreements could adversely impact its consolidated~~ financial condition, results of operations and cash flows. ~~Some~~ of Aluminum Extrusions.

Risks Related to PE Films

•PE Films is highly dependent on sales associated with relatively few large customers. PE Films’ top four customers comprised approximately 13%, 16% and 14% of Tredegar’s consolidated net sales in 2021, 2020 and 2019, respectively. The loss or significant reduction of sales associated with one or more of these customers without replacement by new business could have a material adverse effect on the Company.

The Company previously reported the risk that a portion of its film products used in surface protection applications would be made obsolete by customer product transitions to less costly alternative processes or materials. The Company estimates that these transitions, which principally relate to one customer, adversely impacted EBITDA from ongoing operations for PE Films by $14.8 million during 2021 versus 2020. A further decline of $7 million in EBITDA from ongoing operations due to the transitions is expected in 2022 versus 2021, at which time the transitions are expected to be complete.

The Surface Protection business is also experiencing competitive pricing pressures, unrelated to the customer product transitions, that are expected to adversely impact EBITDA from ongoing operations by approximately $6 million in 2022 versus 2021. To offset the expected adverse impact of the customer transitions and pricing pressures, the Company is aggressively pursuing and making progress in generating contribution from sales of new surface protection products, applications and customers and driving production efficiencies and cost savings. Annual contribution to EBITDA from ongoing operations for PE Films from sales of products unrelated to previously disclosed customer product transitions increased $7 million for the two-year period ended December 31, 2021, which excludes the impact of resin pass-through lag but includes the adverse impact of customer inventory corrections, customer production slowdowns associated with COVID-19-related factors, and a slowdown in the television market in the fourth quarter of 2021.

While PE Films is undertaking efforts to expand its customer base, there can be no assurance that such efforts will be successful, or that they will offset any loss of sales and profits associated with customer transitions and other large customer declines.

•Failure of PE Films’ customers, who are subject to cyclical downturns, to achieve success or maintain market share could adversely impact PE Films’ sales and operating margins. PE Films’ plastic films are used in the production of various consumer products sold worldwide. A customer’s ability to successfully develop, manufacture and market those products is integral to PE Films’ success. Cyclical downturns and changing consumer preferences may negatively affect businesses that use PE Films’ plastic film products, which could adversely affect sales and operating margins. Other factors that could adversely affect the business include (i) failure by a key customer to achieve success or maintain share in markets in which they sell products containing PE Films’ materials, including as a result of customer preferences for products other than plastics, (ii) key customers using products developed by others that replace PE Films’ business with such customers, (iii) delays in a key customer rolling out products utilizing new technologies developed by PE Films, and (iv) operational decisions by a key customer that result in component substitution, inventory reductions and similar changes.

•The Company’s ~~employees are represented by labor unions under various collective bargaining agreements with varying durations~~inability to protect its intellectual property rights or its infringement of the intellectual property rights of others could have a material adverse impact on PE Films. The continued success of the PE Films’ business depends on its ability not only to protect its own technologies and ~~expiration dates. Tredegar may~~trade secrets, but also to develop and sell new products that do not ~~be able to satisfactorily renegotiate collective bargaining agreements when they expire, which~~infringe upon existing patents. Intellectual property litigation is very costly and could result in strikes or work stoppages or higher labor costs. In addition, existing collective bargaining agreements may not prevent a strike or work stoppage at the Company’s facilities in the future. Any such work stoppages (or potential work stoppages)substantial expense and diversions of Company resources, both of which could ~~negatively impact Tredegar’s ability to manufacture its products and~~ adversely affect its consolidated financial condition, results of operations and cash flows.

~~Tredegar’s valuation of its $7.5 million cost-basis investment in kaléo is volatile and uncertain.~~ ~~Tredegar uses the fair value method to account for its fully-diluted ownership interest of approximately 20% in kaleo, Inc. (“kaléo”), a privately held specialty pharmaceutical company. There is~~ In addition, there may be no active secondary market for buying or selling stock in kaléo. The Company’s fair value estimates can fluctuate materially between reporting periods, primarily due to variances in its performance versus expectations. Additionally, the estimated fair valueeffective legal recourse against infringement of the Company’s ~~investment~~intellectual property by third parties, whether due to limitations on enforcement of rights in ~~kaléo~~foreign jurisdictions or as a result of other factors.

•Disruptions to PE Films’ supply chain could ~~decline. Kaléo’s first~~have a material adverse impact on PE Films. Certain raw materials used in manufacturing PE Films’ products are sourced from single suppliers, and PE Films may not be able to quickly or inexpensively re-source from other suppliers. The risk of damage or disruption to its supply chain may increase if and when different suppliers consolidate their product portfolios, experience financial distress or disruption of manufacturing operations (such as, for example, the impact of hurricanes on petrochemical production). Failure to take adequate steps to effectively manage such events, which are intensified when a product is procured from a single supplier or location, could

adversely affect PE Films’ consolidated financial condition, results of operations and cash flows, and also require additional resources to restore its supply chain.

•Rising trade tensions could cause an ~~epinephrine auto-injector, was licensed to sanofi-aventis U.S. LLC (“Sanofi”) in 2009. Sanofi commenced commercial sales~~increase in the cost of PE Films’ products or otherwise negatively impact the Company. A portion of PE Film’s business involves imports to and from the U.S. and other countries where the Company produces and sells its products. Trade tensions have been rising between the U.S. and other countries, particularly China. An increase in tariffs and other trade barriers between the U.S. and China, or between the U.S. and other countries, could cause an increase in the cost of PE Films’ products or otherwise negatively impact the production and sale of the Company’s products in world markets.

Risks Related to Flexible Packaging Films

•A history of uncertain economic conditions in Brazil could adversely impact the financial condition, results of operations and cash flows of Flexible Packaging Films. For flexible packaging films produced in Brazil, selling prices and key raw material costs are principally determined in U.S. Dollars and are impacted by local economic conditions and local and global competitive dynamics. Flexible Packaging Films is exposed to foreign exchange translation risk (its functional currency is the Brazilian Real) because almost 90% of the sales of Flexible Packaging Films business unit in Brazil (“Terphane Ltda.”) and substantially all of its related raw material costs are quoted or priced in U.S. Dollars while its variable conversion, fixed conversion and sales, general and administrative costs before depreciation & amortization (collectively “Terphane Ltda. Operating Costs”) are quoted or priced in Brazilian Real. This mismatch, together with a variety of economic variables impacting currency exchange rates, causes volatility that could negatively or positively impact EBITDA from ongoing operations for Flexible Packaging Films. While Flexible Packaging Films hedges this exposure on a short-term basis with foreign exchange forward rate contracts, the exposure continues to exist beyond the hedging periods.

•Overcapacity in Latin American polyester film production and governmental failure to extend anti-dumping duties in Brazil on imported products or prevent competitors from circumventing such duties could adversely impact Flexible Packaging Films. In recent years, excess global capacity in the industry has led to increased competitive pressures from imports into Brazil. The Company believes that these conditions have shifted the competitive environment from a regional to a global landscape and have driven price convergence and lower product margins for Flexible Packaging Films. Favorable anti-dumping rulings or countervailing duties are in effect for products imported from China, Egypt, India, Mexico, United Arab Emirates, Turkey, Peru and Bahrain. Competitors not currently subject to anti-dumping duties may choose to utilize their excess capacity by selling product in Brazil, which may result in pricing pressures that Flexible Packaging Films may not be able to offset with cost savings measures and/or manufacturing efficiency initiatives. In May 2021, the Brazilian authorities concluded the sunset review relating to the anti-dumping process for polyester film imported from China, India and Egypt, and decided to extend duties for another five years. However, due to its doubts that films would continue to be imported from China and Egypt, the government immediately suspended the implementation of the tariffs for those countries. If in the future there are volumes imported from China or Egypt which are harming the Brazilian market, authorities may promptly reinstate tariffs. For India, the Brazilian authorities also reviewed measures against countervailing duties and extended those for five years as well. Considering the expiration date for anti-dumping rulings against Mexico, United Arab Emirates and Turkey in first quarter ~~of 2013. Kaléo subsequently developed and commenced commercial sales of its second product,~~2023, Terphane may request a ~~naloxone auto-injector,~~sunset review in ~~the third quarter of 2014. In~~ the fourth quarter of ~~2015, Sanofi announced a voluntary recall~~2022, if there are indications of continuous dumping practices from those sources into the ~~product and subsequently returned the rights tokaléo in 2016. Kaléo relaunched the epinephrine auto-injector in the U.S. in the first quarter of 2017. See Note 4 to the~~ ~~Notes to Financial Statements~~ ~~for more information.~~

Brazilian market.

Item 1B. UNRESOLVED STAFF COMMENTS


~~Item 1B.~~	~~UNRESOLVED STAFF COMMENTS~~

None.


~~Item 2.~~	~~PROPERTIES~~

Item 2. PROPERTIES

General

Most of the improved real property and the other assets used in the Company’s operations are owned. Certain of the owned property is subject to an encumbrance under the Company’s ~~revolving~~ credit ~~facility~~agreement (see Note 117 “Debt and Credit Agreements” to the Consolidated Financial Statements in ~~the~~ ~~Notes to Financial Statements~~Item 15 for more information).

Tredegar considers the manufacturing facilities, warehouses and other properties and assets that it owns or leases to be in generally good condition. Capacity utilization at its various manufacturing facilities can vary with product mix and normal fluctuations in sales levels. The Company believes that its Bonnell Aluminum, PE Films and Flexible Packaging Films manufacturing facilities have sufficient capacity to meet ~~its~~ current production requirements. Flexible Packaging Films is operating at capacity but has an idled line that it expects will be restarted in 2018. Bonnell Aluminum is operating at nearly full capacity utilization in its building and construction sector. Tredegar’s corporate headquarters, which is leased, is located at 1100 Boulders Parkway, Richmond, Virginia 23225.

The Company’s principal manufacturing plants and facilities as of December 31, ~~2017~~2021 are listed below:

~~PE Films~~

Aluminum Extrusions

Locations in the U.S.

Locations Outside the U.S.

Principal Operations

~~Lake Zurich, Illinois~~Carthage, Tennessee
Clearfield, Utah (leased)
Elkhart, Indiana
Newnan, Georgia
Niles, Michigan

None

Production of aluminum extrusions, fabrication and finishing

PE Films

~~Durham, North Carolina (technical center and production facility) (leased)~~

Locations in the U.S.

Locations Outside the U.S.

Principal Operations

Pottsville, Pennsylvania

Richmond, Virginia (technical center) (leased)

~~Terre Haute, Indiana (technical center and production facility)~~

Guangzhou, China

~~Kerkrade, The Netherlands~~

~~Pune, India~~

~~Rétság, Hungary~~

~~São Paulo, Brazil~~

~~Shanghai, China~~

Production of plastic films ~~and~~

~~laminate materials~~

Flexible Packaging Films

Locations in the U.S.

Locations Outside the U.S.

Principal Operations

Bloomfield, New York (technical center and production facility)

Cabo de Santo Agostinho, Brazil

Production of ~~polyester~~PET-based films

~~Aluminum Extrusions~~

Item 3. LEGAL PROCEEDINGS

The information required by this Item 3 is set forth in Note 18 "Contingencies" to the Consolidated Financial Statements in Item 15 and is hereby incorporated herein by reference.

Item 4. MINE SAFETY DISCLOSURES



~~Locations in the U.S.~~				~~Principal Operations~~
~~Carthage, Tennessee~~ ~~Elkhart, Indiana~~ ~~Newnan, Georgia~~ ~~Niles, Michigan~~ ~~Clearfield, Utah~~				~~Production of aluminum extrusions, fabrication and finishing~~


~~Item 3.~~	~~LEGAL PROCEEDINGS~~

None.


~~Item 4.~~	~~MINE SAFETY DISCLOSURES~~

~~None.~~

PART II


~~Item 5.~~	~~MARKET FOR TREDEGAR’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES~~

~~Market Prices of Common Stock and Shareholder Data~~Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Tredegar’s common stock is traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “TG”. There were ~~33,017,422~~33,743,617 shares of common stock held by ~~1,951~~1,677 shareholders of record on ~~December 31, 2017.~~

~~The following table shows the reported high and low closing prices of Tredegar’s common stock by quarter for the past two years.~~

2017 2016
High Low High Low
First quarter $ 25.00
$ 16.50
$ 16.01
$ 11.68
Second quarter 17.65
14.90
17.37
14.80
Third quarter 18.35
14.85
19.39
16.30
Fourth quarter 20.20
18.20
25.55
17.30

~~The closing price of Tredegar’s common stock on February 16, 2018 was $16.80.~~March 4, 2022.

Dividend Information

Tredegar has paid a regular cash dividend every quarter since becoming a public company in July ~~1989. During~~1989 and expects that comparable regular cash dividends will continue to be paid in the ~~past three years,~~future. In addition, Tredegar has paid special cash dividends from time to time. On December 1, 2020, the ~~Company paid quarterly dividends as follows:~~

•~~11 cents~~Board declared a special dividend of $200 million, or $5.97 per share, on the Company’s common stock (the “Special Dividend”). The Special Dividend was paid in ~~the last three quarters of 2015 and each of the quarters of 2016 and 2017;~~December 2020.

•~~9 cents per share in the first quarter of 2015.~~

All decisions with respect to the declaration and payment of future dividends will be made by the Board ~~of Directors~~ in its sole discretion based upon earnings, financial condition, anticipated cash needs, restrictions in the Company’s revolving credit facility and other such considerations as the Board deems relevant. See Note ~~11 of~~7 "Debt and Credit Agreements" to the ~~Notes to~~Consolidated Financial Statements in Item 15 for the restrictions on the payment of dividends contained in the Company’s ~~revolving~~ credit agreement related to aggregate dividends permitted.

Issuer Purchases of Equity Securities

On January 7, 2008, Tredegar announced that ~~its~~the Board ~~of Directors~~ approved a share repurchase program whereby management is authorized at its discretion to purchase, in the open market or in privately negotiated transactions, up to 5 million shares of the Company’s outstanding common stock. The authorization has no time limit. Tredegar did not repurchase any shares in the open market or otherwise in ~~2017, 2016 and 2015~~2021, 2020 or 2019 under this standing authorization. The maximum number of shares remaining under this standing authorization was 1,732,003 at December 31, ~~2017.~~2021.

~~Comparative Tredegar Common~~ Stock Performance Graph

The following graph compares cumulative total shareholder returns for Tredegar, the S&P SmallCap 600 Stock Index (an index comprised of companies with market capitalizations similar to Tredegar) and the Russell 2000 Index for the five years ended December 31, ~~2017.~~2021. Tredegar is part of both the S&P SmallCap 600 Index and Russell 2000 Index.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Tredegar Corporation, the S&P SmallCap 600 Index, and the Russell 2000 Index



*$100 invested on 12/31/1215 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. ~~Copyright© 2018~~ Copyright© 2021 Standard & Poor's, a division of S&P Global. All rights reserved. ~~Copyright© 2018~~ Copyright© 2021 Russell Investment Group. All rights reserved.

~~Inquiries~~Item 6. [RESERVED]

~~Inquiries concerning stock transfers, dividends, dividend reinvestment, consolidating accounts,~~

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations focuses on and is intended to clarify the results of our operations, certain changes ~~of address, or lost or stolen stock certificates~~in our financial position, liquidity, capital structure and business developments for the periods covered by the consolidated financial statements included in this Form 10-K. This discussion should be ~~directed~~read in conjunction with, and is qualified by reference to, ~~Computershare Investor Services,~~ the ~~transfer agent~~other related information including, but not limited to, the audited consolidated financial statements (including the notes thereto) and ~~registrar~~the description of our business, all as set forth in this Form 10-K, as well as the risk factors discussed above in Item 1A.

This section provides discussion and a year-to-year comparison for the ~~Company’s common stock:~~

~~Computershare Investor Services~~

~~P.O. Box 30170~~

~~College Station, TX 77842-3170~~

~~Phone: 800-622-6757~~

~~www.computershare.com/us/contact~~

~~All other inquiries should be directed to:~~

~~Tredegar Corporation~~

~~Investor Relations Department~~

~~1100 Boulders Parkway~~

~~Richmond, Virginia 23225~~

~~Phone: 855-330-1001~~

~~E-mail: invest@tredegar.com~~

~~Website: www.tredegar.com~~

~~Quarterly Information~~

Tredegar does not generate or distribute quarterly reports to its shareholders. Information on quarterly results can be obtained from the Company’s website. In addition, Tredegar files quarterly, annual and other information electronically with the SEC, which can be accessed on its website at ~~www.sec.gov~~.


~~Item 6.~~	~~SELECTED FINANCIAL DATA~~

~~The tables that follow present certain selected financial and segment information for the five~~ years ended December 31, ~~2017.~~

~~FIVE-YEAR SUMMARY~~

~~Tredegar Corporation~~2021 and ~~Subsidiaries~~

Years Ended December 31 2017 2016 2015 2014 2013
(In thousands, except per-share data)

Results of Operations (g):
Sales $ 961,330
   $ 828,341
   $ 896,177
   $ 951,826
   $ 959,346

Other income (expense), net 51,713
(a) 2,381
(b) (20,113 ) (d) (6,697 ) (e) 1,776
(f)
1,013,043
   830,722
   876,064
   945,129
   961,122

Cost of goods sold 775,628
(a) 668,626
(b) 725,459
(d) 778,113
(e) 784,675
(f)
Freight 33,683
   29,069
   29,838
   28,793
   28,625

Selling, general & administrative expenses 85,501
(a) 75,754
(b) 71,911
(d) 69,526
(e) 71,195
(f)
Research and development expenses 18,287
   19,122
   16,173
   12,147
   12,669

Amortization of identifiable intangibles 6,198
   3,978
   4,073
   5,395
   6,744

Interest expense 6,170
   3,806
   3,502
   2,713
   2,870

Asset impairments and costs associated with exit and disposal activities 102,488
(a) 2,684
(b) 3,850
(d) 3,026
(e) 1,412
(f)
Goodwill impairment charge —
—
44,465
(c) —
   —

1,027,955
   803,039
   899,271
   899,713
   908,190

Income (loss) from continuing operations before income taxes (14,912 )    27,683
   (23,207 )    45,416
   52,932

Income tax expense (benefit) (53,163 ) (a) 3,217
(b) 8,928
(d) 9,387
(e) 16,995
(f)
Income (loss) from continuing operations (g) 38,251
   24,466
   (32,135 )    36,029
35,937

Income (loss) from discontinued operations, net of tax (g) —
—
—
850
(g) (13,990 ) (g)
Net income (loss) $ 38,251
   $ 24,466
   $ (32,135 )    $ 36,879
$ 21,947

Diluted earnings (loss) per share (g):
Continuing operations $ 1.16
   $ 0.75
   $ (0.99 )    $ 1.11
$ 1.10

Discontinued operations —
—
—
0.02
(g) (0.43 ) (g)
Net income (loss) $ 1.16
   $ 0.75
   $ (0.99 )    $ 1.13
$ 0.67

~~Refer to~~ ~~Notes to Financial Tables~~ ~~that follow these tables.~~

~~FIVE-YEAR SUMMARY~~

~~Tredegar Corporation~~2020. Discussion regarding our results of operations for the year ended December 31, 2019 and ~~Subsidiaries~~

Years Ended December 31 2017 2016 2015 2014 2013
(In thousands, except per-share data)

Share Data:
Equity per share (l) $ 10.41
$ 9.44
$ 8.35
$ 11.47
$ 12.46

Cash dividends declared per share $ 0.44
$ 0.44
$ 0.42
$ 0.34
$ 0.28

Weighted average common shares outstanding during the period 32,946
32,762
32,578
32,302
32,172

Shares used to compute diluted earnings (loss) per share during the period 32,951
32,775
32,578
32,554
32,599

Shares outstanding at end of period 33,017
32,934
32,682
32,422
32,305

Closing market price per share:
High $ 25.00
$ 25.55
$ 23.76
$ 28.45
$ 30.73

Low $ 14.85
$ 11.68
$ 12.63
$ 16.76
$ 21.06

End of year $ 19.20
$ 24.00
$ 13.62
$ 22.49
$ 28.81

Total return to shareholders (h) (18.2 )% 79.4 % (37.6 )% (20.8 )% 42.5 %
Financial Position:
Total assets (k) $ 755,743
$ 651,162
$ 623,260
$ 788,626
$ 793,008

Cash and cash equivalents $ 36,491
$ 29,511
$ 44,156
$ 50,056
$ 52,617

Debt $ 152,000
$ 95,000
$ 104,000
$ 137,250
$ 139,000

Shareholders’ equity (net book value) $ 343,780
$ 310,783
$ 272,748
$ 372,029
$ 402,664

Equity market capitalization (i) $ 633,935
$ 790,411
$ 445,131
$ 729,173
$ 930,711

~~Refer to~~ ~~Notes to Financial Tables~~ ~~that follow these tables.~~

~~SEGMENT TABLES~~

~~Tredegar Corporation~~a year-to-year comparison between the years ended December 31, 2020 and ~~Subsidiaries~~

Net Sales (j)
Years Ended December 31 2017 2016 2015 2014 2013
(In thousands)
PE Films $ 352,459
$ 331,146
$ 385,550
$ 464,339
$ 495,386
Flexible Packaging Films 108,355
108,028
105,332
114,348
125,853
Aluminum Extrusions 466,833
360,098
375,457
344,346
309,482
Total net sales 927,647
799,272
866,339
923,033
930,721
Add back freight 33,683
29,069
29,838
28,793
28,625
Sales as shown in Consolidated Statements of Income $ 961,330
$ 828,341
$ 896,177
$ 951,826
$ 959,346

Identifiable Assets
As of December 31 2017 2016 2015 2014 2013
(In thousands)
PE Films $ 289,514
$ 278,558
$ 270,236
$ 283,606
$ 291,377
Flexible Packaging Films 49,915
156,836
146,253
262,604
265,496
Aluminum Extrusions 268,127
147,639
136,935
143,328
134,928
Subtotal 607,556
�� 583,033
553,424
689,538
691,801
General corporate 111,696
38,618
25,680
49,032
48,590
Cash and cash equivalents 36,491
29,511
44,156
50,056
52,617
Total $ 755,743
$ 651,162
$ 623,260
$ 788,626
$ 793,008

~~Refer to~~ ~~Notes to Financial Tables~~ ~~that follow these tables.~~

~~SEGMENT TABLES~~

~~Tredegar Corporation and Subsidiaries~~

Operating Profit
Years Ended December 31 2017 2016 2015 2014 2013
(In thousands)

PE Films:
Ongoing operations $ 41,546
   $ 26,312
   $ 48,275
   $ 60,971
   $ 61,866

Plant shutdowns, asset impairments, restructurings and other (4,905 ) (a) (4,602 ) (b) (4,180 ) (d) (12,236 ) (e) (671 ) (f)
Flexible Packaging Films:
Ongoing operations (2,626 ) 1,774
5,453
(2,917 ) 9,100

Plant shutdowns, asset impairments, restructurings and other (89,398 ) (a) (214 ) (b) (185 ) (d) (591 ) (e) —

Goodwill impairment charge —
—
(44,465 ) (c) —
—

Aluminum Extrusions:
Ongoing operations 43,454
   37,794
   30,432
   25,664
18,291

Plant shutdowns, asset impairments, restructurings and other 321
(a) (741 ) (b) (708 ) (d) (976 ) (e) (2,748 ) (f)
Total (11,608 )    60,323
   34,622
   69,915
   85,838

Interest income 209
   261
   294
   588
   594

Interest expense 6,170
   3,806
   3,502
   2,713
   2,870

Gain (loss) on investment accounted for under the fair value method 33,800
(a) 1,600
(b) (20,500 ) (d) 2,000
(e) 3,400
(f)
Gain on sale of investment property —
—
—
1,208
(e) —

Unrealized loss on investment property —
1,032
(b) —
—
1,018
(e)
Stock option-based compensation expense 264
   56
   483
   1,272
   1,155

Corporate expenses, net 30,879
(a) 29,607
(b) 33,638
(d) 24,310
(e) 31,857
(f)
Income (loss) from continuing operations before income taxes (14,912 )    27,683
   (23,207 )    45,416
   52,932

Income tax expense (benefit) (53,163 ) (a) 3,217
(b) 8,928
(d) 9,387
(e) 16,995
(f)
Income (loss) from continuing operations 38,251
   24,466
   (32,135 )    36,029
35,937

Income (loss) from discontinued operations, net of tax (g) —
—
—
850
(g) (13,990 ) (g)
Net income (loss) $ 38,251
   $ 24,466
   $ (32,135 )    $ 36,879
$ 21,947

~~Refer to~~ ~~Notes to Financial Tables~~ ~~that follow these tables.~~

~~SEGMENT TABLES~~

~~Tredegar Corporation and Subsidiaries~~

Depreciation and Amortization

Years Ended December 31 2017 2016 2015 2014 2013
(In thousands)
PE Films $ 14,609
$ 13,653
$ 15,480
$ 21,399
$ 25,656
Flexible Packaging Films 10,443
9,505
9,697
9,331
9,676
Aluminum Extrusions 15,070
9,173
9,698
9,974
9,202
Subtotal 40,122
32,331
34,875
40,704
44,534
General corporate 155
141
107
114
121
Total depreciation and amortization expense $ 40,277
$ 32,472
$ 34,982
$ 40,818
$ 44,655

Capital Expenditures
Years Ended December 31 2017 2016 2015 2014 2013
(In thousands)
PE Films $ 15,029
$ 25,759
$ 21,218
$ 17,000
$ 15,615
Flexible Packaging Films 3,619
3,391
3,489
21,806
49,252
Aluminum Extrusions 25,653
15,918
8,124
6,092
14,742
Subtotal 44,301
45,068
32,831
44,898
79,609
General corporate 61
389
—
—
52
Total capital expenditures $ 44,362
$ 45,457
$ 32,831
44,898
79,661

~~Refer to~~ ~~Notes to Financial Tables~~ ~~that follow these tables.~~

~~NOTES TO FINANCIAL TABLES~~

~~(a)~~

Plant shutdowns, asset impairments, restructurings and other charges for 2017 include: income of $11.9 million related to the settlement of an escrow arrangement (included in “Other income (expense), net” in the consolidated statements of income); charges related to the impairment of assets of Flexible Packaging in the amount of $101 million; income of $5.6 million related to the explosion that occurred in the second quarter of 2016 at Bonnell’s aluminum extrusions manufacturing facility in Newnan, Georgia, which includes the recognition of a gain of $5.3 million for a portion of the insurance recoveries received from the insurer for the replacement of capital equipment, plus the recovery of excess production costs incurred in 2016 for which recovery from insurance carriers was not previously considered to be reasonably assured, net of other nonrecoverable costs, of $0.3 million ($0.4 million benefit included in “Cost of goods sold” in the consolidated statements of income and $0.1 million charge included in “Selling, general and administrative expenses” in the consolidated statements of income); charges of $4.1 million for estimated excess costs associated with the ramp-up of new product offerings (included in “Cost of goods sold” in the consolidated statements of income); charges of $1.9 million related to expected environmental costs at certain Aluminum Extrusions manufacturing facilities (included in “Cost of goods sold” in the consolidated statements of income); charges of $3.3 million related to the acquisition of Futura Industries Corporation ($1.7 million included in “Cost of goods sold” and $1.6 million included in “Selling, general and administrative expense” in the consolidated statements of income), offset by pretax income of $0.7 million related to the fair valuation of an earnout provision (included in “Other income (expense), net” in the condensed consolidated statements of income); charges of $0.8 million associated with the consolidation of domestic PE Films manufacturing facilities, which includes asset impairments of $0.1 million, accelerated depreciation of $0.3 million and other facility consolidation-related expenses of $0.5 million (included in “Cost of goods sold” in the consolidated statements of income) offset by income of $0.1 million related to a reduction of severance and other employee-related accrued costs; charges of $2.4 million associated with a business development project included in “Selling, general and administrative” in the consolidated statements of income); charge of $0.7 million for severance and other employee-related costs associated with restructurings in PE Films ($0.2 million), Aluminum Extrusions ($0.1 million) and Corporate ($0.4 million); charges of $0.3 million associated with asset impairments in PE Films; charge of $0.2 million associated with the settlement of customer claims and the shutdown of the aluminum extrusions manufacturing facility in Kentland, Indiana. The unrealized gain of $33.8 million2019 can be found in Item 7 of our Annual Report on ~~the Company’s investment in kaléo is included in “Other income (expense), net” in the consolidated statements of income.~~

~~(b)~~

Plant shutdowns, asset impairments, restructurings and other charges for 2016 include income of $0.4 million related to the explosion that occurred in the second quarter of 2016 at Bonnell’s aluminum extrusions manufacturing facility in Newnan, Georgia, which includes the recognition of a gain of $1.9 million for a portion of the insurance recoveries approved by the insurer to begin the replacement of capital equipment, offset by the impairment of equipment damaged by the explosion of $0.3 million (net amount included in “Other income (expense), net” in the consolidated statements of income) and other costs related to the explosion that are not recoverable from insurance of $0.6 million (included in “Selling, general and administrative”) and excess production costs for which recovery from insurance is not assured of $0.6 million (included in “Cost of goods sold” in the consolidated statements of income); charges of $4.3 million associated with the consolidation of domestic PE Films manufacturing facilities, which includes severance and other employee-related costs of $1.2 million, asset impairments of $0.4 million, accelerated depreciation of $0.6 million (included in “Cost of goods sold” in the consolidated statements of income) and other facility consolidation-related expenses of $2.0 million ($1.6 million is included in “Cost of goods sold” in the consolidated statements of income); charges of $0.4 million associated with a business development project included in “Selling, general and administrative” in the consolidated statements of income); charge of $0.3 million for severance and other employee-related costs associated with restructurings in PE Films ($0.1 million) and Corporate ($0.2 million); charges of $0.6 million associated with the acquisition of Futura Industries Corporation (included in “Selling, general and administrative” in the consolidated statements of income); charges of $0.5 million related to expected future environmental costs at the Company’s aluminum extrusions manufacturing facility in Newnan, Georgia (included in “Cost of goods sold” in the consolidated statements of income); charges of $0.3 million related to the settlement of a tax dispute in the Flexible Packaging Films segment (included in “Cost of goods sold” in the consolidated statements of income); charges of $0.2 million associated with asset impairments in PE Films; gain of $0.1 million from the settlement of a Terphane pre-acquisition contingency (included in “Other income (expense), net” in the consolidated statements of income); charge of $0.1 million from the sale of the aluminum extrusions manufacturing facility in Kentland, Indiana at a pretax gain of $0.2 million, offset by pretax charges of $0.3 million associated with the shutdown of this facility. The unrealized gain of $1.6 million on the Company’s investment in kaléo is included in “Other income (expense), net” in the consolidated statements of income.


~~(c)~~	Results for 2015 included a goodwill impairment charge of $44.5 million ($44.5 million after taxes) recognized in Flexible Packaging Films in the third quarter of 2015 upon completion of an impairment analysis performed as of September 30, 2015.

~~(d)~~

Plant shutdowns, asset impairments, restructurings and other charges for 2015 include charges of $3.9 million (included in “Selling, general and administrative” in the consolidated statements of income) for severance and other employee-related costs associated with the resignation of the Company’s former chief executive and chief financial officers; charges of $2.2 million associated with the consolidation of domestic PE Films manufacturing facilities, which includes severance and other employee-related costs of $0.8 million, asset impairments of $0.4 million, accelerated depreciation of $0.4 million (included in “Cost of goods sold” in the consolidated statements of income) and other facility consolidation-related expenses of $0.6 million ($0.1 million is included in “Cost of goods sold” in the consolidated statements of income); charge of $2.2 million for severance and other employee-related costs associated with restructurings in PE Films ($2.0 million) ($0.4 million included in “Selling, general and administrative expense” in the consolidated statement of income), Flexible Packaging Films ($0.2 million), Aluminum Extrusions ($35,000) and Corporate ($26,000); charges of $1.0 million associated with a non-recurring business development project (included in “Cost of goods sold” in the consolidated statements of income); charges of $0.4 million associated with the shutdown of the aluminum extrusions manufacturing facility in Kentland, Indiana; and charges of $0.3 million related to expected future environmental costs at the Company’s aluminum extrusions manufacturing facility in Newnan, Georgia (included in “Cost of goods sold” in the consolidated statements of income). The unrealized loss of $20.5 million on the Company’s investment in kaléo is included in “Other income (expense), net” in the consolidated statements of income.

~~(e)~~

Plant shutdowns, asset impairments, restructurings and other for 2014 include a charge of $10.0 million (included in “Other income (expense), net” in the consolidated statements of income) associated with the one-time, lump sum license payment to 3M Company (“3M”) after the Company settled all litigation issues associated with a patent infringement complaint; charges of $2.3 million for severance and other employee-related costs in connection with restructurings in PE Films ($1.7 million), Flexible Packaging Films ($0.6 million) and Aluminum Extrusions ($31,000); charges of $0.9 million related to expected future environmental costs at the aluminum extrusions manufacturing facility in Newnan, Georgia (included in “Cost of goods sold” in the consolidated statement of income); charges of $0.7 million associated with the shutdown of the film products manufacturing facility in Red Springs, North Carolina, which includes severance and other employee-related costs of $0.4 million and asset impairment and other shutdown-related charges of $0.3 million; gain of $0.1 million related to the sale of previously shutdown film products manufacturing facility in LaGrange, Georgia (included in “Other income (expense), net” in the consolidated statements of income); and charges of $54,000 associated with the shutdown of the aluminum extrusions manufacturing facility in Kentland, Indiana. The unrealized gain of $2.0 million on the Company’s investment in kaléo; the unrealized loss of $0.8 million on the Company’s investment in Harbinger Capital Partners Special Situations Fund L.P. (“Harbinger”) and the gain of $1.2 million on sale on a portion the Company’s investment property in Alleghany and Bath County, Virginia in 2014 are included in “Other income (expense), net” in the consolidated statements of income. Income taxes from continuing operations in 2014 includes the recognition of a tax benefit for a portion of the Company’s capital loss carryforwards of $4.9 million. These capital loss carryforwards were previously offset by a valuation allowance associated with expected limitations on the utilization of these assumed capital losses. As a result of changes in the underlying basis of certain foreign subsidiaries, income taxes from continuing operations in 2014 also included an adjustment of $2.2 million to reverse previously accrued deferred income tax liabilities arising from foreign currency translation adjustments.

~~(f)~~

Plant shutdowns, asset impairments, restructurings and other for 2013 include a charge of $1.7 million related to expected future environmental costs at the aluminum extrusions manufacturing facility in Newnan, Georgia (included in “Cost of goods sold” in the consolidated statement of income); charges of $0.6 million associated with the shutdown of the Company’s aluminum extrusions manufacturing facility in Kentland, Indiana; charges of $0.5 million associated with the shutdown of the film products manufacturing facility in Red Springs, North Carolina, which includes severance and other employee-related costs of $0.3 million and asset impairment charges of $0.2 million; charges of $0.4 million for severance and other employee-related costs in connection with restructurings in Aluminum Extrusions ($0.3 million) and PE Films ($0.1 million); charges of $0.2 million for integration-related expenses and other nonrecurring transactions (included in “Selling, general and administrative expenses” in the consolidated statements of income) associated with the acquisition of AACOA, Inc. (“AACOA”) by Aluminum Extrusions; and a loss of $0.1 million related to the sale of previously impaired machinery and equipment at the Company’s film products manufacturing facility in Shanghai, China (included in “Other income (expense), net” in the consolidated statements of income). The unrealized gain of $3.4 million on the Company’s investment in kaléo, the unrealized loss of $0.4 million on the Company’s investment in Harbinger and the unrealized loss of $1.0 million on the Company’s investment property in Alleghany and Bath County, Virginia in 2013 are included in “Other income (expense), net” in the consolidated statements of income. Income taxes for 2013 include the recognition of an additional valuation allowance of $0.4 million related to the expected limitations on the utilization of assumed capital losses on certain investments.

~~(g)~~

On November 20, 2012, Tredegar sold its membership interests in Falling Springs, LLC. All historical results for this business have been reflected in discontinued operations. On February 12, 2008, Tredegar sold its aluminum extrusions business in Canada. All historical results for this business have been reflected as discontinued operations. In 2014, accruals for indemnifications under the purchase agreement were adjusted, resulting in income from discontinued operations of $0.9 million. In 2013, discontinued operations include after-tax charges of $14.0 million, to accrue for indemnifications under the purchase agreement related to environmental matters.


~~(h)~~	~~Total return to shareholders is defined as the change in stock price during the year plus dividends per share, divided by the stock price at the beginning of the year.~~


~~(i)~~	~~Equity market capitalization is the closing market price per share for the period multiplied by the shares outstanding at the end of the period.~~


~~(j)~~	~~Net sales represent gross sales less freight. Net sales is the measure used by the chief operating decision maker of each segment for purposes of assessing performance.~~


~~(k)~~	Total assets in 2015, 2016 and 2017 are not comparable to prior years due to the adoption of new FASB guidance associated with the classification of deferred income tax assets and liabilities. See Note 16 to the ~~Notes to the Financial Statements~~ ~~for additional details.~~


~~(l)~~	~~Equity per share is computed by dividing shareholders’ equity at year end by the shares outstanding at end of period.~~


~~Item 7.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Forward-looking and Cautionary Statements~~

~~Some of the information contained in this~~ Form 10-K ~~may constitute “forward-looking statements” within~~for the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. When using the words “believe,” “estimate,” “anticipate,” “expect,” “project,” “likely,” “may” and similar expressions, Tredegar does so to identify forward-looking statements. Such statements are based on then current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. It is possible that actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these forward-looking statements. For risks and important factors that could cause actual results to differ from expectations, refer to the reports that Tredegar files with or furnishes the SEC from time-to-time, including the risks and important factors set forth in “Risk Factors” in Part I, Item 1A of this Form 10-K. Readers are urged to review and consider carefully the disclosures Tredegar makes in the reports Tredegar files with or furnishes to the SEC. Tredegar does not undertake, and expressly disclaims any duty, to update any forward-looking statement to reflect any change in management’s expectations or any change in conditions, assumptions or circumstances on which such statements are based, except as required by applicable law.year ended December 31, 2020.

Executive Summary

General

Tredegar Corporation is aan industrial manufacturer ~~of polyethylene (“PE”) plastic~~with three primary businesses: custom aluminum extrusions for the North American building & construction, automotive and specialty end-use markets through its Aluminum Extrusions segment; surface protection films for high-technology applications in the global electronics industry through its PE Films segment; and specialized polyester films primarily for the Latin American flexible packaging market through its Flexible Packaging Films segment. With approximately 2,400 employees, the Company operates manufacturing facilities in North America, South America, and ~~aluminum extrusions. Descriptions~~Asia.

On October 30, 2020, the Company completed the sale of ~~all~~Personal Care Films. The transaction excluded the ~~Company’s businesses~~packaging film lines and related operations located at Pottsville Packaging, which are ~~provided~~now being reported within the Surface Protection component of PE Films. Commencing in the ~~Business~~ ~~section.~~third quarter of 2020, all historical results for Personal Care Films have been presented as discontinued operations. For more information on these transactions, see Note 17 to the Consolidated Financial Statements in Item 15.

Sales were ~~$961.3~~$826.5 million in ~~2017~~2021 compared to ~~$828.3~~$755.3 million in ~~2016.~~2020. Net income from continuing operations was ~~$38.3~~$57.9 million ($~~1.16~~1.72 per diluted share) in ~~2017,~~2021, compared with ~~$24.5~~net loss from continuing operations of $16.8 million ($~~0.75~~0.51 per diluted share) in ~~2016. In addition~~2020.

The 2021 results include:

•An after-tax gain of $10.0 million ($0.30 per diluted share) on the sale of the Company’s investment in kaléo on December 27, 2021 resulting in total cash proceeds of $47.1 million (see Note 9 to the ~~results of ongoing operations, the 2017~~Consolidated Financial Statements in Item 15 for more details).

The 2020 results include:

•An ~~unrealized~~ after-tax ~~gain~~loss on the Company’s investment in kaléo of ~~$24.0~~$47.6 million ($~~0.73~~1.42 per diluted share), which iswas accounted for under the fair value method (see Note ~~4 of~~9 to the ~~Notes to~~Consolidated Financial Statements ~~for more details);~~

~~An after-tax gain of $11.9 million ($0.36 per share) from the settlement of an escrow agreement related to the Terphane acquisition~~ in ~~2011 (see Note 17 of the~~ ~~Notes to Financial Statements~~ ~~for more details);~~

An income tax benefit of $61.4 million ($1.86 per share) associated with the write-off of the stock basis of Terphane Limitada, Terphane’s Brazilian subsidiary, and Terphane’s U.S. subsidiary, Terphane Inc., computed at the 35% U.S. corporate federal income tax rate in effect in 2017 ($56.6 million ($1.72 per share) when reduced for the deductions applicable to the 21% U.S. corporate federal income tax rate effective in 2018 under the Tax Cuts and Jobs Act (the “TCJA”)) (see Note 17 of the ~~Notes to Financial Statements~~ ~~for more details);~~

An income tax benefit from the adjustment of deferred income tax liabilities as a result of the reduction of U.S. federal corporate income tax rates effective in 2018 and other law changes of $4.4 million ($0.13 per share) (see Note 16 of the ~~Notes to Financial Statements~~ Item 15 for more details); and

•An ~~after-tax write-down~~impairment of the ~~assets~~total goodwill balance of ~~Flexible Packaging Films~~Aluminum Extrusions' reporting unit acquired in the AACOA acquisition in 2012 was recorded in the after-tax amount of ~~$87.2~~$10.5 million ($~~2.65~~0.32 per diluted share) ~~(see Note 17 of~~.

Other losses related to asset impairments and costs associated with exit and disposal activities for continuing operations were not material for the ~~Notes to Financial Statements~~ ~~for more details).~~

~~Other losses~~years ended December 31, 2021 and 2020, respectively. Losses associated with plant shutdowns, asset impairments, ~~and~~ restructurings ~~and gains and losses on the sale of assets,~~ and other items are described in ~~Note 17~~Results of ~~the~~ ~~Notes to Financial Statements. Net sales (sales less freight) and operating profit~~Operations. EBITDA from ongoing operations ~~are~~is the ~~measures~~measure of ~~sales~~profit and ~~operating profit~~loss used by ~~the~~Tredegar’s chief operating decision maker ~~of each segment~~(“CODM”) for purposes of assessing financial performance. The Company uses net sales from continuing operations as its measure of revenues from external customers at the segment level. This measure is separately included in the financial information regularly provided to the CODM.

Earnings before interest and taxes (“EBIT”) from ongoing operations is a non-GAAP financial measure included in the reconciliation of segment financial information to consolidated results for the Company. It is not intended to represent the stand-alone results for Tredegar’s ongoing operations under GAAP and should not be considered as an alternative to net income as defined by GAAP. We believe EBIT is a widely understood and utilized metric that is meaningful to certain investors and that including this financial metric in the reconciliation of management’s performance metric, EBITDA from ongoing operations, provides useful information to those investors that primarily utilize EBIT to analyze the Company’s core operations.

See the table in Note 513 to the Consolidated Financial Statements in Item 15 for a reconciliation of this non-GAAP measure to GAAP.

THE IMPACT OF COVID-19 AND RELATED FINANCIAL CONSIDERATIONS

Essential Business and Employee Considerations

The Company’s priorities during the COVID-19 pandemic continue to be to protect the health and safety of employees while keeping its manufacturing sites open due to the essential nature of many of its products. The Company has continued to manufacture the full range of products at its facilities.

The Company’s protocols to protect the health and well-being of its employees from COVID-19 continue to evolve as the Centers for Disease Control, the Office of the ~~Notes~~Surgeon General and other state and local health departments learn more about the virus and its variants. Consistent with recommendations and mandates from government agencies and health authorities, the Company has implemented multiple layers of COVID-19 protections and interventions.

The Company has engaged in an education campaign that provides employees with the most accurate and up-to-date information related to COVID-19 vaccines and has offered different monetary and/or time-away-from-work incentives to encourage employees to get vaccinated with the primary dose(s) and to get a booster shot once eligible. The Company will continue to monitor available information to assess safeguards that may be taken to try to prevent a COVID-19 outbreak in the workplace.

Aluminum Extrusions, also known as Bonnell Aluminum, continues to experience higher than normal absenteeism and hiring difficulties, which it attributes to COVID-19-related factors, including high COVID-19 transmission rates in the geographic areas where its plants are located. While the average number of direct labor employees at Bonnell Aluminum facilities increased approximately 9% in the fourth quarter of 2021, compared with the abnormally low levels related to the pandemic in the second and third quarters of 2020, there continues to be a shortage of labor to meet existing demand and desired shipment levels. Moreover, onboarding new employees has resulted in higher hiring and training costs and labor inefficiencies in 2021 versus last year.

All three of the Company's business segments are managing through supply chain disruptions and escalating costs, including raw material cost increases, shortages, transportation cost increases and delays. To offset growing cost pressures, Bonnell Aluminum implemented a selling price increase effective January 3, 2022, which followed two price increases in 2021. In response to unprecedented cost increases and supply issues for polyethylene and polypropylene resin, PE Films implemented a quarterly resin cost pass-through mechanism, effective July 1, 2021, for all products and customers not previously covered by such arrangements. Flexible Packaging Films, which is also known as Terphane, which is headquartered in Brazil, continues to monitor cost escalations to adjust selling prices as market dynamics permit.

Financial ~~Statements~~ Considerations

Approximately 58% of Bonnell Aluminum’s sales volume in 2021 was related to building and construction (“B&C”) markets (non-residential B&C of 51% and residential B&C of 7%). Non-residential B&C volume started to decline in the fourth quarter of 2020 after the fulfillment of contracts that existed at the start of the COVID-19 pandemic. Market demand in this sector has recently been strong but not fully realized in Bonnell Aluminum's fourth quarter and full year 2021 results due to pandemic-related labor shortages and resulting production inefficiencies. Non-residential B&C volume declined 4% versus the fourth quarter of 2020 and 11% versus full year 2020. However, current bookings and backlog remain at record high levels which the Company believes will bode well for future results when production constraints are alleviated.

The Surface Protection component of PE Films had record EBITDA from ongoing operations in 2020 but experienced a ~~presentation~~decline in volume in 2021, primarily related to a previously disclosed customer product transition unrelated to the pandemic. In addition, the lag in the pass-through of ~~Tredegar’s~~significant pandemic-related increases in resin costs, and some of such cost increases incurred prior to mid-year that will not be recovered even on a lagging basis, have adversely impacted PE Films’ profitability in 2021.

At Terphane, the Company believes that the pandemic-related surge in demand for flexible packaging films that began in early 2020 returned to lower pre-pandemic levels during the second quarter of 2021.

OPERATIONS REVIEW

Segment Analysis. A summary of results for 2021 versus 2020 for each of the Company’s reporting segments is shown below.

Aluminum Extrusions

A summary of results for Aluminum Extrusions is provided below:


	Year Ended				Favorable/
(In thousands, except percentages)	December 31,				(Unfavorable)
	2021		2020		% Change
Sales volume (lbs)	183,367		186,391		(1.6)	%
Net sales	$	539,325	$	455,711	18.3	%
Ongoing operations:
EBITDA	$	55,948	$	55,137	1.5	%
Depreciation & amortization	(16,272)		(17,403)		6.5	%
EBIT	$	39,676	$	37,734	5.1	%
Capital expenditures	$	18,914	$	10,260

Net sales in 2021 increased by 18.3% versus 2020. The annual increase in net sales was primarily due to an increase in average selling prices to cover significantly higher aluminum raw material costs and higher operating ~~profit~~costs, partially offset by ~~segment~~lower sales volume. Sales volume in 2021 decreased by 1.6% versus 2020. Increased shipments in the specialty sector were offset by declines in B&C and automotive markets. All end markets served within the specialty sector experienced growth. The Company believes that declines in the non-residential B&C market resulted mainly from COVID-19-related labor shortages, with a portion of the decline in automotive sales volume associated with supply chain issues in the automotive industry.

EBITDA from ongoing operations in 2021 increased by $0.8 million versus 2020 due to higher pricing ($13.6 million net of the pass-through of aluminum raw materials costs), partially offset by higher labor and employee-related costs ($7.2 million) and other inflationary operating costs such as higher supply expenses ($6.4 million), lower labor productivity ($1.6 million), higher freight expenses ($3.2 million) and higher selling, general and administrative costs ($3.2 million). In addition, the timing of the flow through under the first-in first-out method of aluminum raw material costs passed through to customers, previously acquired at lower prices in a quickly rising commodity pricing environment, resulted in a benefit of $6.9 million in 2021 versus a charge of $1.3 million in 2020.

Projected Capital Expenditures and Depreciation & Amortization

Capital expenditures are projected to be $30 million in 2022, including $15 million for new ERP/MES, $6 million for infrastructure upgrades at the ~~years ended December 31, 2017~~facilities located in Niles, Michigan, Carthage, Tennessee and ~~2016.~~

Newnan, Georgia, and $3 million for other strategic projects. The ERP/MES project is expected to cost $28 million over a two-year time span. In addition to strategic projects, approximately $6 million will be required to support continuity of current operations. Depreciation expense is projected to be $14 million in 2022. Amortization expense is projected to be $3 million in 2022.

PE Films

A summary of ~~operating~~ results for PE Films is provided below:


	Year Ended				Favorable/
(In thousands, except percentages)	December 31,				(Unfavorable)
	2021		2020		% Change
Sales volume (lbs)	39,429		45,175		(12.7)	%
Net sales	$	118,920	$	139,288	(14.6)	%
Ongoing operations:
EBITDA	$	27,694	$	45,107	(38.6)	%
Depreciation & amortization	(6,263)		(6,762)		7.4	%
EBIT	$	21,431	$	38,345	(44.1)	%
Capital expenditures	$	2,997	$	6,024

(In thousands, except percentages)
Year Ended
December 31

Favorable/
(Unfavorable)
2017 2016 % Change
Sales volume (lbs) 138,999
139,020
— %
Net sales $ 352,459
$ 331,146
6.4 %
Operating profit from ongoing operations $ 41,546
$ 26,312
57.9 %

Net sales in ~~2017 increased~~2021 decreased by ~~$21.3~~$20.4 million versus ~~2016 primarily due to:~~

~~Higher sales from surface protection films ($15.1 million),~~2020, primarily due to ~~higher~~lower volume and ~~a favorable~~unfavorable mix associated with the previously disclosed customer product transitions in Surface Protection, partially offset by higher pricing associated with the pass-through of increased resin costs.

EBITDA from ongoing operations in 2021 decreased by $17.4 million versus 2020 primarily due to:

•A $19.4 million decrease from Surface Protection primarily related to lower sales ~~mix;~~ and

~~Higher volume~~unfavorable mix associated with the customer product transitions ($14.8 million), lower sales and unfavorable mix for ~~acquisition distribution layer materials~~products unrelated to customer product transitions ($3.4 million), margin erosion associated with higher resin costs that occurred before the resin index pricing plan was fully implemented ($1.4 million), the pass-through lag associated with higher resin costs ($1.4 million), and ~~overwrap products, and a favorable sales mix in personal care materials~~higher freight expense ($~~12.0~~1.0 million), partially offset by ~~volume reductions~~production efficiencies and cost savings ($1.9 million) and lower research and development spend ($0.4 million);

•A $0.1 million increase from Pottsville Packaging; and

•A $2.7 million favorable variance associated with the ~~winding down~~divestiture of ~~known lost business in personal care that was substantially completed by~~Bright View Technologies at the end of ~~2016 ($6.2 million).~~

2020.

~~Operating profit from ongoing operations~~Customer Product Transitions and Other Factors in ~~2017 increased by $15.2 million versus 2016 primarily due to:~~

~~Higher contribution to profits from surface protection films ($12.3 million), primarily due to higher volume, a favorable sales mix, and production efficiencies;~~

Higher contribution to profits from personal care materials, primarily due to improved volume, production efficiencies and favorable pricing ($7.3 million), partially offset by known lost business ($2.1 million);

~~A benefit for inventories accounted for under the LIFO method of $1.1 million in 2017 versus a charge of $0.9 million in 2016; and~~

Higher net general, selling and plant expenses ($7.3 million), primarily associated with strategic hires and an increase in employee incentive costs, partially offset by realized cost savings of $3.1 million associated with the North American facility consolidation.

Surface Protection

The North American facility consolidation was completed in the third quarter of 2017, with expected annualized savings, excluding depreciation expense, of approximately $6 million. Total pretax cash expenditures for this multi-year project were $16.0 million, which included $11.2 million of capital expenditures.

~~The surface protection operating segment~~Surface Protection component of PE Films supports manufacturers of optical and other specialty substrates used in flat panel display products. These films are primarily used by customers to protect components of displays in the manufacturing and transportation ~~process~~processes and then discarded.

AsThe Company previously ~~discussed,~~reported the ~~Company believes that over the next few years, there is an increased~~ risk that a portion of its film products used in surface protection applications ~~will~~would be made obsolete by ~~possible future~~ customer product transitions to less costly alternative processes or materials. The Company estimates ~~on a preliminary basis~~ that these transitions, which principally relate to one customer, adversely impacted EBITDA from ongoing operations for PE Films by $14.8 million during 2021 versus 2020. A further decline of $7 million in EBITDA from ongoing operations due to the ~~annual~~transitions is expected in 2022 versus 2021, at which time the transitions are expected to be complete.

The Surface Protection business is also experiencing competitive pricing pressures, unrelated to the customer product transitions, that are expected to adversely impact EBITDA from ongoing operations by approximately $6 million in 2022 versus 2021. To offset the expected adverse impact on ongoing operating profit from customer shifts to alternative processes or materials in surface protection is in the range of up to $5 to $10 million. Given the technological and commercial complexity involved in bringing these alternative processes or materials to market, the Company is very uncertain as to the timing and ultimate amount of the ~~possible transitions. In response,~~customer transitions and pricing pressures, the Company is aggressively pursuing and making progress in generating contribution from sales of new surface protection products, applications and ~~customers.~~

~~The Company continues~~customers and driving production efficiencies and cost savings. Annual contribution to anticipate a significant product transition after 2018 in the personal care operating segment of PE Films. The Company currently estimates that this will adversely impact the annual sales of the business unit by $70 million sometime between 2019 and 2021. The Company has been increasing its research and development spending (an increase of approximately $6 million in 2017 versus 2014), expects to invest capital, and is accelerating sales and marketing efforts to capture growth and diversify its customer base and product offerings in personal care products. The overall timing and net change in personal care’s revenues and profits and the capital expenditures needed to support growth during this transition period are uncertain at this time. The loss of this business without replacement with new business could trigger impairment of personal care’s long-lived assets and goodwill; see ~~Impairment and Useful Lives of Long-lived Assets and Goodwill~~ ~~in the~~ ~~Critical Accounting Policies~~ ~~section for more information.~~

~~Restructuring~~

~~In July 2015, the Company began a consolidation of its domestic production~~EBITDA from ongoing operations for PE Films ~~by restructuring~~from sales of products unrelated to previously disclosed customer product transitions increased $7 million for the ~~operations in its manufacturing facility in Lake Zurich, Illinois. This restructuring was completed~~two-year period ended December 31, 2021, which excludes the impact of resin pass-through lag but includes the adverse impact of customer inventory corrections, customer production slowdowns associated with COVID-19-related factors, and a slowdown in the ~~third~~television market in the fourth quarter of 2017, with expected annualized savings excluding depreciation expenses of $6.0 million. Total expenses associated with the restructuring were $0.8 million in 2017 (included in “Cost of goods sold” in the consolidated statements of income) and the total expenses for the project since inception were $7.3 million. Cash expenditures for the North American facility consolidation project were $1.9 million in 2017, which includes capital expenditures of $0.1 million. Total cash expenditures for the project since inception were $16.0 million, which includes $11.2 million for capital expenditures. Additional cash payments for remaining accrued costs of approximately $0.5 million are expected to be paid within the next 12 months.2021.

Projected Capital Expenditures and Depreciation & Amortization

~~Capital expenditures in PE Films were $15.0 million in 2017 compared to $25.8 million in 2016.~~ Capital expenditures are projected to be ~~$53~~$5 million in ~~2018,~~2022, including: North American capacity expansion for elastics products in personal care ($25 million); new capacity and upgrades for next generation products in surface protection ($9 million); other growth and strategic projects ($9 million); and approximately $10$3 million for ~~routine~~productivity projects and $2 million for capital expenditures required to support continuity of current operations. ~~Depreciation expense was $14.5 million in 2017 and $13.5 million in 2016.~~ Depreciation expense is projected to be ~~$16~~$7 million in ~~2018.~~2022. There is no amortization expense for PE Films.

Flexible Packaging Films

A summary of ~~operating~~ results for Flexible Packaging Films is provided below:


	Year Ended				Favorable/ (Unfavorable) % Change
(In thousands, except percentages)	December 31,
	2021		2020
Sales volume (lbs)	104,569		113,115		(7.6)	%
Net sales	$	139,978	$	134,605	4.0	%
Ongoing operations:
EBITDA	$	31,684	$	30,645	3.4	%
Depreciation & amortization	(1,988)		(1,761)		(12.9)	%
EBIT	$	29,696	$	28,884	2.8	%
Capital expenditures	$	5,603	$	4,959

(In thousands, except percentages)
Year Ended
December 31

Favorable/
(Unfavorable)
2017 2016 % Change
Sales volume (lbs) 89,325
89,706
(0.4 )%
Net sales $ 108,355
$ 108,028
0.3 %
Operating profit (loss) from ongoing operations $ (2,626 ) $ 1,774
n/a

Sales volume declined by 7.6% in 2021 versus 2020, primarily due to lower demand, resin supply issues, and an equipment failure impacting production. Net sales ~~and sales volume~~ in ~~2017 were relatively flat~~2021 increased 4.0% compared to ~~2016, and adversely impacted by production issues~~2020, primarily due to ~~intermittent power outages at Terphane’s Cabo de Santo Agostinho, Brazil plant during~~higher selling prices from the ~~third quarter.~~pass-through of higher resin costs and favorable product mix, partially offset by lower sales volume.

~~Terphane had an operating loss~~EBITDA from ongoing operations in ~~2017 of $2.6~~2021 increased by $1.0 million versus ~~an operating profit from ongoing operations in 2016 of $1.8 million. The resulting unfavorable change of $4.4 million for the period was~~2020 primarily due to:

~~Lower production, primarily due to numerous intermittent power outages during~~

•Higher selling prices from the ~~third quarter~~pass-through of higher resin costs ($~~0.5~~11.2 million), favorable product mix ($2.0 million) and lower ~~average sales price~~selling, general, and administration expenses ($~~1.6~~0.7 million), partially offset by ~~a favorable sales mix ($1.5 million);~~

~~Higher~~higher raw material costs ($12.8 million), lower sales volume ($4.9 million) and higher variable costs ($1.7 million);

•Net favorable currency translation of ~~$1.8 million in 2017 that could not be passed through to customers due to competitive pressures versus a benefit from lower raw material~~Real-denominated operating costs ~~of $1.2 million in 2016;~~

($5.9 million);

~~Foreign currency transaction losses primarily associated with U.S. Dollar denominated export sales in Brazil of $0.2 million in 2017 versus~~•Higher foreign currency transaction ~~losses of $3.5 million in 2016;~~

Higher costs and expenses of $3.2 million primarily related to the adverse impact of high inflation in Brazil and the appreciation by approximately 9% of the average exchange rate for the Brazilian Real relative to the U.S. Dollar; and

~~Higher depreciation and amortization costs~~gains ($~~0.9 million).~~

~~Terphane Asset Impairment Loss and Worthless Stock Deduction~~

The Company acquired Terphane in October 2011, and since that time Terphane’s selling prices, margins and overall performance have been adversely impacted by excess industry capacity, particularly in Latin America, and by a period of poor economic conditions in Brazil. Moreover, significant additional capacity came on-line late in the third quarter of 2017 from a competitor in Latin America. As a result, Terphane has struggled with profitability and incurred operating losses from ongoing operations in two of the last five years, including an operating loss of $2.6 million in 2017. Terphane’s quarterly financial results have been volatile, and the Company expects continued uncertainty and volatility until industry capacity utilization and the competitive dynamics in Latin America improve. Furthermore, while industry economics are suffering with excess

~~capacity, Terphane is currently operating at full capacity utilization and needs to spend approximately $1.8 million (including capital expenditures of $1 million and project expenses of $0.8~~1.2 million) in ~~2018 to re-start an idled production line to participate~~2021 versus 2020; and

•Lower value-added tax credits received in ~~expected market growth and defend its market share.~~2021 ($0.5 million) versus 2020.

During the fourth quarter of 2017, in conjunction with annual business planning as well as valuation activities and other efforts, the Company determined that the carrying value of Terphane’s remaining long-lived assets were impaired (Terphane’s goodwill was written off in 2015). Accordingly, the Company wrote down these assets based on an enterprise valuation for all of Terphane of approximately $30 million. This write-down resulted in a non-cash asset impairment loss recognized during the fourth quarter of 2017 of $101 million ($87 million after non-cash tax benefits).

Also during the fourth quarter of 2017, as a result of the valuation activities referred to above, the Company claimed an ordinary loss for U.S. federal and state income tax purposes of $153 million for the write-off of the stock basis of Terphane Limitada (Terphane’s Brazilian subsidiary). The Terphane Limitada worthless stock deduction resulted in an overall reduction of Tredegar’s U.S. income tax liability of approximately $49 million. Approximately $36 million of the benefit is expected to be realized in cash in 2018 with the balance of $13 million expected to be realized in cash mostly in 2019. The full net tax benefit expected from the Terphane Limitada worthless stock deduction of $49 million was accrued during the fourth quarter of 2017 and reflected as a reduction to Tredegar’s consolidated income tax expense. During the second quarter of 2017, the Company recognized a worthless stock deduction for Terphane, Inc. (Terphane’s U.S. subsidiary), which resulted in an income tax benefit recognized of $8.1 million.

~~Capital Expenditures, Depreciation & Amortization~~

Capital expenditures in Flexible Packaging were $3.6 million in 2017 compared to $3.4 million in 2016. Capital expenditures are projected to be $5 million in 2018, including approximately $1 million to re-start the idled production line referred to above and $4 million for routine items required to support operations. Depreciation expense was $7.5 million in 2017 and $6.7 million in 2016. Depreciation expense is projected to be $1 million in 2018. Amortization expense was $3.0 million in 2017 and $2.8 million in 2016, and is projected to be $0.5 million in 2018. Depreciation and amortization expense projections for 2018 are significantly lower than 2017 actual amounts due to the write-down of Terphane’s long-lived assets during the fourth quarter of 2017.

~~Aluminum Extrusions~~

~~A summary of operating results for Aluminum Extrusions, including the results of Futura Industries Corporation (“Futura”) (except sales volume) since its date of acquisition, is provided below:~~

(In thousands, except percentages)
Year Ended
December 31

Favorable/
(Unfavorable)
2017 2016 % Change
Sales volume (lbs)* 176,269
172,986
1.9 %
Net sales $ 466,833
$ 360,098
29.6 %
Operating profit from ongoing operations $ 43,454
$ 37,794
15.0 %
*Excludes sales volume for Futura, which was acquired on February 15, 2017.

Net sales in 2017 increased versus 2016 primarily due to the addition of Futura. Futura contributed net sales of $71.0 million in 2017. Excluding the impact of Futura, net sales improved due to higher sales volume, improved product mix, and an increase in average selling prices primarily due to the pass-through to customers of higher market-driven raw material costs.

Volume on an organic basis (which excludes the impact of the Futura acquisition) in 2017 increased by 1.9% versus 2016. Higher volume in specialty and automotive & light truck markets were the primary drivers.

~~Operating profit in 2017 increased by $5.7 million versus 2016. Excluding the favorable profit impact of Futura ($8.2 million), operating profit decreased $2.5 million, primarily due to:~~

~~Higher volume and inflation-related sales prices ($7.3 million benefit);~~

~~Increased operating costs, including utilities and employee-related expenses and higher depreciation ($3.9 million);~~

~~Higher costs associated with the startup of the new press at the Niles, Michigan plant, resulting from disruptions to normal plant production ($4.3 million); and~~

~~A charge for inventories accounted for under the LIFO method of $1.3 million in 2017 versus a benefit of $0.5 million in 2016.~~

~~Cast House Explosion~~

On June 29, 2016, the Bonnell Aluminum plant in Newnan, Georgia suffered an explosion in the casting department, causing significant damage to the cast house and related equipment. The Company completed the process of replacing the damaged casting equipment, and the cast house resumed production in the third quarter of 2017. Bonnell Aluminum has various forms of insurance to cover losses associated with this type of event.

During 2017, Bonnell incurred $5.6 million of additional operational expenses as a result of the explosion; $5.5 million of this amount has been fully offset by insurance recoveries. Also, $0.6 million of additional operational expenses incurred in 2016 that were previously considered not reasonably assured of being covered by insurance recoveries were recovered. Each of these amounts is recorded in “Plant shutdowns, asset impairments, restructurings and other” in the Operating Profit table in Note 5 of the ~~Notes to Financial Statements~~ and in “Cost of goods sold” in the Consolidated Statements of Income. In the fourth quarter of 2017, all remaining insurance claims associated with this matter were settled, and a gain on involuntary conversion of the old cast house of $5.3 million was recorded in “Other income (expense), net” in the Consolidated Statements of Income and in “Plant shutdowns, asset impairments, restructurings and other” in the Operating Profit table in Note 5 of the ~~Notes to Financial Statements~~.

Projected Capital Expenditures and Depreciation & Amortization

Capital expenditures ~~for Aluminum Extrusions were $25.7~~are projected to be $8 million in 2017 compared to $15.9 million in 2016. Capital expenditures in 2017 included: $8 million to complete the extrusions capacity expansion project at the Niles, Michigan, manufacturing facility; expenditures to repair the damage caused by the cast house explosion net of related insurance recoveries (facility upgrades of $2 million); $52022, including $4 million for ~~routine~~new capacity for value-added products and productivity projects and $4 million for capital expenditures required to support ~~legacy operations; and $2 million to support the operations~~continuity of Futura. Projections of capital expenditures for Bonnell Aluminum of $15 million in 2018 include approximately $7 million for infrastructure upgrades and to expand fabrication and machining capabilities, and approximately $8 million for routine items required to supportcurrent operations. Depreciation expense ~~was $11.9 million in 2017, which included $2.9 million from the addition of Futura, compared to $8.1 million in 2016, and~~ is projected to be ~~$13~~$2 million in ~~2018.~~2022. Amortization expense ~~was $3.1 million in 2017, which included $2.1 million from the addition of Futura, and $1.0 million in 2016, and~~ is projected to be $3$0.4 million in ~~2018.~~

~~Futura Acquisition~~

On February 15, 2017, Bonnell Aluminum acquired Futura on a net debt-free basis for approximately $92 million. The amount actually funded in cash at the transaction date was approximately $87 million, which was net of preliminary closing adjustments for working capital and seller transaction-related obligations assumed and subsequently paid by Bonnell Aluminum. In addition, the Company will be refunded $5 million in the first half of 2018 since Futura did not meet certain performance requirements for the 2017 fiscal year. The acquisition, which was funded using Tredegar’s revolving credit facility, is being treated as an asset purchase for U.S. federal income tax purposes. For more information, see “Aluminum Extrusions” in the Business section.2022.

Corporate Expenses, Interest and Income Taxes

Corporate expenses, net, decreased $1.1 million in 2021 versus 2020, primarily due to higher transition service fees, net of corporate costs associated with the 2020 divestiture of the Personal Care Films business ($1.1 million).

Interest expense increased to $3.4 million in 2021 from $2.6 million in 2020, primarily due to higher average debt levels.

The effective tax rate used to compute income taxes for continuing operations in 2021 was 13.8% compared to 32.8% in 2020. The differences between the U.S. federal statutory rate and the effective tax rate for 2021 and 2020 are shown in Note 12 to the Consolidated Financial Statements in Item 15.

Pension expense was ~~$10.1~~$14.1 million in ~~2017,~~2021, a favorable change of ~~$0.8~~$0.5 million from ~~2016. Most of the~~2020. The impact on earnings from ~~lower~~ pension expense is reflected in “Corporate expenses, net” in the ~~Operating Profit table~~net sales and operating profit by segment statements in Note 513 to the Consolidated Financial Statements in Item 15. On February 10, 2022, Tredegar announced the initiation of a process to terminate and settle its frozen defined benefit pension plan, which could take up to 24 months to complete. In connection therewith, the ~~Notes~~Company borrowed funds under its revolving credit agreement and made a $50 million Special Contribution to ~~Financial Statements~~.reduce its underfunding and as part of a program within the pension plan to hedge or fix the expected future contributions that will be needed by the Company through the settlement process. The Company expects to realize income tax benefits on the Special Contribution of approximately $11 million. Administrative costs for the pension plan through the settlement process are estimated at $4 to $5 million.

As of December 31, 2021 (and before the Special Contribution), the estimated pension plan underfunding under GAAP was $69 million, comprised of investments at fair value of $245 million and a projected benefit obligation (“PBO”) of $314 million. The ultimate settlement benefit obligation may differ from the PBO, depending on market factors for buyers of pension obligations at the time of settlement. Pension expense is projected to be ~~$10.2~~approximately $14 million under GAAP in ~~2018. Corporate expenses, net,~~2022 and zero for ~~ongoing operations increased~~calculating earnings before interest, taxes, depreciation and amortization as defined in 2017 versus 2016 primarily due to higher stock-based employee benefit costs and incentive accruals, partially offset by lower pension expense. In addition, corporate expenses included aggregate charges for business development, environmental, severance, and other special items of $3.9 million in 2017 and $1.6 million in 2016.

Interest expense increased to $6.2 million in 2017 from $3.8 million in 2016, primarily due to higher average debt levels from the acquisition of Futura. Interest expense in 2016 included the write off of $0.2 million in unamortized loan fees from the Company’s revolving credit agreement ~~that was refinanced in the first quarter of 2016.~~

During 2017, the Company recognized a consolidated income tax benefit of $53.2 million based on a pretax loss of $14.9 million. During 2016, the Company recognized a consolidated income tax expense of $3.2 million based on pretax income of $27.7 million. Information on the significant differences between the effective tax rate for income and the U.S. federal statutory rate for 2017 and 2016 are further detailed in the effective income tax rate reconciliation provided in Note 16 of the ~~Notes~~(“Credit EBITDA”), which is used to ~~Financial Statements~~.

The U.S. government enacted the TCJA in December 2017, which, among other impacts, reduces the U.S. federal corporate income tax rate from 35% to 21% beginning in 2018. In the fourth quarter of 2017, the Company recognized a non-cash deferred income tax benefit of $4.4 million for the decrease of its net deferred income tax liabilities, resulting from the 14% tax rate reduction and other applicable tax law changes. No deemed repatriation tax was recorded on unrepatriated earnings of the Company’s foreign subsidiaries as the Company’s foreign subsidiaries have no net cumulative unremitted earnings due to historical repatriation.compute certain borrowing ratios. The Company ~~expects~~estimates that, ~~its effective tax rate for ongoing operations in 2018~~with the Special Contribution, there will ~~drop~~be no required minimum contributions to ~~22% as a result of~~ the ~~TCJA, but how the TCJA will impact the overall competitive dynamics for the Company’s businesses and markets is uncertain.~~pension plan until final settlement.

Total debt was ~~$152.0~~$73.0 million at December 31, ~~2017,~~2021, compared to ~~$95.0~~$134.0 million at December 31, ~~2016.~~2020. Net debt (debt in excess of cash and cash equivalents), a non-GAAP financial measure, was ~~$115.5~~$42.5 million at December 31, ~~2017,~~2021, compared to ~~$65.5~~$122.2 million at December 31, ~~2016.~~2020. The ~~increase~~year-over-year decline in net debt ~~during 2017~~of $79.7 million includes proceeds of $47.1 million from the ~~acquisition~~sale of ~~Futura~~the Company’s investment in kaleo, Inc (“kaléo”). on ~~February 15, 2017. Net debt is calculated as follows:~~

(In millions) December 31, 2017 December 31, 2016
Debt $ 152.0
$ 95.0
Less: Cash and cash equivalents 36.5
29.5
Net debt $ 115.5
$ 65.5

~~Net debt, a financial measure that is not calculated or presented~~December 27, 2021. The Company’s revolving credit agreement allows borrowings of up to $375 million and matures in ~~accordance with GAAP, is not intended to represent debt as defined by GAAP, but is utilized by management in evaluating financial leverage and equity valuation.~~June 2024. The Company believes that ~~investors also may find net debt helpful for~~its most restrictive covenant (computed quarterly) is the ~~same purposes. Consolidated net~~leverage ratio, which permits maximum borrowings of up to 4x Credit EBITDA. The Company had Credit EBITDA and a leverage ratio (calculated in the “Liquidity and Capital Resources” below) of $90.0 million and 0.81x, respectively, at December 31, 2021.

Net capitalization and other credit measures are provided in Liquidity and Capital Resources, below.

Forward-looking and Cautionary Statements

Some of the ~~Financial Condition section.~~information contained in this Form 10-K may constitute “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. When using the words “believe,” “estimate,” “anticipate,” “expect,” “project,” “plan,” “likely,” “may” and similar expressions, Tredegar does so to identify forward-looking statements. Such statements are based on Tredegar’s then current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. It is possible that Tredegar’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in or implied by these forward-looking statements. In addition, the Company's current projections for its businesses could be materially affected by the highly uncertain impact of the COVID-19 pandemic. As a consequence, the Company's results could differ significantly from its projections, depending on, among other

things, the ultimate impact of the pandemic on employees, supply chains, customers and the U.S. and world economies. Accordingly, you should not place undue reliance on these forward-looking statements. For risks and important factors that could cause actual results to differ from expectations, refer to the reports that Tredegar files with or furnishes the SEC from time-to-time, including the risks and important factors set forth in Item 1A. Readers are urged to review and consider carefully the disclosures Tredegar makes in the reports Tredegar files with or furnishes to the SEC. Tredegar does not undertake, and expressly disclaims any duty, to update any forward-looking statement to reflect any change in management’s expectations or any change in conditions, assumptions or circumstances on which such statements are based, except as required by applicable law.

Critical Accounting Policies and Estimates

~~In the ordinary course of business, the Company makes a number of estimates and assumptions relating to the reporting of results of operations and financial position in the~~The preparation of financial statements in ~~conformity~~accordance with ~~GAAP.~~GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Certain accounting policies, as described below, are considered "critical accounting policies" because they are particularly dependent on estimates made by management about matters that are inherently uncertain and could have a material impact on the Company’s consolidated financial statements. Estimates and judgments are based on historical experience, forecasted events and various other assumptions that management believes are reasonable under the circumstances. Actual results could differ significantly from those estimates under different assumptions and conditions. ~~The Company believes the following discussion addresses its critical~~A summary of all of our significant accounting ~~policies. These~~ policies ~~require management to exercise judgments that are often difficult, subjective and complex due~~is included in Note 1 to the ~~necessity of estimating the effect of matters that are inherently uncertain.~~Consolidated Financial Statements in Item 15.

Impairment ~~and Useful Lives~~ of ~~Long-lived Identifiable Assets and~~ Goodwill

The Company assesses its long-lived identifiable assets for impairment when events or circumstances indicate that their carrying value may not be recoverable from future cash flows. Any necessary impairment charges are recorded when the Company does not believe the carrying value of the long-lived asset(s) will be recoverable. Tredegar also reassesses the useful lives of its long-lived assets based on changes in the business and technologies.

The Company assesses goodwill for impairment when events or circumstances indicate that the carrying value may not be recoverable, or, at a minimum, on an annual basis (December 1^st of each year). When assessing goodwill for impairment, accounting guidance allows the Company to first perform a qualitative assessment about the likelihood of the carrying value of a reporting unit exceeding its fair value, referred to as the Step 0 assessment. The Step 0 assessment requires the evaluation of certain qualitative factors, including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance, as well as company and reporting unit factors. If the Company's Step 0 analysis indicates that it is more likely than not that the fair value of a reporting unit is less than the carrying amount, then the Company would perform a quantitative impairment test.

As of December ~~31, 2017,~~1, 2021, the Company’s reporting units with goodwill were Surface Protection in PE Films and Futura in Aluminum ~~Extrusions carried~~Extrusions. Both of these reporting units have separately identifiable operating net assets (operating assets including goodwill ~~balances. Goodwill~~and identifiable intangible assets net of operating liabilities). In addition, 2021 the ~~PE Films operating units, Personal Care and~~Company applied the Step 0 goodwill assessment to Surface Protection and Futura; both had fair values significantly in excess of their carrying amounts when last tested using the quantitative impairment test. The Company's Step 0 analyses in 2021 of these reporting units concluded that it is not more likely than not that the fair values of each reporting unit was less than its carrying amount. Therefore, the quantitative goodwill impairment tests for these reporting units were not necessary in 2021. The Surface Protection and Futura reporting units had goodwill in the amounts of ~~$46.8~~$57.3 million and $57.3 million, respectively, was tested for impairment at the annual testing date, with the estimated fair value of these reporting units exceeding the carrying value of their net assets by approximately 15% and +100%, respectively, at December 1, 2017.

All goodwill associated with Flexible Packaging Films was impaired in the third quarter of 2015. In 2017, Flexible Packaging Films’ recorded a charge for the impairment of assets in the amount of $101 million. As part of this write-down, trade names, customer relationships and proprietary technology were impaired by $4.0 million, $9.4 million and $4.1 million, respectively, reducing their values to $2.4 million, $0.8 million and $0.4 million, respectively. The remaining part of the write-down was related to property, plant and equipment. See ~~Terphane Asset Impairment Loss and Worthless Stock Deduction~~ in ~~Flexible Packaging Films~~ ~~in the~~ ~~Executive Summary~~ ~~section for more details.~~

Goodwill of the Aluminum Extrusions operating units are associated with the October 2012 acquisition of AACOA and the February 2017 acquisition of Futura. The estimated fair value of AACOA and Futura exceeded the carrying value of their net assets by approximately 61% and 42%, respectively, at December 1, 2017. Goodwill for AACOA and Futura totaled $13.7 million and $10.4$13.3 million, respectively, at December 31, ~~2017.~~2021.

In assessing the recoverability of goodwill and long-lived identifiable assets, the Company primarily estimates fair value using discounted cash flow analysis and comparative enterprise value-to-EBITDA (earnings before interest, taxes, depreciation and amortization) multiples. These calculations require management to make assumptions regarding estimated future cash flows, discount rates and other factors to determine if an impairment exists. If these estimates or their related assumptions change in the future, the Company may be required to record additional impairment charges.

In addition to the impairment of Terphane’s assets, based upon assessments performed as to the recoverability of other long-lived identifiable assets, the Company recorded an asset impairment loss for continuing operations of $1.2 million, $0.6 million and $0.2 million in 2017, 2016 and 2015, respectively.

~~Investment Accounted for Under the Fair Value Method~~

In August 2007 and December 2008, Tredegar made an aggregate investment of $7.5 million in kaléo (formerly Intelliject, Inc.), a privately held specialty pharmaceutical company. This investment is accounted for under the fair value method. At the time of the initial investment, the Company elected the fair value option of accounting since its investment objectives were similar to those of venture capitalists, which typically do not have controlling financial interests (venture capital funds generally use the fair value method to account for their investment portfolios). At December 31, 2017, Tredegar’s ownership interest was approximately 20% on a fully diluted basis.

The Company discloses the level within the fair value hierarchy in which fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). On the dates of its investments, Tredegar believes that the amount it paid for its ownership interest and liquidation preferences was based on Level 2 inputs, including investments by other investors. Subsequent to the last round of financing, and until the next round of financing, the Company believes fair value estimates are based upon Level 3 inputs since there is no secondary market for Tredegar’s ownership interest. Accordingly, after the latest financing and until the next round of financing or any other significant financial transaction, fair value estimates will primarily be based on assumptions relating to meeting cash flow projections and discounting of these factors for the high degree of risk. Adjustments to the estimated fair value of this investment will be made in the period upon which such changes can be quantified.

At December 31, 2017 and 2016, the fair value of the Company’s investment in kaléo (also the carrying value, which is separately stated in the consolidated balance sheets) was estimated at $54.0 million and $20.2 million, respectively. The weighted average cost of capital used in the fair market valuation of the Company’s interest in kaléo was 45% at both December 31, 2017 and 2016. Ultimately, the true value of the Company’s ownership interest in kaléo will be determined if and when a liquidity event occurs, and the ultimate value could be materially different from the $54.0 million estimated fair value at December 31, 2017. The fair market valuation of Tredegar’s interest in kaléo is sensitive to changes in the weighted average cost of capital used to discount cash flow projections for the high degree of risk and wide range of possible outcomes. At December 31, 2017, the effect of a 500 basis point decrease in the weighted average cost of capital assumption would have further increased the fair value of the Company’s interest in kaléo by approximately $11 million, and a 500 basis point increase in the weighted average cost of capital assumption would have decreased the fair value of the Company’s interest by approximately $10 million. See Note 4 of the ~~Notes to Financial Statements~~ ~~for more information.~~

Pension Benefits

Tredegar sponsors noncontributory defined benefit (pension) plans ~~in its continuing operations~~ that have resulted in varying amounts of net pension income or expense, as developed from actuarial valuations. Inherent in these valuations are key assumptions including discount rates and the expected return on plan ~~assets and rate of future compensation increases.~~assets. The Company is required to consider current market conditions, including changes in interest rates and plan asset investment returns, in determining these assumptions. Actuarial assumptions may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants. These differences may result in a significant impact to the amount of net pension income or expense recorded in future periods.

The discount rate is used to determine the present value of future payments. The discount rate is the single rate that, when applied to expected benefit payments, provides a present value equal to the present value of expected benefit payments determined by using the AA-rated bond yield curve. In general, the pension liability increases as the discount rate decreases and vice versa. The weighted average discount rate utilized was ~~3.72%~~2.90%, ~~4.29%~~2.57% and ~~4.55%~~3.27% at the end of ~~2017, 2016~~2021, 2020 and ~~2015,~~2019, respectively, with changes between periods due to changes in market interest rates. Pay for active participants of the plan was frozen as of December 31, 2007. As of January 31, 2018, the plan no longer accrued benefits associated with crediting employees for service, thereby freezing all future benefits under the plan. On February 10, 2022, Tredegar announced the initiation of a process to terminate and settle its frozen defined benefit pension plan, which could take up to 24 months to complete. As the settlement process occurs, the Company expects to recognize a non-cash reclassification adjustment to net income or loss of other comprehensive net actuarial losses associated with the pension plan currently reflected directly in shareholders’ equity. Other comprehensive net actuarial losses associated with the pension plan were approximately $109 million on a pretax basis as of December 31, 2021.

A lower expected return on plan assets increases the amount of expense and vice versa. Decreases in the level of actual plan assets will also serve to increase the amount of pension expense. The total return on plan assets (net of fees and plan expenses), which is primarily affected by the change in fair value of plan assets, current year contributions and current year payments to participants, was approximately ~~11.6%, 7.9%~~10.4% in 2021, 10.9% in 2020 and ~~(1.8)%~~11.8% in ~~2017, 2016 and 2015, respectively.~~2019. The expected long-term rate return ~~on plan assets relating to continuing operations, which is estimated by~~of 3.05%, 5.00% and 6.00% in 2021, 2020 and 2019 was developed through consultation with the Company’s investment advisors. Several factors were considered, including prevailing and planned strategic asset ~~class~~allocations, current and ~~generally based on~~expected future market conditions, inflation-adjusted historical returns, volatilities, risk premiums and managed asset ~~premiums, was 6.50%, 7.00% and 7.50% in 2017, 2016 and 2015, respectively.~~premiums. The Company anticipates that its expected long-term return on plan assets will be ~~6.50%~~3.05% for ~~2018.~~2022. See Note ~~13 of~~8 to the ~~Notes to~~Consolidated Financial Statements in Item 15 for more information on expected long-term return on plan assets and asset mix.

See the Executive Summary section above for further discussion regarding the financial impact of the Company’s pension plans.

Income Taxes

~~On a quarterly basis, Tredegar reviews its judgments regarding uncertain~~Current tax ~~positions~~liabilities and assets are recognized for the estimated taxes payable or refundable, respectively, on the tax returns for the current year. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accordingly, accounting for income taxes represents the Company’s best estimate of various events and transactions. Tax laws are often complex and may be subject to differing interpretations by the taxpayer and the ~~likelihood that the benefits of~~relevant governmental taxing authorities. In establishing a ~~deferred income tax asset will be realized. As circumstances change, the Company reflects in earnings any adjustments to unrecognized benefits~~provision for ~~uncertain tax positions and valuation allowances for deferred income tax assets.~~

For financial reporting purposes, unrecognized tax benefits on uncertain tax positions were $2.0 million, $3.3 million and $4.0 million as of December 31, 2017, 2016 and 2015, respectively. Tax payments resulting from the successful challenge by the taxing authority on uncertain tax positions taken by Tredegar would possibly result in the payment of interest and penalties. Accordingly, the Company also accrues for possible interest and penalties on uncertain tax positions. The balance of accrued interest and penalties on deductions taken relating to uncertain tax positions was $0.1 million, $0.1 million and $0.4 million at December 31, 2017, 2016 and 2015, respectively ($0.1 million, $0.1 million and $0.2 million, respectively, net of corresponding U.S. federal and state income tax benefits). Accruals for possible interest and penalties on uncertain tax positions are reflected in income tax expense, ~~for financial reporting purposes.~~

Tredegar ~~or one~~must make judgments and interpretations about the application of ~~its subsidiaries, files income~~ tax ~~returns~~laws. The Company must also make estimates about when in the ~~U.S. federal jurisdiction,~~future certain items will affect taxable income in the various ~~states and jurisdictions outside~~taxing jurisdictions.

A valuation allowance is recorded in the ~~U.S. With few exceptions, Tredegar~~period when the Company determines that it is ~~no longer subject to U.S. federal, state~~more likely than not that all or ~~non-U.S. income tax examinations by tax authorities for years before 2014.~~

Asa portion of ~~December 31, 2017 and 2016, valuation allowances relating to~~ deferred income tax assets ~~were $28.5 million~~may not be realized. The establishment and ~~$12.7 million, respectively. For more~~removal of a valuation allowance requires the Company to consider all positive and negative evidence and make a judgmental decision regarding the amount of valuation allowance required as of a reporting date.

Tredegar may be required to change its provision for income taxes when estimates used in determining valuation allowances on deferred tax assets significantly change, or when new information indicates the need for adjustment in valuation allowances. Additionally, future events, such as changes in tax laws, tax regulations, or interpretations of such laws or regulations, could have an impact on the provision for income tax and the effective tax rate. Any such changes could significantly affect the amounts reported in the financial statements in the year these changes occur.

See Note 12 to the Consolidated Financial Statements in Item 15 for additional information on ~~deferred~~ income ~~tax assets and liabilities, see Note 16 of the~~ ~~Notes to Financial Statements~~.taxes.

~~Recently Issued Accounting Standards~~

~~Refer to the section~~ ~~Recently Issued Accounting Statements~~ ~~in Note 1 of the~~ ~~Notes to Financial Statements~~ ~~for information concerning the effect of recently issued accounting pronouncements.~~

Results of ~~Continuing~~ Operations

~~2017~~2021 versus ~~2016~~2020

Revenues. Sales in ~~2017~~2021 increased by ~~16.1%~~9.4% compared with ~~2016 due to higher sales in all segments and, in particular, from the acquisition of Futura by Aluminum Extrusions in February 2017.~~2020. Net sales increased ~~6.4%~~18.3% in Aluminum Extrusions primarily due to an increase in average selling prices to cover significantly higher aluminum raw material costs and higher operating costs, partially offset by lower sales volume. Net sales decreased 14.6% in PE Films primarily due to ~~increased~~lower volume and ~~favorable sales~~unfavorable mix ~~for surface protection films, acquisition distribution layer materials and overwrap products.~~associated with the previously disclosed customer product transitions in Surface Protection, partially offset by higher pricing associated with the pass-through of increased resin costs. Net sales ~~were relatively flat~~increased in Flexible Packaging Films ~~(0.3% increase). Net sales increased 29.6% in Aluminum Extrusions~~by 4.0% primarily due to higher selling prices from the ~~acquisition~~pass-through of ~~Futura,~~ higher ~~sales volume, improved~~resin costs and favorable product mix, ~~and an increase in average selling prices primarily due to the pass-through to customers of higher market-driven raw material costs.~~partially offset by lower sales volume. For more information on changes in net sales and volume, see the Executive Summary.section above.

Operating Costs and Expenses. Consolidated gross profit ~~margin~~ (sales minus cost of goods sold and ~~freight~~freight) as a percentage of ~~sales)~~sales (gross profit margin) was ~~15.8%~~18.0% in ~~2017~~2021 versus 22.6% in 2020. The gross profit margin in Aluminum Extrusions decreased primarily due to higher labor and ~~15.8% in 2016.~~employee-related costs and other inflationary operating costs such as higher supply expenses, partially offset by higher pricing. The gross profit margin in PE Films ~~increased~~decreased primarily due to Surface Protection lower sales and unfavorable mix associated with the customer product transitions, lower sales and unfavorable mix for products unrelated to customer product transitions, and margin erosion associated with higher ~~revenue, as discussed above,~~resin costs that occurred before the ~~realized cost savings of a restructuring completed in 2017, productivity efficiencies in surface protection films and personal care, and a favorable LIFO inventory adjustment.~~resin index pricing plan was fully implemented. The gross profit margin in Flexible Packaging Films decreased ~~primarily as a result of lower production primarily~~ due to ~~numerous intermittent power outages at Terphane’s Cabo, Brazil plant, during the third quarter,~~lower sales volume and higher raw material ~~and other~~ costs, ~~related to adverse impact of high inflation in Brazil,~~ partially offset by ~~lower foreign currency transaction losses in 2017 versus 2016. The gross profit margin in Aluminum Extrusions increased slightly due to higher sales volume and improved~~favorable product mix ~~noted above, partially offset by increased operating costs, disruptions to normal plant production associated with~~and higher selling prices from the ~~startup~~pass-through of ~~a new press at the Niles, Michigan plant and an unfavorable LIFO adjustment. Consolidated gross profit as a percentage of sales was positively impacted by lower~~

~~pension expense in 2017 compared to 2016. Most of the impact related to pension expense is not allocated to the Company’s business segments.~~

higher resin costs. For more information on changes in operating costs and expenses, see the Executive Summary.section above.

Selling, General and Administrative. As a percentage of sales, selling, general and administrative (“SG&A”) and R&D expenses were ~~10.8%~~9.8% in ~~2017, which decreased from 11.5%~~2021 compared with 12.3% in ~~2016. The decrease in selling, general and administrative~~2020. SG&A and R&D expenses ~~as a percentage~~were down year-over-year, while net sales increased. Decreased spending is primarily due to non-recurring corporate costs associated with the divested Personal

Care Films business, lower R&D spending in PE Films, lower stock-based compensation, and nonrecurring SG&A expenses related to the Bright View Technologies divestiture at the end of ~~sales can be primarily attributed to higher sales as a result of the acquisition of Futura.~~2020.

Plant shutdowns, asset impairments, restructurings and other. ~~Plant~~Pre-tax losses associated with plant shutdowns, asset impairments, restructurings and other items for continuing operations in ~~2017~~2021 detailed below are shown in the statements of net sales and EBITDA from ongoing operations by segment ~~operating profit~~ table in Note 513 to the Consolidated Financial Statements in Item 15 and are ~~described~~included in ~~detail~~“Asset impairments and costs associated with exit and disposal activities, net of adjustments” in ~~Note 17~~the consolidated statements of ~~the~~ ~~Notes to Financial Statements~~.income, unless otherwise noted. A discussion of unrealized gains and losses on investments can also be found in Note ~~4 of~~16 to the ~~Notes~~Financial Statements in Item 15 and additional information on restructuring costs can be found in Note 17 to the Consolidated Financial Statements. in Item 15.


($ in millions)	Q1		Q2		Q3		Q4		2021
Aluminum Extrusions:
(Gains) losses from sale of assets, investment writedowns and other items:
Consulting expenses for ERP feasibility study1	$	—	$	—	$	—	$	0.3	$	0.3
Futura intangible amortization out-of-period adjustment6	—		—		—		(0.9)		(0.9)
Vacation accrual policy change5	—		—		—		(2.9)		(2.9)
Environmental charges at Newnan, Georgia plant3	—		—		0.1		0.1		0.2
COVID-19-related expenses, net of relief 2	(0.2)		0.3		0.1		(0.1)		0.1
Total for Aluminum Extrusions	$	(0.2)	$	0.3	$	0.2	$	(3.5)	$	(3.2)
PE Films:
(Gains) losses associated with plant shutdowns, asset impairments and restructurings:
Other restructuring costs - severance	$	—	$	—	$	0.1	$	0.3	$	0.4
(Gains) losses from sale of assets, investment writedowns and other items:
Vacation accrual policy change5	—		—		—		(0.5)		(0.5)
COVID-19-related expenses2	0.2		0.1		0.1		0.1		0.5
Total for PE Films	$	0.2	$	0.1	$	0.2	$	(0.1)	$	0.4
Flexible Packaging Films:
(Gains) losses from sale of assets, investment writedowns and other items:
One-time tax credit in Brazil for unemployment/social security insurance non-income taxes resulting from a favorable decision by Brazil’s Supreme Court regarding the calculation of such taxes 2,4	$	—	$	(8.5)	$	—	$	—	$	(8.5)
COVID-19-related expenses2	—		—		—		0.1		0.1
Total for Flexible Packaging Films	$	—	$	(8.5)	$	—	$	0.1	$	(8.4)
Corporate:
(Gains) losses associated with plant shutdowns, asset impairments and restructurings:
Costs, net of gain associated with the sale of the Lake Zurich manufacturing facility assets	$	0.2	$	0.2	$	(0.2)	$	(0.1)	$	0.1
Other restructuring costs - severance	—		—		—		0.2		0.2
(Gains) losses from sale of assets, investment writedowns and other items:
Professional fees associated with business development activities and other2	0.8		0.8		0.7		1.6		3.9
Professional fees associated with internal control over financial reporting2	0.2		0.9		0.8		1.2		3.1
Write-down of investment in Harbinger Capital Partners Special Situations Fund2	0.1		0.4		—		—		0.5
Stock compensation expense associated with the fair value remeasurement of awards granted at the time of the 2020 Special Dividend1	0.4		0.1		(0.1)		—		0.4
Transition service fees, net of corporate costs associated with the divested Personal Care Films business2	(0.3)		(0.3)		0.1		0.2		(0.3)
Vacation accrual policy change5	—		—		—		(0.4)		(0.4)
Total for Corporate	$	1.4	$	2.1	$	1.3	$	2.7	$	7.5
1.Included in “Selling, general and administrative expenses” in the consolidated statements of income. 2. Included in “Other income (expense), net” in the consolidated statements of income. 3. Included in "Costs of goods sold" in the consolidated statements of income. 4. For more information, see Note 9 to the consolidated financial statements in Item 15. 5. For more information, see Note 6 to the consolidated financial statements in Item 15. 6. Included in “Amortization of identifiable intangibles” in the consolidated statements of income.

Interest ~~Income and~~ Expense. ~~Interest income, which is included in “Other income (expense), net” in the consolidated statements of income, was $0.2 million in 2017 and $0.3 million in 2016.~~

Interest expense, which is net of amounts capitalized and included in property, plant and equipment ($~~0.4~~0.1 million and ~~$0.3~~$0.1 million capitalized in ~~2017~~2021 and ~~2016,~~2020, respectively), was ~~$6.2~~$3.4 million in ~~2017,~~2021, compared to ~~$3.8~~$2.6 million for 2016. In February 2017, the Company borrowed $87 million under its revolving credit agreement to fund the acquisition of Futura. Interest expense in 2016 included the write-off of $0.2 million in unamortized loan fees from Tredegar’s revolving credit facility that was refinanced in the first quarter of 2016.2020. Average debt outstanding and interest rates were as follows:


(In millions, except percentages)	2017			2016			(In millions, except percentages)	2021			2020
Floating-rate debt with interest charged on a rollover
basis at one-month LIBOR plus a credit spread:
Floating-rate debt with interest charged on a rollover basis at one-month LIBOR plus a credit spread:							Floating-rate debt with interest charged on a rollover basis at one-month LIBOR plus a credit spread:
Average outstanding debt balance	$	175.0		$	103.5		Average outstanding debt balance	$	128.8		$	33.5
Average interest rate	3.0		%	2.3		%	Average interest rate	1.8		%	2.3		%
Fixed-rate and other debt:
Average outstanding debt balance	$	—		$	—
Average interest rate	n/a			n/a
Total debt:
Average outstanding debt balance	$	175.0		$	103.5
Average interest rate	3.0		%	2.3		%

~~Identifiable Assets.~~ ~~A summary of identifiable assets for the year ended December 31, 2017 versus 2016 is provided below:~~

(In thousands) Year Ended
December 31
2017 2016 Variance
PE Films $ 289,514
$ 278,558
$ 10,956
Flexible Packaging Films 49,915
156,836
(106,921 )
Aluminum Extrusions 268,127
147,639
120,488
Subtotal 607,556
583,033
24,523
General corporate 111,696
38,618
73,078
Cash and cash equivalents 36,491
29,511
6,980
Total $ 755,743
$ 651,162
$ 104,581

~~Identifiable assets in PE Films increased at December 31, 2017 from December 31, 2016 primarily due to higher property, plant~~Liquidity and equipment balances as a result of higher current year capital expenditures. Identifiable assets in Flexible Packaging Films decreased at December 31, 2017 from December 31, 2016 due to the impairment of assets recognized during the fourth quarter of 2017. For more information on the impairment, see the ~~Flexible Packaging Films~~ ~~section of the~~ ~~Executive Summary~~. Identifiable assets in Aluminum Extrusions increased at December 31, 2017 from December 31, 2016 primarily due to the acquisition of Futura and higher property, plant and equipment balances as a result of current year capital expenditures, higher accounts receivable balances due to the timing of collections and higher inventory balances. Identifiable assets in

~~General corporate increased at December 31, 2017 from December 31, 2016 due to an increase in income taxes recoverable and an increase in the value of the Company’s investment in kaléo.~~

~~2016 versus 2015~~

~~Revenues.~~ Sales in 2016 decreased by 7.6% compared with 2015 due to lower sales by PE Films and Aluminum Extrusions, partially offset by higher sales by Flexible Packaging Films. Net sales decreased 14.1% in PE Films primarily due to lower volume from lost sales, product transitions and adverse market demand for certain products. Net sales increased 2.6% in Flexible Packaging Films from higher volume partially due to the increase of end-use applications for flexible packaging films in the Latin American market, partially offset by competitive pricing pressures and the pass-through to customers of lower raw material costs. Net sales decreased 4.1% in Aluminum Extrusions primarily due to a decrease in average selling prices driven mainly by lower aluminum costs, partially offset by higher sales volume in the automotive market.

~~Operating Costs and Expenses.~~ Consolidated gross profit margin (sales minus cost of goods sold and freight as a percentage of sales) was 15.8% in 2016 and 15.7% in 2015. The gross profit margin in PE Films decreased due to lower revenue, as discussed above, an unfavorable lag in the pass-through of average resin costs, productivity inefficiencies in surface protection films and an unfavorable LIFO inventory adjustment. The gross profit margin in Flexible Packaging Films increased primarily as a result of higher sales volume, as discussed above, operating efficiencies and lower other costs and expenses, partially offset by net refunds in 2015 of export duties paid. The gross profit margin in Aluminum Extrusions increased primarily as a result of higher volume, production efficiencies, improved management of freight logistics and lower utility costs. Consolidated gross profit as a percentage of sales was positively impacted by lower pension expenses in 2016 compared to 2015. Most of the impact related to pension expense is not allocated to the Company’s business segments.

~~Selling, General and Administrative.~~ As a percentage of sales, selling, general and administrative and R&D expenses were 11.5% in 2016, which increased from 9.8% in 2015. The increase in selling, general and administrative and R&D expenses as a percentage of sales can be primarily attributed to the higher R&D expenses.

~~Plant shutdowns, asset impairments, restructurings and other.~~ ~~Plant shutdowns, asset impairments, restructurings and other items in 2016 are shown in the segment operating profit table in Note 5 and are described in detail in Note 17 of the~~ ~~Notes to Financial Statements. A discussion of unrealized gains and losses on investments can also be found in Note 4 of the~~ ~~Notes to Financial Statements~~.

~~Interest Income and Expense.~~ ~~Interest income, which is included in “Other income (expense), net” in the consolidated statements of income, was $0.3 million in both 2016 and 2015.~~

Interest expense, which is net of amounts capitalized and included in property, plant and equipment ($0.3 million and $0.4 million capitalized in 2016 and 2015, respectively), was $3.8 million in 2016, compared to $3.5 million for 2015. Interest expense in 2016 included the write-off of $0.2 million in unamortized loan fees from Tredegar’s revolving credit facility that was refinanced, in the first quarter of 2016. Average debt outstanding and interest rates were as follows:

(In millions, except percentages) 2016 2015
Floating-rate debt with interest charged on a rollover
basis at one-month LIBOR plus a credit spread:
Average outstanding debt balance $ 103.5
$ 135.1
Average interest rate 2.3 % 2.0 %
Fixed-rate and other debt:
Average outstanding debt balance $ —
$ —
Average interest rate n/a
n/a
Total debt:
Average outstanding debt balance $ 103.5
$ 135.1
Average interest rate 2.3 % 2.0 %

~~Identifiable Assets.~~ ~~A summary of identifiable assets for the year ended December 31, 2016 versus 2015 is provided below:~~

(In thousands) Year Ended
December 31
2016 2015 Variance
PE Films $ 278,558
$ 270,236
$ 8,322
Flexible Packaging Films 156,836
146,253
10,583
Aluminum Extrusions 147,639
136,935
10,704
Subtotal 583,033
553,424
29,609
General corporate 38,618
25,680
12,938
Cash and cash equivalents 29,511
44,156
(14,645 )
Total $ 651,162
$ 623,260
$ 27,902

Identifiable assets in PE Films increased at December 31, 2016 from December 31, 2015 primarily due to higher property, plant and equipment balances as a result of higher current year capital expenditures. Identifiable assets in Flexible Packaging Films increased at December 31, 2016 from December 31, 2015 primarily due to higher property, plant and equipment balances as a result of changes in the value of the U.S. Dollar relative to foreign currencies, partially offset by depreciation and amortization. Identifiable assets in Aluminum Extrusions increased at December 31, 2016 from December 31, 2015 primarily due to higher property, plant and equipment balances as a result of current year capital expenditures, higher accounts receivable balances due to the timing of collections and higher inventory balances. Identifiable assets in General Corporate increased at December 31, 2016 from December 31, 2015 due to an increase in income taxes recoverable, deferred financing fees from the refinancing of the revolving credit facility, and an increase in the value of the Company’s investment in kaléo.

~~Segment Analysis.~~ ~~A summary of operating results for 2016 versus 2015 for each of the Company’s reporting segments is shown below.~~

~~PE Films~~

~~A summary of operating results for PE Films is provided below:~~

(In thousands, except percentages)
Year Ended
December 31

Favorable/
(Unfavorable)
2016 2015 % Change
Sales volume (pounds) 139,020
160,283
(13.3 )%
Net sales $ 331,146
$ 385,550
(14.1 )%
Operating profit from ongoing operations $ 26,312
$ 48,275
(45.5 )%

~~Net sales in 2016 decreased by $54.4 million versus 2015 primarily due to:~~Capital Resources

The ~~loss of business with PE Films’ largest customer related to various products in personal care materials ($22.0 million) and other personal care materials customers ($7.6 million);~~

~~Lower volume in personal care materials primarily due to the timing of product transitions and lower customer demand ($10.8 million);~~

~~A decline in volume in surface protection films ($6.2 million) that the~~ Company ~~believes is primarily the result of lower consumer demand for products with flat panel display screens; and~~

Lower volume of low margin overwrap films ($9.1 million) primarily due to the loss of business with a large customer, partially offset by sales growth for components used in LED lighting products ($1.3 million).

Sales volume in 2016 declined in part due to the wind down of shipments for certain personal care materials related to previously announced known lost business, primarily with PE Films’ largest customer. The table below summarizes the pro forma operating profit from ongoing operations for 2016 and 2015, had the impact of the lost business been fully realized:

Year Ended December 31,
(In thousands) 2016 2015
Operating profit from ongoing operations, as reported $26,312 $48,275
Contribution to operating profit from ongoing operations associated with known lost business before restructurings & fixed costs reduction 2,995
13,349
Operating profit from ongoing operations net of the impact of known business that will be fully eliminated in future periods 23,317
34,926
Estimated future benefit of North American facility consolidation 5,200
5,200
Pro forma estimated operating profit from ongoing operations $28,517 $40,126

~~Net sales associated with known lost business that had not been fully eliminated were $8.9 million and $38.5 million in 2016 and 2015, respectively.~~

~~Net of the impact of known lost business, pro forma estimated operating profit from ongoing operations in 2016 decreased by $11.6 million versus 2015 primarily due to:~~

~~Lower contribution to profits from surface protection films ($5.0 million) primarily due to lower volume and productivity issues;~~

Lower contribution to profits in personal care materials primarily due to volume declines resulting from the timing of product transitions and lower customer demand ($3.1 million) and lower productivity ($1.8 million) due in part to operational inefficiencies largely related to elastics production for European customers sourced from the Lake Zurich, Illinois facility;

~~The unfavorable lag in the pass-through of average resin costs of $0.2 million in 2016 versus the favorable lag of $1.3 million in 2015;~~

~~A charge for inventories accounted for under the LIFO method of $0.9 million in 2016 versus income of $0.4 million in 2015;~~

~~Higher contribution to profits from other products in PE Films ($0.7 million); and~~

~~Higher research and development expenses to support new product opportunities ($3.0 million), offset by lower general, sales and administrative expenses ($3.6 million).~~

~~Capital Expenditures and Depreciation & Amortization~~

Capital expenditures in PE Films were $25.8 million in 2016 compared to $21.2 million in 2015. Depreciation expense was $13.5 million in 2016 and $15.4 million in 2015. Amortization expense was $0.1 million in 2016 and $0.1 million in 2015.

~~Flexible Packaging Films~~

~~A summary of operating results for Flexible Packaging Films, which excludes the 2015 goodwill impairment charge, is provided below:~~

(In thousands, except percentages)
Year Ended
December 31

Favorable/
(Unfavorable)
2016 2015 % Change
Sales volume (pounds) 89,706
82,347
8.9 %
Net sales $ 108,028
$ 105,332
2.6 %
Operating profit from ongoing operations $ 1,774
$ 5,453
(67.5 )%

Net sales in 2016 increased 2.6% versus 2015 primarily due to a 8.9% increase in sales volume partially offset by competitive pricing pressures and the pass-through to customers of lower raw material costs. Sales volume improved from 2015 to 2016 partially due to the increase of end-use applications for flexible packaging films in the Latin American market.

~~Operating profit from ongoing operations decreased by $3.7 million in 2016 versus 2015 primarily due to:~~

~~Foreign currency transaction losses of $3.5 million in 2016 versus foreign currency transaction gains of $3.5 million in 2015, associated with U.S. Dollar denominated export sales in Brazil;~~

~~Higher volume ($3.0 million) and operating efficiencies ($0.7 million);~~

Net refunds of $1.6 million in 2015 received as a result of the reinstatement by the U.S. of the Generalized System of Preferences (GSP) program for allowing duty-free shipments of Terphane products into the U.S. (none in 2016);

~~The favorable settlement of certain loss contingencies of $0.6 million in 2015 (none in 2016);~~

~~The estimated lag in the pass through of lower raw material costs of $1.2 million in 2016 versus $1.0 million in 2015; and~~

~~Lower depreciation and amortization costs ($0.2 million) and other costs and expenses ($1.4 million).~~

~~Capital Expenditures, Depreciation & Amortization and Goodwill Impairment Charge~~

Capital expenditures were $3.4 million in 2016 compared to $3.5 million in 2015. Depreciation expense was $6.7 million in 2016 and $6.8 million in 2015. Amortization expense was $2.8 million in 2016 and $2.9 million in 2015.

During the third quarter of 2015, the Company performed a goodwill impairment assessment related to Terphane. This review was undertaken as a result of the continued competitive pressures related to ongoing unfavorable economic conditions in Terphane’s primary market of Brazil, and excess global industry capacity. The assessment resulted in a full write-off of the goodwill of $44.5 million associated with the acquisition of Terphane.

~~Aluminum Extrusions~~

~~A summary of operating results for Aluminum Extrusions is provided below:~~

(In thousands, except percentages)
Year Ended
December 31

Favorable/
(Unfavorable)
2016 2015 % Change
Sales volume (pounds) 172,986
170,045
1.7 %
Net sales $ 360,098
$ 375,457
(4.1 )%
Operating profit from ongoing operations $ 37,794
$ 30,432
24.2 %

Net sales in 2016 decreased versus 2015 primarily due to a decrease in average selling prices, partially offset by higher sales volume. Higher sales volume, primarily in the automotive market, had a favorable impact of $4.7 millioncontinuously focuses on ~~sales in 2016 versus 2015. Lower average selling prices, which had an unfavorable impact on net sales of $20.8 million, can be primarily attributed to a decrease in average aluminum market prices.~~

~~Operating profit from ongoing operations in 2016 increased in comparison to 2015 by $7.4 million, as a result of:~~

Higher volume ($0.9 million) and lower materials, supply and other net costs ($2.6 million, including $0.7 million of construction-related costs incurred in 2015 for the anodizing upgrade project); and

~~Improved management of freight logistics and lower utility costs ($2.2 million) and other efficiencies ($1.8 million).~~

~~Cast House Explosion~~

During 2016, Bonnell Aluminum recognized a gain of $1.9 million for insurance recoveries to-date associated with assets destroyed or damaged in the cast house explosion (included in “Other income (expense), net” in the Consolidated Statements of Income - see Note 17 of the ~~Notes to Financial Statements~~ for additional details). The Company also incurred $5.0 million of additional expenses during 2016, $4.3 million of which had been fully offset by insurance recoveries (netted in “Cost of goods sold” in the Consolidated Statements of Income and in “Plant shutdowns, asset impairments, restructurings and other” in the Operating Profit table in Note 5 of the ~~Notes to Financial Statements). The remaining $0.7 million in 2016 of additional expenses for which recovery from insurance was not assured was included in “Cost of goods sold” in the Consolidated Statements of Income.~~

~~Capital Expenditures and Depreciation & Amortization~~

Capital expenditures for Aluminum Extrusions were $15.9 million in 2016 compared to $8.1 million in 2015. Capital expenditures in 2016 included approximately $5 million for routine capital expenditures required to support operations and $9 million of a total of $18 million to add extrusions capacity at the Niles, Michigan, manufacturing facility. Depreciation expense was $8.1 million in 2016 compared to $8.7 million in 2015. Amortization expense was $1.0 million in 2016 and $1.0 million in 2015.

~~Financial Condition~~

~~Assets and Liabilities~~

~~Tredegar’s management continues to focus on improving~~ working capital management. Measures such as days sales outstanding (“DSO”), days inventory outstanding (“DIO”) and days payables outstanding (“DPO”) are used ~~by the Company~~ to evaluate changes in working capital. ~~Significant changes~~Changes in operating assets and liabilities from continuing operations from December 31, ~~2016~~2020 to December 31, ~~2017~~2021 are summarized ~~below:~~below. Cash flows for discontinued operations have not been separately disclosed in the consolidated statements of cash flows.

•Accounts and other receivables increased ~~$22.7~~$17.0 million ~~(23.4%)~~or 19.7%.

◦Accounts and other receivables in ~~PE Films~~Aluminum Extrusions increased by ~~$2.1~~$17.1 million primarily due ~~mainly~~ to ~~the timing of cash receipts~~an increase in average selling prices to cover significantly higher aluminum raw material costs and ~~collections.~~higher operating costs, partially offset by lower sales volume and improved collection efforts in 2021. DSO (computed using trailing 12 months net sales and a rolling 12-month average of accounts and other receivables balances) was approximately ~~48.4~~47.6 days in ~~2017~~2021 and ~~45.7~~47.5 days in ~~2016.~~2020.

◦Accounts and other receivables in PE Films decreased by $0.6 million primarily due to lower volume and unfavorable mix associated with the previously disclosed customer product transitions in Surface Protection, partially offset by higher pricing associated with the pass-through of increased resin costs. DSO was approximately 28.5 days in 2021 and 30.2 days in 2020.

◦Accounts and other receivables in Flexible Packaging Films increased by ~~$0.3~~$1.3 million primarily due to higher selling prices from the ~~impact~~pass-through of ~~the change in the value of the U.S. Dollar relative to the Brazilian real.~~higher resin costs and favorable product mix, partially offset by lower sales volume. DSO was approximately ~~53.2~~40.0 days in ~~2017~~2021 and ~~51.8~~41.0 days in ~~2016.~~2020.

~~Accounts and other receivables~~•Inventories increased $22.1 million or 33.3%.

◦Inventories in Aluminum Extrusions increased by ~~$20.6~~$17.4 million primarily due to ~~the acquisition of Futura in February 2017, which added $10.0 million,~~ higher ~~sales~~average aluminum prices and ~~the timing of cash receipts. DSO was approximately 43.3 days in 2017~~COVID-19-related operational and ~~43.3 days in 2016.~~

~~Inventories increased $20.8 million (31.5%).~~

~~Inventories in PE Films increased by $3.9 million primarily due to increased~~ production ~~to accommodate higher demand and the timing of raw material purchases.~~inefficiencies. DIO (computed using trailing 12 months costs of goods sold calculated on a ~~first-in, first-out~~first in, first out basis and a rolling 12-month average of inventory balances calculated on the first-in, first-out basis) was approximately ~~55.0~~41.4 days in ~~2017~~2021 and ~~52.2~~39.3 days in ~~2016.~~2020.

◦Inventories in PE Films decreased by $2.1 million primarily due to lower planned raw material levels as a result of lower sales volume in 2021 compared to 2020. DIO was approximately 62.8 days in 2021 and 59.2 days in 2020.

◦Inventories in Flexible Packaging Films increased by ~~$1.3~~$6.8 million primarily related to higher average resin prices, higher finished good levels due to lower than anticipated sales demand and higher planned raw material levels due to resin supply issues. DIO was approximately 93.1 days in 2021 and 89.4 days in 2020.

•Net property, plant and equipment increased by $3.8 million (2.3%) primarily due to capital expenditures of $27.8 million, partially offset by depreciation expense of $22.1 million and a reduction from the ~~impact~~effect of ~~the change~~changes in ~~the value~~foreign exchange rates of ~~the U.S. Dollar relative~~$0.8 million.

•Goodwill and identifiable intangible assets, net decreased by $1.8 million (2.0%) primarily due to ~~the Brazilian real. DIO was approximately 70.1 days in 2017 and 77.0 days in 2016.~~amortization expense.

~~Inventories~~•Accounts payable increased by $34.1 million or 38.0%.

◦Accounts payable in Aluminum Extrusions increased by ~~$15.6~~$23.7 million, primarily due to ~~the addition of balances from the acquisition of Futura, which added $9.7 million, the restart of the Newnan, Georgia cast house~~higher average aluminum prices and ~~the timing of purchases. DIO was approximately 32.6 days in 2017 and 26.5 days in 2016.~~

Net property, plant and equipment decreased $37.6 million (14.4%) due primarily to the property and equipment added from the acquisition of Futura of $32.7 million and capital expenditures of $44.4 million, more than offset by the impairment of assets at Terphane ($83.1 million) and depreciation of $34.1 million.

Identifiable intangible assets increased by $7.0 million (20.7%) primarily due to balances added from the acquisition of Futura of $30.7 million, partially offset by the write-down of identifiable intangibles at Terphane in the amount of $17.5 million and amortization expense of $6.2 million.

~~Goodwill increased by $10.4 million (8.8%) due to balances added from the acquisition of Futura.~~

~~Accounts payable increased by $27.0 million (33.3%).~~

~~Accounts payable in PE Films increased by $6.1 million primarily due to the normal volatility associated~~favorable payment terms with ~~the timing of payments at the end of the year.~~certain vendors. DPO (computed using trailing 12 months costs of goods sold calculated on a ~~first-in, first-out~~first in, first out basis and a rolling 12-month average of accounts payable balances) was approximately ~~40.6~~60.1 days in ~~2017~~2021 and ~~38.5~~53.1 days in ~~2016.~~2020.

◦Accounts payable in PE Films increased by $4.4 million primarily due to higher resin costs related to raw material purchases in 2021. DPO was approximately 44.0 days in 2021 and 36.8 days in 2020.

◦Accounts payable in Flexible Packaging Films increased by $2.5 million, due to the timing of payments and the impact of the change in the U.S. Dollar value of currencies for operations outside the U.S. DPO was approximately 42.8 days in 2017 and 39.5 days in 2016.

~~Accounts payable in Aluminum Extrusions increased by $18.3~~$6.7 million, primarily due to ~~the addition of balances from the acquisition of Futura, which added $4.3 million, negotiation of~~higher resin costs related to raw material purchases in 2021 and favorable payment terms ~~and the normal volatility associated~~ with ~~the timing of payments.~~certain vendors. DPO was approximately ~~48.0~~68.2 days in ~~2017~~2021 and ~~45.4~~61.7 days in ~~2016.~~

Accrued expenses increased by $3.8 million (9.8%) from December 31, 2016 due to the addition of balances from the acquisition of Futura, which added $2.1 million, higher employee benefit accruals, and higher stock-based compensation obligations.2020.

Net ~~noncurrent deferred income tax assets~~cash provided by operating activities was $70.6 million in ~~excess of noncurrent deferred income tax liabilities increased by $35.0~~2021 compared to $74.4 million in 2020. The decrease was primarily due to ~~numerous changes between years~~higher net working capital ($13.8 million), partially offset by lower pension and postretirement benefit plan contributions ($7.0 million) and lower operating lease payments ($1.1 million) in ~~the balance of the components shown in the December 31, 2017 and 2016 schedule of deferred income tax assets and liabilities provided in Note 16 of the~~ ~~Notes to Financial Statements. The Company had a current income tax receivable of $32.1 million at December 31, 2017~~2021 compared to ~~$7.5~~2020.

Net cash provided by investing activities was $24.5 million ~~at December 31, 2016.~~in 2021 compared to $32.9 million in 2020. The ~~change is~~decrease was primarily due to higher capital expenditure spending of $4.0 million in 2021 and cash proceeds from the sale of Personal Care Films ($55.1 million) and Bright View Technologies ($1.1 million) in 2020, partially offset by cash proceeds received in 2021 in connection with the sale of the Company’s investment in kaléo ($47.1 million) and the sale of the Lake Zurich manufacturing facility assets ($4.7 million).

Net cash used in financing activities was $76.8 million in 2021 compared to $125.6 million in 2020. The decrease was primarily due to a special dividend of $200 million paid to shareholders in 2020, partially offset by higher net borrowings ($153.0 million) in 2020 under the Credit Agreement (as defined below).

The Company believes that existing borrowing availability, current cash balances and cash flow from operations will be sufficient to satisfy short term material cash requirements related to working capital, capital expenditure, debt repayments and dividend requirements for at least the next twelve months. In the longer term, liquidity will depend on many factors, including results of operations, the timing and extent of ~~tax payments and anticipated refunds of net~~capital expenditures, changes in operating ~~losses and tax credits available for carryback to prior years.~~

~~On March 1, 2016,~~plans, or other events that would cause the Company ~~entered into~~to seek additional financing in future periods.

At December 31, 2021, Tredegar had cash and cash equivalents of $30.5 million, including funds held in locations outside the U.S. of $16.4 million.

Tredegar has a ~~new~~ five-year ~~$400 million~~ secured revolving credit agreement ~~that expires on March 1, 2021 (“revolving credit agreement”~~(the “Credit Agreement”). providing for aggregate borrowings in an amount of $375 million, which matures in June 2024.

Net capitalization and indebtedness as defined under the ~~revolving credit agreement~~Credit Agreement as of December 31, ~~2017~~2021 were as follows:

Net Capitalization and Indebtedness as of December 31, 2017
(In thousands)

Net capitalization:
Cash and cash equivalents $ 36,491
Debt:
$400 million revolving credit agreement maturing March 1, 2021 152,000
Other debt —
Total debt 152,000
Debt net of cash and cash equivalents 115,509
Shareholders’ equity 343,780
Net capitalization $ 459,289
Indebtedness as defined in revolving credit agreement:
Total debt $ 152,000
Face value of letters of credit 2,685
Capital lease 144
Other 250
Indebtedness $ 155,079


Net Capitalization and Indebtedness as of December 31, 2021
(In thousands)
Net capitalization:
Cash and cash equivalents	$	30,521
Debt:
Credit Agreement	73,000
Debt, net of cash and cash equivalents	42,479
Shareholders’ equity	184,722
Net capitalization	$	227,201
Indebtedness as defined in Credit Agreement:
Total debt	$	73,000
Indebtedness	$	73,000

The credit spread and commitment fees charged on the unused amount under ~~our revolving credit agreement~~the Credit Agreement at various ~~indebtedness-to-adjusted~~indebtedness-to-Credit EBITDA levels are as follows:


Pricing Under Revolving Credit Agreement (Basis Points)
Indebtedness-to-Adjusted EBITDA Ratio	Credit Spread Over LIBOR	Commitment Fee
Pricing Under Credit Agreement (Basis Points)			Pricing Under Credit Agreement (Basis Points)
Indebtedness-to-Credit EBITDA Ratio			Indebtedness-to-Credit EBITDA Ratio	Credit Spread Over LIBOR	Commitment Fee
> 3.5x but <= 4.0x	250	45	> 3.5x but <= 4.0x	200.0	40
> 3.0x but <= 3.5x	225	40	> 3.0x but <= 3.5x	187.5	35
> 2.0x but <= 3.0x	200	35	> 2.0x but <= 3.0x	175.0	30
> 1.0x but <= 2.0x	175	30	> 1.0x but <= 2.0x	162.5	25
<= 1.0x	150	25	<= 1.0x	150.0	20

~~Shareholders’ Equity~~

At December 31, 2017, Tredegar had 33,017,422 shares of common stock outstanding and a total market capitalization of $633.9 million, compared with 32,933,807 shares of common stock outstanding and a total market capitalization of $790.4 million at December 31, 2016.

~~Tredegar did not repurchase any shares on the open market in 2017, 2016 or 2015 under its approved share repurchase program.~~

~~Cash Flows~~

~~The discussion in this section supplements the information presented in the~~ ~~Consolidated Statements of Cash Flows~~.

Cash provided by operating activities was $88.2 million in 2017 compared with $48.9 million in 2016. The increase is due primarily to higher operating profit from ongoing operations ($16.5 million), higher non-cash charges for depreciation and amortization expense included in operating profit ($7.8 million), lower income tax payments ($6.2 million), cash received from a settlement of an escrow agreement associated with the acquisition of Terphane in October 2011 ($11.9 million) and lower contributions to fund pension and postretirement benefit plans ($2.2 million), partially offset by higher interest payments from higher debt levels ($2.7 million).

Cash used in investing activities was $125.6 million in 2017 compared with $42.0 million in 2016. Cash used in investing activities in 2017 primarily represents the acquisition of Futura in 2017 for $87.1 million (which includes the net settlement of post-closing adjustments of $0.1 million) and capital expenditures of $~~44.4 million, which compares to $45.5 million in 2016.~~

Net cash flow provided by financing activities was $43.2 million in 2017, which is primarily due to net borrowings under the revolving credit facility to fund the acquisition of Futura and the payment of regular quarterly dividends aggregating for the year to $14.5 million ($0.44 per share annually), partially offset by the proceeds from the exercise of stock options and other financing activities of $0.7 million. Cash used in financing activities was $23.7 million in 2016, primarily used for net debt repayments of $9.0 million, regular quarterly dividends aggregating for the year to $14.5 million ($0.44 per share annually) and debt financing costs related to the refinancing of the credit agreement of $2.6 million, partially offset by the proceeds from the exercise of stock options and other financing activities of $2.3 million.

Quantitative and Qualitative Disclosures about Market Risk

Tredegar has exposure to the volatility of interest rates, polyethylene ~~polypropylene~~ and ~~polyester~~polypropylene resin prices, PTA and MEG prices, aluminum ingot and scrap prices, energy prices, foreign currencies and emerging markets. See ~~the~~ ~~Assets~~Liquidity and ~~Liabilities~~ ~~section~~Capital Resources regarding interest rate exposures related to borrowings under the ~~revolving credit agreement.~~Credit Agreement.

Profit margins in Aluminum Extrusions are sensitive to fluctuations in aluminum ingot and scrap prices as well as natural gas prices (natural gas is the principal energy source used to operate its casting furnaces). Changes in polyethylene resin prices and the timing of those changes could have a significant impact on profit margins in PE Films. Changes in polyester resin, PTA and MEG prices, and the timing of those changes, could have a significant impact on profit margins in Flexible Packaging Films. Profit margins in Aluminum Extrusions are sensitive to fluctuations in aluminum ingot and scrap prices as well as natural gas prices (natural gas is the principal energy source used to operate its casting furnaces). There is no assurance of the Company’s ability to pass through higher raw material and energy costs to its customers.

~~See the~~ ~~Executive Summary~~ ~~and the~~ ~~Results of Continuing Operations~~ ~~sections for discussion regarding the impact of the lag in the pass-through of resin price changes.~~

~~The volatility of average quarterly prices of low density polyethylene resin in the U.S. (a primary raw material for PE Films products) is shown in the chart below:~~

Source: Quarterly averages computed by Tredegar using monthly data provided by IHS, Inc. In January 2015, IHS reflected a 21 cents per pound non-market adjustment based on their estimate of the growth of discounts in prior periods. The 4th quarter 2014 average rate of $1.09 per pound is shown on a pro forma basis as if the non-market adjustment was made in the fourth quarter of 2014.

Polyethylene resin prices in Europe, Asia and South America have exhibited similar long-term trends. The price of resin is driven by several factors, including supply and demand and the price of oil, ethylene and natural gas. To address fluctuating resin prices, PE Films has index-based pass-through raw material cost agreements for the majority of its business. However, under certain agreements, changes in resin prices are not passed through for an average period of 90 days (see the ~~Executive Summary~~ ~~and the~~ ~~Results of Continuing Operations~~ ~~sections for more information). Pricing on the remainder of the business is based upon raw material costs and supply/demand dynamics within the markets in which the Company operates.~~

Polyester resins, MEG and PTA used by Flexible Packaging Films in Brazil are primarily purchased domestically, with other sources available, mostly from Asia and the U.S. Given the nature of these products as commodities, pricing is derived from Asian pricing indexes. The volatility of the average quarterly prices for polyester fibers in Asia, which is representative of polyester resin (a primary raw material for polyester film products) prices, is shown in the chart below:

~~Source: Quarterly averages computed by Tredegar using monthly data from CMAI Global Index data.~~

~~The volatility of average quarterly prices of PTA and MEG in Asia (raw materials used in the production of polyester resins produced by Flexible Packaging Films) is shown in the chart below:~~

~~Source: Quarterly averages computed by Tredegar using monthly data from CMAI Global Index data.~~

In the normal course of business, Aluminum Extrusions 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 (see the chart below) 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 or hedge aluminum, based on the scheduled deliveries. See Note ~~9 of~~10 to the ~~Notes to~~Consolidated Financial Statements in Item 15 for ~~more~~additional information.

The volatility of quarterly average aluminum prices is shown in the chart ~~below:~~below.



Source: Quarterly averages computed by ~~Tredegar~~the Company using daily Midwest average prices provided by Platts.

From time-to-time, Aluminum Extrusions hedges a portion of its exposure to natural gas price volatility by entering into fixed-price forward purchase contracts with its natural gas suppliers. The Company estimates that, in an unhedged situation, every $1 per mmBtu per month change in the market price of natural gas has an $102,000 impact on the continuing monthly operating profit for U.S. operations in Aluminum Extrusions. There is an energy surcharge for Aluminum Extrusions in the U.S. that is applied when the previous quarter’s NYMEX natural gas average settlement price is in excess of $8.85 per mmBtu.

The volatility of quarterly average natural gas prices is shown in the chart ~~below:~~below.



Source: Quarterly averages computed by Tredegar using monthly NYMEX settlement prices.

The volatility of average quarterly prices of polyethylene resin in the U.S. (a primary raw material for PE Films products) is shown in the chart below:


Source: Quarterly averages computed by Tredegar using monthly data provided by IHS, Inc. In February 2020, IHS reflected a 32 cents per pound non-market adjustment based on their estimate of the growth of discounts in prior periods. The 4th quarter 2019 average rate of $0.51 per pound is shown on a pro forma basis as if the non-market adjustment was made in the fourth quarter of 2019.

The price of resin is driven by several factors, including supply and demand and the price of oil, ethylene and natural gas. Selling prices to customers are set considering numerous factors, including the expected volatility of resin prices. In certain situations, PE Films has index-based pass-through raw material cost arrangements with customers. However, under certain agreements, changes in resin prices are not passed through for a period of 90 days or more. In response to unprecedented cost increases and supply issues for polyethylene and polypropylene resin, Tredegar Surface Protection implemented a quarterly resin cost pass-through mechanism, effective July 1, 2021, for all products and customers not previously covered by such arrangements. Pricing on the remainder of the business is based upon raw material costs and supply/demand dynamics within the markets that the Company competes.

Polyester resins, MEG and PTA used in flexible packaging films produced in Brazil are primarily purchased domestically, with other sources available mostly from Asia and the U.S. Given the nature of these products as commodities, pricing is

derived from Asian pricing indexes. The volatility of the average quarterly prices for polyester fibers in Asia, which is representative of polyester resin (a primary raw material for Flexible Packaging Films) pricing trends, is shown in the chart below:


Source: Quarterly averages computed by Tredegar using monthly data from CMAI Global Index data.

The volatility of average quarterly prices of PTA and MEG in Asia (raw materials used in the production of polyester resins produced by Flexible Packaging Films) is shown in the chart below:


Source: Quarterly averages computed by Tredegar using monthly data from CMAI Global Index data.

The Company sells to customers in foreign markets through its foreign operations and through exports from U.S. plants. The percentage of sales and total assets for manufacturing operations related to foreign markets for ~~2017, 2016~~2021, 2020 and ~~2015~~2019 are as follows:

Tredegar Corporation—Continuing Operations
Percentage of Net Sales and Total Assets Related to Foreign Markets
2017 2016 2015
% of Total
% Total
Assets -
Foreign
Oper-
ations *
% of Total
% Total
Assets -
Foreign
Oper-
ations *
% of Total
% Total
Assets -
Foreign
Oper-
ations *
Net Sales * Net Sales * Net Sales *

Exports
From
U.S.

Foreign
Oper-
ations

Exports
From
U.S.

Foreign
Oper-
ations

Exports
From
U.S.

Foreign
Oper-
ations

Canada 5
—
—
6
—
—
5
—
—
Europe 1
9
6
1
10
6
1
10
5
Latin America** 2
9
7
—
11
21
—
10
20
Asia 9
2
5
9
3
6
9
3
7
Total % exposure to foreign markets 17
20
18
16
24
33
15
23
32


Tredegar Corporation Percentage of Net Sales and Total Assets Related to Foreign Markets*
	2021			2020			2019
	% of Total		% Total Assets - Foreign Operations	% of Total		% Total Assets - Foreign Operations	% of Total		% Total Assets -Foreign Operations
	Net Sales			Net Sales			Net Sales
	Exports From U.S.	Foreign Operations		Exports From U.S.	Foreign Operations		Exports From U.S.	Foreign Operations
Canada	2	—	—	2	—	—	2	—	—
Europe	1	—	—	1	—	—	1	—	—
Latin America	1	12	10	—	13	10	1	12	7
Asia	7	—	3	11	—	4	10	—	3
Total	11	12	13	14	13	14	14	12	10



*		The percentages for foreign markets are relative to Tredegar’s consolidated net sales and total assets ~~from continuing operations.~~
**	~~In 2017, Flexible Packaging Films’ recorded a charge for the impairment of assets in the amount of $101 million. See~~ ~~Terphane Asset Impairment Loss and Worthless Stock Deduction~~ in ~~Flexible Packaging Films~~ ~~in the~~ ~~Executive Summary~~ ~~section for more details.~~ .

Tredegar attempts to match the pricing and cost of its products in the same currency and generally views the volatility of foreign currencies ~~and emerging markets,~~ and the corresponding impact on earnings and cash flow as part of the overall risk of operating in a global environment (for additional information, see trends for the ~~Euro,~~ Brazilian Real and Chinese Yuan in the charts on the following page). Exports from the U.S. are generally denominated in U.S. Dollars. The Company’s foreign currency exposure on income from continuing foreign operations relates to the ~~Euro, the~~ Chinese Yuan ~~the Hungarian Forint,~~and the Brazilian ~~Real and the Indian Rupee.~~Real.

PE Films is generally able to match the currency of its sales and costs for its product lines. For flexible packaging films produced in Brazil, selling prices and key raw material costs are principally determined in U.S. Dollars and are impacted by local economic ~~conditions. Competition in Brazil, Terphane’s primary market, has been exacerbated by~~conditions and local and global overcapacity in the polyester industry generally, and by particularly acute overcapacity in Latin America. Additional PET capacity from a competitor in Latin America came on line in September 2017. These factors have resulted in significant competitive ~~pricing pressures and U.S. Dollar equivalent margin compression. Moreover, variable conversion, fixed conversion and sales, general~~

~~and administrative costs for operations in Brazil have been adversely impacted by inflation in Brazil that is higher than in the U.S.~~dynamics. Flexible Packaging Films is exposed to ~~additional~~ foreign exchange translation risk (its functional currency is the Brazilian Real) because almost 90% of the sales of Flexible Packaging ~~Films’ Brazilian sales~~Films business unit in Brazil (“Terphane Ltda.”) and substantially all of its related raw material costs are quoted or priced in U.S. Dollars while ~~a large majority of~~ its ~~Brazilian~~variable conversion, fixed conversion and sales, general and administrative costs before depreciation & amortization (collectively “Terphane Ltda. Operating Costs”) are quoted or priced in Brazilian Real. This mismatch, together with a variety of economic variables impacting currency exchange rates, causes volatility that could negatively or positively impact ~~operating profit~~EBITDA from ongoing operations for Flexible Packaging Films.

The Company's earnings are exposed to foreign currency exchange risk primarily through the translation of the financial statements of subsidiaries that have a functional currency other than the U.S. Dollar. The Company estimates ~~that~~annual net costs of R$150 million for the net mismatch translation exposure between ~~Terphane’s~~Terphane Ltda.’s U.S. Dollar quoted or priced sales and raw material costs and underlying Brazilian Real quoted or priced operating costs (excluding depreciation and amortization) is annual net costs of R$95 million (approximately $30 million annually in equivalent U.S. Dollars or $2.5 million per month). On September 29, 2017, the Flexible Packaging Films business unit in Brazil (“Terphane ~~Limitada”) entered into 15 monthly~~Ltda. Operating Costs. Terphane Ltda. has outstanding foreign exchange average forward rate contracts to purchase Brazilian Real ~~(“R$”)~~ and sell U.S. Dollars ~~covering~~to hedge its exposure. See Note 10 to the ~~period from October 2017 through December 2018. These agreements hedge half of the Company’s exposure at monthly average forward rates ranging~~Consolidated Financial Statements in Item 15 for more information on an approximately linear increasing basis from R$3.164 for each U.S. Dollar in October 2017 to R$3.3148 in December 2018. For example, if in December 2018 the actual average rate was R$3.000 for each U.S. Dollar, then Terphane Limitada would have a settlement gain on its forward contract of R$393,500, which would help offset the estimated translation loss on the net mismatch exposure of R$787,000 for December 2018. The opposite would occur if the actual average rate were greater than the forward rate. These foreign currency exchangeoutstanding hedging contracts ~~have been designated~~ and qualify as cash flow hedges of Terphane Limitada's forecasted sales to customers quoted or priced in U.S. Dollars over that period. By changing the currency risk associated with these U.S. Dollar sales, the derivatives have the effect of offsetting operating costs quoted or priced in Brazilian Real and decreasing the net exposure to Brazilian Real in the consolidated statements of income. The aggregate notional amount of open foreign exchange contracts at December 31, 2017 was $15.0 million (R$48.8 million). The net fair value of the 12 open forward contracts was a negative $0.6 million as of December 31, 2017.this hedging program.

Tredegar estimates that the change in the value of foreign currencies relative to the U.S. Dollar on PE Films had a favorable impact on ~~operating profit~~EBITDA from ongoing operations in PE Films of $0.3 million in ~~2017~~2021 compared to ~~2016~~2020 and an unfavorable impact on ~~operating profit~~EBITDA from ongoing operations of ~~$0.3~~$0.7 million in ~~2016~~2020 compared with ~~2015.~~

~~Trends for the Euro are shown in the chart below:~~

2019.

~~Source: Quarterly averages computed by Tredegar using daily closing data provided by Bloomberg.~~

Trends for the Brazilian Real and Chinese Yuan are shown in the chart below:



Source: Quarterly averages computed by Tredegar using daily closing data provided by Bloomberg.


~~Item 7A.~~	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See discussion of Quantitative and Qualitative Disclosures about Market Risk in ~~Management’s Discussion~~Item 7.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item 8 is set forth in Item 15 and ~~Analysis of Financial Condition~~is hereby incorporated herein by reference.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A.CONTROLS AND PROCEDURES

On November 1, 2018, the Company filed a Current Report on Form 8-K (the “November 2018 Form 8-K”) to disclose deficiencies in internal control over financial reporting. For further information, see the November 2018 Form 8-K and ~~Results of Operations.~~


~~Item 8.~~	~~FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA~~

~~See the~~ ~~Index to Financial Statements~~Item 4. “Controls and ~~Supplementary Data~~ ~~for references to the report~~Procedures” of the ~~independent registered public accounting firm,~~Company’s Quarterly Report on Form 10-Q for the ~~consolidated~~quarterly period ended September 30, 2018. See Item 1A. “Risk Factors” of this Form 10-K for risks and uncertainties associated with management’s report on internal control over financial ~~statements~~reporting as of and ~~selected quarterly financial data.~~for the year ended December 31, 2021.


~~Item 9.~~	~~CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE~~

~~None.~~


~~Item 9A.~~	~~CONTROLS AND PROCEDURES~~

Evaluation of Disclosure Controls and Procedures

~~Pursuant~~In connection with the preparation of this Form 10-K, pursuant to Rule 13a-15(b) under the Securities Exchange Act ~~Tredegar~~of 1934, as amended (the “Exchange Act”), the Company carried out an evaluation with the participation of its management, including its ~~principal~~Chief Executive Officer (principal executive ~~officer~~officer) and ~~principal~~Chief Financial Officer (principal financial ~~officer,~~officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2021.

Based on this evaluation, the ~~end~~Company’s Chief Executive Officer and Chief Financial Officer concluded that, because of the ~~period covered by this report. Based upon that evaluation, the principal executive officer and principal~~material weaknesses in internal control over financial ~~officer concluded that~~reporting discussed below, the Company’s disclosure controls and procedures ~~are~~were not effective as of December 31, 2021, to ~~ensure~~ensure: (i) that information required to be disclosed by ~~Tredegar~~the Company in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (ii) that such information is accumulated and communicated to management, including the ~~principal executive officer~~Chief Executive Officer and ~~principal financial officer,~~Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in ~~Rule~~Rules 13a-15(f) and 15d-15(f) under the Exchange Act. ~~Tredegar’s~~The Company’s internal control over financial reporting is a process designed by or under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, and overseen by the Board of Directors, to provide reasonable assurance regarding the reliability of financial reporting and the preparation ~~and fair presentation~~ of ~~published~~ financial statements for external purposes in accordance with ~~U.S. generally accepted accounting principles~~GAAP and includes policies and procedures that:

•Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of ~~our~~the Company’s assets;

•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with ~~U.S. generally accepted accounting principles,~~GAAP, and that ~~our~~the Company’s receipts and expenditures are being made only in accordance with the authorization of ~~our~~its management and directors; and

•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of ~~our~~the Company’s assets that could have a material effect on the ~~consolidated~~ financial statements.

~~Internal control over financial reporting includes the controls themselves, monitoring (including internal auditing practices) and actions taken to correct deficiencies as identified.~~

Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of the Company’s consolidated financial statements would be prevented or detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Management conducted an evaluation of the effectiveness of ~~our~~the Company’s internal control over financial reporting ~~based on~~using the ~~framework~~criteria in Internal Control - Integrated Framework 2013issued by the Committee of Sponsoring Organizations of the Treadway Commission ~~(“COSO”~~(the “2013 COSO Framework”). ~~In conducting its assessment~~As a result of ~~the effectiveness of our internal controls over financial reporting, management excluded its acquisition of Futura Industries Corporation, which was acquired by Tredegar on~~

February 15, 2017, and is included in Tredegar’s 2017 consolidated financial statements and constituted 7% of consolidated total assets and 8% of consolidated total sales for the year then ended. Based on this evaluation, ~~under the framework in~~ ~~Internal Control — Integrated Framework 2013, Tredegar’s~~ management concluded that the Company’s internal control over financial reporting was not effective as of December 31, ~~2017.~~2021, because of the material weaknesses in internal control over financial reporting discussed below.

•Control Environment: The Company did not have a sufficient number of trained resources with assigned responsibility and accountability for the design, operation and documentation of internal control over financial reporting in accordance with the 2013 COSO Framework.

•Risk Assessment:The Company did not have an effective risk assessment process to identify and evaluate at a sufficient level of detail all relevant risks of material misstatement, including fraud risks.

•Information and Communication: The Company did not have an effective information and communication process that identified and assessed the source of and controls necessary to ensure the reliability of information used in financial reporting and that communicates relevant information about roles and responsibilities for internal control over financial reporting.

•Monitoring Activities: The Company did not have effective monitoring activities to assess the operation of internal control over financial reporting, including the continued appropriateness of control design and level of documentation maintained to support control effectiveness.

•Control Activities: As a consequence of the material weaknesses described above, internal control deficiencies related to the design and operation of process-level controls and general information technology controls were determined to be pervasive throughout the Company’s financial reporting processes.

While these material weaknesses did not result in material misstatements of the Company’s consolidated financial statements as of and for the year ended December 31, 2021, these material weaknesses create a reasonable possibility that a material misstatement of account balances or disclosures in annual or interim consolidated financial statements may not be prevented or detected in a timely manner. Accordingly, the Company concluded that the deficiencies represent material weaknesses in its internal control over financial reporting and its internal control over financial reporting was not effective as of December 31, 2021.

The Company’s independent registered public accounting firm, KPMG LLP, which audited the 2021 consolidated financial statements included in this Form 10-K, has expressed an adverse opinion on the operating effectiveness of the Company's internal control over financial reporting. KPMG LLP’s report appears on page 40 of this Form 10-K.

Remediation Plan and Efforts to Address the Previously Identified Material Weaknesses

To remediate the material weaknesses described above, the Company, with the oversight of the Audit Committee of the Board of Directors (the “Audit Committee”), has been pursuing the six remediation steps as originally identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The Company’s remediation plan was designed with the assistance of management’s outside consultant, an internationally recognized accounting firm. The Company continues to work with its outside consultant to assist in completing the remediation plan and believes that its remediation plan will be sufficient to remediate the identified material weaknesses and strengthen its internal control over financial reporting. As the Company continues to evaluate, and works to improve, its internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary.

Through the fourth quarter of 2021, the Company has completed certain steps in its remediation plan, including:

•for certain processes, developed new and revised existing process narratives and identified risks of material misstatement inherent to those processes;

•developed new controls and revised the design of existing controls for a significant number of relevant key controls to mitigate the aforementioned risks, inclusive of general information technology controls and entity-level controls;

•conducted initial organization-wide training sessions with all control owners;

•increased resources in the Company’s internal audit function and created and staffed a controls compliance group charged with monitoring and facilitating compliance with the Company’s responsibilities under the Sarbanes Oxley Act of 2002 (“SOX”); and

•implemented a software solution to assist in monitoring and documenting compliance with SOX.

The ~~effectiveness~~following remaining activities are scheduled for completion in the first half of ~~Tredegar’s~~2022 in anticipation of conducting management’s testing that will begin in the first half of 2022 in support of issuing management’s assessment of internal control over financial reporting as of December 31, ~~2017~~2022:

•completion of the identification of risks arising from inappropriate segregation of duties and fraud risks;

•completion of risk assessment and control design for the remaining populations of processes and controls;

•implementation of controls across all financial reporting processes and information technology environments;

•ongoing training with control owners, as necessary; and

•ongoing migration of certain components of a legacy information technology system onto a common information technology environment, including risk assessment, control design and implementation of new and revised controls.

The Company continues to monitor the impact of employee turnover, the COVID-19 pandemic and other external factors on its remediation plan and its assessment of internal control over financial reporting. The material weaknesses cannot be considered remediated until the applicable controls have operated for a sufficient period of time and management has ~~been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated~~concluded, through testing, that these controls are operating effectively. The Company cannot assure you when it will remediate the identified material weaknesses, nor can it be certain whether additional actions will be required. Moreover, the Company cannot assure you that additional material weaknesses will not arise in ~~their report which is included in Item 15.~~the future.

Changes in Internal Control Over Financial Reporting

~~There~~The Company is in the process of making certain changes in its internal controls to remediate the material weaknesses as described above. The execution of the material aspects of this plan began in the second quarter of 2019. Except as noted above with respect to the completion of certain steps in the remediation plan, there has been no change in ~~Tredegar’s~~the Company’s internal control over financial reporting during the quarter ended December 31, ~~2017,~~2021, that has materially affected, or is reasonably likely to materially affect, its internal control over financial ~~reporting.~~reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).


~~Item 9B.~~	~~OTHER INFORMATION~~

Item 9B. OTHER INFORMATION

None.

Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

None.

PART III


~~Item 10.~~	~~DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE~~

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information concerning directors and persons nominated to become directors of Tredegar to be included in the Proxy Statement under the headings “Proposal 1: Election of Directors” and “Tredegar’s Board of Directors” is incorporated herein by reference.

The information concerning corporate governance to be included in the Proxy Statement under the headings “Board Meetings, Meetings of Non-Management Directors and the Board Committees” and “Corporate Governance” is incorporated herein by reference.

~~The information to be included in the Proxy Statement under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” is incorporated herein by reference.~~

Set forth below are the names, ages and titles of the Company’s executive officers:

Name

Age

Title

John ~~D. Gottwald~~M. Steitz

President and Chief Executive Officer

D. Andrew Edwards

5963

Executive Vice President and Chief Financial Officer

~~Michael J. Schewel~~Kevin C. Donnelly

6447

Vice President, General Counsel and Corporate Secretary

John ~~D. Gottwald.~~ M. Steitz. Mr. ~~Gottwald~~Steitz was elected President and Chief Executive Officer ~~on August 18, 2015. From June 26, 2015 until August 17, 2015, he served as interim President and Chief Executive Officer.~~effective March 19, 2019. He previously served as ~~the Company’s~~ President and Chief Executive Officer of Addivant Corporation, a leading global supplier of antioxidants, intermediates, inhibitors, modifiers, UV stabilizers and other additives to the plastic and rubber industries, from March ~~1, 2006~~2015 until January ~~31, 2010,~~2019, as President and ~~as the Company’s Chairman~~Chief Operating Officer of ~~the Board~~PQ Corporation, a leading worldwide producer of specialty inorganic performance chemicals and catalysts, from ~~September 2001~~October 2013 until ~~February 2008. Mr. Gottwald also served~~March 2015, as ~~the Company’s~~ President and Chief Executive Officer of Avantor Performance Materials, a global supplier of ultra-high-purity life sciences materials with strict regulatory and performance specifications, from ~~July 1989~~September 2012 until September ~~2001.~~2013, as President and Chief Operating Officer of Albemarle Corporation, a global specialty chemicals company, from March 2012 until August 2012, and as Chief Operating Officer and Executive Vice President of Albemarle from April 2007 until March 2012.

D. Andrew Edwards.Mr. Edwards was ~~elected~~named Executive Vice President and Chief Financial Officer effective August 6, 2020. Mr. Edwards served as Vice President and Chief Financial Officer from July 20, ~~2015.~~2015 until August 2020. He previously served as the Chief Financial Officer of United Sporting Companies, Inc., a wholesale distributor of outdoor sporting goods, from February 2013 until July 2015 and as Vice President, Controller and Chief Accounting Officer of Owens & Minor, Inc., a distributor of acute medical products, from April 2010 to February 2013 and as Acting Chief Financial Officer of Owens & Minor, Inc. from March 2012 to February 2013. Mr. Edwards also served as Vice President, Finance, of Owens & Minor, Inc. from December 2009 until April 2010. Mr. Edwards previously served as the Company’s Vice President, Chief Financial Officer and Treasurer from August 2003 to December 2009 and as the Company’s Vice President, Finance from November 1998 to August 2003. Mr. Edwards also served as the Company’s Treasurer from May 1997 to December 2009 and as the Company’s Controller from October 1992 until July 2000.

~~Michael J. Schewel~~Kevin C. Donnelly. Mr. ~~Schewel~~Donnelly was elected Vice President, General Counsel and Corporate Secretary effective ~~May 9, 2016.~~January 1, 2021. He ~~was previously partner with the law firm of McGuire Woods, LLP from 1986 until May 2016, except for four years from 2002 until 2006 when he~~joined Tredegar in 2010 and served as ~~Secretary~~its Associate General Counsel from 2013 to 2020. Prior to joining Tredegar, Mr. Donnelly was an associate at Hunton & Williams LLP (now Hunton Andrews Kurth LLP). He received a B.A. degree from the University of ~~Commerce~~Richmond and ~~Trade for~~a J.D. from the ~~Commonwealth~~University of Virginia.

Tredegar has adopted a Code of Conduct that applies to all of its directors, officers and employees (including its chief executive officer, chief financial officer and principal accounting officer) and has posted the Code of Conduct on its website. All amendments to or waivers from any provision of the Company’s Code of Conduct applicable to the chief executive officer, chief financial officer and principal accounting officer will be disclosed on the Company’s website. The Company’s internet address is www.tredegar.com.


~~Item 11.~~	~~EXECUTIVE COMPENSATION~~

Item 11. EXECUTIVE COMPENSATION

The information to be included in the Proxy Statement under the headings “Compensation of Directors,” “Board Meetings, Meetings of Non-Management Directors and Board ~~Committees—~~Committees - Executive Compensation Committee Interlocks and Insider Participation,” “Compensation Discussion and Analysis,” “Executive Compensation Committee Report” and “Compensation of Executive Officers” is incorporated herein by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED STOCKHOLDER MATTERS


~~Item 12.~~	~~SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED STOCKHOLDER MATTERS~~

The information to be included in the Proxy Statement under the heading ~~“Stock Ownership”~~“Equity Compensation Plan Information” is incorporated herein by reference. ~~The following table summarizes information with respect to equity compensation plans under which securities are authorized for issuance as of December 31, 2017.~~

Column (a) Column (b) Column (c)
Plan Category
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights*
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans,
Excluding Securities
Reflected in Column (a)**
Equity compensation plans approved by security holders 987,329
$ 19.75
1,704,554
Equity compensation plans not approved by security holders —
—
—
Total 987,329
$ 19.75
1,704,554


*	~~Includes performance stock units that give the holder the right to receive shares of Tredegar common stock upon the satisfaction of certain performance criteria.~~

** Due to an administrative error, the number of securities remaining available for future issuance under equity compensation plans, excluding securities reflected in column (a), was overstated in

Item 12 of Tredegar’s Annual Report on Form 10-K for the years ended December 31, 2014, 2015 and 2016. The correct amounts as of December 31, 2014, 2015 and 2016 were 2,099,239; 2,025,091; and 1,898,592, respectively.13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


~~Item 13.~~	~~CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE~~

The information to be included in the Proxy Statement under the headings “Certain Relationships and Related ~~Transactions”,~~Transactions,” “Tredegar’s Board of Directors” and “Board Meetings, Meetings of Non-Management Directors and Board Committees” is incorporated herein by reference.


~~Item 14.~~	~~PRINCIPAL ACCOUNTING FEES AND SERVICES~~

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Our independent registered public accounting firm is KPMG LLP, Richmond, Virginia, Audit Firm ID: 185.

The following is incorporated herein by reference:

•Information on accounting fees and services to be included in the Proxy Statement under the heading “Audit and Non-Audit Fees;” and

•Information on the Audit Committee’s procedures for pre-approving certain audit and non-audit services to be included in the Proxy Statement under the heading “Board Meetings, Meetings of Non-Management Directors and Board Committees—Audit Committee Matters.”

PART IV


~~Item 15.~~	~~EXHIBITS AND FINANCIAL STATEMENT SCHEDULES~~


~~(a)~~	~~List of documents filed as a part of the report:~~


~~(1)~~	~~Financial statements:~~

~~Tredegar Corporation~~

~~Index to Financial Statements and Supplementary Data~~Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


(a)	List of documents filed as a part of the report:
(1)	Financial statements:
	Tredegar Corporation
	Index to Financial Statements and Supplementary Data
		Page
	Auditors’ Opinions:
	Report of Independent Registered Public Accounting Firm	38
	Opinion on Internal Control Over Financial Reporting	40
	Financial Statements:
	Consolidated Balance Sheets	42
	Consolidated Statements of Income	43
	Consolidated Statements of Comprehensive Income (Loss)	44
	Consolidated Statements of Cash Flows	45
	Consolidated Statements of Shareholders' Equity	46
	Notes to Financial Statements	47
(2)	Financial statement schedules:
	None
(3)	Exhibit Index	88



	~~Page~~
~~Report of Independent Registered Public Accounting Firm~~	48~~-49~~
~~Financial Statements:~~
~~Consolidated Balance Sheets as of December 31, 2017 and 2016~~	50
~~Consolidated Statements of Income for the Years Ended December 31, 2017, 2016 and 2015~~	51
~~Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2017, 2016 and 2015~~	52
~~Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015~~	53
~~Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2017, 2016 and 2015~~	54
~~Notes to Financial Statements~~	55~~-94~~


~~(2)~~	~~Financial statement schedules:~~

~~None.~~


~~(3)~~	~~Exhibits:~~

~~See Exhibit Index on pages 95-97.~~

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors ~~and Shareholders of~~

Tredegar Corporation:

~~Opinions~~Opinion on the Consolidated Financial Statements ~~and Internal Control over Financial Reporting~~

We have audited the accompanying consolidated balance sheets of Tredegar Corporation and ~~its~~ subsidiaries (the Company) as of December 31, ~~2017~~2021 and ~~2016, and~~2020, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows ~~and shareholders’ equity~~ for each of the ~~three~~ years in the three-year period ended December 31, ~~2017, including~~2021, and the related notes (collectively, ~~referred to as~~ the ~~“consolidated~~consolidated financial ~~statements”)~~statements). ~~We also have audited the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in~~ ~~Internal Control - Integrated Framework(2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).~~

In our opinion, the consolidated financial statements ~~referred to above~~ present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017~~2021 and ~~2016,~~2020, and the results of its operations and its cash flows for each of the ~~three~~ years in the three-year period ended December 31, ~~2017~~2021, in conformity with ~~accounting principles~~U.S. generally accepted accounting principles.

We also have audited, in accordance with the ~~United States~~standards of ~~America. Also in our opinion,~~ the Public Company ~~maintained, in all material respects, effective~~Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, ~~2017,~~2021, based on criteria established in Internal Control -– Integrated Framework (2013) issued by the ~~COSO.~~

~~Basis for Opinions~~

~~The Company's management is responsible for these consolidated financial statements, for maintaining effective~~Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 11, 2022 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial ~~reporting, and~~reporting.

Basis for ~~its assessment~~Opinion

These consolidated financial statements are the responsibility of the ~~effectiveness of internal control over financial reporting, included in Management's Report on Internal Control Over Financial Reporting under Item 9A.~~Company’s management. Our responsibility is to express ~~opinions~~an opinion on ~~the Company’s~~these consolidated financial statements ~~and on the Company's internal control over financial reporting~~ based on our audits. We are a public accounting firm registered with the ~~Public Company Accounting Oversight Board (United States) ("PCAOB")~~PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the ~~audits~~audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or ~~fraud, and whether effective internal control over financial reporting was maintained in all material respects.~~

fraud. Our audits ~~of the consolidated financial statements~~ included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Fair value of investments measured at net asset value

As discussed in Note 8 to the consolidated financial statements, the fair value of pension plan assets at December 31, 2021 was $244.6 million. Of this amount, $49.0 million represents the fair value of private equity, hedge funds and certain international equity securities measured at net asset value (NAV).

We identified the assessment of the fair value of investments measured at NAV as a critical audit matter. Subjective auditor judgment was required in the application and performance of procedures to assess the fair value of the investments measured at NAV because the determination involved the use of unobservable inputs. Additionally, specialized skills and

knowledge were required to assess the fair value of the investments measured at NAV and to assess the sufficiency of audit evidence obtained.

The following are the primary procedures we performed to address this critical audit matter. For a selection of the investments measured at NAV, we compared:

•the Company’s previous estimates of fair value to the NAVs subsequently audited by third parties

•the rates of return to relevant, publicly available market indices

•the estimated fair values to external confirmations received directly from the third-party investment managers.

We involved valuation professionals with specialized skills and knowledge, who assisted in our risk assessment and the design of procedures performed for the investments measured at NAV. With respect to the selection of investments tested, the valuation professionals assisted in assessing the sufficiency of audit evidence obtained by assessing the results of the procedures performed.

/s/ KPMG LLP

We have served as the Company’s auditor since 2018.

Richmond, Virginia

March 11, 2022

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Tredegar Corporation:

Opinion on Internal Control Over Financial Reporting

We have audited Tredegar Corporation and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weaknesses, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated March 11, 2022 expressed an unqualified opinion on those consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses related to an ineffective control environment resulting from an insufficient number of trained resources, ineffective risk assessment, ineffective information and communication, and ineffective monitoring activities resulting in ineffective control activities related to the design and operation of process-level controls and general information technology controls across all financial reporting processes have been identified and included in management’s assessment. The material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2021 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our ~~audits~~audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our ~~audits provide~~audit provides a reasonable basis for our ~~opinions.~~opinion.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Futura Industries Corporation (“Futura”) from its assessment of internal control over financial reporting as of December 31, 2017 because it was acquired by the Company in a purchase business combination during 2017. We have also excluded Futura from our audit of internal control over financial reporting. Futura is a wholly-owned subsidiary whose total assets and total sales excluded from management’s assessment and our audit of internal control over financial reporting represent 7% and 8%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2017.

Definition and Limitations of Internal Control ~~over~~Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that ~~(i)~~(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; ~~(ii)~~(2) provide reasonable assurance that transactions are recorded as necessary to

permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and ~~(iii)~~(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ ~~PricewaterhouseCoopers~~KPMG LLP

Richmond, Virginia

~~February 21, 2018~~March 11, 2022

~~We have served as the Company’s auditor since 1989.~~

CONSOLIDATED BALANCE SHEETS

Tredegar Corporation and Subsidiaries


									December 31
December 31		2017			2016
									2021		2020
(In thousands, except share data)	(In thousands, except share data)							(In thousands, except share data)
Assets	Assets							Assets
Current assets:	Current assets:							Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	36,491		$	29,511		Cash and cash equivalents	$	30,521	$	11,846
Accounts and other receivables, net of allowance for doubtful accounts and sales returns of $3,304 in 2017 and $3,102 in 2016		120,135			97,388
Accounts and other receivables, net								Accounts and other receivables, net	103,312		86,327
Income taxes recoverable	Income taxes recoverable	32,080			7,518			Income taxes recoverable	2,558		2,807
Inventories	Inventories	86,907			66,069			Inventories	88,569		66,437
Prepaid expenses and other	Prepaid expenses and other	8,224			7,738			Prepaid expenses and other	11,275		19,679
Current assets of discontinued operations								Current assets of discontinued operations	178		1,339
Total current assets	Total current assets	283,837			208,224			Total current assets	236,413		188,435
Property, plant and equipment, at cost:	Property, plant and equipment, at cost:							Property, plant and equipment, at cost:
Land and land improvements	Land and land improvements	8,723			11,294			Land and land improvements	4,537		4,544
Buildings	Buildings	101,271			126,064			Buildings	69,406		66,406
Machinery and equipment	Machinery and equipment	660,898			660,272			Machinery and equipment	424,368		404,669
Total property, plant and equipment	Total property, plant and equipment	770,892			797,630			Total property, plant and equipment	498,311		475,619
Less accumulated depreciation	Less accumulated depreciation	(547,801		)	(536,905		)	Less accumulated depreciation	(327,930)		(309,074)
Net property, plant and equipment	Net property, plant and equipment	223,091			260,725			Net property, plant and equipment	170,381		166,545
Right-of-use leased assets								Right-of-use leased assets	13,847		16,037
Investment in kaléo (cost basis of $7,500)	Investment in kaléo (cost basis of $7,500)	54,000			20,200			Investment in kaléo (cost basis of $7,500)	—		34,600
Identifiable intangible assets, net	Identifiable intangible assets, net	40,552			33,601			Identifiable intangible assets, net	14,152		18,820
Goodwill	Goodwill	128,208			117,822			Goodwill	70,608		67,708
Deferred income tax assets	Deferred income tax assets	16,636			584			Deferred income tax assets	15,723		19,068
Other assets	Other assets	9,419			10,006			Other assets	2,460		3,506
Non-current assets of discontinued operations								Non-current assets of discontinued operations	—		151
Total assets	Total assets	$	755,743		$	651,162		Total assets	$	523,584	$	514,870
Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity							Liabilities and Shareholders’ Equity
Current liabilities:	Current liabilities:							Current liabilities:
Accounts payable	Accounts payable	$	108,391		$	81,342		Accounts payable	$	123,760	$	89,702
Accrued expenses	Accrued expenses	42,433			38,647			Accrued expenses	33,104		40,741
Lease liability, short-term								Lease liability, short-term	2,158		2,082
Income taxes payable								Income taxes payable	9,333		706
Current liabilities of discontinued operations								Current liabilities of discontinued operations	193		7,521
Total current liabilities	Total current liabilities	150,824			119,989			Total current liabilities	168,548		140,752
Lease liability, long-term								Lease liability, long-term	12,831		14,949
Long-term debt	Long-term debt	152,000			95,000			Long-term debt	73,000		134,000
Pension and other postretirement benefit obligations, net	Pension and other postretirement benefit obligations, net	98,837			95,370			Pension and other postretirement benefit obligations, net	78,265		110,585
Deferred income tax liabilities		2,123			21,110
Other noncurrent liabilities		8,179			8,910

Other non-current liabilities								Other non-current liabilities	6,218		5,529
Total liabilities	Total liabilities	411,963			340,379			Total liabilities	338,862		405,815
Commitments and contingencies (Notes 15 and 18)
Shareholders’ equity:	Shareholders’ equity:							Shareholders’ equity:
Common stock (no par value):	Common stock (no par value):							Common stock (no par value):
Authorized 150,000,000 shares;	Authorized 150,000,000 shares;							Authorized 150,000,000 shares;
Issued and outstanding—33,017,422 shares in 2017 and 32,933,807 in 2016 (including restricted stock)		34,747			32,007
Common stock held in trust for savings restoration plan (71,309 shares in 2017 and 69,622 in 2016)		(1,528		)	(1,497		)
Issued and outstanding— 33,736,629 shares in 2021 and 33,457,176 in 2020 (including restricted stock)								Issued and outstanding— 33,736,629 shares in 2021 and 33,457,176 in 2020 (including restricted stock)	55,174		50,066
Common stock held in trust for savings restoration plan (108,433 shares in 2021 and 105,067 in 2020)								Common stock held in trust for savings restoration plan (108,433 shares in 2021 and 105,067 in 2020)	(2,135)		(2,087)
Accumulated other comprehensive income (loss):	Accumulated other comprehensive income (loss):							Accumulated other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	(86,178		)	(93,970		)	Foreign currency translation adjustment	(85,792)		(84,149)
Gain (loss) on derivative financial instruments	Gain (loss) on derivative financial instruments	459			863			Gain (loss) on derivative financial instruments	901		2,264
Pension and other postretirement benefit adjustments	Pension and other postretirement benefit adjustments	(90,950		)	(90,127		)	Pension and other postretirement benefit adjustments	(64,613)		(96,519)
Retained earnings	Retained earnings	487,230			463,507			Retained earnings	281,187		239,480
Total shareholders’ equity	Total shareholders’ equity	343,780			310,783			Total shareholders’ equity	184,722		109,055
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	755,743		$	651,162		Total liabilities and shareholders’ equity	$	523,584	$	514,870

See accompanying notes to financial statements.

CONSOLIDATED STATEMENTS OF INCOME

Tredegar Corporation and Subsidiaries


											Years Ended December 31
Years Ended December 31		2017			2016		2015
											2021		2020		2019
(In thousands, except per-share data)	(In thousands, except per-share data)									(In thousands, except per-share data)
Revenues and other:	Revenues and other:									Revenues and other:
Sales	Sales	$	961,330		$	828,341	$	896,177		Sales	$	826,455	$	755,290	$	826,324
Other income (expense), net	Other income (expense), net	51,713			2,381		(20,113		)	Other income (expense), net	20,376		(67,294)		28,371
		1,013,043			830,722		876,064				846,831		687,996		854,695
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of goods sold	Cost of goods sold	775,628			668,626		725,459			Cost of goods sold	649,690		558,967		641,140
Freight	Freight	33,683			29,069		29,838			Freight	28,232		25,686		28,980
Selling, general and administrative	Selling, general and administrative	85,501			75,754		71,911			Selling, general and administrative	74,964		84,246		76,598
Research and development	Research and development	18,287			19,122		16,173			Research and development	6,347		8,398		7,893
Amortization of identifiable intangibles	Amortization of identifiable intangibles	6,198			3,978		4,073			Amortization of identifiable intangibles	1,704		3,017		13,601
Pension and postretirement benefits										Pension and postretirement benefits	14,160		14,720		9,642
Interest expense	Interest expense	6,170			3,806		3,502			Interest expense	3,386		2,587		4,051
Asset impairments and costs associated with exit and disposal activities		102,488			2,684		3,850
Goodwill impairment charge		—			—		44,465
Asset impairments and costs associated with exit and disposal activities, net of adjustments										Asset impairments and costs associated with exit and disposal activities, net of adjustments	1,127		1,725		784
Goodwill impairment										Goodwill impairment	—		13,696		—
Total	Total	1,027,955			803,039		899,271			Total	779,610		713,042		782,689
Income (loss) before income taxes		(14,912		)	27,683		(23,207		)
Income (loss) from continuing operations before income taxes										Income (loss) from continuing operations before income taxes	67,221		(25,046)		72,006
Income tax expense (benefit)	Income tax expense (benefit)	(53,163		)	3,217		8,928			Income tax expense (benefit)	9,284		(8,213)		13,545
Net income (loss) from continuing operations										Net income (loss) from continuing operations	57,937		(16,833)		58,461
Income (loss) from discontinued operations, net of tax										Income (loss) from discontinued operations, net of tax	(111)		(58,611)		(10,202)
Net income (loss)	Net income (loss)	$	38,251		$	24,466	$	(32,135	)	Net income (loss)	$	57,826	$	(75,444)	$	48,259

Earnings (loss) per share:	Earnings (loss) per share:									Earnings (loss) per share:
Basic:										Basic:
Continuing operations										Continuing operations	$	1.72	$	(0.51)	$	1.76
Discontinued operations										Discontinued operations	—		(1.75)		(0.31)
Basic earnings (loss) per share										Basic earnings (loss) per share	$	1.72	$	(2.26)	$	1.45
Diluted:										Diluted:
Continuing operations										Continuing operations	$	1.72	$	(0.51)	$	1.76
Discontinued operations										Discontinued operations	—		(1.75)		(0.31)
Diluted earnings (loss) per share										Diluted earnings (loss) per share	$	1.72	$	(2.26)	$	1.45

Shares used to compute earnings (loss) per share:										Shares used to compute earnings (loss) per share:
Basic	Basic	$	1.16		$	0.75	$	(0.99	)	Basic	33,563		33,402		33,236
Diluted	Diluted	$	1.16		$	0.75	$	(0.99	)	Diluted	33,670		33,402		33,258

See accompanying notes to financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Tredegar Corporation and Subsidiaries

Years Ended December 31 2017 2016 2015
(In thousands, except per-share data)
Net income (loss) $ 38,251
$ 24,466
$ (32,135 )
Other comprehensive income (loss):
Unrealized foreign currency translation adjustment (net of tax benefit of $371 in 2017, tax benefit of $729 in 2016 and tax benefit of $890 in 2015) 7,792
18,837
(65,537 )
Derivative financial instruments adjustment (net of tax of $111 in 2017, net of tax of $727 in 2016 and tax benefit of $550 in 2015) (404 ) 1,236
(1,029 )
Pension & other postretirement benefit adjustments:
Net gains (losses) and prior service costs (net of tax benefit of $2,518 in 2017, tax benefit of $1,874 in 2016 and tax benefit of $226 in 2015) (8,634 ) (3,288 ) (2,176 )
Amortization of prior service costs and net gains or losses (net of tax of $4,234 in 2017, tax of $4,398 in 2016 and tax of $5,823 in 2015) 7,811
8,700
10,218
Other comprehensive income (loss) 6,565
25,485
(58,524 )
Comprehensive income (loss) $ 44,816
$ 49,951
$ (90,659 )


	Years Ended December 31
	2021		2020		2019
(In thousands)
Net income (loss)	$	57,826	$	(75,444)	$	48,259
Other comprehensive income (loss):
Unrealized foreign currency translation adjustment (net of tax benefit of $365 in 2021, net of tax benefit of $897 in 2020 and net of tax benefit of $623 in 2019)	(1,643)		(8,781)		(3,723)
Reclassification of foreign currency translation loss realized on the sale of Personal Care Films	—		25,295		—
Derivative financial instruments adjustment (net of tax benefit of $351 in 2021, net of tax of $790 in 2020 and net of tax of $71 in 2019)	(1,363)		3,571		294
Pension & other postretirement benefit adjustments:
Net gains (losses) and prior service costs (net of tax of $5,212 in 2021, net of tax benefit of $4,228 in 2020 and net of tax benefit of $6,417 in 2019)	18,720		(12,197)		(22,508)
Amortization of prior service costs and net gains or losses (net of tax of $3,676 in 2021, net of tax of $3,937 in 2020 and net of tax of $2,359 in 2019)	13,186		11,359		8,273
Other comprehensive income (loss)	28,900		19,247		(17,664)
Comprehensive income (loss)	$	86,726	$	(56,197)	$	30,595

See accompanying notes to financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Tredegar Corporation and Subsidiaries


												Years Ended December 31
Years Ended December 31		2017			2016			2015
(In thousands)
												2021		2020		2019
												(In thousands)
Cash flows from operating activities:	Cash flows from operating activities:										Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	38,251		$	24,466		$	(32,135	)	Net income (loss)	$	57,826	$	(75,444)	$	48,259
Adjustments for noncash items:	Adjustments for noncash items:										Adjustments for noncash items:
Depreciation	Depreciation	34,079			28,494			30,909			Depreciation	22,080		28,940		30,683
Amortization of identifiable intangibles	Amortization of identifiable intangibles	6,198			3,978			4,073			Amortization of identifiable intangibles	1,704		3,017		13,601
Goodwill impairment charge		—			—			44,465
Goodwill impairment											Goodwill impairment	—		13,696		—
Reduction of right-of-use lease asset											Reduction of right-of-use lease asset	2,086		2,753		2,588
Deferred income taxes	Deferred income taxes	(36,414		)	(3,689		)	(10,523		)	Deferred income taxes	(4,944)		(16,892)		5,856
Accrued pension and postretirement benefits	Accrued pension and postretirement benefits	10,193			11,047			12,521			Accrued pension and postretirement benefits	14,160		14,720		9,642
(Gain) loss on investment in kaléo accounted for under the fair value method		(33,800		)	(1,600		)	20,500
Loss on asset impairments		101,282			1,436			403
(Gain) loss on sale of assets		553			(220		)	(11		)
Gain from insurance recoveries		(5,261		)	(1,634		)	—
Stock-based compensation expense											Stock-based compensation expense	5,167		5,402		7,293
(Gain) loss on investment in kaléo											(Gain) loss on investment in kaléo	(12,462)		60,900		(10,900)
Loss on sale of divested businesses											Loss on sale of divested businesses	—		52,326		—
Net gain on disposal of assets											Net gain on disposal of assets	—		—		(6,334)
Changes in assets and liabilities:	Changes in assets and liabilities:										Changes in assets and liabilities:
Accounts and other receivables	Accounts and other receivables	(10,566		)	92			9,180			Accounts and other receivables	(16,993)		(335)		16,471
Inventories	Inventories	(9,128		)	1,127			1,137			Inventories	(23,132)		(4,366)		11,315
Income taxes recoverable/payable	Income taxes recoverable/payable	(24,449		)	(7,061		)	(1,849		)	Income taxes recoverable/payable	8,956		1,617		2,644
Prepaid expenses and other	Prepaid expenses and other	(784		)	(1,914		)	(1,256		)	Prepaid expenses and other	3,612		(2,203)		795
Accounts payable and accrued expenses	Accounts payable and accrued expenses	21,123			161			(2,455		)	Accounts payable and accrued expenses	19,835		4,045		(2,937)
Lease liability											Lease liability	(1,935)		(3,049)		(2,723)
Pension and postretirement benefit plan contributions	Pension and postretirement benefit plan contributions	(5,829		)	(8,061		)	(2,709		)	Pension and postretirement benefit plan contributions	(5,687)		(12,681)		(8,614)
Other, net	Other, net	2,767			2,250			2,006			Other, net	310		1,927		(1,776)
Net cash provided by operating activities	Net cash provided by operating activities	88,215			48,872			74,256			Net cash provided by operating activities	70,583		74,373		115,863
Cash flows from investing activities:	Cash flows from investing activities:										Cash flows from investing activities:
Capital expenditures	Capital expenditures	(44,362		)	(45,457		)	(32,831		)	Capital expenditures	(27,361)		(23,355)		(50,864)
Acquisitions, net of cash acquired		(87,110		)	—			—
Insurance proceeds from cast house explosion		5,739			1,156			—
Proceeds from the sale of kaléo											Proceeds from the sale of kaléo	47,062		—		—
Net proceeds on sale of divested businesses											Net proceeds on sale of divested businesses	—		56,236		—
Proceeds from the sale of assets and other	Proceeds from the sale of assets and other	129			2,308			1,416			Proceeds from the sale of assets and other	4,749		—		10,936
Net cash used in investing activities		(125,604		)	(41,993		)	(31,415		)
Net cash provided by (used in) investing activities											Net cash provided by (used in) investing activities	24,450		32,881		(39,928)
Cash flows from financing activities:	Cash flows from financing activities:										Cash flows from financing activities:
Borrowings	Borrowings	190,750			96,750			107,000			Borrowings	75,500		162,250		65,500
Debt principal payments	Debt principal payments	(133,750		)	(105,750		)	(140,250		)	Debt principal payments	(136,500)		(70,250)		(125,000)
Dividends paid	Dividends paid	(14,532		)	(14,456		)	(13,725		)	Dividends paid	(16,167)		(216,049)		(15,325)
Debt financing costs	Debt financing costs	—			(2,606		)	(78		)	Debt financing costs	0		(693)		(1,817)
Proceeds from exercise of stock options and other		695			2,313			2,858
Net cash provided by (used) in financing activities		43,163			(23,749		)	(44,195		)
Other											Other	325		(850)		(670)
Net cash used in financing activities:											Net cash used in financing activities:	(76,842)		(125,592)		(77,312)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	1,206			2,225			(4,546		)	Effect of exchange rate changes on cash	484		(1,238)		(1,598)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	6,980			(14,645		)	(5,900		)	Increase (decrease) in cash and cash equivalents	18,675		(19,576)		(2,975)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	29,511			44,156			50,056			Cash and cash equivalents at beginning of period	11,846		31,422		34,397
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	36,491		$	29,511		$	44,156		Cash and cash equivalents at end of period	$	30,521	$	11,846	$	31,422
Supplemental cash flow information:	Supplemental cash flow information:										Supplemental cash flow information:
Interest payments	Interest payments	$	5,808		$	3,074		$	3,508		Interest payments	$	2,923	$	1,679	$	4,358
Income tax payments (refunds), net	Income tax payments (refunds), net	$	9,193		$	15,406		$	20,118		Income tax payments (refunds), net	$	4,706	$	1,670	$	2,595

See accompanying notes to financial statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Tredegar Corporation and Subsidiaries

Accumulated Other Comprehensive Income (Loss)
Common Stock
Retained
Earnings
Trust for Savings Restora-tion Plan
Foreign
Currency
Trans-lation

Gain
(Loss) on
Derivative
Financial Instruments

Pension & Other Post-
retirement Benefit Adjust.

Total
Share-
holders’ Equity
(In thousands, except share and per-share data) Shares Amount
Balance at January 1, 2015 32,422,082
$ 24,364
$ 499,300
$ (1,440 ) $ (47,270 ) $ 656
$ (103,581 ) $ 372,029
Net loss —
—
(32,135 ) —
—
—
—
(32,135 )
Foreign currency translation adjustment (net of tax benefit of $890) —
—
—
—
(65,537 ) —
—
(65,537 )
Derivative financial instruments adjustment (net of tax benefit of $550) —
—
—
—
—
(1,029 ) —
(1,029 )
Net gains or losses and prior service costs (net of tax benefit of $226) —
—
—
—
—
—
(2,176 ) (2,176 )
Amortization of prior service costs and net gains or losses (net of tax of $5,823) —
—
—
—
—
—
10,218
10,218
Cash dividends declared ($0.42 per share) —
—
(13,725 ) —
—
—
—
(13,725 )
Stock-based compensation expense 118,440
3,435
—
—
—
—
—
3,435
Issued upon exercise of stock options (including related income tax of $302) & other 141,640
1,668
—
—
—
—
—
1,668
Shareholder Rights Plan redemption —
—
—
—
—
—
—
—
Tredegar common stock purchased by trust for savings restoration plan —
—
27
(27 ) —
—
—
—
Balance at December 31, 2015 32,682,162
29,467
453,467
(1,467 ) (112,807 ) (373 ) (95,539 ) 272,748
Net income —
—
24,466
—
—
—
—
24,466
Foreign currency translation adjustment (net of tax benefit of $729) —
—
—
—
18,837
—
—
18,837
Derivative financial instruments adjustment (net of tax of $727) —
—
—
—
—
1,236
—
1,236
Net gains or losses and prior service costs (net of tax benefit of $1,874) —
—
—
—
—
—
(3,288 ) (3,288 )
Amortization of prior service costs and net gains or losses (net of tax of $4,398) —
—
—
—
—
—
8,700
8,700
Cash dividends declared ($0.44 per share) —
—
(14,456 ) (14,456 )
Stock-based compensation expense 127,169
1,461
—
—
—
—
—
1,461
Issued upon exercise of stock options (including related income tax of $1,109) & other 124,476
1,079
—
—
—
—
—
1,079
Tredegar common stock purchased by trust for savings restoration plan —
—
30
(30 ) —
—
—
—
Balance at December 31, 2016 32,933,807
32,007
463,507
(1,497 ) (93,970 ) 863
(90,127 ) 310,783
Net income —
—
38,251
—
—
—
—
38,251
Foreign currency translation adjustment (net of tax benefit of $371) —
—
—
—
7,792
—
—
7,792
Derivative financial instruments adjustment (net of tax of $111) —
—
—
—
—
(404 ) —
(404 )
Net gains or losses and prior service costs (net of tax benefit of $2,518) —
—
—
—
—
—
(8,634 ) (8,634 )
Amortization of prior service costs and net gains or losses (net of tax of $4,234) —
—
—
—
—
—
7,811
7,811
Cash dividends declared ($0.44 per share) —
—
(14,532 ) —
—
—
—
(14,532 )
Stock-based compensation expense 49,475
2,018
—
—
—
—
—
2,018
Issued upon exercise of stock options & other 34,140
695
—
—
—
—
—
695
Cumulative effect adjustment for adoption of stock-based compensation accounting guidance —
27
(27 ) —
—
—
—
—
Tredegar common stock purchased by trust for savings restoration plan —
—
31
(31 ) —
—
—
—
Balance at December 31, 2017 33,017,422
$ 34,747
$ 487,230
$ (1,528 ) $ (86,178 ) $ 459
$ (90,950 ) $ 343,780


								Accumulated Other Comprehensive Income (Loss)
	Common Stock			Retained Earnings		Trust for Savings Restoration Plan		Foreign Currency Translation		Gain (Loss) on Derivative Financial Instruments		Pension & Other Postretirement Benefit Adjust		Total Shareholders’ Equity
(In thousands, except share and per-share data)	Shares	Amount
Balance at January 1, 2019	33,176,024	$	38,892	$	497,511	$	(1,559)	$	(96,940)	$	(1,601)	$	(81,446)	$	354,857
Net income (loss)	—	—		48,259		—		—		—		—		48,259
Foreign currency translation adjustment	—	—		—		—		(3,723)		—		—		(3,723)
Derivative financial instruments adjustment	—	—		—		—		—		294		—		294
Net gains or (losses) and prior service costs	—	—		—		—		—		—		(22,508)		(22,508)
Amortization of prior service costs and net gains or losses	—	—		—		—		—		—		8,273		8,273
Cash dividends declared ($0.46 per share)	—	—		(15,325)		—		—		—		—		(15,325)
Stock-based compensation expense	228,959	7,292		—		—		—		—		—		7,292
Repurchase of employee common stock for tax withholdings	(49,444)	(854)		—		—		—		—		—		(854)
Issued upon exercise of stock options	9,500	184		—		—		—		—		—		184
Tredegar common stock purchased by trust for savings restoration plan	—	—		33		(33)		—		—		—		—
Balance at December 31, 2019	33,365,039	45,514		530,478		(1,592)		(100,663)		(1,307)		(95,681)		376,749
Net income (loss)	—	—		(75,444)		—		—		—		—		(75,444)
Foreign currency translation adjustment	—	—		—		—		(8,781)		—		—		(8,781)
Foreign currency translation loss realized on the sale of Personal Care Films	—	—		—		—		25,295		—		—		25,295
Derivative financial instruments adjustment	—	—		—		—		—		3,571		—		3,571
Net gains or (losses) and prior service costs	—	—		—		—		—		—		(12,197)		(12,197)
Amortization of prior service costs and net gains or losses	—	—		—		—		—		—		11,359		11,359
Cash dividends declared ($6.45 per share)	—	—		(216,049)		—		—		—		—		(216,049)
Stock-based compensation expense	131,354	5,402		—		—		—		—		—		5,402
Repurchase of employee common stock for tax withholdings	(39,217)	(850)		—		—		—		—		—		(850)
Tredegar common stock purchased by trust for savings restoration plan	—	—		495		(495)		—		—		—		—
Balance at December 31, 2020	33,457,176	50,066		239,480		(2,087)		(84,149)		2,264		(96,519)		109,055
Net income (loss)	—	—		57,826		—		—		—		—		57,826
Foreign currency translation adjustment	—	—		—		—		(1,643)		—		—		(1,643)
Derivative financial instruments adjustment	—	—		—		—		—		(1,363)		—		(1,363)
Net gains or (losses) and prior service costs	—	—		—		—		—		—		18,720		18,720
Amortization of prior service costs and net gains or losses	—	—		—		—		—		—		13,186		13,186
Cash dividends declared ($0.48 per share)	—	—		(16,167)		—		—		—		—		(16,167)
Stock-based compensation expense	229,014	4,783		—		—		—		—		—		4,783
Issued upon exercise of stock options	67,705	915		—		—		—		—		—		915
Repurchase of employee common stock for tax withholdings	(17,266)	(590)		—		—		—		—		—		(590)
Tredegar common stock purchased by trust for savings restoration plan	—	—		48		(48)		—		—		—		—
Balance at December 31, 2021	33,736,629	$	55,174	$	281,187	$	(2,135)	$	(85,792)	$	901	$	(64,613)	$	184,722

See accompanying notes to financial statements.

NOTES TO FINANCIAL STATEMENTS

Tredegar Corporation and Subsidiaries


1	~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

~~Organization and~~ 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations. Tredegar Corporation and subsidiaries (collectively “Tredegar,” “the Company,” “we,” “us” or “our”) ~~are primarily engaged~~is an industrial manufacturer with three primary businesses: custom aluminum extrusions for the North American building & construction, automotive and specialty end-use markets; surface protection films for high-technology applications in the ~~manufacture of~~global electronics industry and polyethylene overwrap films ~~polyester~~used in bathroom tissue and paper towels; and polyester-based films for use in packaging applications that have specialized properties primarily for the Latin American and ~~aluminum extrusions, which~~the United States (“U.S.”) flexible packaging markets. The Company’s business segments are ~~reported for business segment purposes under PE Films, Flexible Packaging Films (also referred to as Terphane) and~~ Aluminum Extrusions (also referred to as Bonnell Aluminum), ~~respectively.~~PE Films, and Flexible Packaging Films (also referred to as Terphane). More information on the Company’s business segments is provided in Note ~~5. See~~13.

On October 30, 2020, the Company completed the sale of its personal care films business (“Personal Care Films”), which was part of its PE Films segment. The transaction excluded the packaging film lines and related operations located at the Pottsville, Pennsylvania manufacturing site (“Pottsville Packaging”), which are now being reported within the Surface Protection component of PE Films. Commencing in the third quarter of 2020, all historical results for Personal Care Films have been presented as discontinued operations.

In December 2020, the Company entered into a definitive agreement to sell Bright View Technologies (“Bright View”). The sale did not represent a strategic shift nor did it have a major effect on the Company’s historical and ongoing operations, thus all financial information for Bright View has been presented as continuing operations in the PE Films segment.

For more information on these transactions, see Note 15 in the Notes ~~10 and 17 regarding restructurings.~~to Financial Statements

Basis of ~~Presentation.~~Presentation and Principles of Consolidation. The consolidated financial statements include the accounts and operations of ~~Tredegar~~the Company and ~~all of its majority-owned subsidiaries.~~have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Intercompany ~~accounts~~balances and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”) requires Tredegar 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.

Certain amounts for the prior years have been reclassified to conform to current year presentation.

Fiscal Year End. The Company operates on a calendar fiscal year except for the Aluminum Extrusions segment, which operates on a 52/53-week fiscal year basis. References to Aluminum Extrusions for ~~2017, 2016~~2021, 2020 and ~~2015~~2019 relate to the 52-week fiscal ~~years~~year ended December ~~24, 2017, December~~ 26, ~~2016 and~~2021, the 52-week fiscal year ended December 27, ~~2015,~~2020 and the 52-week fiscal year ended December 29, 2019, respectively. The Company does not believe the impact of reporting the results of this segment ~~as stated above~~in this manner is material to the consolidated financial results. The Company may fund or receive cash from the Aluminum Extrusions segment based on Aluminum Extrusion’s cash flows from operations during the intervening period from Aluminum Extrusion’s fiscal year end to the Company’s calendar year end. There was no intercompany funding with Aluminum Extrusions between December 27, 2021 and December 31, 2021. As of December 31, 2020, the Company’s cash and cash equivalents declined by $3.8 million since the Company made payments to the Aluminum Extrusions segment to fund its working capital during the intervening period.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and disclosure of contingent assets and liabilities (if any). On an ongoing basis, the Company evaluates its estimates, including those related to provisions for transaction and credit losses, income taxes, pension, and the valuation of goodwill and intangible assets, among others. Tredegar bases its estimates on historical experience and various other assumptions which the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Risk and Uncertainties. While it is not possible to estimate the impact that the coronavirus pandemic (“COVID-19”) may have on the Company’s business, estimates related to the accounting for impairment of long-lived assets and goodwill, pension benefits and income taxes could be materially adversely affected in future periods. Due to the uncertainty with respect to the magnitude of the impact and duration of COVID-19, future developments associated with COVID-19 may adversely affect the Company's financial condition, results of operations and cash flows. The Company continues to monitor the impact of COVID-19 on the business and its effect on the consolidated financial statements.

Foreign Currency Translation. The financial statements of subsidiaries located outside the U.S., where the local currency is the functional currency, are translated into U.S. Dollars using exchange rates in effect at the period end for assets and liabilities and average exchange rates during each reporting period for results of operations. Adjustments resulting from the translation of these financial statements are reflected as a separate component of shareholders’ equity. There are no operating subsidiaries located outside the U.S. where the U.S. Dollar is the functional currency.

Transaction and remeasurement gains or losses included in income were losses of ~~$0.8~~$0.5 million, ~~$3.6~~gains of $0.6 million and ~~$4.0~~losses of $0.6 million in ~~2017, 2016~~2021, 2020 and ~~2015,~~2019, respectively. These amounts do not include the effects between reporting periods that exchange rate changes have on income of the locations outside the U.S. that result from translation into U.S. Dollars.

Cash and Cash Equivalents. Cash and cash equivalents consist of cash on hand in excess of daily operating requirements and highly liquid investments with original maturities of three months or less. At December 31, ~~2017~~2021 and ~~2016,~~2020, Tredegar had cash and cash equivalents of ~~$36.5~~$30.5 million and ~~$29.5~~$11.8 million, respectively, including funds held in locations outside the U.S. of ~~$32.7~~$16.4 million and ~~$23.8~~$9.4 million, respectively.

The Company’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 the policy are safety of principal and liquidity.

Accounts and Other ~~Receivables.~~Receivables, net. Accounts receivable are stated at the amount invoiced to customers less allowances for doubtful ~~accounts and sales returns.~~accounts. Accounts receivable are non-interest bearing and arise from the sale of product to customers under typical industry trade terms. Notes receivable are ~~not significant.~~immaterial. Past due amounts are determined based on established terms and charged-off when deemed uncollectible. The allowance for doubtful accounts is determined based on an assessment of probable losses taking into account past due amounts, customer credit profile, historical experience and current economic conditions. For receivables that do not have a specific allowance, the loss rate is computed by segment to apply to the remaining receivables balance, using each segment’s historic loss rate. Other receivables include value-added taxes related to certain foreign subsidiaries and other miscellaneous receivables due within one year. For certain customers, the Company has arrangements in place with financial institutions whereby certain customer receivables are sold to the financial institution at a discount and without recourse. Upon sale, the associated receivable is unrecognized and the discount is recognized as a reduction of sales. For more information on accounts receivable and other receivables, net, see Note 2.

Inventories. Inventories are stated at the lower of cost or market, with cost determined onusing the ~~last-in, first-out~~last in, first out (“LIFO”) ~~basis,~~, the weighted average cost or the ~~first-in, first-out basis.~~first in, first out method. Cost elements included in work-in-process and finished goods inventories are raw materials, direct labor and manufacturing overhead. Finished goods, work-in-process, raw materials and supplies, stores and other inventory are reviewed to determine if inventory quantities are in excess of forecasted usage or if they have become obsolete.

Property, Plant and Equipment. Accounts include costs of assets constructed or purchased, related delivery and installation costs and interest incurred on significant capital projects during their construction periods. Expenditures for renewals and betterments also are capitalized, but expenditures for repairs and maintenance are expensed as incurred. The cost and

accumulated depreciation applicable to assets retired or sold are removed from the respective accounts, and gains or losses thereon are included in income.

Capital expenditures for property, plant and equipment include capitalized interest. Capitalized interest included in capital expenditures for property, plant and equipment was ~~$0.4~~$0.1 million, $0.1 million and $0.3 million in 2021, 2020 and ~~$0.4 million in 2017, 2016 and 2015,~~2019, respectively.

Depreciation is computed primarily by the straight-line method based on the estimated useful lives of the assets that ~~except for isolated exceptions,~~generally range from 5 to 40 years for buildings and land improvements and 2 to 20 years for machinery and equipment.

~~Investments in Private Entities with Less Than or Equal to 50% Voting Ownership Interest.~~ ~~The Company accounts for its investments in private entities where its voting ownership is less than or equal to 50% based on the facts and circumstances surrounding the investment.~~

For those investments measured at fair value, GAAP requires disclosure of the level within the fair value hierarchy in which fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

Goodwill and Identifiable Intangibles. The excess of the purchase price over the fair value of identifiable net assets of acquired companies is allocated to goodwill. The Company assesses goodwill for impairment when events or circumstances indicate that the carrying value may not be recoverable or, at a minimum, on an annual basis (December 1st of each year). When assessing goodwill for impairment, accounting guidance allows the Company to first perform a qualitative assessment about the likelihood of the carrying value of a reporting unit exceeding its fair value, referred to as the "Step 0" assessment. The Step 0 assessment requires the evaluation of certain qualitative factors, including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance, as well as company and reporting unit factors. If the Company's Step 0 analysis indicates that it is more likely than not that the fair value of a reporting unit is less than the carrying amount, then the Company would perform a quantitative impairment test that estimates the fair value of its reporting units using discounted cash flow analyses and comparative enterprise value-to-EBITDA (earnings before interest, taxes, depreciation and amortization) multiples.

During the first three months of 2020, the Company performed goodwill impairment tests and recognized a goodwill impairment charge of $13.7 million ($10.5 million after taxes), which represented the entire amount of goodwill associated with Aluminum Extrusions’ AACOA reporting unit. The operations of the AACOA reporting unit, which includes the Niles, Michigan and Elkhart, Indiana facilities, were expected to be severely impacted by COVID-19, with over 80% of the aluminum extrusions manufactured at these facilities sold to customers that make consumer durable products, such as recreational boating and power sports vehicles, and to customers serving the building and construction and automotive markets.

As of December 1, 2021, the Company’s ~~significant operating~~reporting units with goodwill were Surface Protection in PE Films ~~include Personal Care~~ and ~~Surface Protection. There are three operating units~~Futura in Aluminum ~~Extrusions: Bonnell Aluminum, AACOA and Futura. Each~~Extrusions. Both of these reporting units ~~has~~have separately identifiable operating net assets (operating assets including goodwill and identifiable intangible assets net of operating liabilities).

In addition, the Company applied the Step 0 goodwill assessment to Surface Protection and Futura; both had fair values significantly in excess of their carrying amounts when last tested using the quantitative impairment test. The ~~Company recorded a~~Company's Step 0 analyses in 2021 of these reporting units concluded that it is not more likely than not that the fair values of each reporting unit was less than its carrying amount. Therefore, the quantitative goodwill impairment ~~charge of $44.5 million ($44.5 million after taxes) to write off the goodwill associated with Flexible Packaging Films in the third quarter of 2015. See Note 8~~tests for ~~additional details.~~

~~The Company estimates the fair value of its~~these reporting units ~~using discounted cash flow analysis~~were not necessary in 2021. The Surface

Protection and ~~comparative enterprise value-to-EBITDA (earnings before interest, taxes, depreciation and amortization) multiples. Goodwill of the PE Films operating~~Futura reporting units ~~Personal Care and Surface Protection,~~had goodwill in the amounts of ~~$46.8~~$57.3 million and $57.3 million, respectively, was tested for impairment at the annual testing date, with the estimated fair value of these reporting units exceeding the carrying value of their net assets by approximately 15% and +100%, respectively, at December 1, 2017. The goodwill of the Aluminum Extrusions reporting unit was tested for impairment at the annual testing date. The goodwill in Aluminum Extrusions is associated with the October 2012 acquisition of AACOA, Inc. (“AACOA”) and the February 2017 acquisition of Futura Industries Corporation (“Futura”). The estimated fair value of AACOA and Futura exceeded the carrying value of their net assets by approximately 61% and 42%, respectively, at December 1, 2017. Goodwill for AACOA and Futura totaled $13.7 million and $10.4$13.3 million, respectively, at December 31, ~~2017.~~

~~Indefinite-lived identifiable intangible assets are assessed for impairment when events or circumstances indicate that the carrying value may not be recoverable, or, at a minimum,~~2021. For more information on ~~an annual basis (December 1st of each year). The Company estimates the fair value of its trade names using a relief-from-royalty method that relies upon a corresponding discounted cash flow analysis.~~

For AACOA and Futura, the indefinite-lived identifiable intangible assets for each were tested for impairment at the annual testing date, with the estimated fair value substantially exceeding the carrying value of the net assets for each.

Based on a valuation analysis conducted in the fourth quarter of 2017, Terphane recorded an impairment of its assets. Indefinite-lived trade names for Terphane were written down by $4.0 million to $2.4 million and were assigned estimated useful lives of 5 to 13 years. Also, Terphane recorded a reduction of the carrying value of definite-lived identifiable intangible assets in the amount of $14.0 million.

~~Additional disclosure of Tredegar~~ goodwill and identifiable ~~intangible assets and the impairments recorded in 2017 are included in~~intangibles, see Note 8.5.

Impairment of Long-Lived Assets. The Company reviews long-lived assets for possible impairment when events indicate that an impairment may exist. For assets that are held and used in operations, if events indicate that an asset may be impaired, the Company estimates the future unlevered pre-tax 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 pre-tax cash flows is less than the carrying amount of the asset group, an impairment loss is calculated. Measurement of the impairment loss is the amount by which the carrying amount exceeds the estimated fair value of the asset group.

~~During the fourth quarter~~ As of ~~2017, in conjunction with annual business planning as well as valuation activities (including the use of discounted cash flow~~December 31, 2021 and ~~comparative enterprise value-to-EBITDA multiple methods) and other efforts, the Company determined~~2020, no events were identified that ~~the carrying value of Terphane’s remaining~~indicated long-lived assets ~~were~~may be impaired. Accordingly, the Company wrote down these assets based on an enterprise valuation for all of Terphane of approximately $30 million. This write-down resulted in a non-cash asset impairment loss recognized during the fourth quarter of 2017 of $101 million ($87 million after non-cash tax benefits). See Note 17 for more information on this impairment.

Assets that are held for sale 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-down required.

Pension Costs and Postretirement Benefit Costs Other than Pensions. Pension costs and postretirement benefit costs other than pensions ~~are~~have been accrued over the period employees ~~provide~~provided service to Tredegar. Liabilities and expenses for pension plans and other postretirement benefits are determined using actuarial methodologies and incorporate significant assumptions, including the rate used to discount the future estimated liability, the long-term rate of return on plan assets, and several assumptions relating to the employee workforce. The Company recognizes the funded status of its pension and other postretirement plans in the accompanying consolidated balance sheets. Tredegar’s policy is to fund its pension plans at amounts not less than the minimum requirements of the Employee Retirement Income Security Act (“ERISA”) of 1974 and to fund postretirement benefits other than pensions when claims are incurred.

On February 10, 2022, Tredegar announced the initiation of a process to terminate and settle its frozen defined benefit pension plan, which could take up to 24 months to complete. In connection therewith, on February 9, 2022, the Company contributed $50 million to the pension plan (the “Special Contribution”). The Company estimates that, with the Special Contribution, there will be no required minimum contributions to the pension plan until final settlement. As of December 31, 2021, no adjustment to the consolidated financial statements has been recognized as a result of this announcement and Special Contribution made in 2022. As the settlement process occurs, the Company expects to recognize a non-cash reclassification adjustment to net income or loss of other comprehensive net actuarial losses associated with the pension plan currently reflected directly in shareholders’ equity. Other comprehensive net actuarial losses associated with the pension plan were approximately $109 million on a pretax basis as of December 31, 2021.

Additional disclosure regarding Tredegar’s pension costs and postretirement benefit costs other than pensions is included in Note 8.

Revenue Recognition. ~~Revenue~~ The Company’s revenue is primarily generated from the sale of finished products ~~which is shown net of estimated~~to customers. Those sales ~~returns~~predominantly contain a single performance obligation and ~~allowances,~~revenue is recognized at the point in time when ~~title has passed to the customer, the price~~control of the product is transferred to customers, along with the title, risk of loss and rewards of ownership. Depending on the arrangement with the customer, these criteria are met either at the time the product is shipped or when the product is made available or delivered at the destination specified in the agreement with the customer.

Sales revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for that finished product. The Company offers various discounts, rebates and allowances to customers, (collectively, “allowances”), all of which are considered when determining the transaction price. Certain allowances are fixed and determinable at the time of sale and ~~collectability is reasonably assured.~~ are recorded at the time of sale as a reduction to revenues. Other allowances can vary depending on future outcomes such as sales returns and customer sales volume, thus represents variable consideration.

Amounts billed to customers related to freight ~~have been~~are classified as sales inrevenue and the ~~accompanying consolidated statements of income. The~~ cost of freight ~~has been~~is classified as a separate line in the accompanying consolidated statements of income. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction between Tredegar and its customers (such as value-added taxes) are accounted for on a net basis and therefore excluded from revenues. See Note 13 for disaggregation of revenue by segment and type. See Note 2 for a table showing accounts and other receivables, net of allowance for bad debts.

Revenue expected to be recognized in any future period related to remaining performance obligations, excluding i) revenue pertaining to contracts that have an original expected duration of one year or less, ii) contracts where revenue is recognized as invoiced and iii) variable consideration related to unsatisfied performance obligations, is not expected to materially impact the Company’s financial results.

Research & Development (“R&D”) Costs. R&D costs are expensed as incurred and include primarily salaries, wages, employee benefits, equipment depreciation, facility costs and the cost of materials consumed relating to R&D efforts. R&D costs include a reasonable allocation of indirect costs.

Leases. At inception, the Company determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. The Company has elected to not record short-term leases with an original lease term of one year or less in the consolidated balance sheet. To the extent such leases contain renewal options that the Company intends to exercise, the related Right-of-Use (“ROU”) asset and lease liability are included in the consolidated balance sheet. Some of the Company’s lease arrangements contain lease components (e.g., minimum rent payments) and non-lease components (e.g., maintenance, labor charges, etc.). The Company generally accounts for the lease and non-lease components as a single lease component.

Certain of the Company’s lease agreements include rental payments that are adjusted periodically for an index or rate. The leases are initially measured using the projected payments adjusted for the index or rate in effect at the commencement date. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating leases are included in “Right-of-use lease assets”, “Lease liabilities - short-term” and “Lease liabilities - long-term” on the consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s secured incremental borrowing rates, adjusted for term and geographic location using country-based swap rates. As a result of the Company’s review of new and existing lease contracts, there were no instances where the Company could readily determine a rate implicit in the lease.

Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Depending upon the specific use of the ROU asset, lease expense is included in the “Cost of goods sold”, “Freight”, “Selling, general and administrative”, and “Research and development” line items on the consolidated statements of income. Lease income is not material to the results of operations for the years ended December 31, 2021 and 2020, respectively. Additional disclosure regarding Tredegar’s leases is included in Note 4.

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)~~12). Tredegar’s policy is to accrue U.S. federal income taxes to the extent required under GAAP on unremitted earnings of all foreign subsidiaries where required. However, due to changes in the taxation of dividends under the Tax Cuts and Jobs Act (the “TCJA”) enacted by the U.S. government onin December ~~22,~~ 2017, Tredegar ~~will~~ only ~~record~~records U.S. federal income taxes on unremitted earnings of its foreign subsidiaries where Tredegar cannot take steps to eliminate any potential tax on future distributions from its foreign subsidiaries. Prior to the second quarter of 2016, deferred U.S. federal income taxes had not been recorded for the undistributed earnings for Terphane Limitada because the Company had intended to permanently reinvest these earnings. Due to concerns about the current political and economic conditions in Brazil, Terphane Limitada began making cash distributions to the Company. During 2016, Terphane Limitada paid dividends totaling $13.3 million to the Company. Because of the accumulation of significant losses related to foreign currency translations at Terphane Limitada, there were no unrecorded deferred income tax liabilities associated with ~~the~~ U.S. federal income taxes and foreign withholding taxes on Terphane Limitada’s undistributed earnings as of December 31, ~~2017~~2021 and December 31, ~~2016.~~2020.

A valuation allowance is recorded in the period when the Company determines that it is more likely than not that all or a portion of deferred income tax assets may not be realized. The establishment and removal of a valuation allowance requires the Company to consider all positive and negative evidence and make a judgmental decision regarding the amount of valuation allowance required as of a reporting date. The benefit of an uncertain tax position is included in the accompanying financial statements when the Company determines that it is more likely than not that the position will be sustained, based on the technical merits of the position, if the taxing authority examines the position and the dispute is litigated. This determination is made on the basis of all the facts, circumstances and information available as of the reporting date.

Earnings Per Share. Basic earnings per share is computed using the weighted average number of shares of common stock outstanding. Diluted earnings per share is computed using the weighted average common and potentially dilutive common equivalent shares outstanding, determined as follows:


	2017	2016	2015		2021	2020	2019
Weighted average shares outstanding used to compute basic earnings per share	32,945,961	32,761,793	32,578,116	Weighted average shares outstanding used to compute basic earnings per share	33,562,684	33,402,147	33,236,115
Incremental shares attributable to stock options and restricted stock	5,327	13,279	—	Incremental shares attributable to stock options and restricted stock	107,566	—	22,022
Shares used to compute diluted earnings per share	32,951,288	32,775,072	32,578,116	Shares used to compute diluted earnings per share	33,670,250	33,402,147	33,258,137

The ~~following table summarizes the after-tax~~ changes in accumulated other comprehensive income (loss) ~~for the year ended December 31, 2017:~~by component are summarized as follows:

(In thousands) Foreign currency translation adjustment Gain (loss) on derivative financial instruments Pension and other post-retirement benefit adjustments Total
Beginning balance, January 1, 2017 $ (93,970 ) $ 863
$ (90,127 ) $ (183,234 )
Other comprehensive income (loss) before reclassifications 7,792
538
(8,634 ) (304 )
Amounts reclassified from accumulated other comprehensive income (loss) —
(942 ) 7,811
6,869
Net other comprehensive income (loss) - current period 7,792
(404 ) (823 ) 6,565
Ending balance, December 31, 2017 $ (86,178 ) $ 459
$ (90,950 ) $ (176,669 )


	Foreign Currency Translation		Gain (Loss) on Derivative Financial Instruments		Pension & Other Postretirement Benefit Adjust		Total Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2019	$	(96,940)	$	(1,601)	$	(81,446)	$	(179,987)
Other comprehensive income (loss)	(4,346)		(3,214)		(28,925)		(36,485)
Income tax (expense) benefit	623		528		6,417		7,568
Other comprehensive income (loss), net of tax	(3,723)		(2,686)		(22,508)		(28,917)
Reclassification adjustment to net income (loss)	—		3,578		10,632		14,210
Income tax (expense) benefit	—		(598)		(2,359)		(2,957)
Reclassification adjustment to net income (loss), net of tax	—		2,980		8,273		11,253
Other comprehensive income (loss), net of tax	(3,723)		294		(14,235)		(17,664)
Balance at December 31, 2019	(100,663)		(1,307)		(95,681)		(197,651)
Other comprehensive income (loss)	(9,678)		(4,362)		(16,425)		(30,465)
Income tax (expense) benefit	897		1,077		4,228		6,202
Other comprehensive income (loss), net of tax	(8,781)		(3,285)		(12,197)		(24,263)
Reclassification adjustment to net income (loss)	25,295		8,724		15,296		49,315
Income tax (expense) benefit	—		(1,868)		(3,937)		(5,805)
Reclassification adjustment to net income (loss), net of tax	25,295		6,856		11,359		43,510
Other comprehensive income (loss), net of tax	16,514		3,571		(838)		19,247
Balance at December 31, 2020	(84,149)		2,264		(96,519)		(178,404)
Other comprehensive income (loss)	(2,008)		3,800		23,932		25,724
Income tax (expense) benefit	365		(842)		(5,212)		(5,689)
Other comprehensive income (loss), net of tax	(1,643)		2,958		18,720		20,035
Reclassification adjustment to net income (loss)	—		(5,513)		16,862		11,349
Income tax (expense) benefit	—		1,192		(3,676)		(2,484)
Reclassification adjustment to net income (loss), net of tax	—		(4,321)		13,186		8,865
Other comprehensive income (loss), net of tax	(1,643)		(1,363)		31,906		28,900
Balance at December 31, 2021	$	(85,792)	$	901	$	(64,613)	$	(149,504)

The ~~following table summarizes the after-tax changes in accumulated other comprehensive income (loss) for the year ended December 31, 2016:~~

(In thousands) Foreign currency translation adjustment Gain (loss) on derivative financial instruments Pension and other post-retirement benefit adjustments Total
Beginning balance, January 1, 2016 $ (112,807 ) $ (373 ) $ (95,539 ) $ (208,719 )
Other comprehensive income (loss) before reclassifications 18,837
247
(3,288 ) 15,796
Amounts reclassified from accumulated other comprehensive income (loss) —
989
8,700
9,689
Net other comprehensive income (loss) - current period 18,837
1,236
5,412
25,485
Ending balance, December 31, 2016 $ (93,970 ) $ 863
$ (90,127 ) $ (183,234 )

~~Reclassifications of balances~~amounts reclassified out of accumulated other comprehensive income (loss) ~~into~~related to pension and other postretirement benefits is included in the computation of net ~~income during 2017 are summarized as follows:~~periodic pension costs, see Note 8 for additional details.

(In thousands) Amount reclassified from other comprehensive income (loss) Location of gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (loss)
Gain (loss) on derivative financial instruments:
Aluminum future contracts, before taxes $ 1,210
Cost of goods sold
Foreign currency forward contracts, before taxes 62
Cost of goods sold
Foreign currency forward contracts, before taxes (43 ) Selling, general and administrative
Total, before taxes 1,229

Income tax expense (benefit) 287
Income taxes
Total, net of tax $ 942

Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes $ (12,045 ) (a)
Income tax expense (benefit) (4,234 ) Income taxes
Total, net of tax $ (7,811 )

(a) This component of accumulated other comprehensive income is included in the computation of net periodic pension cost (see Note 13 for additional detail).

~~Reclassifications of balances out of accumulated other comprehensive income (loss) into net income during 2016 are summarized as follows:~~

(In thousands) Amount reclassified from other comprehensive income (loss) Location of gain (loss) reclassified from accumulated other comprehensive income (loss) to net income
Gain (loss) on derivative financial instruments:
Aluminum future contracts, before taxes $ (1,630 ) Cost of goods sold
Foreign currency forward contracts, before taxes 62
Cost of goods sold
Total, before taxes (1,568 )
Income tax expense (benefit) (579 ) Income taxes
Total, net of tax $ (989 )
Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes $ (13,098 ) (a)
Income tax expense (benefit) (4,398 ) Income taxes
Total, net of tax $ (8,700 )

(a) This component of accumulated other comprehensive income is included in the computation of net periodic pension cost (see Note 13 for additional detail).

~~Reclassifications of balances out of accumulated other comprehensive income (loss) into net income during 2015 are summarized as follows:~~

(In thousands) Amount reclassified from other comprehensive income (loss) Location of gain (loss) reclassified from accumulated other comprehensive income (loss) to net income
Gain (loss) on derivative financial instruments:
Aluminum future contracts, before taxes $ (3,538 ) Cost of goods sold
Foreign currency forward contracts, before taxes 62
Cost of goods sold
Total, before taxes (3,476 )
Income tax expense (benefit) (1,284 ) Income taxes
Total, net of tax $ (2,192 )
Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes $ (16,041 ) (a)
Income tax expense (benefit) (5,823 ) Income taxes
Total, net of tax $ (10,218 )

(a) This component of accumulated other comprehensive income is included in the computation of net periodic pension cost (see Note 13 for additional detail).

~~Recently Issued~~ Accounting Standards Adopted.

In ~~May 2014,~~December 2019, the Financial Accounting Standards Board (“FASB”) ~~and International~~issued Accounting Standards ~~Board~~Update (“~~IASB”~~ASU”) ~~issued their converged standard on revenue recognition. The revised revenue standard contains principles that~~2019-12, which simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an ~~entity will apply to direct the measurement of revenue~~interim period, hybrid taxes and ~~timing of when it is recognized. The core principle of the guidance is that~~ the recognition of ~~revenue should depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange~~deferred tax liabilities for ~~those goods~~outside basis differences. It also clarifies and services. To achieve that core principle, an entity will utilize a principle-based five-step approach model. The converged standard also includes more robust disclosure requirements which will require entities to provide sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In March 2016, amended guidance was issued regarding clarifying the implementation guidance on principal versus agent considerations and in April 2016, clarifying guidance was issued relating to identifying performance obligations and licensing implementation. The effective date of this revised standard is for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The converged standard can be adopted using a full retrospective method or a modified retrospective method, which applies the new guidance to contracts that are not completed at the adoption date without adjusting prior reporting periods. The Company has completed its assessmentsimplifies other aspects of the impact of this standard. The Company used a team to analyze the impact of the standard, and the related guidance issued, across all revenue streams and to evaluate the impact of the new standard on revenue contracts. This team reviewed current accounting ~~policies and practices, identifying potential differences that would result from applying the requirements under the new standard. The Company will adopt this new standard in~~for income taxes. In the first quarter of ~~2018 using~~2021, the modified retrospective method of adoption, and the adoption will not have a material impact on the timing or amount of revenue recognized in the Company’s consolidated financial statements, although there will be expanded disclosures.

In July 2015, the FASB issued new guidance for the measurement of inventories. Inventories within the scope of the revised guidance should be measured at the lower of cost or net realizable value. The previous guidance dictated that inventory should be measured at the lower of cost or market, with market being either replacement cost, net realizable value or net realizable value less an approximation of normal profit margin. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventories measured using LIFO or the retail inventory method. The Company adopted ~~the new guidance prospectively in the first quarter of 2017, and the adoption of this guidance~~ASU 2019-12, which did not have a material impact on the Company’s consolidated financial statements.

Accounting Standards Not Yet Adopted.

In ~~January 2016,~~March 2020, the FASB issued ~~amended guidance associated with accounting~~ASU 2020-04, which provides optional expedients and exceptions for ~~equity investments measured at fair value. The amended guidance requires all equity investments~~applying GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate or by another reference rate expected to be ~~measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method~~discontinued because of ~~accounting or those that result in consolidation of the investee or those without a readily determinable fair value).~~reference rate reform. The ~~amended~~ guidance also requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this update eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entitieswas effective beginning March 12, 2020 and

the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. The amended guidance is effective for fiscal years beginning after December 31, 2017, including the interim periods within those fiscal years. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should can be applied prospectively ~~to equity investments that exist as~~through December 31, 2022. In January 2021, the FASB issued ASU 2021-01, which clarified the scope and application of the ~~date~~original guidance. The Company is currently evaluating the potential impact of ~~adoption of the update. Early adoption is permitted under limited, specific circumstances. The adoption of the amended~~adopting this guidance, isbut does not ~~expected~~expect it to have a material impact on the ~~Company’s~~ consolidated financial statements.

~~In February 2016, the FASB issued a revised standard on lease accounting. Lessees will need to recognize virtually all~~

2. ACCOUNTS AND OTHER RECEIVABLES

As of their leases on the balance sheet, by recording a right-of-use asset and lease liability. The revised standard requires additional analysis of the components of a transaction to determine if a right-of-use asset is embedded in the transaction that needs to be treated as a lease. Substantial additional disclosures are also required by the revised standard. The revised standard is effective for fiscal years beginning after December 31, 2018, including the interim periods within those fiscal years. The revised standard should be adopted using a modified retrospective approach, with early adoption permitted. The Company has a process in place to analyze the impact of the standard,2021 and the related guidance issued, on all leases throughout the Company. This process includes reviewing all active leases with terms greater than 12 months, which are currently being identified. The Company has also started evaluating the new requirements for tracking and cost recovery of these leases. The Company expects to complete its evaluations of the impacts of the accounting and disclosure requirements on its business processes, controls and systems by the second half of 2018.

In October 2016, the FASB issued guidance that requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings at the beginning of the period of adoption. Early adoption is permitted in the first interim period of an annual reporting period for which financial statements have not been issued. The Company has evaluated the impact of adopting this guidance and does not expect there to be a material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued guidance to assist with evaluating when a set of transferred assets and activities (collectively, the "set") is a business and provides a screen to determine when a set is not a business. Under the new guidance, when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset, or group of similar assets, the assets acquired would not represent a business. Also, to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to produce outputs. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be applied on a prospective basis to any transactions occurring within the period of adoption. Early adoption is permitted for interim or annual periods for which the financial statements have not been issued. The Company has not elected early adoption of this guidance and will apply the new guidance beginning in the first quarter of 2018.

In January 2017, the FASB issued amended guidance that eliminates the requirement to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment. Under the amendments in the new guidance, goodwill impairment testing will be performed by comparing the fair value of the reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The new standard is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and should be applied on a prospective basis. Early adoption is permitted for annual or interim goodwill impairment testing performed after January 1, 2017. The Company has not elected early adoption and does not expect any impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued final guidance on the presentation of net periodic pension and postretirement benefit cost (net benefit cost). Currently, net benefit cost is reported as an employee cost within operating income. This new guidance requires the bifurcation of net periodic pension and postretirement benefit costs. Service cost will be part of operating income (and is the only piece eligible to be capitalized). All other components will be shown outside of operations. The new standard is effective for annual and interim periods in fiscal years beginning after December 15, 2017, and should be applied on a retrospective basis, except for the amendments related to capitalization of benefit cost, which should be applied on a prospective basis. The Company is currently evaluating the amended guidance but does not expect there to be an impact of adopting this guidance on the Company’s consolidated financial statements.

In August 2017, the FASB issued amended guidance on the accounting for hedging activities. The amended guidance makes more hedging strategies qualify for hedge accounting. After initial qualification, the amended guidance permits a qualitative effectiveness assessment for certain hedges instead of a quantitative test, if the company can reasonably support an

expectation of effectiveness throughout the term of the hedge. The amended guidance is effective for annual and interim periods beginning after January 1, 2019, but may be adopted immediately. The adoption should be on a cumulative effect basis and applied prospectively. The Company is currently evaluating the amended guidance but does not expect there to be an impact of adopting this guidance on the Company’s consolidated financial statements.


2	~~ACQUISITIONS~~

On February 15, 2017, Bonnell Aluminum acquired 100% of the stock of Futura on a net debt-free basis for approximately $92 million (the “Initial Purchase Price”). The amount actually funded in cash at the transaction date was approximately $87.0 million (the “Initial Cash Funding”), which was the Initial Purchase Price net of preliminary closing adjustments for working capital and seller transaction-related obligations assumed and subsequently paid by Bonnell Aluminum. The acquisition, which was funded using Tredegar’s revolving credit facility, was treated as an asset purchase for U.S. federal income tax purposes. Tredegar expects to receive a $5 million refund in 2018 from an earnout price adjustment mechanism discussed further below.

Futura, headquartered in Clearfield, Utah, with a national sales presence and particular strength in the western U.S., designs and manufactures a wide range of extruded aluminum products, including branded flooring trims and TSLOTS^TM~~, as well as OEM (original equipment manufacturer) components for truck grills, solar panels, fitness equipment~~2020, accounts receivable and other applications. As a result of this transaction, Futura is now a wholly-owned subsidiary of the William L. Bonnell Company, Inc. (which is a wholly-owned subsidiary of Tredegar) and operates as a division of Bonnell Aluminum, and its results of operations are included in Tredegar’s consolidated financial statements from the date of acquisition.

Under the terms of the transaction, $5 million of the Initial Cash Funding was placed in escrow (the “Earnout Escrow”) and will be returned to Bonnell Aluminum because Futura did not achieve a targeted EBITDA level (as defined in the Stock Purchase Agreement) for the last eleven months of the fiscal year ended December 2017. At the acquisition date, the Company performed a probability weighted assessment in order to determine the fair value of this contingent asset. The assessment estimated a fair value of $4.3 million, which would be returned to Bonnell Aluminum in early 2018, and accordingly, a receivable of $4.3 million (“Initial Earnout Receivable”) was recorded by Bonnell Aluminum. In the second quarter of 2017, the Company updated its valuation of this contingent asset, which resulted in a fair value of $5.0 million. The receivable was increased to $5.0receivables, net, were $103.3 million and ~~$0.7~~$86.3 million, ~~was recognized as income in the second quarter of 2017 in Other income (expense), net in the Consolidated Statements of Income.~~

The net purchase price for financial reporting purposes was set at approximately $82.9 million (the “Adjusted Net Purchase Price”), which was the Initial Cash Funding less the Initial Earnout Receivable and the net settlement of certain post-closing adjustments of $0.1 million paid to the seller during the second quarter of 2017. Adjustments to the purchase price wererespectively, made retrospectively as if the accounting had been completed on the acquisition date. Based upon management’s valuation of the fair value of tangible and identifiable intangible assets acquired (net of cash acquired) and liabilities assumed, the allocation of the Adjusted Net Purchase Price is as follows:

(In thousands)
Accounts receivable $ 6,680
Inventories 10,342
Prepaid expenses and other current assets 240
Property, plant & equipment 32,662
Identifiable intangible assets:
      Customer relationships 24,000
      Trade names 6,700
Trade payables & accrued expenses (8,135 )
      Total identifiable net assets 72,489
      Adjusted Net Purchase Price 82,860
Goodwill $ 10,371

The goodwill and identifiable intangible asset balances associated with this acquisition will be deductible for tax purposes on a straight-line basis over a period of approximately 15 years. For financial reporting purposes, customer relationships are being amortized over 12 years and trade names are being amortized over 13 years. Goodwill is not subject to amortization for financial reporting purposes. Customer relationships were valued using the excess earnings approach. Trade

names were valued using a relief-from-royalty approach. The Company does not anticipate marketing Futura’s products under a different brand in light of its strong name recognition and competitive advantage in its target markets.

For 2017, Tredegar’s consolidated results of operations and its Aluminum Extrusions business segment included the following Futura results for the 10.5 months owned: sales of $71.0 million, operating profit from ongoing operations of $8.2 million, depreciation and amortization of $5.0 million, and capital expenditures of $2.5 million.

The following unaudited supplemental pro forma data presents Tredegar’s consolidated sales, net income and related earnings per share as if the acquisition of Futura had been consummated at the beginning of 2016, and is not necessarily indicative of the Company’s financial performance if the acquisition had actually been consummated as of that date, or of future performance. The supplemental unaudited pro forma measures for the years ended December 31, 2017 and 2016 are presented below:

Tredegar Pro Forma Results with Futura Acquisition
(In thousands, except per-share data) 2017 2016
Sales $ 968,340
$ 904,877
Net income $ 37,974
$ 27,805
Earnings per share:
Basic $ 1.15
$ 0.85
Diluted $ 1.15
$ 0.85

Futura’s pre-acquisition results for the period from January 1 to February 14, 2017, and therefore the pro forma information for 2017 presented above, were adversely impacted by significant disruptions to manufacturing operations and sales caused by the renovation of its anodizing line. The actual accretion to Tredegar’s diluted earnings per share from Futura since the acquisition date was 12 cents per share for 2017.

The Company’s pro forma net income was computed for the periods shown as: (i) the Company’s reported net income, plus (ii) Futura’s historical pre-acquisition period earnings before interest, taxes, depreciation and amortization and excluding one-time purchase accounting and transaction-related expenses, minus (iii) the pro forma pre-acquisition period depreciation and amortization for Futura under purchase accounting for the Company, minus (iv) the pro forma pre-acquisition period interest expense for the Company applied at an annual rate of 3.0% to the $87.0 million Initial Cash Funding, minus (v) the pro forma pre-acquisition period income taxes applied at a rate of 39.1% to the pro forma pre-acquisition earnings before income taxes computed from items (ii) through (iv).


3	~~OTHER INCOME (EXPENSE), NET~~

~~Other income (expense), net consists~~up of the following:

(In thousands) 2017 2016 2015
Gain (loss) on investment in kaléo accounted for under fair value method $ 33,800
$ 1,600
$ (20,500 )
Gain associated with the settlement of an escrow agreement related to Terphane, acquired in October 2011 11,856
—
—
Gain from insurance recoveries 5,261
1,902
—
Unrealized loss on investment property —
(1,032 ) —
Other 796
(89 ) 387
Total $ 51,713
$ 2,381
$ (20,113 )

~~See Note 17 for more details on the items broken out separately in the table above.~~


4	~~INVESTMENTS~~

In August 2007 and December 2008, Tredegar made an aggregate investment of $7.5 million in kaleo, Inc. (“kaléo”), a privately held specialty pharmaceutical company dedicated to building innovative solutions for serious and life-threatening medical conditions. The mission of kaléo is to provide products that empower patients to confidently take control of their medical conditions. Tredegar owns Series A-3 Preferred Stock and Series B Preferred Stock in kaléo that, taken together, represents on a fully-diluted basis an approximate 20% interest in kaléo. Tredegar accounts for its investment in kaléo under the fair value method. At the time of the initial investment, the Company elected the fair value option of accounting since its investment objectives were similar to those of venture capitalists, which typically do not have controlling financial interests.

At December 31, 2017 and 2016, the estimated fair value of the Company’s investment (also the carrying value, which is separately stated in the consolidated balance sheets) was $54.0 million and $20.2 million, respectively. The Company recognized an unrealized gain on its investment in kaléo of $33.8 million ($24.0 million after taxes) and $1.6 million ($1.2 million after taxes) in 2017 and 2016, respectively.

The change in the estimated fair value of the Company’s holding in kaléo in 2017 primarily related to recent favorable operating results and projections. Kaléo’s stock is not publicly traded. In addition, kaléo had not completed a full year of operations since the re-launch of its Auvi-Q® product which occurred during the first quarter of 2017. The valuation estimate in this situation is based on projection assumptions or Level 3 inputs that have a wide range of possible outcomes. Consequently, the present value of kaléo’s projected future cash flows is determined at a discount rate of 45% for their high degree of risk. Ultimately, the true value of the Company’s ownership interest in kaléo will be determined if and when a liquidity event occurs, and the ultimate value could be materially different from the $54.0 million estimated fair value reflected in the Company’s financial statements at December 31, 2017.

The Company recognized an unrealized loss of $20.5 million ($15.7 million after taxes) in 2015 that primarily related to a voluntary recall of the epinephrine auto-injectors that were on the market which was announced on October 28, 2015 by sanofi-aventis U.S. LLC to whom kaléo had licensed exclusive rights to commercialize the epinephrine auto-injectors at that time. Kaléo relaunched the epinephrine auto-injector in the U.S. in the first quarter of 2017.

Unrealized gains (losses) associated with this investment are included in “Other income (expense), net” in the consolidated statements of income and separately stated in the segment operating profit table in Note 5. Subsequent to its most recent investment (December 15, 2008), and until the next round of financing, the Company believes fair value estimates are based upon Level 3 inputs since there is no secondary market for its ownership interest. Accordingly, until the next round of financing or any other significant financial transaction, value estimates will primarily be based on assumptions related to meeting cash flow projections and discounting of these factors for their high degree of risk. If kaléo does not meet its projected cash flows or related risks are unfavorable versus the most recent valuation, or a new round of financing or other significant financial transaction indicates a lower enterprise value, then the Company’s estimate of the fair value of its ownership interest in kaléo is likely to decline. Adjustments to the estimated fair value of this investment will be made in the period upon which such changes can be quantified.

In addition to the impact on valuation of the possible changes in assumptions, Level 3 inputs and projections from changes in business conditions, the fair market valuation of Tredegar’s interest in kaléo is sensitive to changes in the weighted average cost of capital used to discount cash flow projections for the high degree of risk associated with a wide range of possible outcomes. The weighted average cost of capital used in the fair market valuation of the Company’s interest in kaléo was 45% at both December 31, 2017 and 2016. At December 31, 2017, the effect of a 500 basis point decrease in the weighted average cost of capital assumption would have further increased the fair value of Tredegar’s interest in kaléo by approximately $11 million, and a 500 basis point increase in the weighted average cost of capital assumption would have decreased the fair value of the Company’s interest by approximately $10 million.

On April 2, 2007, Tredegar invested $10.0 million in Harbinger Capital Partners Special Situations Fund, L.P. (the “Harbinger Fund”), a private investment fund that is subject to limitations on withdrawal. There is no secondary market for interests in the fund. The Company’s investment in the Harbinger Fund, which represents less than 1% of its total partnership capital, is accounted for under the cost method. There were no unrealized gains or losses on the Company’s investment in the Harbinger Fund in 2017, 2016 and 2015. The December 31, 2017 and 2016 carrying values in the consolidated balance sheets (included in “Other assets and deferred charges”) were $1.7 million and $1.7 million, respectively. The carrying value at December 31, 2017 reflected Tredegar’s cost basis in its investment in Harbinger, net of total withdrawal proceeds received and unrealized losses. Withdrawal proceeds were $0.1 million in 2015 (none in 2017 and 2016). The timing and amount of future installments of withdrawal proceeds was not known as of December 31, 2017. There were no realized gains or losses associated with the investment in the Harbinger Fund in 2017, 2016 and 2015. Gains on the Company’s investment in the Harbinger Fund, if any, will be recognized when the amounts expected to be collected from withdrawal from the investment are known, which will likely be when cash in excess of the remaining carrying value is received. Losses will be recognized if management believes it is probable that future withdrawal proceeds will not exceed the remaining carrying value.

Tredegar has investment property in Alleghany and Bath counties, Virginia. In 2016, the Company recorded an unrealized loss on this investment property of $1.0 million ($0.7 million after taxes) as a reduction in the estimated fair value of the investment that is not expected to be temporary. The Company’s carrying value in this investment property (included in “Other assets and deferred charges” on the consolidated balance sheets) was $1.6 million at December 31, 2017 and $1.6 million at December 31, 2016.


5	~~BUSINESS SEGMENTS~~

The Company's business segments are PE Films, Flexible Packaging Films and Aluminum Extrusions. PE Films is comprised of the following operating segments: personal care materials, surface protection films, and LED lighting products. Flexible Packaging Films is comprised of the Company’s polyester films business, Terphane Holdings LLC (“Terphane”), which was acquired by Tredegar in October 2011. Aluminum Extrusions, which includes Bonnell Aluminum and its operating divisions, AACOA and Futura, produces high-quality, soft-alloy and medium-strength aluminum extrusions primarily for the following markets: building and construction, automotive, and specialty, which consists of consumer durables, machinery and equipment, electrical and distribution end-use products.

Information by business segment and geographic area for the last three years is provided below. There were no accounting transactions between segments and no allocations to segments. Net sales (sales less freight) and operating profit from ongoing operations are the measures of sales and operating profit used by the chief operating decision maker (Tredegar’s President and Chief Executive Officer) for purposes of assessing performance. PE Films’ net sales to The Procter & Gamble Company (“P&G”) totaled $122.4 million in 2017, $129.1 million in 2016 and $163.9 million in 2015. These amounts include plastic film sold to others that convert the film into materials used with products manufactured by P&G.

Net Sales
(In thousands) 2017 2016 2015
PE Films $ 352,459
$ 331,146
$ 385,550
Flexible Packaging Films 108,355
108,028
105,332
Aluminum Extrusions 466,833
360,098
375,457
Total net sales 927,647
799,272
866,339
Add back freight 33,683
29,069
29,838
Sales as shown in consolidated statements of income $ 961,330
$ 828,341
$ 896,177

Operating Profit
(In thousands) 2017 2016 2015
PE Films:
Ongoing operations $ 41,546
$ 26,312
$ 48,275
Plant shutdowns, asset impairments, restructurings and other (a) (4,905 ) (4,602 ) (4,180 )
Flexible Packaging Films:
Ongoing operations (2,626 ) 1,774
5,453
Plant shutdowns, asset impairments, restructurings and other (a) (89,398 ) (214 ) (185 )
Goodwill impairment charge —
—
(44,465 )
Aluminum Extrusions:
Ongoing operations 43,454
37,794
30,432
Plant shutdowns, asset impairments, restructurings and other (a) 321
(741 ) (708 )
Total (11,608 ) 60,323
34,622
Interest income 209
261
294
Interest expense 6,170
3,806
3,502
Gain (loss) on investment in kaléo accounted for under the fair value method (a) 33,800
1,600
(20,500 )
Unrealized loss on investment property (a) —
1,032
—
Stock option-based compensation expense 264
56
483
Corporate expenses, net (a) 30,879
29,607
33,638
Income (loss) before income taxes (14,912 ) 27,683
(23,207 )
Income tax expense (benefit) (a) (53,163 ) 3,217
8,928
Net income (loss) $ 38,251
$ 24,466
$ (32,135 )

Identifiable Assets
(In thousands) 2017 2016
PE Films $ 289,514
$ 278,558
Flexible Packaging Films 49,915
156,836
Aluminum Extrusions 268,127
147,639
Subtotal 607,556
583,033
General corporate (b) 111,696
38,618
Cash and cash equivalents (d) 36,491
29,511
Total $ 755,743
$ 651,162

Depreciation and Amortization Capital Expenditures
(In thousands) 2017 2016 2015 2017 2016 2015
PE Films $ 14,609
$ 13,653
$ 15,480
$ 15,029
$ 25,759
$ 21,218
Flexible Packaging Films 10,443
9,505
9,697
3,619
3,391
3,489
Aluminum Extrusions 15,070
9,173
9,698
25,653
15,918
8,124
Subtotal 40,122
32,331
34,875
44,301
45,068
32,831
General corporate 155
141
107
61
389
—
Total $ 40,277
$ 32,472
$ 34,982
$ 44,362
$ 45,457
$ 32,831

~~See footnotes following the tables.~~

Net Sales by Geographic Area (d)
(In thousands) 2017 2016 2015
United States $ 584,066
$ 475,734
$ 528,881
Exports from the United States to:
Asia 84,846
73,220
75,383
Canada 46,505
45,683
45,290
Europe 8,505
7,348
9,809
Latin America 15,199
5,561
3,464
Operations outside the United States:
Brazil 87,155
90,571
89,829
The Netherlands 54,380
54,352
53,211
Hungary 24,727
24,207
32,612
China 12,199
14,390
18,919
India 10,065
8,206
8,941
Total (c) $ 927,647
$ 799,272
$ 866,339

Identifiable Assets
by Geographic Area (d)

Property, Plant & Equipment,
Net by Geographic Area (d)
(In thousands) 2017 2016 2017 2016
United States (b) $ 475,844
$ 367,406
$ 156,054
$ 118,661
Operations outside the United States:
Brazil 49,536
139,163
13,396
91,553
China 28,833
29,751
23,273
23,759
Hungary 28,573
20,610
18,230
15,117
The Netherlands 17,423
19,484
6,423
5,784
India 7,347
6,619
4,628
4,670
General corporate (b) 111,696
38,618
1,087
1,181
Cash and cash equivalents (d) 36,491
29,511
n/a
n/a
Total $ 755,743
$ 651,162
$ 223,091
$ 260,725

Net Sales by Product Group
(In thousands) 2017 2016 2015
PE Films:
Personal care materials $ 246,416
$ 238,213
$ 287,768
Surface protection films 99,079
84,013
90,197
LED lighting products & other films 6,964
8,920
7,585
Subtotal 352,459
331,146
385,550
Flexible Packaging Films 108,355
108,028
105,332
Aluminum Extrusions:
Nonresidential building & construction 239,713
212,863
221,363
Consumer durables 54,126
39,293
41,835
Automotive 38,261
34,700
30,250
Machinery & equipment 33,450
20,872
18,102
Distribution 30,202
20,506
18,659
Residential building & construction 40,354
20,252
22,737
Electrical 30,727
11,612
22,511
Subtotal 466,833
360,098
375,457
Total $ 927,647
$ 799,272
$ 866,339

~~See footnotes following the tables and a reconciliation of net sales to sales as shown in the~~ ~~Consolidated Statements of Income~~ ~~in the first table of this Note 5.~~


~~(a)~~	See Notes 1, 3, 4 and 17 for more information on losses associated with plant shutdowns, asset impairments and restructurings, unusual items, gains or losses from sale of assets, gains or losses on an investment accounted for under the fair value method and other items.


~~(b)~~	The balance sheets include the funded status of each of the Company’s defined benefit pension and other postretirement plans. The funded status of the Company’s defined benefit pension plan was a net liability of $91.8 million and $88.6 million as of December 31, 2017 and 2016, respectively. See Note 13 for more information on the Company’s pension and other postretirement plans.


~~(c)~~	The difference between total consolidated sales as reported in the consolidated statements of income and segment, geographic and product group net sales reported in this note is freight of $33.7 million in 2017, $29.1 million in 2016 and $29.8 million in 2015.

~~(d)~~

Information on exports and foreign operations are provided on the previous page. Cash and cash equivalents includes funds held in locations outside the U.S. of $32.7 million and $23.8 million at December 31, 2017 and 2016, respectively. Export sales relate almost entirely to PE Films. Operations outside the U.S. in The Netherlands, Hungary, China and India also relate to PE Films. Operations in Brazil are primarily related to Flexible Packaging Films, but also include PE Films operations. Sales from locations in The Netherlands and Hungary are primarily to customers located in Europe. Sales from locations in China (Guangzhou and Shanghai) are primarily to customers located in China, but also include other customers in Asia.


6	~~ACCOUNTS AND OTHER RECEIVABLES~~

~~Accounts and other receivables consist of the following:~~

(In thousands) 2017 2016
Trade, less allowance for doubtful accounts and sales returns of $3,304 in 2017 and $3,102 in 2016 $ 110,252
$ 91,109
Other 9,883
6,279
Total $ 120,135
$ 97,388


(In thousands)	2021		2020
Customer receivables	$	102,090	$	85,274
Other accounts and notes receivable	2,958		3,850
Total accounts and other receivables	105,048		89,124
Less: Allowance for bad debts(a)	(1,736)		(2,797)
Total accounts and other receivables, net	$	103,312	$	86,327
(a) As of December 31, 2021, the Company recorded a reclassification of $0.8 million from accounts receivable, net to accrued expenses to account for the Company’s estimated obligation to customers for product returns that may result in either a customer credit or refund. Prior to December 31, 2021, the Company presented estimated sales returns as a reduction to accounts receivable.

A reconciliation of the beginning and ending balances of the allowance for doubtful accounts ~~and sales returns~~ for the three years ended December 31, ~~2017~~2021 is as follows:


(In thousands)	2021		2020		2019
Balance, beginning of year	$	2,797	$	1,904	$	2,054
Charges to expense	1,440		1,901		715
Recoveries	35		(90)		(38)
Write-offs and settlements	(1,246)		(709)		(756)
Foreign exchange and other	(515)		(209)		(71)
Reclassification to accrued expenses for estimated sales returns	(775)		—		—
Balance, end of year	$	1,736	$	2,797	$	1,904

(In thousands) 2017 2016 2015
Balance, beginning of year $ 3,102
$ 3,746
$ 2,610
Charges to expense 2,369
1,410
3,387
Recoveries (857 ) (32 ) (7 )
Write-offs and settlements (1,322 ) (2,167 ) (1,970 )
Foreign exchange and other 12
145
(274 )
Balance, end of year $ 3,304
$ 3,102
$ 3,746

3. INVENTORIES


7	~~INVENTORIES~~

Inventories consist of the following:


(In thousands)		2017		2016		(In thousands)	2021		2020
Finished goods	Finished goods	$	20,281	$	16,215	Finished goods	$	25,199	$	15,251
Work-in-process	Work-in-process	11,958		8,590		Work-in-process	11,955		9,098
Raw materials	Raw materials	35,909		23,733		Raw materials	32,958		25,913
Stores, supplies and other	Stores, supplies and other	18,759		17,531		Stores, supplies and other	18,457		16,175
Total	Total	$	86,907	$	66,069	Total	$	88,569	$	66,437


Virginia				54-1497771
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

~~Virginia~~		~~54-1497771~~
~~(State or other jurisdiction~~ ~~of incorporation or organization)~~			~~(I.R.S. Employer~~ ~~Identification No.)~~

1100 Boulders Parkway, ~~Richmond, Virginia~~		~~23225~~
Richmond,	Virginia			23225
(Address of principal executive offices)				(Zip Code)



Title of ~~Each Class~~each class		Trading Symbol	Name of ~~Each Exchange~~each exchange on ~~Which Registered~~which registered
Common Stock		TG	New York Stock Exchange
~~Preferred Stock Purchase Rights~~	~~New York Stock Exchange~~


•Building & construction - residential						Residential windows and doors, shower and tub enclosures, railing and support systems, venetian blinds, and swimming pools
Automotive and transportation						Automotive and light truck structural components, spare parts, after-market automotive accessories, grills for heavy trucks, travel trailers and recreation vehicles
Consumer durables						Office furniture, pleasure boats, refrigerators and freezers, appliances and sporting goods
Machinery & equipment						~~Three-dimensional apertured film transfer layers for baby diapers~~Material handling equipment, conveyors and ~~adult incontinence products sold under the AquiDry~~^®conveying systems, medical equipment, industrial fans and ~~AquiDry Plus~~^™ ~~brand names;~~aluminum framing systems (TSLOTSTM)
Distribution (metal service centers specializing in stock and release programs and custom fabrications to small manufacturers)						Various custom profiles including storm shutters, pleasure boat accessories, theater set structures and various standard profiles (including rod, bar, tube and pipe)
Electrical and renewable energy						Lighting fixtures, electronic apparatus, solar panel brackets and rigid and flexible conduits



~~Major Markets~~		~~End-Uses~~

~~Building & construction - nonresidential~~		Commercial windows and doors, curtain walls, storefronts and entrances, walkway covers, ducts, louvers and vents, office wall panels, partitions and interior enclosures, acoustical walls and ceilings, point of purchase displays, pre-engineered structures, and flooring trims

~~Building & construction - residential~~		~~Shower and tub enclosures, railing and support systems, venetian blinds, swimming pools and storm shutters~~

~~Automotive~~		~~Automotive and light truck structural components, spare parts, after-market automotive accessories, grills for heavy trucks, travel trailers and recreation vehicles~~

~~Consumer durables~~		~~Furniture, pleasure boats, refrigerators and freezers, appliances and sporting goods~~

~~Machinery & equipment~~		~~Material handling equipment, conveyors and conveying systems, medical equipment, and aluminum framing systems (TSLOTS~~^TM)

~~Distribution (metal service centers specializing in stock and release programs and custom fabrications to small manufacturers)~~		~~Various custom profiles including storm shutters, pleasure boat accessories, theater set structures and various standard profiles (including rod, bar, tube and pipe)~~

~~Electrical~~		~~Lighting fixtures, solar panels, electronic apparatus and rigid and flexible conduits~~



Computations of Adjusted EBITDA, Adjusted EBIT, Leverage Ratio and Interest Coverage Ratio as Defined in the Revolving Credit Agreement Along with Related Most Restrictive Covenants
As of and for the Twelve Months Ended December 31, 2017 (In thousands)
Computations of adjusted EBITDA and adjusted EBIT as defined in revolving credit agreement for the twelve months ended December 31, 2017:
Net income	$	38,251
Plus:
After-tax losses related to discontinued operations	—
Total income tax expense for continuing operations	—
Interest expense	6,170
Depreciation and amortization expense for continuing operations	40,277
All non-cash losses and expenses, plus cash losses and expenses not to exceed $10,000, for continuing operations that are classified as unusual, extraordinary or which are related to plant shutdowns, asset impairments and/or restructurings (cash-related of $10,000)	113,254
Charges related to stock option grants and awards accounted for under the fair value-based method	264
Losses related to the application of the equity method of accounting	—
Losses related to adjustments in the estimated fair value of assets accounted for under the fair value method of accounting	—
Minus:
After-tax income related to discontinued operations	—
Total income tax benefits for continuing operations	(53,163		)
Interest income	(209		)
All non-cash gains and income, plus cash gains and income in excess of $10,000, for continuing operations that are classified as unusual, extraordinary or which are related to plant shutdowns, asset impairments and/or restructurings	(7,867		)
Income related to changes in estimates for stock option grants and awards accounted for under the fair value-based method	—
Income related to the application of the equity method of accounting	—
Income related to adjustments in the estimated fair value of assets accounted for under the fair value method of accounting	(33,800		)
Plus cash dividends declared on investments accounted for under the equity method of accounting	—
Plus or minus, as applicable, pro forma EBITDA adjustments associated with acquisitions and asset dispositions	547
Adjusted EBITDA as defined in revolving credit agreement	103,724
Less: Depreciation and amortization expense for continuing operations (including pro forma for acquisitions and asset dispositions)	(40,953		)
Adjusted EBIT as defined in revolving credit agreement	$	62,771
Computations of leverage and interest coverage ratios as defined in revolving credit agreement at December 31, 2017:
Leverage ratio (indebtedness-to-adjusted EBITDA)	1.50x
Interest coverage ratio (adjusted EBIT-to-interest expense)	10.17x
Most restrictive covenants as defined in revolving credit agreement:
Maximum permitted aggregate amount of dividends that can be paid by Tredegar during the term of the revolving credit agreement ($100,000 plus 50% of net income generated for each quarter beginning January 1, 2016)	$	140,323
Maximum leverage ratio permitted	4.00x
Minimum interest coverage ratio permitted	2.50x



x			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the fiscal year ended December 31, ~~2017~~2021



¨			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to



*			In determining this figure, an aggregate of ~~7,283,549~~7,142,062 shares of Common Stock beneficially owned by Floyd D. Gottwald, Jr., John D. Gottwald, William M. Gottwald and the members of their immediate families has been excluded because the shares are deemed to be held by affiliates. The aggregate market value has been computed based on the closing price in the New York Stock Exchange on June 30, ~~2017.~~2021.



*Items	~~11, 13 and 14 and portions of Items 10 and 12 are incorporated by reference from the Proxy Statement.~~


•Major Markets			~~Apertured film and laminate materials for use as topsheet in feminine hygiene products, baby diapers and adult incontinence products (including materials sold under the ComfortAire~~^™~~, ComfortFeel~~^™ ~~and FreshFeel~~^™ ~~brand names);~~			End-Uses


•Building & construction nonresidential						~~Elastic materials for use as components for baby diapers, adult incontinence products~~Commercial windows and ~~feminine hygiene products (including components sold under the ExtraFlex~~^™doors, curtain walls, storefronts and ~~FlexAire~~^™ ~~brand names);~~entrances, automatic entry doors, walkway covers, ducts, louvers and vents, office wall panels, partitions and interior enclosures, acoustical walls and ceilings, point of purchase displays, pre-engineered structures, and flooring trims (Futura TransitionsTM)


% of Aluminum Extrusions Net Sales by Market Segment
	2021	2020	2019
Building and construction:
Nonresidential	50%	56%	51%
Residential	10%	9%	8%
Automotive	8%	8%	9%
Specialty:
Consumer durables	10%	10%	11%
Machinery & equipment	8%	7%	7%
Electrical	6%	4%	7%
Distribution	8%	6%	7%
Total	100%	100%	100%



% of PE Films Net Sales by Market Segment *
	2017	2016	2015
Personal Care	70%	72%	75%
Surface Protection	28%	25%	23%
Bright View	2%	3%	2%
Total	100%	100%	100%

* See previous discussion by market segment for comparison of net sales to the Company’s consolidated net sales for significant market segments for each of the years presented.



	2017				2016
	High		Low		High		Low
First quarter	$	25.00	$	16.50	$	16.01	$	11.68
Second quarter	17.65		14.90		17.37		14.80
Third quarter	18.35		14.85		19.39		16.30
Fourth quarter	20.20		18.20		25.55		17.30



Net Sales (j)
Years Ended December 31	2017			2016		2015		2014		2013
(In thousands)
PE Films	$	352,459		$	331,146	$	385,550	$	464,339	$	495,386
Flexible Packaging Films	108,355			108,028		105,332		114,348		125,853
Aluminum Extrusions	466,833			360,098		375,457		344,346		309,482
Total net sales	927,647			799,272		866,339		923,033		930,721
Add back freight	33,683			29,069		29,838		28,793		28,625
Sales as shown in Consolidated Statements of Income	$	961,330		$	828,341	$	896,177	$	951,826	$	959,346

Identifiable Assets
As of December 31	2017			2016		2015		2014		2013
(In thousands)
PE Films	$	289,514		$	278,558	$	270,236	$	283,606	$	291,377
Flexible Packaging Films	49,915			156,836		146,253		262,604		265,496
Aluminum Extrusions	268,127			147,639		136,935		143,328		134,928
Subtotal	607,556		��	583,033		553,424		689,538		691,801
General corporate	111,696			38,618		25,680		49,032		48,590
Cash and cash equivalents	36,491			29,511		44,156		50,056		52,617
Total	$	755,743		$	651,162	$	623,260	$	788,626	$	793,008



(Title of class)


~~Item 1.~~	~~BUSINESS~~


~~Item 1A.~~	~~RISK FACTORS~~



Operating Profit
Years Ended December 31	2017				2016				2015				2014				2013
(In thousands)

PE Films:
Ongoing operations	$	41,546			$	26,312			$	48,275			$	60,971			$	61,866
Plant shutdowns, asset impairments, restructurings and other	(4,905		)	(a)	(4,602		)	(b)	(4,180		)	(d)	(12,236		)	(e)	(671		)	(f)
Flexible Packaging Films:
Ongoing operations	(2,626		)		1,774				5,453				(2,917		)		9,100
Plant shutdowns, asset impairments, restructurings and other	(89,398		)	(a)	(214		)	(b)	(185		)	(d)	(591		)	(e)	—
Goodwill impairment charge	—				—				(44,465		)	(c)	—				—
Aluminum Extrusions:
Ongoing operations	43,454				37,794				30,432				25,664				18,291
Plant shutdowns, asset impairments, restructurings and other	321			(a)	(741		)	(b)	(708		)	(d)	(976		)	(e)	(2,748		)	(f)
Total	(11,608		)		60,323				34,622				69,915				85,838
Interest income	209				261				294				588				594
Interest expense	6,170				3,806				3,502				2,713				2,870
Gain (loss) on investment accounted for under the fair value method	33,800			(a)	1,600			(b)	(20,500		)	(d)	2,000			(e)	3,400			(f)
Gain on sale of investment property	—				—				—				1,208			(e)	—
Unrealized loss on investment property	—				1,032			(b)	—				—				1,018			(e)
Stock option-based compensation expense	264				56				483				1,272				1,155
Corporate expenses, net	30,879			(a)	29,607			(b)	33,638			(d)	24,310			(e)	31,857			(f)
Income (loss) from continuing operations before income taxes	(14,912		)		27,683				(23,207		)		45,416				52,932
Income tax expense (benefit)	(53,163		)	(a)	3,217			(b)	8,928			(d)	9,387			(e)	16,995			(f)
Income (loss) from continuing operations	38,251				24,466				(32,135		)		36,029				35,937
Income (loss) from discontinued operations, net of tax (g)	—				—				—				850			(g)	(13,990		)	(g)
Net income (loss)	$	38,251			$	24,466			$	(32,135	)		$	36,879			$	21,947



Depreciation and Amortization
Years Ended December 31	2017		2016		2015		2014		2013
(In thousands)
PE Films	$	14,609	$	13,653	$	15,480	$	21,399	$	25,656
Flexible Packaging Films	10,443		9,505		9,697		9,331		9,676
Aluminum Extrusions	15,070		9,173		9,698		9,974		9,202
Subtotal	40,122		32,331		34,875		40,704		44,534
General corporate	155		141		107		114		121
Total depreciation and amortization expense	$	40,277	$	32,472	$	34,982	$	40,818	$	44,655

Capital Expenditures
Years Ended December 31	2017		2016		2015		2014		2013
(In thousands)
PE Films	$	15,029	$	25,759	$	21,218	$	17,000	$	15,615
Flexible Packaging Films	3,619		3,391		3,489		21,806		49,252
Aluminum Extrusions	25,653		15,918		8,124		6,092		14,742
Subtotal	44,301		45,068		32,831		44,898		79,609
General corporate	61		389		—		—		52
Total capital expenditures	$	44,362	$	45,457	$	32,831	44,898		79,661



(In thousands, except percentages)	Year Ended December 31				Favorable/ (Unfavorable)
(In thousands, except percentages)	2017		2016		% Change
Sales volume (lbs)	138,999		139,020		—	%
Net sales	$	352,459	$	331,146	6.4	%
Operating profit from ongoing operations	$	41,546	$	26,312	57.9	%



(In millions)	December 31, 2017		December 31, 2016
Debt	$	152.0	$	95.0
Less: Cash and cash equivalents	36.5		29.5
Net debt	$	115.5	$	65.5



	Year Ended December 31,
(In thousands)	2016	2015
Operating profit from ongoing operations, as reported	$26,312	$48,275
Contribution to operating profit from ongoing operations associated with known lost business before restructurings & fixed costs reduction	2,995	13,349
Operating profit from ongoing operations net of the impact of known business that will be fully eliminated in future periods	23,317	34,926
Estimated future benefit of North American facility consolidation	5,200	5,200
Pro forma estimated operating profit from ongoing operations	$28,517	$40,126



	Payments Due by Period
(In millions)	2018		2019		2020		2021		2022		Remainder		Total
Debt:
Principal payments	$	—	$	—	$	—	$	152.0	$	—	$	—	$	152.0
Estimated interest expense	5.2		5.2		5.2		0.9		—		—		16.5
Estimated contributions required: ⁽¹⁾
Defined benefit plans	5.3		5.3		5.0		5.3		5.9		11.3		38.1
Other postretirement benefits	0.5		0.5		0.5		0.5		0.5		2.4		4.9
Capital expenditure commitments	4.6		—		—		—		—		—		4.6
Leases	3.7		3.5		3.3		2.8		2.0		3.1		18.4
Estimated obligations relating to uncertain tax positions ⁽²⁾	—		—		—		—		—		2.0		2.0
Other ⁽³⁾	3.0		2.1		—		—		—		—		5.1
Total	$	22.3	$	16.6	$	14.0	$	161.5	$	8.4	$	18.8	$	241.6

Plus:
~~(3)~~After-tax losses related to discontinued operations	~~Includes contractual severance~~111
Total income tax expense for continuing operations	9,284
Interest expense	3,386
Depreciation and ~~other miscellaneous contractual arrangements.~~amortization expense for continuing operations	23,784
All non-cash losses and expenses, plus cash losses and expenses not to exceed $10,000, for continuing operations that are classified as unusual, extraordinary or which are related to plant shutdowns, asset impairments and/or restructurings (cash-related of $8,999)	9,553
Charges related to stock option grants and awards accounted for under the fair value-based method	2,495
Losses related to the application of the equity method of accounting	—
Losses related to adjustments in the estimated fair value of assets accounted for under the fair value method of accounting	—
Minus:
After-tax income related to discontinued operations	—
Total income tax benefits for continuing operations	—
Interest income	(73)
All non-cash gains and income, plus cash gains and income in excess of $10,000, for continuing operations that are classified as unusual, extraordinary or which are related to plant shutdowns, asset impairments and/or restructurings	(3,859)
Income related to changes in estimates for stock option grants and awards accounted for under the fair value-based method	—
Income related to the application of the equity method of accounting	—
Income related to adjustments in the estimated fair value of assets accounted for under the fair value method of accounting	(12,780)
Plus cash dividends declared on investments in an amount not to exceed $10,000 for such period	318
Plus or minus, as applicable, pro forma EBITDA adjustments associated with acquisitions and asset dispositions	—
Plus or minus, as applicable, pro forma EBITDA adjustments to pension expense associated with the early payment of pension obligations	—
Credit EBITDA as defined in Credit Agreement	$	90,045
Computations of leverage and interest coverage ratios as defined in Credit Agreement at December 31, 2021:
Leverage ratio (indebtedness-to-Credit EBITDA)	0.81x
Interest coverage ratio (Credit EBITDA-to-interest expense)	26.59x
Most restrictive covenants as defined in Credit Agreement:
Available balance of maximum permitted aggregate amount of dividends that can be paid by Tredegar during the remaining term of the Credit Agreement ($75,000 minus $20,187 of dividends paid after December 1, 2020)	$	54,813
Maximum leverage ratio permitted	4.00x
Minimum interest coverage ratio permitted	3.00x



	Column (a)	Column (b)		Column (c)
Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights*	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans, Excluding Securities Reflected in Column (a)**
Equity compensation plans approved by security holders	987,329	$	19.75	1,704,554
Equity compensation plans not approved by security holders	—	—		—
Total	987,329	$	19.75	1,704,554



	2017
Dividend yield	1.9		%
Weighted average volatility percentage	38.3		%
Weighted average risk-free interest rate	1.8		%
Holding period (years):
Officers	5
Management	5
Weighted average exercise price at date of grant (also weighted average market price at date of grant):
Officers	$	15.65
Management	15.65



	2017
Stock options granted (number of shares):
Officers	151,992
Management	57,559
Total	209,551
Estimated weighted average fair value of options per share at date of grant:
Officers	$	4.69
Management	4.69
Total estimated fair value of stock options granted (in thousands)	$	983



(In thousands)	Amount reclassified from other comprehensive income (loss)			Location of gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (loss)
Gain (loss) on derivative financial instruments:
Aluminum future contracts, before taxes	$	1,210		Cost of goods sold
Foreign currency forward contracts, before taxes	62			Cost of goods sold
Foreign currency forward contracts, before taxes	(43		)	Selling, general and administrative
Total, before taxes	1,229
Income tax expense (benefit)	287			Income taxes
Total, net of tax	$	942
Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes	$	(12,045	)	(a)
Income tax expense (benefit)	(4,234		)	Income taxes
Total, net of tax	$	(7,811	)

(a) This component of accumulated other comprehensive income is included in the computation of net periodic pension cost (see Note 13 for additional detail).



(In thousands)
Accounts receivable	$	6,680
Inventories	10,342
Prepaid expenses and other current assets	240
Property, plant & equipment	32,662
Identifiable intangible assets:
Customer relationships	24,000
Trade names	6,700
Trade payables & accrued expenses	(8,135		)
Total identifiable net assets	72,489
Adjusted Net Purchase Price	82,860
Goodwill	$	10,371



Net Sales by Geographic Area (d)
(In thousands)	2017		2016		2015
United States	$	584,066	$	475,734	$	528,881
Exports from the United States to:
Asia	84,846		73,220		75,383
Canada	46,505		45,683		45,290
Europe	8,505		7,348		9,809
Latin America	15,199		5,561		3,464
Operations outside the United States:
Brazil	87,155		90,571		89,829
The Netherlands	54,380		54,352		53,211
Hungary	24,727		24,207		32,612
China	12,199		14,390		18,919
India	10,065		8,206		8,941
Total (c)	$	927,647	$	799,272	$	866,339



	Identifiable Assets by Geographic Area (d)				Property, Plant & Equipment, Net by Geographic Area (d)
(In thousands)	2017		2016		2017		2016
United States (b)	$	475,844	$	367,406	$	156,054	$	118,661
Operations outside the United States:
Brazil	49,536		139,163		13,396		91,553
China	28,833		29,751		23,273		23,759
Hungary	28,573		20,610		18,230		15,117
The Netherlands	17,423		19,484		6,423		5,784
India	7,347		6,619		4,628		4,670
General corporate (b)	111,696		38,618		1,087		1,181
Cash and cash equivalents (d)	36,491		29,511		n/a		n/a
Total	$	755,743	$	651,162	$	223,091	$	260,725



Net Sales by Product Group
(In thousands)	2017		2016		2015
PE Films:
Personal care materials	$	246,416	$	238,213	$	287,768
Surface protection films	99,079		84,013		90,197
LED lighting products & other films	6,964		8,920		7,585
Subtotal	352,459		331,146		385,550
Flexible Packaging Films	108,355		108,028		105,332
Aluminum Extrusions:
Nonresidential building & construction	239,713		212,863		221,363
Consumer durables	54,126		39,293		41,835
Automotive	38,261		34,700		30,250
Machinery & equipment	33,450		20,872		18,102
Distribution	30,202		20,506		18,659
Residential building & construction	40,354		20,252		22,737
Electrical	30,727		11,612		22,511
Subtotal	466,833		360,098		375,457
Total	$	927,647	$	799,272	$	866,339


(In thousands)
	Future Lease Payments
2022		$	2,594
2023		2,478
2024		2,417
2025		2,417
2026		2,079
Thereafter		5,326
Total undiscounted operating lease payments		17,311
Less: Imputed interest		2,322
Present value of operating lease liabilities		$	14,989



(In thousands)			Customer Relationships			Proprietary Technology			Trade Names			Total
PE Films:
	Net carrying value at January 1, 2016		$	—		$	1,073		$	—		$	1,073
		Amortization expense	—			(114		)	—			(114		)
	Net carrying value at December 31, 2016		—			959			—			959
		Amortization expense	—			(114		)	—			(114		)
	Net carrying value at December 31, 2017		$	—		$	845		$	—		$	845

Flexible Packaging Films:
	Net carrying value at January 1, 2016		$	12,380		$	6,362		$	5,776		$	24,518
		Amortization expense	(1,700		)	(1,131		)	—			(2,831		)
		Increase (decrease) due to foreign currency translation	1,404			343			599			2,346
	Net carrying value at December 31, 2016		12,084			5,574			6,375			24,033
		Amortization expense	(1,793		)	(1,161		)	—			(2,954		)
		Increase (decrease) due to foreign currency translation	(16		)	(2		)	(33		)	(51		)
		Impairment loss	(9,444		)	(4,051		)	(4,005		)	(17,500		)
	Net carrying value at December 31, 2017		$	831		$	360		$	2,337		$	3,528

Aluminum Extrusions:
	Net carrying value at January 1, 2016		$	3,240		$	1,602		$	4,800		$	9,642
		Amortization expense	(480		)	(553		)	—			(1,033		)
	Net carrying value at December 31, 2016		2,760			1,049			4,800			8,609
		Additions related to acquisition of Futura	24,000			—			6,700			30,700
		Amortization expense	(2,147		)	(554		)	(429		)	(3,130		)
	Net carrying value at December 31, 2017		$	24,613		$	495		$	11,071		$	36,179

Total net carrying value of identifiable intangibles at December 31, 2017			$	25,444		$	1,700		$	13,408		$	40,552


(In thousands)	Aluminum Extrusions(a)		PE Films(a)		Total
Net carrying value of goodwill at December 31, 2019	$	24,066	$	57,338	$	81,404
Goodwill impairment charge	(13,696)		—		(13,696)
Net carrying value of goodwill at December 31, 2020	10,370		57,338		67,708
Out-of-period adjustment	2,900		—		2,900
Net carrying value of goodwill at December 31, 2021	$	13,270	$	57,338	$	70,608
(a) The goodwill of Aluminum Extrusions and PE Films is carried by the Futura and Surface Protection reporting units, respectively.


Year	Amount (In thousands)
2022	$	2,579
2023	1,953
2024	1,913
2025	1,913
2026	1,913

~~Estimated minimum required contributions for defined benefit plans~~Computations of Credit EBITDA, Leverage Ratio and ~~benefit payments for other postretirement plans are based on actuarial estimates using current assumptions for discount rates, long-term rate~~Interest Coverage Ratio as Defined in the Credit Agreement Along with Related Most Restrictive Covenants

As of ~~return on plan assets, rate of compensation increases~~ and health care cost trends. The expected defined benefit plan contribution estimates for 2018 through 2027 were determined under provisions of the Pension Protection Act of 2006 using the preliminary assumptions chosen by Tredegar for the ~~2018 plan year. Tredegar has determined that it is not practicable to present~~Twelve Months Ended December 31, 2021 (In thousands)

Computations of Credit EBITDA as defined ~~benefit contributions and other postretirement benefit payments beyond 2027.~~in Credit Agreement for the twelve months ended December 31, 2021