

~~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~~

~~Aluminum Extrusions’ net sales by market segment over the last three years is shown below:~~

% of Aluminum Extrusions Net Sales by Market Segment*
2018 2017 2016
Building and construction:
Nonresidential 51% 51% 59%
Residential 8% 9% 6%
Automotive 8% 8% 9%
Specialty:
Consumer durables 12% 12% 11%
Machinery & equipment 7% 7% 6%
Electrical 7% 7% 3%
Distribution 7% 6% 6%

Total 100% 100% 100%
*Includes Futura as of its acquisition date of February 15, 2017.

~~In 2018, 2017 and 2016, nonresidential building and construction accounted for approximately 28%, 26% and 27% of Tredegar’s consolidated net sales from continuing operations, respectively.~~

~~Raw Materials~~. The primary raw materials used by Aluminum Extrusions consist of aluminum ingot, aluminum scrap and various alloys, which are purchased from domestic and foreign producers in open-market purchases and under short-term contracts. Aluminum Extrusions believes that it has adequate supply agreements for aluminum and other required raw materials and supplies in the foreseeable future.

General

Intellectual Property. Tredegar considers patents, licenses and trademarks to be ~~significant~~material to PE Films. On December 31, ~~2018,~~2020, PE Films held ~~273~~54 patents (including 634 U.S. patents), ~~licenses under patents owned by third parties,~~ and ~~109~~82 registered trademarks (including 84 U.S. registered trademarks). Flexible Packaging Films held 1 U.S. patent and 1415 registered trademarks (including 2 U.S. registered trademarks). Aluminum Extrusions held no U.S. patents and 24 U.S. registered trademarks. OnAs of December 31, ~~2018,~~2020, these patents had remaining terms ~~in the range~~ of 13.5 to 2015.5 years.

Research and Development. Tredegar’s spending for research and development (“R&D”) activities in ~~2018, 2017~~2020, 2019 and ~~2016~~2018 was primarily related to PE Films. ~~PE Films has technical centers in Durham, North Carolina; Richmond, Virginia; and Terre Haute, Indiana. Flexible Packaging has a technical center in Bloomfield, New York.~~ R&D spending by the Company was approximately ~~$18.7~~$8.4 million, ~~$18.3~~$7.9 million and ~~$19.1~~$6.7 million in 2020, 2019 and 2018, ~~2017 and 2016,~~ respectively.

Backlog. Overall backlog in Aluminum Extrusions was approximately $74.2 million at December 31, 2020 compared to approximately $52.8 million at December 31, 2019, an increase of $21.4 million, or approximately 41%. Backlogs are not material to the operations in PE Films or Flexible Packaging Films. Overall backlog for continuing operations in Aluminum Extrusions was approximately $67.6 million at December 31, 2018 compared to approximately $46.2 million at December 31, 2017, an increase of $21.4 million, or approximately 46%. Net sales for Aluminum Extrusions, which the Company believes isare cyclical in nature, were $455.7 million in 2020, $529.6 million in 2019 and $573.1 million in ~~2018, $466.8 million in 2017~~2018.

Government Regulation. The Company’s operations are subject to various local, state, federal and ~~$360.1 million in 2016.~~foreign government regulations, including environmental, privacy and anti-corruption and anti-bribery laws and regulations.

~~Government Regulation~~.U.S. laws concerning the environment to which the Company’s domestic operations are or may be subject to include ~~among others,~~ the Clean Water Act, the Clean Air Act, the Resource Conservation and Recovery Act, the Occupational Safety and Health Act, the National Environmental Policy Act, the Toxic Substances Control Act, the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), regulations promulgated under these acts, and other federal, state or local laws or regulations governing environmental matters. Compliance with these laws is an important consideration because Tredegar uses hazardous materials in some of its operations, is a generator of hazardous waste, and wastewater from the Company’s operations is discharged to various types of wastewater management systems. Under CERCLA and other laws, Tredegar may be subject to financial exposure for costs associated with waste management and disposal, even if the Company fully complies with applicable environmental laws.

The U.S. Environmental Protection Agency has adopted regulations under the Clean Air Act relating to emissions of carbon dioxide and other greenhouse gases (“GHG”), including mandatory reporting and permitting requirements. Several of the Company’s manufacturing operations result in emissions of carbon dioxide or GHG and are subject to the current GHG regulations. The Company’s compliance with these regulations has yet to require significant expenditures. The cost of compliance with any future GHG legislation or regulations is not presently determinable, but Tredegar does not anticipate compliance to have a material adverse effect on its consolidated financial condition, results of operations and cash flows based on information currently available.

~~Tredegar is also subject to the governmental regulations in the countries where it conducts business.~~

~~At December 31, 2018, the Company believes that it was in material compliance with all applicable~~capital expenditures; however, environmental ~~laws, regulations and permits in the U.S. and other countries where it conducts business. Environmental~~ standards tend to become more stringent over time. ~~In addition, consumer preferences, ongoing health, safety and environmental studies on plastics and resins and other related legislative initiatives may adversely affect Tredegar’s business. In~~Therefore, in order to ~~maintain substantial compliance~~comply with ~~such standards,~~current or future environmental legislation or regulations, the Company may be ~~required~~subject to ~~incur~~ additional capital expenditures, operating expenses or other compliance costs, the amounts and timing of which are not presently determinable but which could be significant, inincluding constructing new facilities or in modifying existing facilities. ~~Furthermore,~~

For further discussion regarding certain privacy and anti-corruption and anti-bribery laws and regulations to which the Company is subject, see Item 1A. Risk Factors below. Like environmental regulations, current or future privacy and anti-corruption and anti-bribery legislation or regulations may subject the Company to additional capital expenditures, operating expenses or other compliance costs, the amounts and timing of which are not presently determinable but could be significant. Finally, any failure to comply with current or future laws and regulations could subject Tredegar to substantial penalties, fines, costs and expenses.

~~Employees~~. Human Capital Management. Tredegar employed approximately ~~3,200~~2,400 people at December 31, ~~2018.~~2020 located in the U.S., Brazil, and Asia. Approximately 34% of the Company’s employees are represented by labor unions located in the U.S. and Brazil under various collective bargaining agreements with varying durations and expiration dates. Generally, the total number of employees of Tredegar does not significantly fluctuate throughout the year. However, acquisition or divestiture activity, or changes in the level of business activity may impact employee levels.

The Company believes its employees are its most valuable asset and are critical to the success of the Company. Tredegar strictly complies with all applicable state, local and international laws governing nondiscrimination in employment in every location where Tredegar and its businesses have facilities to ensure healthy and positive working conditions. This applies to all terms and conditions of employment, including recruiting, hiring, job assignments, promotion, termination, layoff, recall, transfer, leaves of absence, compensation and training. All applicants and employees are treated with the same high level of respect regardless of their race, creed, color, religion, sex, sexual orientation, gender identity, age, pregnancy, national origin, ethnicity, political affiliation, union membership, marital status, citizenship status, veteran status, disability or other protected category. Employees who experience or witness discriminatory behavior are encouraged to report such behavior to their supervisor, Human Resources or Tredegar’s toll-free anonymous reporting hotline. Additionally, the Company spends significant resources in developing its employees. Among the five core principles of the “The Tredegar Way” that the Company uses to guide its organization, the “Leadership” principle is focused on building a team of motivated and engaged leaders at every level of the Company. Each business unit has identified specific action plans to promote the Leadership

principle among its employees. Action plans include talent development, skills training, reinforcement of strong cultural values, and robust systems to ensure a safe working environment.

The Company seeks to retain employees by offering competitive wages, benefits and training opportunities. To assess and monitor employee retention and engagement, the Company surveys employees and takes actions to address areas of employee concern. The annual employee engagement survey results are presented to Tredegar’s Board of Directors (“Board”). Additionally, the objectives of our executive compensation programs are to attract, motivate and retain highly qualified executive officers. To accomplish these objectives, we rely on a pay strategy that emphasizes performance-based compensation through annual and long-term incentives. We believe that this pay strategy creates a strong link between pay and performance and aligns with our business strategy of generating strong operating results and shareholder value creation while controlling fixed costs.

We are committed to holistically supporting our employees both at work and in their communities by:

•Strictly following all applicable health, safety and non-discrimination laws in each country;

•Promoting the highest standards for employee health and safety through innovative programs; and

•Providing opportunities for community outreach and supporting programs that enhance the lives of children and families.

The Company uses various forms of employee safety metrics to assess the health and safety performance of its Aluminum Extrusions, PE Films and Flexible Packaging operations, including employee safety data which is available on its website at https://tredegar.com/about-tredegar/committed-to-our-employees. Tredegar has also instituted additional safety precautions during the ongoing COVID-19 pandemic as described in "The Impact of COVID-19" included in Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K (“Item 7”).

Information About Our Executive Officers. See Item 10. “Directors, Executive Officers and Corporate Governance” of this Form 10-K.

Available Information and Corporate Governance Documents. Tredegar’s ~~Internet~~website address is www.tredegar.com. The Company makes available, ~~free of charge~~ through its website, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”). Information filed electronically with the SEC can be accessed on its website at www.sec.gov. In addition, the Company’s Corporate Governance Guidelines, Code of Conduct, ~~and~~ the charters of the Audit, Executive Compensation, and Nominating and Governance Committees and many other corporate policies are available on Tredegar’s website and are available in print ~~without charge,~~ to any shareholder upon request by contacting Tredegar’s Corporate Secretary at 1100 Boulders Parkway, Richmond, Virginia 23225. The information on or that can be accessed through the Company’s website is not, and shall not be deemed to be, a part of this Annual Report on Form 10-K for the year ended December 31, ~~2018~~2020 (“Form 10-K”) or incorporated into other filings it makes with the SEC.


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

Item 1A. RISK FACTORS

There are a number of risks and uncertainties that could have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. The following risk factors should be considered, in addition to the other information included in this Form 10-K, when evaluating Tredegar and its businesses.

Risks Related to Aluminum Extrusions

•Sales volume and profitability of 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 coronavirus pandemic (“COVID-19”). 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 ongiong 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 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.

•Failure to prevent competitors from evading anti-dumping and countervailing duties, or a reduction in such duties, could adversely impact Aluminum Extrusions. 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. Chinese and other overseas manufacturers continue to try to evade the anti-dumping and countervailing orders to avoid duties. 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 financial condition, results of operations and cash flows of Aluminum Extrusions.

•The duty-free importation of goods allowed under the United States-Mexico-Canada Agreement (“USMCA”) could result in lower demand for aluminum extrusions made in the U.S., which could materially and negatively affect Bonnell Aluminum’s business and results of operations. In March 2018, the U.S. imposed tariffs of 10% on aluminum ingot and semi-finished aluminum imported in the U.S. from certain countries, including countries from which Bonnell Aluminum 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, aluminum extrusions 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 Bonnell Aluminum’s business and results of operations.

•Competition from China could increase significantly if China is granted market economy status by the World Trade Organization. China launched a formal complaint to the World Trade Organization (“WTO”) challenging its non-market economy status, claiming that as of December 11, 2016, China’s transition period as a non-market economy under its Accession Protocol to the WTO ended. China believes with respect to all Chinese-made products that it should receive market economy status and the rights attendant to that status under WTO rules. The U.S. and the European Union have each rejected that interpretation. If China is granted market economy status by the WTO, the extent to which the U.S. anti-dumping laws will be able to limit unfair trade practices from China will likely be limited because the U.S. government will be forced to utilize Chinese prices and costs that do not reflect market principles in anti-dumping duty investigations involving China, which could ultimately limit the level of anti-dumping duties applied to unfairly traded Chinese imports. The volume of unfairly traded imports of Chinese aluminum extrusions could increase as a result and this, in turn, would likely create substantial pricing pressure on Aluminum Extrusions’ products and could have a material adverse effect on the financial condition, results of operations and cash flows of Aluminum Extrusions. In June 2019, at China’s request, after certain preliminary rulings in the case went against the Chinese position, the WTO indefinitely suspended the proceedings on the Chinese WTO complaint.

•The markets for Aluminum Extrusions’ products are highly competitive with product quality, service, delivery performance and price being the principal competitive factors. Aluminum Extrusions has approximately 1,450 customers 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 delivery and competitive pricing to retain existing customers and participate in overall industry cross-cycle growth. Failure in any of these areas could lead to a loss of customers, which could have an adverse material effect on the financial condition, results of operations and cash flows of Aluminum Extrusions.

Risks Related to PE Films

•PE Films is highly dependent on sales associated with ~~its top five customers, the largest of which is P&G.~~relatively few large customers. PE Films’ top ~~five~~four customers comprised approximately ~~21%~~16%, ~~26%~~14% and ~~29%~~13% of Tredegar’s consolidated net sales in ~~2018, 2017~~2020, 2019 and ~~2016, respectively, with net sales to P&G alone comprising approximately 10%, 13% and 16% in~~ 2018, ~~2017 and 2016,~~ 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.

Additionally, PE Films anticipates that a portion of its film products used in surface protection applications could be made obsolete by possible future customer product transitions to less costly alternative processes or materials. These transitions principally relate to one customer. The Company believes that previously reported delays in this customer's transitions were recently resolved by the customer and much of the remaining transitions could occur by the end of 2021. Under this scenario, the Company estimates that the contribution to EBITDA from ongoing operations for PE Films could decline due to the remaining customer product transitions by $18 million in 2021 versus 2020 and $4 million in 2022 versus 2021. To offset the expected adverse impact, the Company is aggressively pursuing and making progress in generating contribution from sales from new surface protection products, applications and customers and implementing cost savings measures. Annual contribution to EBITDA from ongoing operations for PE Films on surface protection products unrelated to the customer product transitions has increased since 2018 by approximately $12 million.

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 ~~by way of example,~~ (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 ~~customer,~~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. 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 delay or loss of sales and profits associated with these large customers.

In recent years, PE Films lost substantial sales volume due to product transitions and incurred other sales losses associated with various customers. During October 2018, the Personal Care component of PE Films completed negotiations with a customer regarding a previously disclosed significant product transition. The total annual sales that will be adversely impacted by this product transition is approximately $70 million. During 2019, the Company expects sales for the product of $30 to $35 million with the potential for no sales thereafter. Any actions that the Company takes to reduce fixed costs to partially mitigate the decline in variable contribution that will accompany the decline in sales will depend on the level of success that Personal Care has with replacing the lost business with new products and business.

Personal Care has increased its annual R&D spending by approximately $5 million since 2014, reaching $12 million in 2018. Personal Care is also investing capital and is accelerating sales and marketing efforts to capture growth and diversify its customer base and product offerings in personal care products, but there can be no assurance that such efforts will be successful or that they will offset any loss of business due to product transitions.

The Personal Care component of PE Films had operating profit from ongoing operations plus depreciation and amortization in the fourth quarter of 2018 of $3.1 million. As a result of the decline in sales from the significant product transition discussed above, the Company expects operating profit from ongoing operations plus depreciation and amortization for this component of approximately negative $1.5 million during the first half of 2019. Personal Care projects its operating profit from ongoing operations plus depreciation and amortization to turn positive in the second half of 2019 assuming production and sales growth targets are achieved.

PE Films also anticipates that a portion of its film used in surface protection applications will be made obsolete by future customer product transitions to less costly alternative processes or materials. These transitions could possibly be fully implemented by the fourth quarter of 2019. When fully implemented, the Company estimates that the annualized adverse impact on future operating profit from this customer shift will be approximately $11 million. In response, the Company is aggressively pursuing new surface protection products, applications and customers, but there can be no assurance that such efforts will be successful or that they will offset any loss of business due to product transitions.

~~PE Films and its customers operate in highly competitive markets~~. PE Films competes on product innovation, quality, price and service, and its businesses and their customers operate in highly competitive markets. Global market conditions continue to exacerbate the Company’s exposure to margin compression due to competitive forces, especially as certain products move into the later stages of their product life cycles. In addition, the changing dynamics of consumer products retailing, including the impact of on-line retailers such as Amazon, is creating price and margin pressure on the customers of PE Films’ personal care business. While PE Films continually works to identify new business opportunities with new and existing customers, primarily through the development of new products with improved performance and/or cost characteristics, there can be no assurances that such efforts will be successful or that they will offset business lost from competitive dynamics or customer product transitions.

~~Our cost saving initiatives may not achieve the results we anticipate.~~ PE Films has undertaken and will continue to undertake cost reduction initiatives to consolidate certain production, improve operating efficiencies and generate cost savings. PE Films cannot be certain that it will be able to complete these initiatives as planned or that the estimated operating efficiencies or cost savings from such activities will be fully realized or maintained over time. In addition, PE

Films may not be successful in moving production to other facilities or timely qualifying new production equipment. Failure to complete these initiatives could adversely affect PE Films’ financial condition, results of operations and cash flows.

~~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 serve as components for, or 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. Also, consumers of premium products made with or using PE Films’ components may shift to less premium or less expensive products, reducing the demand for PE Films’ plastic films. Cyclical downturns may negatively affect businesses that use PE Films’ plastic film products, which could adversely affect sales and operating margins.

•The Company’s 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. ~~PE Films operates in an industry where its significant customers and competitors have substantial intellectual property portfolios.~~ The continued success of the PE Films’ business depends on its ability not only to protect its own technologies and trade secrets, but also to develop and sell new products that do not infringe upon existing ~~patents or threaten existing customer relationships.~~patents. Intellectual property litigation is very costly and could result in substantial expense and diversions of Company resources, both of which could adversely affect its consolidated financial condition, results of operations and cash flows. In addition, there may be no effective legal recourse against infringement of the Company’s intellectual property by third parties, whether due to limitations on enforcement of rights in foreign jurisdictions or as a result of other factors.

~~An unstable economic environment~~•Disruptions to PE Films’ supply chain could have a ~~disruptive~~material adverse impact on PE ~~Films’ supply chain.~~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, ~~as well as~~and also require additional resources to restore its supply chain.

•Rising trade tensions could cause an 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

•Overcapacity in Latin American polyester film production and a history of uncertain economic conditions in Brazil could adversely impact the financial condition, results of operations and cash flows of Flexible Packaging Films. Competition in Brazil, Terphane’s primary market, has been exacerbated by 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 2017. These factors have resulted in significant competitive pricing pressures and U.S. Dollar equivalent margin compression.

For flexible packaging films produced in Brazil, selling prices and key raw material costs ~~for operations~~are principally determined in ~~Brazil have been adversely~~U.S. Dollars and are impacted by ~~inflation in Brazil that is higher than in the U.S.~~local economic conditions and local and global competitive 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 part 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. 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.

•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, ~~UAE and Turkey. In January 2018, the Brazilian government opened new anti-dumping investigations for products imported from~~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. Brazilian authorities initiated an investigation for sunset review on anti-dumping rulings against China, India and Egypt and extended duties that would have expired in 2020 for

one year. There can be no assurance that efforts to ~~impose~~extend anti-dumping ~~constraints on products imported to Brazil from Peru and Bahrain, or to extend~~ duties beyond ~~2020~~2021 on products imported from ~~certain~~China, India, Egypt and other countries will be successful.

~~Aluminum Extrusions~~

~~Sales volume and profitability of 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. Because of the capital intensive nature and level of fixed costs inherent in the aluminum extrusions business, the percentage drop in operating profits 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 protect their position with key customers. Any benefits associated with cost reductions and productivity improvements may not 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 further reduce profits unless offset by price increases or cost reductions and productivity improvements.

~~Failure to prevent competitors from circumventing anti-dumping and countervailing duties, or a reduction in such duties, could adversely impact Aluminum Extrusions.~~ As of April 2017, the antidumping duty and countervailing duty orders on aluminum extrusions from China will remain in place until the next five-year review of the orders. Chinese and other overseas manufacturers continue to try to circumvent the antidumping and countervailing orders to avoid duties. A failure by, or the inability of, U.S. trade officials to curtail efforts to circumvent these duties, or the potential reduction of applicable duties pursuant to annual reviews of the orders, could have a material adverse effect on the financial condition, results of operations and cash flows of Aluminum Extrusions.

The imposition of tariffs or duties on imported aluminum products could significantly increase the price of Aluminum Extrusions’ main raw material, which could adversely impact demand for its products. In March 2018, the U.S. imposed tariffs of 10% on aluminum ingot and semi-finished aluminum imported into the U.S. from certain countries, including countries from which Bonnell Aluminum has historically sourced aluminum supplies. These tariffs have increased the cost of aluminum ingot used by Bonnell Aluminum to make its products. For the vast majority of its business, Bonnell Aluminum expects to be able to pass through higher aluminum costs to customers. However, sustained higher costs for aluminum extrusions could result in reduced demand and product substitutions in place of aluminum extrusions, which could materially and negatively affect Bonnell Aluminum’s business and results of operations.

~~Competition from China could increase significantly if China is granted market economy status by the World Trade Organization.~~ China has launched a formal complaint at the World Trade Organization challenging its non-market economy status, claiming that as of December 11, 2016, China’s transition period as a non-market economy under its Accession Protocol to the World Trade Organization ended. China believes with respectRisks Related to all Chinese-made products that it should receive market economy status and the rights attendant to that status under World Trade Organization rules. The U.S. and the European Union have each rejected that interpretation. If China is granted market economy status, the extent to which the U.S. antidumping laws will be able to limit unfair trade practices from China will likely be limited because the U.S. government will be forced to utilize Chinese prices and costs that do not reflect market principles in antidumping duty investigations involving China, which could ultimately limit the level of antidumping duties applied to unfairly traded Chinese imports. The volume of unfairly traded imports of Chinese aluminum extrusions could increase as a result and this, in turn, would likely create substantial pricing pressure on Aluminum Extrusions’ products and could have a material adverse effect on the financial condition, results of operations and cash flows of Aluminum Extrusions.

Tredegar Businesses

~~The markets for Aluminum Extrusions’ products are highly competitive with product quality, service, delivery performance and price being the principal competitive factors.~~ Aluminum Extrusions has approximately 1,400 customers 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 customer exceeds 4% of Aluminum Extrusions’ net sales. Future success and prospects depend on Aluminum Extrusions’ ability to provide superior service, high quality products, timely delivery and competitive pricing to retain existing customers and participate in overall industry cross-cycle growth. Failure in any of these areas could lead to a loss of customers, which could have an adverse material effect on the financial condition, results of operations and cash flows of Aluminum Extrusions.

~~Aluminum Extrusions may not have sufficient capacity to meet its growth targets and service all of its customers.~~ Aluminum Extrusions’ ability to grow and service existing customers is closely tied to having sufficient capacity. In recent years, increased demand, primarily from the nonresidential building and construction sector, has substantially increased Aluminum Extrusions’ average capacity utilization.

~~General~~

•The Company has identified material weaknesses in its internal control over financial ~~reporting at December 31, 2017 and 2018.~~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, ~~which~~could, in turn, ~~could~~ have a negative impact on its financial condition.

Maintaining effective internal control over financial reporting is ~~necessary for the Company to produce~~an integral part of producing reliable financial statements. As discussed in Item 9A. “Controls and ~~Procedures,”~~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 ~~as of December 31, 2017 or December 31, 2018,~~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.

Under standards established by the Public Company Accounting Oversight Board, ~~(“PCAOB”),~~ 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 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 detect and correct material errors or that the personnel responsible for performing the review did not have the sufficient skill set or knowledge of the subject matter to perform a proper assessment.

As discussed in Item ~~9A. “Controls and Procedures,”~~9A to remediate the material weaknesses, the Company, with the assistance of its outside consultant, is in the process of implementing certain changes to its internal controls and reviewing the entire control environment to help ensure that there are no other material weaknesses. The Company believes that its remediation plan will be sufficient to remediate the identified material weaknesses and strengthen its internal control over financial reporting. ~~However,~~The Company’s remediation efforts are ongoing, and it will continue its initiatives to implement and document policies and procedures. Remediation of the identified material weaknesses and strengthening the Company’s internal control environment ~~will require a substantial effort throughout 2019,~~have extended into 2021. In addition, the Company is monitoring the impact of COVID-19 on its remediation plan. Depending on the severity and ~~those efforts may extend beyond 2019.~~ length of the pandemic, the remediation timeline could be negatively impacted because of inefficiencies caused by COVID-related limitations on travel, meetings, on-site work and close collaboration and the related increase in time necessary to complete remediation projects.

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 ~~determine to~~ modify the remediation plan. The Company cannot ~~assure you,~~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 ~~assure you~~provide assurance that additional material weaknesses will not arise in the future.

While the material weaknesses discussed in Item ~~9A. “Controls and Procedures”~~9A did not result in material misstatements of the Company’s financial statements as of and for the ~~year~~years ended December 31, 2020, 2019, 2018 and 2017 or ~~December 31, 2018, or any~~in the intervening interim ~~period~~periods during ~~2017 or 2018,~~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 cause it to fail to meet its reporting and financial obligations, which in turn could have a negative impact on its financial condition.

•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 ~~substantially frozen~~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. As of December 31, ~~2018,~~2020, the plan was underfunded under U.S. generally accepted accounting principles (“GAAP”) measures by ~~$81.9~~$103.1 million. Tredegar expects that it will be required to make a cash contribution of approximately ~~$8.1~~$11.7 million to its underfunded pension plan in ~~2019,~~2021, and may be required to make higher cash contributions in future periods depending on the level of interest rates and investment returns on plan assets.

•Noncompliance with any of the covenants in the Company’s ~~$400~~$375 million revolving credit facility, as amended on December 1, 2020, which matures in ~~March of 2021,~~June 2024, could result in all debt under the agreement outstanding at such time becoming due and limiting ~~its~~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.

•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 and diesel fuel. ~~Resin, aluminum~~Aluminum, resin and natural gas prices are volatile as shown in the charts in ~~the~~ Quantitative and Qualitative Disclosures~~section.~~ in Item 7. 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.

~~Tredegar may not be able to successfully integrate strategic acquisitions.~~ Acquisitions involve special risks, including, without limitation, meeting revenue, margin, working capital and capital expenditure expectations that substantially drive valuation, diversion of management’s time and attention from existing businesses, the potential assumption of unanticipated liabilities and contingencies and potential difficulties in integrating acquired businesses and achieving anticipated operational improvements. Acquired businesses may not achieve expected results.

•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 those relating to environmental matters (including global climate change and plastic ~~products,~~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. See Government Regulationin ~~“Item~~Item 1. ~~Business”~~“Business” of this Form 10-K for a further discussion of this risk factor.

We are 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.

•Material disruptions at one of the Company’s major manufacturing facilities could negatively impact financial results. Tredegar believes ~~its facilities are operated in compliance with applicable local laws and regulations and that the Company~~it has implemented measures to minimize the risks of disruption at its facilities. ~~Such~~However, a disruption could beoccur 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. A material disruption in one of the Company’s operating locations could negatively impact production and ~~its~~the Company’s consolidated financial condition, results of operations and cash flows.


~~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 ~~33,176,024~~33,537,892 shares of common stock held by ~~1,948~~1,747 shareholders of record on ~~December 31, 2018.~~

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

2018 2017
High Low High Low
First quarter $ 20.25
$ 15.60
$ 25.00
$ 16.50
Second quarter 24.60
16.99
17.65
14.90
Third quarter 26.25
20.60
18.35
14.85
Fourth quarter 21.56
15.00
20.20
18.20

~~The closing price of Tredegar’s common stock on~~ March ~~11, 2019 was $17.21.~~12, 2021.

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~~Board declared a special dividend of ~~11 cents~~$200 million, or $5.97 per share, on the Company’s common stock (the “Special Dividend”). The Special Dividend was paid in ~~each quarter of 2016, 2017 and 2018.~~December 2020.

All decisions with respect to the declaration and payment of future dividends will be made by the Board ~~of Directors (“Board”)~~ 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 "Debt and Credit Agreements" to the 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 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 ~~2018, 2017~~2020, 2019 or ~~2016~~2018 under this standing authorization. The maximum number of shares remaining under this standing authorization was 1,732,003 at December 31, ~~2018.~~2020.

~~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, ~~2018.~~2020. 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 12/31/1315 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. ~~Copyright© 2019~~ Copyright© 2021 Standard & Poor's, a division of S&P Global. All rights reserved. ~~Copyright© 2019~~ Copyright© 2021 Russell Investment Group. All rights reserved.

~~Quarterly Information~~Item 6. SELECTED FINANCIAL DATA

Tredegar does not generate or distribute quarterly reports to its shareholders. Information on quarterly results can be obtained from the Company’s website, www.tredegar.com. 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, ~~2018.~~2020. All historical results for Personal Care Films have been presented as discontinued operations. The surface protection component of the PE Films segment now includes Pottsville Packaging.

FIVE-YEAR SUMMARY

Tredegar Corporation and Subsidiaries


Years Ended December 31	2020			2019			2018			2017			2016
(In thousands, except per-share data)
Results of Operations:
Sales	$	755,290		$	826,324		$	851,834		$	725,867		$	595,665
Other income (expense), net (g)	(67,294)		(a)	28,371		(a)	30,455		(a)	51,718		(b)	2,225		(b)
Total	687,996			854,695			882,289			777,585			597,890
Cost of goods sold (i)	558,967		(a)	641,140		(a)	679,665		(a)	579,545		(b)	472,767		(b)
Freight	25,686			28,980			27,170			22,273			17,864
Selling, general & administrative (i)	84,246		(a)	76,598		(a)	67,929		(a)	65,189		(b)	58,334		(b)
Research and development	8,398			7,893			6,672			6,189			6,877
Amortization of identifiable intangibles	3,017			13,601			3,976			6,198			3,978
Pension and postretirement benefits (i)	14,720			9,642			10,406			10,193			11,047
Interest expense	2,587			4,051			5,702			6,170			3,806
Asset impairments and costs associated with exit and disposal activities, net of adjustments	1,725		(a)	784		(a)	398		(a)	102,114		(b)	302		(b)
Goodwill impairment	13,696		(c)	—			—			—			—
Total	713,042			782,689			801,918			797,871			574,975
Income (loss) from continuing operations before income taxes	(25,046)			72,006			80,371			(20,286)			22,915
Income tax expense (benefit)	(8,213)			13,545			18,807			(57,753)			4,786
Income (loss) from continuing operations	(16,833)			58,461			61,564			37,467			18,129
Income (loss) from discontinued operations, net of tax	(58,611)			(10,202)			(36,722)			784			6,337
Net income (loss)	$	(75,444)		$	48,259		$	24,842		$	38,251		$	24,466
Diluted earnings (loss) per share:
Continuing operations	$	(0.51)		$	1.76		$	1.86		$	1.14		$	0.55
Discontinued operations	(1.75)			(0.31)			(1.11)			0.02			0.20
Diluted earnings (loss) per share	$	(2.26)		$	1.45		$	0.75		$	1.16		$	0.75

Refer to Notes to Financial Tables that follow these tables.

FIVE-YEAR SUMMARY

Tredegar Corporation and Subsidiaries


Years Ended December 31	2020			2019			2018			2017			2016
(In thousands, except per-share data)
Share Data:
Equity per share (h)	$	3.26		$	11.29		$	10.70		$	10.41		$	9.44
Cash dividends declared per share (n)	$	6.45		$	0.46		$	0.44		$	0.44		$	0.44
Weighted average common shares outstanding during the period	33,402			33,236			33,068			32,946			32,762
Shares used to compute diluted earnings (loss) per share during the period	33,402			33,258			33,092			32,951			32,775
Shares outstanding at end of period	33,457			33,365			33,176			33,017			32,934
Closing market price per share:
High	$	22.32		$	23.31		$	26.25		$	25.00		$	25.55
Low	$	11.32		$	15.59		$	15.00		$	14.85		$	11.68
End of year	$	16.70		$	22.35		$	15.86		$	19.20		$	24.00
Total return to shareholders (d)(n)	3.6		%	43.8		%	(15.1)		%	(18.2)		%	79.4		%
Financial Position:
Total assets	$	514,870		$	712,668		$	707,373		$	755,743		$	651,162
Cash and cash equivalents	$	11,846		$	31,422		$	34,397		$	36,491		$	29,511
Debt	$	134,000		$	42,000		$	101,500		$	152,000		$	95,000
Shareholders’ equity	$	109,055		$	376,749		$	354,857		$	343,780		$	310,783
Equity market capitalization (e)	$	558,735		$	745,709		$	526,172		$	633,935		$	790,411

Years Ended December 31 2018 2017 2016 2015 2014
(In thousands, except per-share data)

Results of Operations:
Sales $ 1,065,471
$ 961,330
   $ 828,341
   $ 896,177
   $ 951,826

Other income (expense), net (k) 30,459
(a) 51,713
(b) 2,381
(c) (20,113 ) (6,697 ) (f)
1,095,930
   1,013,043
   830,722
   876,064
   945,129

Cost of goods sold (m) 849,756
(a) 767,550
(b) 659,867
(c) 715,744
(e) 772,897
(f)
Freight 36,027
   33,683
   29,069
   29,838
   28,793

Selling, general & administrative expenses (m) 85,283
(a) 83,386
(b) 73,466
(c) 69,384
(e) 68,110

Research and development expenses 18,707
   18,287
   19,122
   16,173
   12,147

Amortization of identifiable intangibles 3,976
   6,198
   3,978
   4,073
   5,395

Pension and postretirement benefits (m) 10,406
10,193
11,047
12,242
6,632

Interest expense 5,702
   6,170
   3,806
   3,502
   2,713

Asset impairments and costs associated with exit and disposal activities 2,913
(a) 102,488
(b) 2,684
(c) 3,850
(e) 3,026
(f)
Goodwill impairment charge 46,792
(d) —
—
44,465
(d) —

1,059,562
   1,027,955
   803,039
   899,271
   899,713

Income (loss) from continuing operations before income taxes 36,368
   (14,912 )    27,683
   (23,207 )    45,416

Income tax expense (benefit) 11,526
(53,163 ) 3,217
8,928
9,387

Income (loss) from continuing operations 24,842
   38,251
   24,466
   (32,135 )    36,029

Income (loss) from discontinued operations, net of tax —
—
—
—
850
(g)
Net income (loss) $ 24,842
   $ 38,251
   $ 24,466
   $ (32,135 )    $ 36,879

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

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

Refer to Notes to Financial Tables that follow these tables.

~~FIVE-YEAR SUMMARY~~

~~Tredegar Corporation and Subsidiaries~~

Years Ended December 31 2018 2017 2016 2015 2014
(In thousands, except per-share data)

Share Data:
Equity per share (l) $ 10.70
$ 10.41
$ 9.44
$ 8.35
$ 11.47

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

Weighted average common shares outstanding during the period 33,068
32,946
32,762
32,578
32,302

Shares used to compute diluted earnings (loss) per share during the period 33,092
32,951
32,775
32,578
32,554

Shares outstanding at end of period 33,176
33,017
32,934
32,682
32,422

Closing market price per share:
High $ 26.25
$ 25.00
$ 25.55
$ 23.76
$ 28.45

Low $ 15.00
$ 14.85
$ 11.68
$ 12.63
$ 16.76

End of year $ 15.86
$ 19.20
$ 24.00
$ 13.62
$ 22.49

Total return to shareholders (h) (15.1 )% (18.2 )% 79.4 % (37.6 )% (20.8 )%
Financial Position:
Total assets $ 707,373
$ 755,743
$ 651,162
$ 623,260
$ 788,626

Cash and cash equivalents $ 34,397
$ 36,491
$ 29,511
$ 44,156
$ 50,056

Debt $ 101,500
$ 152,000
$ 95,000
$ 104,000
$ 137,250

Shareholders’ equity (net book value) $ 354,857
$ 343,780
$ 310,783
$ 272,748
$ 372,029

Equity market capitalization (i) $ 526,172
$ 633,935
$ 790,411
$ 445,131
$ 729,173

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

SEGMENT TABLES

Tredegar Corporation and Subsidiaries


Net Sales (f)
Years Ended December 31	2020		2019		2018		2017		2016
(In thousands)
Aluminum Extrusions	$	455,711	$	529,602	$	573,126	$	466,833	$	360,098
PE Films	139,288		133,807		127,708		128,406		109,674
Flexible Packaging Films	134,605		133,935		123,830		108,355		108,028
Total net sales	729,604		797,344		824,664		703,594		577,800
Add back freight	25,686		28,980		27,170		22,273		17,864
Sales as shown in Consolidated Statements of Income	$	755,290	$	826,324	$	851,834	$	725,867	$	595,664

Identifiable Assets
As of December 31	2020		2019		2018		2017		2016
(In thousands)
Aluminum Extrusions	$	244,560	$	265,027	$	281,372	$	268,127	$	147,639
PE Films	119,013		124,269		118,496		123,507		117,307
Flexible Packaging Films	66,453		74,016		58,964		49,915		156,836
Subtotal	430,026		463,312		458,832		441,549		421,782
General corporate	71,508		109,655		99,570		109,882		37,345
Cash and cash equivalents	11,846		31,422		34,397		36,491		29,511
Discontinued operations	1,490		108,279		114,574		167,821		162,524
Total	$	514,870	$	712,668	$	707,373	$	755,743	$	651,162

Net Sales (j)
Years Ended December 31 2018 2017 2016 2015 2014
(In thousands)
PE Films $ 332,488
$ 352,459
$ 331,146
$ 385,550
$ 464,339
Flexible Packaging Films 123,830
108,355
108,028
105,332
114,348
Aluminum Extrusions 573,126
466,833
360,098
375,457
344,346
Total net sales 1,029,444
927,647
799,272
866,339
923,033
Add back freight 36,027
33,683
29,069
29,838
28,793
Sales as shown in Consolidated Statements of Income $ 1,065,471
$ 961,330
$ 828,341
$ 896,177
$ 951,826

Identifiable Assets
As of December 31 2018 2017 2016 2015 2014
(In thousands)
PE Films $ 231,720
$ 289,514
$ 278,558
$ 270,236
$ 283,606
Flexible Packaging Films 58,964
49,915
156,836
146,253
262,604
Aluminum Extrusions 281,372
268,127
147,639
136,935
143,328
Subtotal 572,056
607,556
583,033
553,424
689,538
General corporate 100,920
111,696
38,618
25,680
49,032
Cash and cash equivalents 34,397
36,491
29,511
44,156
50,056
Total $ 707,373
$ 755,743
$ 651,162
$ 623,260
$ 788,626

Refer to Notes to Financial Tables that follow these tables.

SEGMENT TABLES

Tredegar Corporation and Subsidiaries


EBITDA from Ongoing Operations (l)
Years Ended December 31	2020			2019			2018			2017			2016
(In thousands)
Aluminum Extrusions:
Ongoing operations:
EBITDA	$	55,137		$	65,683		$	65,479		$	58,524		$	46,967
Depreciation & amortization (j)	(17,403)			(16,719)			(16,866)			(15,070)			(9,173)
EBIT (m)	37,734			48,964			48,613			43,454			37,794
Plant shutdowns, asset impairments, restructurings and other	(3,506)		(a)	(561)		(a)	(505)		(a)	321		(b)	(741)		(b)
Goodwill impairment charge	(13,696)		(c)	—			—			—			—
Trade name accelerated amortization	—			(10,040)		(j)	—			—			—
PE Films:
Ongoing operations:
EBITDA	45,107			41,133			32,404			37,029			21,535
Depreciation & amortization	(6,762)			(5,860)			(6,201)			(6,117)			(5,718)
EBIT (m)	38,345			35,273			26,203			30,912			15,817
Plant shutdowns, asset impairments, restructurings and other	(1,974)		(a)	(733)		(a)	(186)		(a)	(157)		(b)	(1)		(b)
Flexible Packaging Films:
Ongoing operations:
EBITDA	30,645			14,737			11,154			7,817			11,279
Depreciation & amortization	(1,761)			(1,517)			(1,262)			(10,443)			(9,505)
EBIT (m)	28,884			13,220			9,892			(2,626)			1,774
Plant shutdowns, asset impairments, restructurings and other	(18)			—		(a)	(45)		(a)	(89,398)		(b)	(214)		(b)
Total	85,769			86,123			83,972			(17,494)			54,429
Interest income	44			66			146			54			106
Interest expense	2,587			4,051			5,702			6,170			3,806
Gain (loss) on investment in kaléo accounted for under the fair value method (g)	(60,900)			28,482			30,600			33,800			1,600
Loss on sale of Bright View (o)	(2,299)			—			—			—			—
Loss on sale of investment property	—			—			(38)			—			—
Unrealized loss on investment property	—			—			(186)			—			(1,032)
Stock option-based compensation expense	2,161			4,132			1,156			245			81
Corporate expenses, net (k)	42,912		(a)	34,482		(a)	27,265		(a)	30,231		(b)	28,301		(b)
Income (loss) from continuing operations before income taxes	(25,046)			72,006			80,371			(20,286)			22,915
Income tax expense (benefit)	(8,213)			13,545			18,807			(57,753)			4,786
Income (loss) from continuing operations	(16,833)			58,461			61,564			37,467			18,129
Income (loss) from discontinued operations, net of tax	(58,611)			(10,202)			(36,722)			784			6,337		(g)
Net income (loss)	$	(75,444)		$	48,259		$	24,842		$	38,251		$	24,466

Operating Profit
Years Ended December 31 2018 2017 2016 2015 2014
(In thousands)

PE Films:
Ongoing operations $ 36,181
$ 41,546
   $ 26,312
   $ 48,275
   $ 60,971

Plant shutdowns, asset impairments, restructurings and other (5,905 ) (a) (4,905 ) (b) (4,602 ) (c) (4,180 ) (e) (12,236 ) (f)
       Goodwill impairment charge (46,792 ) (d) —
—
—
—

Flexible Packaging Films:
Ongoing operations 9,892
(2,626 ) 1,774
5,453
(2,917 )
Plant shutdowns, asset impairments, restructurings and other (45 ) (a) (89,398 ) (b) (214 ) (c) (185 ) (e) (591 ) (f)
Goodwill impairment charge —
—
—
(44,465 ) (d) —

Aluminum Extrusions:
Ongoing operations 48,613
   43,454
   37,794
   30,432
   25,664

Plant shutdowns, asset impairments, restructurings and other (505 ) (a) 321
(b) (741 ) (c) (708 ) (e) (976 ) (f)
Total 41,439
   (11,608 )    60,323
   34,622
   69,915

Interest income 369
   209
   261
   294
   588

Interest expense 5,702
   6,170
   3,806
   3,502
   2,713

Gain (loss) on investment in kaléo accounted for under the fair value method (k) 30,600
33,800
1,600
(20,500 ) 2,000

Gain (loss) on sale of investment property (38 ) —
—
—
1,208
(f)
Unrealized loss on investment property 186
—
1,032
—
—

Stock option-based compensation expense 1,221
264
   56
483
   1,272

Corporate expenses, net 28,893
(a) 30,879
(b) 29,607
(c) 33,638
(e) 24,310
(f)
Income (loss) from continuing operations before income taxes 36,368
(14,912 ) 27,683
   (23,207 )    45,416

Income tax expense (benefit) 11,526
(53,163 ) 3,217
8,928
9,387

Income (loss) from continuing operations 24,842
   38,251
   24,466
   (32,135 )    36,029

Income (loss) from discontinued operations, net of tax —
—
—
—
850
(g)
Net income (loss) $ 24,842
   $ 38,251
   $ 24,466
   $ (32,135 )    $ 36,879

Refer to Notes to Financial Tables that follow these tables.

SEGMENT TABLES

Tredegar Corporation and Subsidiaries


Depreciation and Amortization
Years Ended December 31	2020		2019		2018		2017		2016
(In thousands)
Aluminum Extrusions	$	17,403	$	26,759	$	16,866	$	15,070	$	9,173
PE Films	6,762		5,860		6,201		6,117		5,716
Flexible Packaging Films	1,761		1,517		1,262		10,443		9,505
Subtotal	25,926		34,136		24,329		31,630		24,394
General corporate (k)	520		186		163		155		141
Discontinued operations	5,511		9,962		9,312		8,492		7,937
Total depreciation and amortization expense	$	31,957	$	44,284	$	33,804	$	40,277	$	32,472

Capital Expenditures
Years Ended December 31	2020		2019		2018		2017		2016
(In thousands)
Aluminum Extrusions	$	10,260	$	17,855	$	12,966	$	25,653	$	15,918
PE Films	6,024		8,567		2,523		4,648		9,411
Flexible Packaging Films	4,959		8,866		5,423		3,619		3,391
Subtotal	21,243		35,288		20,912		33,920		28,720
General corporate	200		223		427		61		389
Discontinued operations	1,912		15,353		19,475		10,381		16,348
Total capital expenditures	$	23,355	$	50,864	$	40,814	$	44,362	$	45,457

Depreciation and Amortization

Years Ended December 31 2018 2017 2016 2015 2014
(In thousands)
PE Films $ 15,513
$ 14,609
$ 13,653
$ 15,480
$ 21,399
Flexible Packaging Films 1,262
10,443
9,505
9,697
9,331
Aluminum Extrusions 16,866
15,070
9,173
9,698
9,974
Subtotal 33,641
40,122
32,331
34,875
40,704
General corporate 163
155
141
107
114
Total depreciation and amortization expense $ 33,804
$ 40,277
$ 32,472
$ 34,982
$ 40,818

Capital Expenditures
Years Ended December 31 2018 2017 2016 2015 2014
(In thousands)
PE Films $ 21,998
$ 15,029
$ 25,759
$ 21,218
$ 17,000
Flexible Packaging Films 5,423
3,619
3,391
3,489
21,806
Aluminum Extrusions 12,966
25,653
15,918
8,124
6,092
Subtotal 40,387
44,301
45,068
32,831
44,898
General corporate 427
61
389
—
—
Total capital expenditures $ 40,814
$ 44,362
$ 45,457
$ 32,831
$ 44,898

Refer to Notes to Financial Tables that follow these tables.

NOTES TO FINANCIAL TABLES

~~(a)~~

Plant shutdowns, asset impairments, restructurings and other charges for 2018 include charges of $3.3 million associated with the shutdown of PE Films’ manufacturing facility in Shanghai, China, which consists of severance and other employee-related costs of $2.2 million ($0.4 million included in “Cost of goods sold” in the consolidated statements of income), 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 $0.5 million ($0.1 million included in “Cost of goods sold” in the consolidated statements of income); charges of $2.0 million for estimated excess costs associated with the ramp-up of new product offerings and additional expenses for strategic capacity expansion projects (included in “Cost of goods sold” in the consolidated statements of income); charges of $0.8 million for professional fees associated with the Terphane Limitada worthless stock deduction, the impairment of assets of Flexible Packaging Films, determining the effect of the new U.S. federal income tax law, and a market study for PE Films (included in “Selling, general and administrative expense” in the consolidated statements of income); charges of $0.8 million for severance and other employee-related costs associated with restructurings in PE Films ($0.7 million) and Aluminum Extrusions ($0.1 million); charges of $0.5 million associated with a business development projects (included in “Selling, general and administrative” in the consolidated statements of income); charges of $0.3 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 $0.5 million for professional fees associated with the implementation of new accounting guidance and analysis and revision to the Company’s internal control over financial reporting (included in “Selling, general and administrative” in the consolidated statements of income); income of $0.3 million from the reversal of a PE Films’ contingent liability related to the acquisition of Bright View Technologies (included in “Other income (expense), net” in the consolidated statements of income); charges of $0.1 million related to wind damage that occurred in the third quarter of 2018 at the aluminum extrusions manufacturing facility in Elkhart, Indiana (included in “Selling, general and administrative expense” in the consolidated statements of income); and charges of $0.1 million related to a fire that occurred in the fourth quarter of 2018 at the PE Films facility in Retsag, Hungary (included in “Selling, general and administrative expense” in the consolidated statements of income).

~~(b)~~

Plant shutdowns, asset impairments, restructurings and other charges for 2017 include charges of $101.3 million related to the impairment of assets of Flexible Packaging Films; income of $11.9 million related to the settlement of an escrow arrangement established upon the acquisition of Terphane in 2011 (included in “Other income (expense), net” in the consolidated statements of income); charges of $3.3 million related to the acquisition of Futura ($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 $4.1 million for estimated excess costs associated with the ramp-up of new product offerings and additional expenses for strategic capacity expansion projects (included in “Cost of goods sold” in the consolidated statements of income); income of $5.6 million related to the explosion that occurred in the second quarter of 2016 at the aluminum extrusions manufacturing facility in Newnan, Georgia, including 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 $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 business development projects (included in “Selling, general and administrative” in the consolidated statements of income); charges of $1.9 million related to expected future environmental costs at certain Aluminum Extrusions manufacturing facilities (included in “Cost of goods sold” in the consolidated statements of income); charges of $0.8 million at Corporate related to expected future environmental costs at various shutdown facilities (included in “Cost of goods sold” 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, included in “Corporate expenses, net” in the statements of net sales and operating profit by segment); charges of $0.4 million for professional fees associated with the Terphane Limitada worthless stock deduction and impairment of assets of Flexible Packaging Films; charges of $0.3 million associated with asset impairments in PE Films; and charges of $0.2 million associated with the settlement of customer claims and the shutdown of the aluminum extrusions manufacturing facility in Kentland, Indiana.

~~(c)~~

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 the 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); charges 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 (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, which includes a pretax gain of $0.2 million, related to the sale of property, offset by pretax charges of $0.3 million associated with the shutdown of this facility.

~~(d)~~

Results for 2018 included a goodwill impairment charge of $46.8 million ($38.2 million after taxes) recognized in PE Films in the third quarter of 2018 upon completion of an impairment analysis performed as of September 30, 2018. 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.

~~(e)~~

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 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 aluminum extrusions manufacturing facility in Newnan, Georgia (included in “Cost of goods sold” in the consolidated statements of income).

~~(f)~~

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 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.


~~(g)~~	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.


~~(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 for purposes of assessing performance.~~


~~(k)~~	~~The gains and losses on the Company’s investment in kaléo are included in “Other income (expense), net” in the consolidated statements of income.~~


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


~~(m)~~	For the years ended December 31, 2014 to 2017, the pension and postretirement benefit expenses recorded in Cost of goods sold and Selling, general and administrative have been reclassified to a new line item, Pension and postretirement benefits, on the consolidated statements of income, due to the retrospective adoption of ASU 2017-07.

(a)For a description of plant shutdowns, asset impairments, restructurings and other charges for 2020, 2019, and 2018, see the plant shutdowns, asset impairments, restructurings and other tables for the respective periods in Results of Operations in Item 7.

(b)For a description of plant shutdowns, asset impairments, restructurings and other charges for 2017 and 2016, see Item 6. “Selected Financial Data” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.


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

(c)Results for 2020 included a goodwill impairment charge of $13.7 million ($10.5 million after taxes) recognized in Bonnell Aluminum in the first quarter of 2020 upon completion of an impairment analysis performed as of March 31, 2020.

(d)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.

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

(f)Net sales represents gross sales less freight. The Company uses net sales as its measure of revenues from external customers at the segment level.

(g)The gains and losses on the Company’s investment in kaléo are included in “Other income (expense), net” in the consolidated statements of income. See Note 4 to the Consolidated Financial Statements in Item 15 for more details for the years 2020, 2019 and 2018.

(h)Equity per share is computed by dividing shareholders’ equity at year end by the shares outstanding at year end.

(i)For the year ended December 31, 2017, the pension and postretirement benefit expenses recorded in Cost of goods sold and Selling, general and administrative expenses were reclassified to a new line item, Pension and postretirement benefits, on the consolidated statements of income, due to the retrospective adoption of Accounting Standards Update (“ASU”) 2017-07.

(j)Depreciation and amortization (“D&A”) in 2019 for Aluminum Extrusions excludes $10.0 million for accelerated amortization of trade names as a result of a rebranding initiative.

(k)Corporate depreciation and amortization is included in Corporate expenses, net, on the EBITDA from ongoing operations table above.

(l)In the fourth quarter of 2019, the Company changed its segment measure of profit and loss from operating profit from ongoing operations to EBITDA (earnings before interest, taxes, depreciation and amortization) from ongoing operations. EBITDA from ongoing operations is the key profitability metric used by the Company’s chief operating decision maker to assess segment financial performance. See Note 5 to the Consolidated Financial Statements in Item 15 for additional business segment information.

(m)EBIT (earnings before interest and taxes) 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. EBIT is a widely understood and utilized metric that is meaningful to certain investors. We believe 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.

(n)On December 1, 2020, the Board declared a special cash dividend of $200 million or $5.97 per share on the Company’s common stock. The special cash dividend was payable on December 18, 2020 to shareholders of record at the close of business on December 11, 2020.

(o)In December 2020, the Company entered into a definitive agreement and completed the sale of Bright View. See Note 2 to the Consolidated Financial Statements in Item 15 for more details.

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 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 COVID-19. As a consequence, the Company's results could differ significantly from its projections, depending on, among other things, the duration of "shelter in place" orders and 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 ~~“Risk Factors” in Part I,~~ Item ~~1A of this Form 10-K.~~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.

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~~its personal care films business (“Personal Care Films”). The transaction excluded the ~~Company’s businesses~~packaging film lines and related operations located at the Pottsville, Pennsylvania manufacturing site (“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 2 to the Consolidated Financial Statements in Item 15.

Sales were ~~$1.1 billion~~$755.3 million in ~~2018~~2020 compared to ~~$961.3~~$826.3 million in ~~2017.~~2019. Net ~~income~~loss from continuing operations was ~~$24.8~~$16.8 million ($~~0.75~~0.51 per diluted share) in ~~2018,~~2020, compared with ~~$38.3~~net income from continuing operations of $58.5 million ($~~1.16~~1.76 per diluted share) in ~~2017.~~2019.

The ~~2018~~2020 results include:

•An after-tax loss on the Company’s investment in kaléo of $47.6 million ($1.42 per diluted share), which is accounted for under the fair value method (see Note 4 to the Consolidated Financial Statements in Item 15 for more details); and

•An impairment of the total goodwill balance of ~~PE Films’ Personal Care division~~Aluminum Extrusions' reporting unit acquired in the AACOA acquisition in 2012 was recorded in the after-tax amount of ~~$38.2~~$10.5 million ($~~1.15~~0.32 per ~~share after-tax)~~diluted share). ~~See~~

The 2019 results include:

•An after-tax dividend received from kaléo of $14.8 million ($0.45 per diluted share); and

•An unrealized after-tax gain on the ~~Customer Product Transitions~~Company’s investment in ~~Personal Care and Surface Protection~~ ~~section below and Note 8 for more details; and~~

kaléo of $8.5 million ($0.26 per diluted share).

The 2018 results include:

•An unrealized after-tax gain on the Company’s investment in kaléo of $23.9 million ($0.72 per diluted share)~~, which is accounted for under the fair value method (see Note 4 for more details);~~.

~~The 2017 results include:~~

~~An unrealized after-tax gain on the Company’s investment in kaléo of $24.0 million ($0.73 per share);~~

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

~~An income tax benefit of $61.4 million ($1.86 per share)~~asset impairments and costs associated with ~~the write-off of the stock basis of Terphane Limitada, Terphane’s Brazilian subsidiary,~~exit 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~~disposal activities for continuing operations were not material for the ~~deductions applicable to the 21% U.S. corporate federal income tax rate effective in~~years ended December 31, 2020, 2019 and 2018, ~~under the Tax Cuts and Jobs Act (the “TCJA”)) (see Note 16 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 for more details); and

~~An after-tax write-down of the assets of Flexible Packaging Films of $87.2 million ($2.65 per share) (see Note 17 for more details).~~

~~Other losses~~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. Net sales (sales less freight)~~Results of Operations. Earnings before interest, taxes, depreciation and ~~operating profit~~amortization (“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 sales less

freight (“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.

EBIT (earnings before interest and taxes) 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. EBIT is a widely understood and utilized metric that is meaningful to certain investors. We believe 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.

THE IMPACT OF COVID-19

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. Within the limitations imposed by the health and safety procedures described below, 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 develop as COVID-19 informed work practices evolve and the Company responds to recommended and mandated actions of government and health authorities. In addition, to facilitate a return to fully functional operations, the Company has undertaken an education campaign to provide employees with the most accurate and up-to-date information available, particularly from the Centers for Disease Control (“CDC”), the Office of the Surgeon General and state and local health departments. The Company believes that these efforts will encourage employees to receive a vaccine when they are eligible.

The Company has educated employees about COVID-19, including how the virus is spread, COVID-19 symptoms and mitigation efforts to keep employees safe. Even in those facilities not bound by the Families First Coronavirus Response Act, the Company has adopted COVID-19 related pay and sick leave policies and remote work policies that require employees to stay home if they feel ill or have been exposed to others with the illness, until they are cleared to return to work by our Human Resources team, who applies CDC and other state health department guidance to each case. The Company’s policies include: mandating employees self-monitor for symptoms; taking an employee’s temperature before entering production facilities; answering self-screening questions related to potential exposure and COVID-19 symptoms; mandating frequent handwashing; requiring social distancing; requiring face coverings on production floors at all times and in common areas and office settings where social distancing is difficult; streamlining onsite personnel to only those required for production and distribution; strongly encouraging and, where mandated, requiring remote work for all those who can work from home; limiting travel to essential business purposes; and regularly cleaning and disinfecting facilities. In the U.S., the Company has educated employees on COVID-19-related government benefits and has provided such benefits even in those facilities where the government benefits are not mandated.

Bonnell Aluminum is experiencing higher than normal absenteeism and hiring difficulties, which it attributes to COVID-19-related factors. Bonnell Aluminum attempts to match its direct labor with demand and is facing difficulty maintaining sufficient labor to meet desired shipment levels.

Financial Considerations

The 2020 annual plan for Bonnell Aluminum (pre-COVID-19) included sales volume of 201 million pounds and EBITDA from ongoing operations of $65 million, versus 2019 sales volume of 208 million pounds and EBITDA from ongoing operations of $65.7 million. Actual 2020 sales volume was 186 million pounds and EBITDA from ongoing operations was $55.1 million. Approximately 62% of Bonnell Aluminum’s sales volume in 2020 was related to building and construction (“B&C”) markets (non-residential B&C of 55% and residential B&C of 7%). Much of the 2020 sales volume associated with the B&C market was related to contracts that existed at the start of the COVID-19 pandemic. With the completion of many of these contracts, Bonnell began experiencing weakness in the B&C market during the fourth quarter of 2020. Overall, the Company believes that volume results for Bonnell Aluminum in 2020 have outperformed the industry, and performance to date during the COVID-19 environment has exceeded the Company's expectations, with current bookings and backlog at high levels. No significant issues have arisen to date on the collection of accounts receivable at Bonnell Aluminum.

Demand has remained strong under COVID-19 conditions for the Company’s flexible food packaging films produced by Terphane. The Surface Protection component of PE Films had record performance for EBITDA from ongoing operations in the second quarter and first half of 2020, but it experienced a slowdown in the third quarter, with a portion of the decline in volume related to a previously disclosed customer product transition and customer inventory corrections. The Company believes that while Surface Protection’s customer inventory corrections were largely resolved during the third quarter of 2020, it will experience a significant decline in volume and profitability in the first quarter of 2021 as a result of the customer product

transition. See the ~~table~~PE Films section below for further discussion. No significant issues have arisen to date on the collection of accounts receivable at Terphane or Surface Protection.

Tredegar owns approximately 20% of kaleo, Inc. (“kaléo”), which makes and sells an epinephrine delivery device under the name AUVI-Q®. The Company accounts for its investment in ~~Note 5~~kaléo on a fair value basis. The Company’s estimate of the fair value of its interest in kaléo at December 31, 2020 was $34.6 million ($29.7 million after taxes), which represents an increase of $0.1 million ($0.1 million after taxes) and a decrease of $60.9 million ($47.6 million after taxes) since September 30, 2020 and December 31, 2019, respectively. The decline in estimated fair value in 2020 was primarily due to: (i) current projections that assume ongoing pricing pressures, (ii) expected changes in market access as well as continued lower market demand for epinephrine delivery devices resulting from COVID-19-driven delays in in-person back-to-school schedules and social distancing guidelines, and (iii) a higher private company liquidity discount.kaléo’s stock is not publicly traded. The ultimate value of Tredegar’s ownership interest in kaléo could be materially different from the $34.6 million estimated fair value reflected in the Company’s financial statements at December 31, 2020.

Total debt was $134 million at December 31, 2020, compared to $42 million at December 31, 2019. Net debt (debt in excess of cash and cash equivalents), a non-GAAP financial measure, was $122.2 million at December 31, 2020, compared to $10.6 million at December 31, 2019. In December 2020, the Company paid a special dividend of $5.97 per share or $200 million, as a result of strong cash generation and overall net cash proceeds of approximately $46 million relating to the sale of Personal Care Films. The overall net cash proceeds resulted from net proceeds of $53 million received in the fourth quarter of 2020 less $7 million of expected expenditures during 2021, primarily related to information technology transition services and severance. The Company’s revolving credit agreement allows borrowings of up to $375 million and matures in June 2024. The Company believes that its most restrictive covenant (computed quarterly) is the leverage ratio, which permits maximum borrowings of up to 4x EBITDA, as defined under the revolving credit agreement for the trailing four quarters (“Credit EBITDA”). The Company had Credit EBITDA and a leverage ratio (calculated in the “Liquidity and Capital Resources” below) of $93.4 million and 1.43x, respectively, at December 31, 2020. The Company’s current stress testing under a COVID-19-driven recession indicates a low probability that a future leverage ratio will exceed 4.0x. See the “Liquidity and Capital Resources” below for a ~~presentation~~reconciliation of ~~Tredegar’s~~ net debt, a non-GAAP financial measure, to the most directly comparable GAAP financial measure.

OPERATIONS REVIEW

Segment Analysis. A summary of results for 2020 versus 2019 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)
	2020		2019		% Change
Sales volume (lbs)	186,391		208,249		(10.5)	%
Net sales	$	455,711	$	529,602	(14.0)	%
Ongoing operations:
EBITDA	$	55,137	$	65,683	(16.1)	%
Depreciation & amortization*	(17,403)		(16,719)		(4.1)	%
EBIT**	$	37,734	$	48,964	(22.9)	%
Capital expenditures	$	10,260	$	17,855
* Excludes pre-tax accelerated amortization of trade names of $10.0 million in the year ended December 31, 2019. ** See the table in Item 6. “Selected Financial Data” of this Form 10-K (“Item 6”) for a reconciliation of this non-GAAP measure to GAAP.

Net sales in 2020 decreased by 14.0% versus 2019 primarily due to lower sales volume and the pass-through of lower metal costs, partially offset by an increase in average selling prices to cover higher operating ~~profit~~costs. Sales volume in 2020 decreased by ~~segment~~10.5% versus 2019 with declines in all key markets, which the Company believes was mainly a result of COVID-19-related lower demand.

EBITDA from ongoing operations in 2020 decreased by $10.5 million in comparison to 2019 due to lower volume ($16.1 million) and higher labor and employee-related costs ($4.3 million), partially offset by higher pricing ($8.1 million), lower freight ($0.8 million) and lower travel and entertainment expenses as a result of COVID-19 ($0.9 million).

Projected Capital Expenditures and Depreciation & Amortization

Capital expenditures are projected to be $21 million in 2021, including $3 million for infrastructure upgrades at the ~~years ended December 31, 2018~~Carthage, Tennessee and ~~2017.~~

Newnan, Georgia facilities, $3 million for a roof replacement at the Elkhart, Indiana site and $4 million for strategic projects. In addition, approximately $11 million will be required to support continuity of current operations. Depreciation expense is projected to be $14 million in 2021. Amortization expense is projected to be $3 million in 2021.

PE Films

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


								Year Ended				Favorable/
(In thousands, except percentages)	Year Ended December 31				Favorable/ (Unfavorable)		(In thousands, except percentages)	December 31,				(Unfavorable)
	2018		2017		% Change			2020		2019		% Change
Sales volume (lbs)	123,583		138,999		(11.1	)%	Sales volume (lbs)	45,175		43,983		2.7	%
Net sales	$	332,488	$	352,459	(5.7	)%	Net sales	$	139,288	$	133,807	4.1	%
Operating profit from ongoing operations	$	36,181	$	41,546	(12.9	)%
Ongoing operations:							Ongoing operations:
EBITDA							EBITDA	$	45,107	$	41,133	9.7	%
Depreciation & amortization							Depreciation & amortization	(6,762)		(5,860)		(15.4)	%
EBIT*							EBIT*	$	38,345	$	35,273	8.7	%
Capital expenditures							Capital expenditures	$	6,024	$	8,567
* See the table in Item 6 for a reconciliation of this non-GAAP measure to GAAP.							* See the table in Item 6 for a reconciliation of this non-GAAP measure to GAAP.

Net sales increased by 4.1% in ~~2018 decreased by $20.0 million~~2020 versus ~~2017~~2019 primarily due ~~to:~~

~~The volume decline in Personal Care was primarily related~~ to ~~topsheet business lost from competitive pressures in North America, Europe and Asia, including at the Shanghai, China, facility that was shut down in the fourth quarter~~higher sales of ~~2018. A small portion of the volume decline was associated with the start of the previously disclosed customer product transition discussed below. Volume for elastics~~ products ~~in Personal Care increased year-over-year.~~

~~Slightly lower sales~~ in Surface Protection ~~caused by lower volume and the adverse impact of quality claims, partially offset by higher volume-based selling prices.~~

~~Operating profit from ongoing operations in 2018 decreased by $5.4 million versus 2017 primarily due to:~~

~~Lower contribution~~unrelated to ~~profits from Personal Care, primarily due to lower volume and unfavorable~~customer product ~~mix~~transitions ($~~9.3~~12.0 million), partially offset by ~~volume-based higher selling pricing~~lower sales associated with the customer product transitions this year ($~~2.2~~6.8 million)~~, lower fixed and selling, general and administrative costs ($1.1 million), the timing of resin cost passthroughs ($0.7 million), productivity improvements ($0.3 million) and net favorable impact~~.

EBITDA from ~~the change~~ongoing operations in ~~U.S. Dollar value of currencies for operations outside of the U.S. ($0.8 million);~~

2020 increased by $4.0 million versus 2019 primarily due to:

~~Lower contribution to profits~~•A $3.2 million increase from Surface Protection, primarily due to ~~lower volumes and unfavorable~~sales of products unrelated to the customer product ~~mix~~transitions ($4.1 million), the adverse impact of quality claims ($1.3 million), higher fixed and other manufacturing costs ($1.6 million), higher research and development spending and selling, general and administrative costs ($0.4 million) and higher freight costs ($0.58.3 million), partially offset by ~~volume-based higher selling prices ($4.4 million); and~~

~~Realized cost savings~~lower sales associated with the ~~North American consolidation of our PE Films manufacturing facilities completed in 2017~~customer product transitions ($~~2.4~~4.5 million).

; and

~~In June 2018, the Company announced plans~~•A $0.8 million increase from Pottsville Packaging primarily related to close its facility in Shanghai, China, which primarily produced topsheet films used as components for personal care products. Production ceased at this plant during the fourth quarter of 2018. Net annual cash savings from consolidating operations is projected at $1.7 million. Additional information on costs associated with exithigher sales volume and ~~disposal activities (currently estimated at $5.0 million) and other details are available in Note 17.~~favorable raw materials pricing.

Customer Product Transitions in ~~Personal Care and~~ Surface Protection

During October 2018, the Personal Care component of PE Films completed negotiations with a customer regarding a previously disclosed significant product transition. The total annual sales that will be adversely impacted by this product transition is approximately $70 million. During 2019, the Company expects sales for the product of $30 to $35 million with the potential for no sales thereafter. Any actions that the Company takes to reduce fixed costs to partially mitigate the decline in variable contribution that will accompany the decline in sales will depend on the level of success that Personal Care has with replacing the lost business with new products and business.

~~profit from ongoing operations plus depreciation and amortization to turn positive in the second half of 2019 assuming production and sales growth targets are achieved.~~

Because of the significance of the customer transition discussed above, the Company performed an asset recoverability test and goodwill impairment analysis for the Personal Care component of PE Films. The Company’s analysis concluded that the fair value of the Personal Care reporting unit was less than its carrying value. Accordingly, the goodwill associated with Personal Care of $46.8 million ($38.2 million after deferred income tax benefits) was written off during the third quarter of 2018.

The 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 processes and then discarded.

The Company previously reported the risk that a portion of its film products used in surface protection applications will be made obsolete by possible future customer product transitions to less costly alternative processes or materials. These transitions ~~could possibly be fully implemented~~principally relate to one customer. The Company believes that previously reported delays in this customer's transitions were recently resolved by the ~~fourth quarter~~customer and much of ~~2019. When fully implemented,~~the remaining transitions could occur by the end of 2021. Under this scenario, the Company estimates that the ~~annualized~~contribution to EBITDA from ongoing operations for PE Films could decline due to the remaining customer product transitions by $18 million in 2021 versus 2020 and $4 million in 2022 versus 2021. To offset the expected adverse impact, ~~on future operating profit from this customer shift will be approximately $11 million. The~~the Company is aggressively pursuing and making progress in generating contribution from sales from new surface protection products, applications and ~~customers.~~

~~Capital Expenditures~~customers and ~~Depreciation~~

~~Capital expenditures in PE Films were $22.0 million in 2018 compared~~implementing cost savings measures. Annual contribution to $15.0 million in 2017. The Company’s business plans for 2019 include projected capital expenditures of approximately $45 million including: $12 million of a total $25 million needed to complete the North American capacity expansion for elastics products and $9 million for other projects to support next generation elastics in Personal Care; $5 million in Personal Care in support of topsheet products; $4 million for a new scale-up line in Surface Protection to improve development and speed to market for new products; $5 million for other development projects; and $10 million for capital expenditures required to support continuity of current operations.

From 2016 to 2018, the Company spent annually on average approximately $15 million less than originally planned for capital expenditures. Actual capital expenditures in 2019 will depend on approval of specific capital project requests and will consider progress towards replacing lost business with new products and business in Personal Care.

~~Depreciation expense was $15.4 million in 2018 and $14.5 million in 2017. Depreciation expense is projected to be $16 million in 2019.~~

~~Flexible Packaging Films~~

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

(In thousands, except percentages)
Year Ended
December 31

Favorable/
(Unfavorable)
2018 2017 % Change
Sales volume (lbs) 98,994
89,325
10.8 %
Net sales $ 123,830
$ 108,355
14.3 %
Operating profit (loss) from ongoing operations $ 9,892
$ (2,626 ) n/a

Net sales in 2018 increased versus 2017 primarily due to higher sales volume and increased selling prices associated with the pass-through of higher resin costs. The higher sales volume was supported by increased production capacity for Brazilian operations resulting from the re-start in June 2018 of a previously idled production line.

~~Terphane had operating profit~~EBITDA from ongoing operations infor PE Films on surface protection products unrelated to the customer product transitions has increased since 2018 ~~of $9.9 million versus an operating loss from ongoing operations in 2017 of $2.6~~by approximately $12 million. ~~The resulting favorable change of $12.5 million for the period was primarily due to:~~

~~Significantly lower depreciation and amortization of $8.9 million resulting from the $101 million non-cash asset impairment loss recognized in the fourth quarter of 2017;~~

A benefit from higher volume ($5.5 million) and favorable tax incentives ($1.3 million), partially offset by the unfavorable impact of mix and higher resin costs, net of higher selling prices ($2.2 million);

~~Higher fixed and other manufacturing costs and selling, general and administrative costs, primarily related to higher volume ($2.0 million);~~

Favorable foreign currency translation of Real-denominated operating costs ($3.2 million), which was offset by a $1.7 million loss on foreign currency forward contracts that partially hedged Real-denominated operating costs; and

~~Unfavorable net foreign currency transaction impact ($0.6 million) resulting from foreign currency transaction losses of $0.8 million in 2018 and losses of $0.2 million in 2017.~~

Projected Capital Expenditures and Depreciation & Amortization

Capital expenditures ~~in Flexible Packaging were $5.4 million in 2018 compared to $3.6 million in 2017. Capital expenditures~~ are projected to be ~~$13~~$5 million in ~~2019, including $7~~2021, including: $2 million for ~~new capacity for value-added products and~~ productivity projects and $6$3 million for capital expenditures required to support continuity of current operations. Depreciation expense ~~was $0.8 million in 2018 and $7.5 million in 2017. Depreciation expense~~ is projected to be $1$6 million in ~~2019. Amortization expense was $0.4 million in 2018 and $3.0 million in 2017, and~~2021. There is ~~projected to be $0.5 million in 2019. Depreciation and~~no amortization expense ~~projections in 2018 were significantly lower than 2017 due to the non-cash write-down of Terphane’s long-lived assets during the fourth quarter of 2017.~~for PE Films.

~~Aluminum Extrusions~~

Flexible Packaging Films

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

(In thousands, except percentages)
Year Ended
December 31

Favorable/
(Unfavorable)
2018 2017 % Change
Sales volume (lbs)* 190,696
176,269
8.2 %
Net sales $ 573,126
$ 466,833
22.8 %
Operating profit from ongoing operations $ 48,613
$ 43,454
11.9 %
*Sales volume for the years ended December 31, 2018 and 2017 excludes sales volume of 33,170 lbs. and 23,166 lbs., respectively, associated with Futura, which was acquired on February 15, 2017.


	Year Ended				Favorable/ (Unfavorable) % Change
(In thousands, except percentages)	December 31,
	2020		2019
Sales volume (lbs)	113,115		105,276		7.4	%
Net sales	$	134,605	$	133,935	0.5	%
Ongoing operations:
EBITDA	$	30,645	$	14,737	107.9	%
Depreciation & amortization	(1,761)		(1,517)		(16.1)	%
EBIT*	$	28,884	$	13,220	118.5	%
Capital expenditures	$	4,959	$	8,866
* See the table in Item 6 for a reconciliation of this non-GAAP measure to GAAP.

Net sales in ~~2018~~2020 increased 0.5% versus ~~2017~~2019 while volume increased 7.4% versus 2019 primarily due to ~~higher volume and an increase in average~~lower selling prices from ~~the pass-through of higher market-driven~~lower raw material ~~costs. Futura contributed $102.5 million of net sales~~costs and changes in 2018 versus $71.0 million for the 10½ months owned during 2017. Excluding the impact of Futura, the increase in net sales was the result of higher sales volume ($32.4 million), an increase in average selling prices as noted above ($31.7 million) and improved mix ($10.8 million).product mix.

Volume on an organic basis, (which excludes the impact of the Futura acquisition) increased by 8.2% in 2018 versus 2017 due to higher volume in all of Aluminum Extrusion’s primary markets. Overall average capacity utilization during the fourth quarter of 2018 was in excess of 90%. Bookings and backlog at the end of 2018 remained strong.

~~Operating profit~~Terphane’s EBITDA from ongoing operations in ~~2018~~2020 increased by ~~$5.2~~$15.9 million ~~in comparison to 2017. Excluding the~~versus 2019 due to:

•Lower raw material costs, net of lower selling prices ($8.9 million), higher sales volume ($3.3 million), favorable ~~profit impact of owning Futura for a full twelve-month period~~product mix ($~~2.8~~2.2 million) and ~~the benefit for inventories accounted for under the LIFO method in the fourth quarter of 2018, as noted above~~lower fixed costs ($~~2.3~~1.0 million), ~~operating profit from ongoing operations increased $0.1 million, primarily due to:~~

~~Higher volume ($5.1 million) and favorable mix ($5.8 million), which were~~partially offset by higher ~~employee-related~~variable costs ($~~5.2~~1.1 million)~~, higher supplies and maintenance ($2.3 million), higher freight ($1.7 million), higher utilities, primarily in the first quarter of 2018 at the Newnan, Georgia facility ($0.9 million),~~ and higher ~~depreciation~~selling and general administration expenses ($~~0.9~~0.4 million).;

~~The Company continues~~•Net favorable foreign currency translation of Real-denominated costs ($1.5 million);

•Foreign currency transaction losses of $0.5 million in 2020 versus gains of $0.2 million in 2019; and

•A benefit of $1.2 million in 2020 resulting from the favorable settlement of a dispute related to focus on fixing inefficiencies associated with the new extrusion line at its Niles, Michigan plant and estimates that operating profit from ongoing operations in 2018 would have been higher by $3 million if not for these inefficiencies. These inefficiencies are reflected in the higher costs noted above. value-added taxes.

Projected Capital Expenditures and Depreciation & Amortization

Capital expenditures ~~for Aluminum Extrusions were $13.0 million in 2018 compared to $25.7 million in 2017. Capital expenditures~~ are projected to be ~~$18~~$9 million in ~~2019,~~2021, including ~~approximately $9~~$5 million for ~~infrastructure upgrades at the~~

~~Carthage, Tennessee facility~~new capacity for value-added products and ~~other~~ productivity ~~improvement~~ projects and ~~approximately $8~~$4 million for capital expenditures required to support continuity of current operations. Depreciation expense ~~was $13.4 million in 2018 compared to $11.9 million in 2017 and~~ is projected to be ~~$13~~$2 million in ~~2019.~~2021. Amortization expense ~~was $3.4 million in 2018 and $3.1 million in 2017 and~~ is projected to be $4$0.4 million in ~~2019.~~2021.

Corporate Expenses, ~~Investments,~~ Interest and Income Taxes

Pension expense was ~~$10.3~~$14.6 million in ~~2018,~~2020, an unfavorable change of ~~$0.2~~$5.1 million from ~~2017. Most of the~~2019. The impact on earnings from ~~lower~~ pension expense is reflected in “Corporate expenses, net” in the ~~Operating Profit~~net sales and operating profit by segment table in Note 5.5 to the Consolidated Financial Statements in Item 15. Pension expense is projected to be ~~$9.6~~$14.0 million in ~~2019. Corporate~~2021, which is determined at the beginning of the year based on the funded status of the Company’s defined benefit pension plan and actuarial assumptions at that time. In addition to the higher pension expense in 2020 compared to 2019, corporate expenses, net, ~~decreased in 2018 versus 2017~~increased primarily due to ~~lower~~higher professional fees ($3.4 million) related to business development activities and ~~environmental costs,~~higher stock compensation expense ($1.0 million), partially offset by ~~higher stock-based employee benefit costs.~~lower environmental expenses ($0.6 million) and lower other employee-related compensation ($1.3 million).

Interest expense decreased to ~~$5.7~~$2.6 million in ~~2018~~2020 from ~~$6.2~~$4.1 million in ~~2017,~~2019, primarily due to lower average debt ~~levels, partially offset by higher interest rates~~levels.

The effective tax rate used to compute income taxes for continuing operations in ~~2018.~~

~~During 2018,~~2020 was 32.8% compared to 18.8% in 2019. The differences between the ~~Company recognized consolidated income tax expense of $11.5 million based on pretax income of $36.4 million~~. ~~During 2017, the Company recognized a consolidated income tax benefit of $53.2 million based on pretax loss of $14.9 million. Information on the significant differences between~~U.S. federal statutory rate and the effective tax rate for ~~income~~2020 and ~~the U.S. federal statutory rate for 2018 and 2017~~2019 are ~~further detailed~~shown in Note 16 in the ~~effective income tax rate reconciliation provided in Note 16.~~Notes to the Financial Statements.

~~Total debt was $101.5 million at December 31, 2018, compared to $152.0 million at December 31, 2017.~~ Net debt (debt in excess of cash and cash equivalents) was $67.1 million at December 31, 2018, compared to $115.5 million at December 31, 2017. The decline in net debt includes the impact of U.S. federal income tax refunds of $26 million received in 2018. Net debt is calculated as follows:

(In millions) December 31, 2018 December 31, 2017
Debt $ 101.5
$ 152.0
Less: Cash and cash equivalents 34.4
36.5
Net debt $ 67.1
$ 115.5

Net debt, a financial measure that is not calculated or presented 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. The Company believes that investors also may find net debt helpful for the same purposes. Consolidated net capitalization and other credit measures are provided in ~~the~~ ~~Financial Condition~~ ~~section.~~Liquidity and Capital Resources, below.

Critical Accounting Policies

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 preparation of financial statements in conformity with GAAP. Actual results could differ significantly from those estimates under different assumptions and conditions. The Company believes the following discussion addresses its critical accounting policies. These policies require management to exercise judgments that are often difficult, subjective and complex due to the necessity of estimating the effect of matters that are inherently uncertain.

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"~~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, 2018,~~1, 2020, the Company applied the Step 0 assessment to its PE Films’ Surface Protection ~~operating~~reporting unit and its Aluminum Extrusions’ ~~AACOA operating~~Futura reporting unit, which ~~both~~was created as a result of an acquisition in 2017. Each reporting unit had a fair ~~values~~value significantly in excess of ~~their~~its carrying ~~amounts~~amount when last tested ~~in 2017.~~using the quantitative impairment test. The Company's Step 0 analysis in ~~2018~~2020 of ~~the~~these reporting units concluded that it is not more likely than not that the fair value of ~~the~~each reporting unit iswas less than its carrying amount. ~~Therefore, the quantitative goodwill impairment test for these reporting units was not necessary in 2018.~~

Goodwill for Surface Protection and ~~AACOA~~Futura totaled $57.3 million and ~~$13.7~~$10.4 million, respectively, at December 31, ~~2018. The goodwill of AACOA is associated with its October 2012 acquisition.~~

Goodwill in the amount of $10.4 million from Aluminum Extrusions acquisition of Futura in February 2017, was tested for impairment at the annual testing date, with the estimated fair value of this reporting unit exceeding the carrying value of its net assets at December 1, 2018.2020.

In assessing the recoverability of goodwill and long-lived identifiable assets, the Company primarily estimates fair value using discounted cash flow ~~analysis~~analyses 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.

~~All goodwill associated with PE Films’ Personal Care operating unit, in~~During the ~~amount~~first three months of ~~$46.8 million ($38.2 million after deferred income tax benefits), was impaired in~~2020, the ~~third quarter of 2018. The~~Company performed goodwill impairment ~~charge~~tests for the Aluminum Extrusions’ AACOA reporting unit, which was ~~recognized upon the completion~~created as a result of an ~~asset recoverability test~~acquisition in 2011, and ~~impairment analysis performed as~~the Futura reporting unit using a combination of ~~September 30, 2018. This non-operating, non-cash charge, as computed under GAAP, resulted from the expectation of a significant customer transition. The Company performed an asset recoverability test~~income and ~~impairment analysis using projections under various business planning scenarios~~market approaches and ~~concluded~~determined that the fair value of the ~~Personal Care~~Futura reporting unit ~~was less than~~exceeded its carrying value.

~~In 2017, Flexible Packaging Films recorded~~ However, the fair value of the AAOCA reporting unit did not exceed its carrying value. As a result, the Company recognized a goodwill impairment charge ~~for~~of $13.7 million ($10.5 million after taxes), which represented the ~~impairment of assets in the~~entire 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;~~goodwill associated with the ~~remaining part~~AACOA reporting unit. The operations of the ~~write-down~~AACOA reporting unit, which includes the Niles, Michigan and Elkhart, Indiana facilities, was ~~related~~expected to ~~property, plant~~be severely impacted by COVID-19 at that time, with over 80% of the aluminum extrusions manufactured at these facilities sold to customers that make consumer durable products, such as recreational boating and ~~equipment.~~

~~In addition~~power sports vehicles, and to customers serving the impairment of Terphane’s assets in 2017, 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 $2.9 million, $1.2 millionbuilding and ~~$0.6 million in 2018, 2017~~construction and ~~2016, respectively.~~automotive markets.

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~~option to account for their investment portfolios). At December 31, ~~2018,~~2020, Tredegar’s ownership interest was approximately 20% on a fully diluted basis.

The Company considers its investment in kaléo to be a Level 3 investment under the fair value hierarchy described in GAAP. The Company discloses the level of its investments within the fair value hierarchy in which fair value measurements ~~for its investments,~~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). The Company believes that its fair value estimates will continue to be based upon Level 3 inputs since there is no secondary market for Tredegar’s ~~ownership and a new round of equity financing that would establish a Level 1 fair value is not likely needed.~~ownership. See Note 4 to the Consolidated Financial Statements in Item 15 for more information on valuation methods used. Adjustments to the estimated fair value of this investment will be made in the period ~~upon~~in which such changes can be quantified.

At December 31, ~~2018~~2020 and ~~2017,~~2019, 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 ~~$84.6~~$34.6 million and ~~$54.0~~$95.5 million, respectively. The weighted average cost of capital used in the fair market valuation of the Company’s interest in kaléo was 35% and 29% as of December 31, 2020 and 2019. The ultimate value of the Company’s ownership interest in kaléo will be determined and realized only if and when a liquidity event occurs, and the ultimate value could be materially different from the ~~$84.6~~$34.6 million estimated fair value reflected in the Company’s financial statements at December 31, ~~2018.~~

2020. 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, 2020, 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 $5 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 $6 million.

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, expected return on plan assets and rate of future compensation increases. 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 ~~4.40%~~2.57%, ~~3.72%~~3.27% and ~~4.29%~~4.40% at the end of ~~2018, 2017~~2020, 2019 and ~~2016,~~2018, 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.

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 10.9% in 2020, 11.8% in 2019 and negative ~~3.9%~~5.4% in ~~2018 and positive 11.6% and 7.9% in 2017 and 2016, respectively.~~2018. The expected long-term return on plan assets, ~~relating to continuing operations,~~ which is estimated by asset class and generally based on inflation-adjusted historical returns, volatilities, risk premiums and managed asset premiums, was ~~6.50%~~5.00%, 6.00% and 6.50% in 2020, 2019 and ~~7.00% in~~ 2018, ~~2017 and 2016,~~ respectively. The Company anticipates that its expected long-term return on plan assets will be ~~6.00%~~5.00% for ~~2019.~~2021. See Note 13 to the 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 tax positions and the likelihood that the benefits of a deferred income tax asset will be realized. As circumstances change, the Company reflects in earnings any adjustments to unrecognized benefits for uncertain tax positions and valuation allowances for deferred income tax assets.

For financial reporting purposes, unrecognized tax benefits on uncertain tax positions were ~~$3.4 million, $2.0~~$0.6 million and ~~$3.3~~$0.9 million as of December 31, ~~2018, 2017~~2020 and ~~2016,~~2019, 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 ~~$0.2~~$0.1 million, $0.1 million and ~~$0.1~~$0.2 million at December 31, ~~2018, 2017~~2020, 2019 and ~~2016,~~2018, respectively ($~~0.2~~0.1 million, $0.1 million and ~~$0.1~~$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.

As of December 31, ~~2018~~2020 and ~~2017,~~2019, valuation allowances relating to deferred income tax assets were ~~$24.7~~$17.5 million and ~~$28.5~~$3.8 million, respectively. For more information on deferred income tax assets and liabilities, see Note ~~16.~~

~~Recently Issued Accounting Standards~~

~~Refer~~16 to the ~~section~~ ~~Recently Issued Accounting Standards~~Consolidated Financial Statements in ~~Note 1 for information concerning the effect of recently issued accounting pronouncements.~~Item 15.

Results of ~~Continuing~~ Operations

~~2018~~2020 versus ~~2017~~2019

Revenues. Sales in ~~2018 increased~~2020 decreased by ~~10.8%~~8.6% compared with ~~2017~~2019 primarily due to lower sales in Aluminum Extrusions partially offset by higher sales in ~~all segments, except~~ PE Films. Net sales decreased ~~5.7%~~14.0% in Aluminum Extrusions primarily due to lower sales volume and the pass-through of lower metal costs, partially offset by an increase in average selling prices to cover higher operating costs. Net sales increased 4.1% in PE Films primarily due to ~~topsheet business lost from competitive pressures~~higher sales of products in ~~Europe and Asia,~~

~~including at~~Surface Protection unrelated to customer product transitions, partially offset by lower sales associated with the ~~Shanghai, China, facility that was recently shut down.~~customer product transitions. Net sales increased in Flexible Packaging Films by ~~14.3%~~0.5% primarily due to ~~higher sales volume,~~ increased selling prices associated with the pass-through of higher resin costs and increased production capacity from an idle line that was restarted in June 2018. Net sales increased 22.8% in Aluminum Extrusions primarily due to a full year of sales by Futura (acquired February 15, 2017), higher volume and ~~an increase~~changes in ~~average selling prices from the pass-through of higher market-driven raw material costs.~~product mix. 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 as a percentage of sales) was ~~16.9%~~22.6% in ~~2018~~2020 versus ~~16.7%~~18.9% in 2017. The gross profit margin in PE Films decreased due to lower volume, as discussed above, unfavorable product mix and increased operating costs, partially offset by the realized cost savings of a restructuring completed in 2017.2019. The gross profit margin in Flexible Packaging Films increased due to ~~significantly~~higher sales volume, lower ~~depreciation~~raw material costs and amortization costs in 2018 compared to 2017, resulting from the $101 million non-cash asset impairment charge recognized in the fourth quarter of 2017, higher production primarily from the restart of an idle line in June 2018, and higher overall demand.favorable product mix. The gross profit margin in PE Films and Aluminum Extrusions ~~decreased primarily as a result of operating inefficiencies relating~~was flat compared to ~~the operation of its Niles, Michigan facility.~~2019.

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 ~~9.8%~~12.3% in ~~2018,~~2020, which ~~decreased~~increased from ~~10.6%~~10.2% in ~~2017. The decrease in selling, general and administrative~~2019. SG&A and R&D expenses ~~as a percentage of~~were up year-over-year, while net sales can be primarily attributed to higher sales as a result of the acquisition of Futura and the restart of a production line by Flexible Packaging Films, overall higher demand at Aluminum Extrusions and higher selling pricesdecreased. Increased SG&A expense was primarily due to higher professional fees related to business development activities, higher stock-based compensation expense, and corporate costs incurred during 2020 associated with the ~~pass-through to customers~~sale of ~~higher market-driven raw material costs.~~Personal Care Films.

~~Please note that the 2017 and 2016 percentages in the~~ ~~Operating Costs and Expenses~~ ~~and~~ ~~Selling, General and Administrative~~ ~~sections (above and in~~ ~~2017 versus 2016~~ below) have changed from the amounts disclosed in the prior year due to the retrospective adoption of FASB’s Accounting Standards Update (“ASU”) 2017-07, which resulted in the separate presentation of “Pension and postretirement benefits” expense in the consolidated statements of income. Historically the Company had reported a portion of its pension and postretirement benefit expenses in cost of goods sold and selling, general and administrative expenses.

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 ~~2018~~2020 detailed below are shown in the statements of net sales and EBITDA from ongoing operations by segment ~~operating profit~~ table in Note 5 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 income, unless otherwise noted. A discussion of unrealized gains and losses on investments can also be found in Note 4.4 to the 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		2020
Aluminum Extrusions:
Losses from sale of assets, investment writedowns and other items:
Consulting expenses for ERP feasibility study2	$	0.7	$	0.2	$	0.3	$	0.1	$	1.3
Environmental charges at Newnan, Georgia plant1	—		—		—		0.3		0.3
COVID-19-related expenses2	—		0.9		0.5		0.5		1.9
Total for Aluminum Extrusions	$	0.7	$	1.1	$	0.8	$	0.9	$	3.5

PE Films:
Losses associated with plant shutdowns, asset impairments and restructurings:
Surface Protection restructuring costs - severance	$	—	$	—	$	—	$	1.6	$	1.6
(Gains) losses from sale of assets, investment writedowns and other items:
COVID-19-related expenses3	—		0.1		—		0.2		0.3
Total for PE Films	$	—	$	0.1	$	—	$	1.8	$	1.9

Corporate:
Professional fees associated with: internal control over financial reporting; business development activities; and implementation of new accounting guidance2	$	1.8	$	1.8	$	0.6	$	1.3	$	5.5
Accelerated recognition of stock option-based compensation2	—		0.1		—		—		0.1
Corporate costs associated with the divestiture of Personal Care Films2	—		—		1.1		(0.3)		0.8
Loss on sale of Bright View3	—		—		—		2.3		2.3
Write-down of investment in Harbinger Capital Partners Special Situations Fund3	0.2		—		0.1		0.1		0.4
Stock compensation expense associated with the fair value remeasurement of awards granted at the time of the Special Dividend2	—		—		—		0.4		0.4
Total for Corporate	$	2.0	$	1.9	$	1.8	$	3.8	$	9.5
1. Included in “Cost of goods sold” in the consolidated statements of income. 2. Included in “Selling, general and administrative” in the consolidated statements of income. 3. Included in “Other income (expense), net” in the consolidated statements of income.

Interest ~~Income and~~ Expense.Interest ~~income,~~expense, which is net of amounts capitalized and included in ~~“Other income (expense)~~property, plant and equipment ($0.1 million and $0.3 million capitalized in 2020 and 2019, respectively), ~~net”~~was $2.6 million in 2020, compared to $4.1 million for 2019. Average debt outstanding and interest rates were as follows:


(In millions, except percentages)	2020			2019
Floating-rate debt with interest charged on a rollover basis at one-month LIBOR plus a credit spread:
Average outstanding debt balance	$	33.5		$	85.0
Average interest rate	2.3		%	4.0		%

2019 versus 2018

Revenues. Sales in 2019 decreased by 3.0% compared with 2018 due to lower sales in Aluminum Extrusions partially offset by higher sales in PE Films and Flexible Packaging Films. Net sales decreased 7.6% in Aluminum Extrusions primarily due to lower sales volume and the pass-through of lower metal costs, partially offset by an increase in average selling prices to cover higher operating costs. Net sales increased 4.8% in PE Films primarily due to higher sales volume and increased selling prices. Net sales increased in Flexible Packaging Films by 8.2% primarily due to higher sales volume and increased selling prices. For more information on changes in net sales and volume, see the Segment Analysis below.

Operating Costs and Expenses. Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 18.9% in 2019 versus 17.0% in 2018. The gross profit margin in Aluminum Extrusions increased primarily as a result of higher selling prices. The gross profit margin in PE Films increased primarily due to higher profits in Surface Protection as a result of higher sales volume and increased selling prices. The gross profit margin in Flexible Packaging Films was essentially unchanged from 2018 to 2019. For more information on changes in operating costs and expenses, see the Segment Analysis below.

Selling, General and Administrative. As a percentage of sales, SG&A and R&D expenses were 10.2% in 2019, which increased from 8.8% in 2018. The increase in SG&A and R&D expenses as a percentage of sales can be primarily attributed to lower sales for Aluminum Extrusions. Increased spending was due to higher stock-based compensation and consulting fees for remediation activities and other costs relating to the Company’s material weaknesses in internal control over financial reporting, business development activities and implementation of new accounting guidance.

Plant shutdowns, asset impairments, restructurings and other. Pre-tax losses associated with plant shutdowns, asset impairments, restructurings and other items for continuing operations in 2019 and 2018 detailed below are shown in the statements of net sales and EBITDA from ongoing operations by segment table in Note 5 to the Consolidated Financial Statements in Item 15 and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the consolidated statements of income, ~~was $0.4 million~~unless otherwise noted. A discussion of unrealized gains and losses on investments can also be found in ~~2018~~Note 4 to the Consolidated Financial Statements in Item 15 and ~~$0.2 million~~additional information on restructuring costs can be found in ~~2017.~~Note 17 to the Consolidated Financial Statements in Item 15.


($ in millions)	Q1		Q2		Q3		Q4		2019
Aluminum Extrusions:
(Gains) losses from sale of assets, investment writedowns and other items:
Wind damage to roof of Elkhart, Indiana plant2	$	—	$	—	$	0.3	$	(0.4)	$	(0.1)
Environmental charges at Carthage Tennessee plant1	—		—		0.4		0.2		0.6
Total for Aluminum Extrusions	$	—	$	—	$	0.7	$	(0.2)	$	0.5

PE Films:
Losses associated with plant shutdowns, asset impairments and restructurings:
Write-off of films production line - Guangzhou, China facility	$	0.4	$	—	$	—	$	—	$	0.4
Surface Protection restructuring costs - severance	—		—		0.1		0.2		0.3
Total for PE Films	$	0.4	$	—	$	0.1	$	0.2	$	0.7

Corporate:
Professional fees associated with: internal control over financial reporting; business development activities; and implementation of new accounting guidance2	$	0.9	$	0.9	$	1.5	$	0.2	$	3.5
Accelerated recognition of stock option-based compensation2	—		—		—		1.3		1.3
Environmental costs not associated with a business unit2	—		—		—		0.6		0.6
Total for Corporate	$	0.9	$	0.9	$	1.5	$	2.1	$	5.4
1. Included in “Cost of goods sold” in the consolidated statements of income. 2. Included in “Selling, general and administrative” in the consolidated statements of income.


($ in millions)	Q1		Q2		Q3		Q4		2018
Aluminum Extrusions:
Losses associated with plant shutdowns, asset impairments and restructurings:
Other restructuring costs - severance	$	0.1	$	—	$	—	$	—	$	0.1
(Gains) losses from sale of assets, investment writedowns and other items:
Wind damage to roof of Elkhart, Indiana plant2	—		—		0.1		—		0.1
Environmental charges at Carthage Tennessee plant1	—		—		0.2		0.1		0.3
Total for Aluminum Extrusions	$	0.1	$	—	$	0.3	$	0.1	$	0.5

PE Films:
Losses associated with plant shutdowns, asset impairments and restructurings:
Surface Protection restructuring costs - severance	$	—	$	—	$	—	$	0.2	$	0.2
(Gains) losses from sale of assets, investment writedowns and other items:
Costs to prepare a market study2	—		—		0.2		—		0.2
Gain on reversal of contingent liability3	—		—		—		(0.3)		(0.3)
Total for PE Films	$	—	$	—	$	0.2	$	(0.1)	$	0.1

Corporate:
Professional fees associated with: internal control over financial reporting; and implementation of new accounting guidance2	$	0.3	$	—	$	0.2	$	0.6	$	1.1
Write-down of investment in Harbinger Capital Partners Special Situations Fund3	—		0.2		0.2		0.1		0.5
Business development projects2	—		—		—		0.5		0.5
Total for Corporate	$	0.3	$	0.2	$	0.4	$	1.2	$	2.1
1. Included in “Cost of goods sold” in the consolidated statements of income. 2. Included in “Selling, general and administrative” in the consolidated statements of income. 3. Included in “Other income (expense), net” in the consolidated statements of income.

Interest Expense. Interest expense, which is net of amounts capitalized and included in property, plant and equipment ($0.3 million and ~~$0.4~~$0.1 million capitalized in ~~2018~~2019 and ~~2017,~~2018, respectively), was $4.1 million in 2019, compared to $5.7 million ~~in 2018, compared to $6.2 million~~ for ~~2017.~~2018. Average debt outstanding and interest rates were as follows:


(In millions, except percentages)	2019			2018
Floating-rate debt with interest charged on a rollover basis at one-month LIBOR plus a credit spread:
Average outstanding debt balance	$	85.0		$	121.3
Average interest rate	4.0		%	3.8		%

(In millions, except percentages) 2018 2017
Floating-rate debt with interest charged on a rollover
basis at one-month LIBOR plus a credit spread:
Average outstanding debt balance $ 121.3
$ 175.0
Average interest rate 3.8 % 3.0 %
Fixed-rate and other debt:
Average outstanding debt balance $ —
$ —
Average interest rate n/a
n/a
Total debt:
Average outstanding debt balance $ 121.3
$ 175.0
Average interest rate 3.8 % 3.0 %

~~Identifiable Assets.~~ ~~A summary of identifiable assets for the year ended December 31, 2018 versus 2017 is provided below:~~

(In thousands) Year Ended
December 31
2018 2017 Variance
PE Films $ 231,720
$ 289,514
$ (57,794 )
Flexible Packaging Films 58,964
49,915
9,049
Aluminum Extrusions 281,372
268,127
13,245
Subtotal 572,056
607,556
(35,500 )
General corporate 100,920
111,696
(10,776 )
Cash and cash equivalents 34,397
36,491
(2,094 )
Total $ 707,373
$ 755,743
$ (48,370 )

Identifiable assets in PE Films decreased at December 31, 2018 from December 31, 2017 primarily due to the $46.8 million write-off of goodwill in the Personal Care component of PE Films. For more information, see the ~~PE Films~~ ~~section of the~~ ~~Executive Summary~~. Identifiable assets in Flexible Packaging Films increased at December 31, 2018 from December 31, 2017 primarily due to current year capital expenditures and higher inventory balances to support increased demand. Identifiable assets in Aluminum Extrusions increased at December 31, 2018 from December 31, 2017 primarily due to current year capital expenditures, higher accounts receivable balances due to the timing of collections and higher inventory balances. Identifiable assets in General corporate decreased at December 31, 2018 from December 31, 2017 due to a decrease in income taxes recoverable.

~~2017 versus 2016~~

~~Revenues.~~ Sales in 2017 increased by 16.1% compared with 2016 due to higher sales in all segments and, in particular, from the acquisition of Futura by Aluminum Extrusions in February 2017. Net sales increased 6.4% in PE Films primarily due to increased volume and favorable sales mix for surface protection films, acquisition distribution layer materials and overwrap products. Net sales were relatively flat in Flexible Packaging Films (0.3% increase). Net sales increased 29.6% in Aluminum Extrusions primarily due to the acquisition of Futura, 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.

~~Operating Costs and Expenses.~~ Consolidated gross profit margin (sales minus cost of goods sold and freight as a percentage of sales) was 16.7% in 2017 and 16.8% in 2016. The gross profit margin in PE Films increased due to higher revenue, as discussed above, 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. 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, 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 product mix noted above, partially offset by increased operating costs, disruptions to normal plant production associated with the startup of a new press at the Niles, Michigan plant and an unfavorable LIFO adjustment.

~~Selling, General and Administrative.~~ As a percentage of sales, selling, general and administrative and R&D expenses were 10.6% in 2017, which decreased from 11.2% in 2016. The decrease in selling, general and administrative and R&D expenses as a percentage of sales can be primarily attributed to higher sales as a result of the acquisition of Futura.

~~Plant shutdowns, asset impairments, restructurings and other.~~ Plant shutdowns, asset impairments, restructurings and other items in 2017 are shown in the segment operating profit table in Note 5 and are described in detail in Note 17. A discussion of unrealized gains and losses on investments can also be found in Note 4.

~~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 million and $0.3 million capitalized in 2017 and 2016, respectively), was $6.2 million in 2017, compared to $3.8 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. Average debt outstanding and interest rates were as follows:

(In millions, except percentages) 2017 2016
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 interest rate 3.0 % 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 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. 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.

Segment Analysis. A summary of operating results for ~~2017~~2019 versus ~~2016~~2018 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)
	2019		2018		% Change
Sales volume (lbs)	208,249		223,866		(7.0)	%
Net sales	$	529,602	$	573,126	(7.6)	%
Ongoing operations:
EBITDA	$	65,683	$	65,479	0.3	%
Depreciation & amortization*	(16,719)		(16,866)		0.9	%
EBIT**	$	48,964	$	48,613	0.7	%
Capital expenditures	$	17,855	$	12,966
* Excludes pre-tax accelerated amortization of trade names of $10.0 million in the year ended December 31, 2019. ** See the table in Item 6 for a reconciliation of this non-GAAP measure to GAAP.

Net sales in 2019 decreased versus 2018 primarily due to lower sales volume and the pass-through of lower metal costs, partially offset by an increase in average selling prices to cover higher operating costs.

EBITDA from ongoing operations in 2019 increased slightly in comparison to 2018. Excluding the adverse impact of the accounting for inventories under the last in, first out method in the fourth quarter of 2019 versus 2018 ($1.5 million), EBITDA from ongoing operations increased $1.7 million despite a 7% decline in sales volume. The increase was primarily due to higher pricing ($22.8 million) and fabrication profits ($1.0 million), partially offset by lower sales volume ($8.7 million), increased labor and employee-related expenses ($7.4 million), higher supplies, maintenance, utilities and other operating costs ($2.0 million), increased freight costs ($2.0 million) and increased general and administrative expenses ($1.9 million).

PE Films

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


								Year Ended				Favorable/
(In thousands, except percentages)	Year Ended December 31				Favorable/ (Unfavorable)		(In thousands, except percentages)	December 31,				(Unfavorable)
	2017		2016		% Change			2019		2018		% Change
Sales volume (lbs)	138,999		139,020		—	%	Sales volume (lbs)	43,983		40,173		9.5	%
Net sales	$	352,459	$	331,146	6.4	%	Net sales	$	133,807	$	127,708	4.8	%
Operating profit from ongoing operations	$	41,546	$	26,312	57.9	%
Ongoing operations:							Ongoing operations:
EBITDA							EBITDA	$	41,133	$	32,404	26.9	%
Depreciation & amortization							Depreciation & amortization	(5,860)		(6,201)		5.5	%
EBIT*							EBIT*	$	35,273	$	26,203	34.6	%
Capital expenditures							Capital expenditures	$	8,567	$	2,523
* See the table in Item 6 for a reconciliation of this non-GAAP measure to GAAP.							* See the table in Item 6 for a reconciliation of this non-GAAP measure to GAAP.

Net sales in ~~2017~~2019 increased by ~~$21.3~~$6.1 million versus ~~2016~~2018 primarily due to higher sales in Surface Protection. Surface Protection’s sales increased $5.8 million due to higher sales volume and increased selling prices, partially offset by unfavorable product mix.

EBITDA from ongoing operations in 2019 increased by $8.7 million versus 2018 primarily due to:

~~Higher sales~~•A $6.8 million increase from ~~surface protection films ($15.1 million),~~Surface Protection, primarily due to higher ~~volume~~selling prices ($6.0 million), quality claims in 2018 that did not recur in 2019 ($1.2 million), production efficiencies ($1.4 million) and a favorable ~~sales mix; and~~

~~Higher volume for acquisition distribution layer materials and overwrap products, and a favorable sales mix in personal care materials~~raw material costs ($~~12.0~~1.9 million), partially offset by unfavorable mix (net impact of $2.0 million) and higher fixed manufacturing and general and administrative costs ($1.5 million); and

•A $1.6 million increase from Pottsville Packaging primarily related to higher sales volume ~~reductions from the winding down of known lost business in personal care that was substantially completed by the end of 2016~~ ($~~6.2 million).~~

~~Operating profit from ongoing operations in 2017 increased by $15.2 million versus 2016 primarily due to:~~

~~Higher contribution to profits from surface protection films ($12.3~~1.5 million), ~~primarily due to higher volume, a favorable sales mix,~~increased productivity ($0.5 million) and ~~production efficiencies;~~

~~Higher contribution to profits from personal care materials, primarily due to improved volume, production efficiencies and favorable pricing~~increased selling prices ($~~7.3~~0.2 million), partially offset by ~~known lost business~~unfavorable product mix ($~~2.1~~1.0 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.

~~Restructuring~~

In July 2015, the Company began a consolidation of its domestic production for PE Films by restructuring the operations in its manufacturing facility in Lake Zurich, Illinois. This restructuring was completed in the third 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.

~~Capital Expenditures and Depreciation~~

~~Capital expenditures in PE Films were $15.0 million in 2017 compared to $25.8 million in 2016. Depreciation expense was $14.5 million in 2017 and $13.5 million in 2016.~~

Flexible Packaging Films

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


									Year Ended				Favorable/ (Unfavorable) % Change
(In thousands, except percentages)	Year Ended December 31					Favorable/ (Unfavorable)		(In thousands, except percentages)	December 31,
	2017			2016		% Change			2019		2018
Sales volume (lbs)	89,325			89,706		(0.4	)%	Sales volume (lbs)	105,276		98,994		6.3	%
Net sales	$	108,355		$	108,028	0.3	%	Net sales	$	133,935	$	123,830	8.2	%
Operating profit (loss) from ongoing operations	$	(2,626	)	$	1,774	n/a
Ongoing operations:								Ongoing operations:
EBITDA								EBITDA	$	14,737	$	11,154	32.1	%
Depreciation & amortization								Depreciation & amortization	(1,517)		(1,262)		(20.2)	%
EBIT*								EBIT*	$	13,220	$	9,892	33.6	%
Capital expenditures								Capital expenditures	$	8,866	$	5,423
* See the table in Item 6 for a reconciliation of this non-GAAP measure to GAAP.								* See the table in Item 6 for a reconciliation of this non-GAAP measure to GAAP.

Net sales ~~and~~in 2019 increased versus 2018 primarily due to higher sales volume ~~in 2017 were relatively flat compared to 2016,~~ and ~~adversely impacted by production issues due to intermittent power outages at~~ increased selling prices.

Terphane’s ~~Cabo de Santo Agostinho, Brazil plant during the third quarter.~~

~~Terphane had an operating loss~~EBITDA from ongoing operations in ~~2017 of $2.6~~2019 increased by $3.6 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 primarily~~2018 due to:

~~Lower production, primarily due to numerous intermittent power outages during the third quarter~~•Higher volume ($~~0.5~~2.6 million), and ~~lower average sales price~~higher selling prices ($1.6 million), partially offset by higher fixed and variable costs, including costs related to a restarted line ($2.0 million);

•Net favorable ~~sales mix ($1.5 million);~~

~~Higher raw material~~foreign currency translation of Real-denominated operating costs 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 costs of $1.2 million in 2016;~~$0.4 million; and

•Foreign currency transaction ~~losses primarily associated with U.S. Dollar denominated export sales in Brazil~~gains of ~~$0.2~~$1.0 million in ~~2017~~2019 versus ~~foreign currency transaction~~ losses of ~~$3.5~~$0.8 million in ~~2016;~~2018.

~~Higher costs~~Liquidity 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 ($0.9 million).~~

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

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.

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 basedcontinuously focuses 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. The full net tax benefit expected from the Terphane Limitada worthless stock deduction 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. Depreciation expense was $7.5 million in 2017 and $6.7 million in 2016. Amortization expense was $3.0 million in 2017 and $2.8 million in 2016.

~~Aluminum Extrusions~~

~~A summary of operating results for Aluminum Extrusions, including the results of 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.

During 2017, Bonnell incurred $5.6 million of additional operational expenses as a result of the explosion; $5.5 million of this amount was 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 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.

~~Capital Expenditures and Depreciation & Amortization~~

Capital expenditures for Aluminum Extrusions were $25.7 million in 2017 compared to $15.9 million in 2016. 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. Amortization expense was $3.1 million in 2017, which included $2.1 million from the addition of Futura, and $1.0 million in 2016.

~~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, ~~2017~~2019 to December 31, ~~2018~~2020 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 $4.6~~decreased $2.8 million ~~(3.8%~~(3.1%).

◦Accounts and other receivables in ~~PE Films~~Aluminum Extrusions decreased by ~~$5.0~~$3.3 million primarily due ~~mainly~~ to lower ~~net~~ sales ~~for certain Personal Care products, a focus on collection efforts,~~volume and lower sales prices from the ~~use~~pass-through of ~~supply chain financing arrangements and the timing of cash receipts.~~lower metal costs, partially offset by an increase in average selling prices. DSO (computed using trailing 12 months net sales and a rolling 12-month average of accounts and other receivables balances) was approximately ~~43.2~~47.5 days in ~~2018~~2020 and ~~48.4~~48.5 days in ~~2017.~~2019.

◦Accounts and other receivables in PE Films decreased by $0.3 million as the removal of assets related to Bright View was partially offset by increased accounts receivables in Surface Protection due to higher sales. DSO was approximately 30.2 days in 2020 and 34.7 days in 2019.

◦Accounts and other receivables in Flexible Packaging Films ~~decreased by $2.9 million primarily due~~remained consistent compared to the ~~negotiation of shorter payments terms with certain customers, the use of supply chain financing arrangements and the timing of cash receipts.~~prior year. DSO was approximately ~~43.7~~41.0 days in ~~2018~~2020 and ~~53.2~~37.7 days in ~~2017.~~2019.

~~Accounts and other receivables~~•Inventories increased $2.2 million (3.5%).

◦Inventories in Aluminum Extrusions increased by ~~$12.5~~$3.2 million primarily due to higher average aluminum prices ~~resulting from the pass-through of higher metal costs. DSO was approximately 44.6 days in 2018~~ and ~~43.3 days in 2017.~~

~~Inventories increased $6.9 million (7.9%).~~

~~Inventories in PE Films decreased by $5.7 million primarily due to lower sales~~COVID-19-related operational and ~~the timing of raw material purchases.~~production 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 ~~54.9~~39.3 days in ~~2018~~2020 and ~~55.0~~38.6 days in ~~2017.~~2019.

◦Inventories in PE Films increased by $0.7 million primarily due to higher raw material levels in Surface Protection partially offset by the removal of assets related to Bright View. DIO was approximately 59.2 days in 2020 and 51.3 days in 2019.

◦Inventories in Flexible Packaging Films ~~increased~~decreased by ~~$9.5~~$1.6 million primarily due to aincreased sales volume and lower resin costs partially offset by higher ~~production level leading to more finished goods on hand and higher levels of~~ raw ~~materials to support increased production, and the impact of~~

~~the change in the value of the U.S. Dollar relative to the Brazilian real.~~material levels. DIO was approximately ~~77.9~~89.4 days in ~~2018~~2020 and ~~70.1~~94.3 days in ~~2017.~~2019.

Inventories in Aluminum Extrusions increased by $3.2 million primarily due to an increase in raw material prices and the timing of purchases. DIO was approximately 33.5 days in 2018 and 32.6 days in 2017.

•Net property, plant and equipment ~~increased~~decreased by ~~$5.3~~$7.0 million ~~(2.4%~~(4.0%) primarily due ~~primarily~~ to depreciation expenses of $23.4 million, a reduction from the effect of changes in foreign exchange rates of $3.3 million and the removal of assets related to Bright View of $2.3 million, partially offset by capital expenditures of ~~$40.8 million, offset by depreciation of $29.8 million and a change in the value of the U.S. dollar relative to foreign currencies ($5.2 million decrease).~~$21.4 million.

•Identifiable intangible assets, net decreased by ~~$4.3~~$3.8 million ~~(10.5%~~(16.9%) primarily due to amortization expense of ~~$4.0 million.~~

~~Goodwill decreased by $46.8~~$3.0 million ~~(36.5%) due to~~and the ~~write-off~~removal of ~~all of the goodwill~~assets related to ~~the Personal Care component~~Bright View of ~~PE Films.~~$0.6 million.

•Accounts payable increased by ~~$4.4~~$2.4 million ~~(4.0%~~(2.8%).

◦Accounts payable in ~~PE Films decreased~~Aluminum Extrusions increased by ~~$5.6~~$3.3 million, primarily due to increased inventory levels as a result of COVID-19-related lower ~~planned production and the normal volatility associated with the timing of payments.~~demand. 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 ~~43.7~~53.1 days in ~~2018~~2020 and ~~40.6~~49.9 days in ~~2017.~~2019.

◦Accounts payable in ~~Flexible Packaging~~PE Films ~~increased~~decreased by ~~$3.4~~$3.2 million primarily due to ~~higher production levels and inventory levels to meet market demand~~effective working capital management and the normal volatility associated with the timing of payments. DPO was approximately ~~51.9~~36.8 days in ~~2018~~2020 and ~~42.8~~37.1 days in ~~2017.~~2019.

◦Accounts payable in ~~Aluminum Extrusions~~Flexible Packaging Films increased by ~~$5.5~~$0.5 million, primarily due ~~to higher volume, an increase in metal prices,~~the negotiation of longer payment terms ~~and the normal volatility associated with the timing of payments.~~partially offset by reduced resin costs. DPO was approximately ~~49.7~~61.7 days in ~~2018~~2020 and ~~48.0~~55.2 days in ~~2017.~~2019.

~~Accrued expenses increased~~Net cash provided by ~~$0.1~~operating activities was $74.4 million ~~(0.1%) from December 31, 2017~~in 2020 compared to $115.9 million in 2019. The decrease is primarily due to ~~normal fluctuations~~significant net working capital efficiencies in 2019 versus 2020 ($28.5 million), a dividend received from kaléo in 2019 ($17.6 million), and higher pension and postretirement benefit plan contributions ($4.1 million), partially offset by higher EBITDA from ongoing operations for business segments of $9.3 million in 2020 versus the ~~accrual accounts.~~prior period.

Cash provided by investing activities was $32.9 million in 2020 compared to cash used in investing activities of $39.9 million in 2019. Cash provided by investing activities in 2020 includes the net cash proceeds received for the sale of Personal Care Films ($55.1 million) and Bright View ($1.1 million), partially offset by capital expenditures of $23.4 million. Cash used in investing activities in 2019 includes capital expenditures of $50.9 million, which was partially offset by $10.9 million of cash proceeds received for the sale of the PE Films’ Shanghai manufacturing facility.

Net ~~noncurrent deferred income tax assets~~cash used in ~~excess~~financing activities of ~~noncurrent deferred income tax liabilities decreased by $11.1~~$125.6 million in 2020 compared to $77.3 million in 2019. The increase is primarily due to higher net borrowings of $151.5 million under the Credit Agreement (as defined below) and higher dividend payments to shareholders of $200.7 million primarily due to ~~numerous changes between years in~~ the ~~balance~~$200 million Special Dividend (partially funded from borrowings under the Credit Agreement, as defined below), partially offset by lower debt financing costs of the components shown in the December 31, 2018 and 2017 schedule of deferred income tax assets and liabilities provided in Note 16. The Company had a current income tax receivable of $6.8 million at December 31, 2018 compared to a current income tax receivable of $32.1 million at December 31, 2017. The change is primarily due to timing of tax payments and refunds from net operating losses and tax credits carried back to prior years.

$1.1 million.

On ~~March~~December 1, ~~2016, the Company~~2020, Tredegar entered into aan amendment (“Amendment No. 1”) to its five-year ~~$400 million~~ secured revolving credit agreement ~~that expires~~(the “Credit Agreement”), which matures in June 2024. The material changes from Amendment No. 1 are as follows:

•Aggregate borrowings available under the facility were reduced from $500 million to $375 million.

•The definition of Credit EBITDA was amended to permit certain adjustments for prepayment of pension obligations on ~~March~~a pro forma basis.

•Amendments were made to certain of the negative covenants, including, among other amendments, the following: (i) the restricted payments covenant was amended to permit a one-time special dividend payment of up to $200 million and allow for an aggregate amount of dividend payments up to $75 million subsequent to Amendment No. 1 ~~2021 (“revolving credit agreement”).~~ through the maturity date of the Credit Agreement; (ii) the asset disposition covenant was amended to reduce the general basket to 20% of consolidated total assets over the life of the facility and was reset as of December 1, 2020; and (iii) the indebtedness covenant was amended to reduce several baskets to $25 million each.

Net capitalization and indebtedness as defined under the ~~revolving credit agreement~~Credit Agreement as of December 31, ~~2018~~2020 were as follows:

Net Capitalization and Indebtedness as of December 31, 2018
(In thousands)

Net capitalization:
Cash and cash equivalents $ 34,397
Debt:
$400 million revolving credit agreement maturing March 1, 2021 101,500
Other debt —
Total debt 101,500
Debt net of cash and cash equivalents 67,103
Shareholders’ equity 354,857
Net capitalization $ 421,960
Indebtedness as defined in revolving credit agreement:
Total debt $ 101,500
Face value of letters of credit 2,686
Capital lease 29
Other —
Indebtedness $ 104,215


Net Capitalization and Indebtedness as of December 31, 2020
(In thousands)
Net capitalization:
Cash and cash equivalents	$	11,846
Debt:
Credit Agreement	134,000
Debt, net of cash and cash equivalents	122,154
Shareholders’ equity	109,055
Net capitalization	$	231,209
Indebtedness as defined in Credit Agreement:
Total debt	$	134,000
Indebtedness	$	134,000

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

At December 31, ~~2018,~~2020, the interest rate on debt under the ~~revolving credit agreement~~Credit Agreement existing at that date was priced at one-month LIBOR plus the applicable credit spread of ~~150~~162.5 basis points. Under the ~~revolving credit agreement,~~Credit Agreement, borrowings are permitted up to ~~$400~~$375 million, and approximately ~~$298~~$241 million was available to borrow at December 31, ~~2018,~~2020, based upon the most restrictive covenant within the ~~revolving credit agreement.~~

As of December 31, 2018, Tredegar was in compliance with all financial covenants outlined in its revolving credit agreement. Noncompliance with any of the debt covenants may have a material adverse effect on financial condition or liquidity in the event such noncompliance cannot be cured or should the Company be unable to obtain a waiver from the lenders. Renegotiation of the covenant(s) through an amendment to the revolving credit agreement may effectively cure the noncompliance, but may have an effect on financial condition or liquidity depending upon how the amended covenant is renegotiated.Credit Agreement.

The computations of ~~adjusted~~Credit EBITDA, ~~adjusted EBIT,~~ the leverage ratio and interest coverage ratio as defined in the ~~revolving credit agreement~~Credit Agreement are presented below along with the related most restrictive covenants. ~~Adjusted~~Credit EBITDA ~~and adjusted EBIT~~ as defined in the ~~revolving credit agreement are~~Credit Agreement is not intended to represent net income or cash flow from operations as defined by GAAP and should not be considered as either an alternative to net income or to cash flow.


~~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, 2018.~~

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 1,319,561
$ 19.69
1,548,917
Equity compensation plans not approved by security holders —
—
—
Total 1,319,561
$ 19.69
1,548,917
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


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


~~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

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	45
	Opinion on Internal Control Over Financial Reporting	47
	Financial Statements:
	Consolidated Balance Sheets	48
	Consolidated Statements of Income	49
	Consolidated Statements of Comprehensive Income (Loss)	50
	Consolidated Statements of Cash Flows	51
	Consolidated Statements of Shareholders' Equity	52
	Notes to Financial Statements	53
(2)	Financial statement schedules:
	None
(3)	Exhibit Index	88



	~~Page~~
~~Auditors’ Opinions:~~
~~Reports of Independent Registered Public Accounting Firm - KPMG LLP~~	49
~~Report of Independent Registered Public Accounting Firm - PricewaterhouseCoopers LLP~~	52
~~Financial Statements:~~
~~Consolidated Balance Sheets as of December 31, 2018 and 2017~~	53
~~Consolidated Statements of Income for the Years Ended December 31, 2018, 2017 and 2016~~	54
~~Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2018, 2017 and 2016~~	55
~~Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016~~	56
~~Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2018, 2017 and 2016~~	57
~~Notes to Financial Statements~~	58-98


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

~~None~~


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



~~See Exhibit Index on pages:~~	99-~~101~~

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Tredegar Corporation:

Opinion on the ConsolidatedFinancial Statements

We have audited the accompanying consolidated balance ~~sheet~~sheets of Tredegar Corporation and subsidiaries (the Company) as of December 31, ~~2018,~~2020 and 2019, the related consolidated statements of income, comprehensive income (loss), cash flows, and shareholders’ equity for each of the ~~year~~years in the three-year period ended December 31, ~~2018,~~2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2018,~~2020 and 2019, and the results of its operations and its cash flows for each of the ~~year~~years in the three-year period ended December 31, ~~2018,~~2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, ~~2018,~~2020, based on criteria established in Internal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March ~~18, 2019~~16, 2021 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

~~Change in Accounting Principle~~

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for revenue in 2018 due to the adoption of Financial Accounting Standards Board Accounting Standards Codification Topic 606, ~~Revenue from Contracts with Customers~~.

~~Basis for Opinion~~

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. 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 the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit 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 audit 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 audit provides a reasonable basis for our opinion.

~~/s/ KPMG LLP~~

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

~~Richmond, Virginia~~

~~March 18, 2019~~

~~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, 2018, 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, 2018, 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 sheet of the Company as of December 31, 2018, the related consolidated statements of income, comprehensive income (loss), cash flows, and shareholders’ equity for the year ended December 31, 2018, and the related notes (collectively, the consolidated financial statements), and our report dated March 18, 2019 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. 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 2018 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 as of December 31, 2018~~. 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 audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

~~Definition and Limitations of Internal Control 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 (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; (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 (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/ KPMG LLP~~

~~Richmond, Virginia~~

~~March 18, 2019~~

~~Report of Independent Registered Public Accounting Firm~~

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

~~Opinion on the Financial Statements~~

~~We have audited the accompanying consolidatedbalance sheet of Tredegar Corporation and its subsidiaries(the “Company”) as of December 31, 2017,and the related consolidated statements of income, of comprehensive income (loss), of shareholders’ equity, and of cash flowsfor each of the two years in the period ended December 31, 2017,including the related notes(collectively referred to as the “consolidated financial statements”).In our opinion, the consolidatedfinancial statements present fairly, in all material respects, the financial position ofthe Company as of December 31, 2017, and the results of its operations and itscash flows for each of the two years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America.~~

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the ~~manner in which it accounts for pension and postretirement benefits in 2018.~~

adoption of Accounting Standards Codification Topic 842, Leases.

Basis for Opinion

These consolidated financial statements are the responsibility of the ~~Company's~~Company’s management. Our responsibility is to express an opinion on ~~the Company’s~~these consolidated financial statements 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 ~~of these consolidatedfinancial statements~~ in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits 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

~~/s/ PricewaterhouseCoopers LLP~~

~~Richmond, Virginia~~

~~February 21, 2018, except for~~The critical audit matter communicated below is a matter arising from the ~~change in~~current period audit of the ~~manner in which~~consolidated financial statements that was communicated or required to be communicated to the ~~Company~~audit committee and that: (1) relates to accounts ~~for pension and postretirement benefits discussed in Note 1~~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.

Valuation of investment in kaleo, Inc.

As discussed in Notes 1 and 4 to the ~~date~~consolidated financial statements, the Company accounts for its ownership interest in kaleo, Inc. (“kaléo”) under the fair value option of accounting. The Company estimates the fair value of its investment in kaléo by computing the weighted average estimated enterprise value utilizing both the discounted cash flow method (the “DCF method”) and the application of a market multiple to earnings before interest, taxes, depreciation and amortization (the “EBITDA multiple method”), and applying certain other adjustments. The Company applied an 80% weighting to the DCF method and a 20% weighting to the EBITDA multiple method. As of December 31, 2020, the estimated fair value of the Company’s ownership interest in kaléo was $34.6M.

We identified the assessment of the fair value of the Company’s ownership interest in kaléo as a critical audit matter. Subjective auditor judgment was required to evaluate certain assumptions used in the DCF method. Specifically, the weighted average cost of capital (“WACC”), which was used as the basis for the discount rate, is ~~March 18, 2019~~sensitive to variation such that minor changes to this assumption could have a significant impact on the estimated fair value of the Company’s ownership interest in kaléo.

The following are the primary procedures we performed to address the critical audit matter. We involved valuation professionals with specialized skills and knowledge who assisted in:

— evaluating the Company’s discount rate by comparing it to a discount rate that was independently developed using publicly available third-party market data for comparable entities

— developing an estimate of fair value using kaléo’s forecasted cash flows and the independently developed discount rate, and comparing the results of our estimate of fair value to the Company’s fair value estimate.

/s/ KPMG LLP

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

Richmond, Virginia

March 16, 2021

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, 2020, 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, 2020, 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, 2020 and 2019, the related consolidated statements of income, comprehensive income (loss), cash flows, and shareholders’ equity for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements), and our report dated March 16, 2021 expressed an unqualified opinion on those consolidated financial statements.

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 2020 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.

Definition and Limitations of Internal Control Over Financial Reporting

/s/ KPMG LLP

Richmond, Virginia

March 16, 2021

CONSOLIDATED BALANCE SHEETS

Tredegar Corporation and Subsidiaries


									December 31
December 31		2018			2017
									2020		2019
(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	$	34,397		$	36,491		Cash and cash equivalents	$	11,846	$	31,422
Accounts and other receivables, net of allowance for doubtful accounts and sales returns of $2,937 in 2018 and $3,304 in 2017		124,727			120,135
Accounts and other receivables, net of allowance for doubtful accounts and sales returns of $2,797 in 2020 and $1,904 in 2019								Accounts and other receivables, net of allowance for doubtful accounts and sales returns of $2,797 in 2020 and $1,904 in 2019	86,327		89,117
Income taxes recoverable	Income taxes recoverable	6,783			32,080			Income taxes recoverable	2,807		2,661
Inventories	Inventories	93,810			86,907			Inventories	66,437		64,205
Prepaid expenses and other	Prepaid expenses and other	9,564			8,224			Prepaid expenses and other	19,679		8,333
Current assets of discontinued operations								Current assets of discontinued operations	1,339		37,418
Total current assets	Total current assets	269,281			283,837			Total current assets	188,435		233,156
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	8,772			8,723			Land and land improvements	4,544		4,554
Buildings	Buildings	101,332			101,271			Buildings	66,406		64,311
Machinery and equipment	Machinery and equipment	682,968			660,898			Machinery and equipment	404,669		413,856
Total property, plant and equipment	Total property, plant and equipment	793,072			770,892			Total property, plant and equipment	475,619		482,721
Less accumulated depreciation	Less accumulated depreciation	(564,703		)	(547,801		)	Less accumulated depreciation	(309,074)		(309,165)
Net property, plant and equipment	Net property, plant and equipment	228,369			223,091			Net property, plant and equipment	166,545		173,556
Right-of-use leased assets								Right-of-use leased assets	16,037		18,492
Investment in kaléo (cost basis of $7,500)	Investment in kaléo (cost basis of $7,500)	84,600			54,000			Investment in kaléo (cost basis of $7,500)	34,600		95,500
Identifiable intangible assets, net	Identifiable intangible assets, net	36,295			40,552			Identifiable intangible assets, net	18,820		22,636
Goodwill	Goodwill	81,404			128,208			Goodwill	67,708		81,404
Deferred income tax assets	Deferred income tax assets	3,412			16,636			Deferred income tax assets	19,068		12,435
Other assets	Other assets	4,012			9,419			Other assets	3,506		4,628
Non-current assets of discontinued operations								Non-current assets of discontinued operations	151		70,861
Total assets	Total assets	$	707,373		$	755,743		Total assets	$	514,870	$	712,668
Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity							Liabilities and Shareholders’ Equity
Current liabilities:	Current liabilities:							Current liabilities:
Accounts payable	Accounts payable	$	112,758		$	108,391		Accounts payable	$	89,702	$	87,296
Accrued expenses	Accrued expenses	42,495			42,433			Accrued expenses	40,741		39,465
Lease liability, short-term								Lease liability, short-term	2,082		2,427
Income taxes payable								Income taxes payable	706		0
Current liabilities of discontinued operations								Current liabilities of discontinued operations	7,521		23,280
Total current liabilities	Total current liabilities	155,253			150,824			Total current liabilities	140,752		152,468
Lease liability, long-term								Lease liability, long-term	14,949		17,338
Long-term debt	Long-term debt	101,500			152,000			Long-term debt	134,000		42,000
Pension and other postretirement benefit obligations, net	Pension and other postretirement benefit obligations, net	88,124			98,837			Pension and other postretirement benefit obligations, net	110,585		107,446
Deferred income tax liabilities	Deferred income tax liabilities	—			2,123			Deferred income tax liabilities	0		11,019
Other noncurrent liabilities		7,639			8,179
Other non-current liabilities								Other non-current liabilities	5,529		5,297
Non-current liabilities of discontinued operations								Non-current liabilities of discontinued operations	0		351
Total liabilities	Total liabilities	352,516			411,963			Total liabilities	405,815		335,919
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—33,176,024 shares in 2018 and 33,017,422 in 2017 (including restricted stock)		38,892			34,747
Common stock held in trust for savings restoration plan (72,883 shares in 2018 and 71,309 in 2017)		(1,559		)	(1,528		)
Issued and outstanding— 33,457,176 shares in 2020 and 33,365,039 in 2019 (including restricted stock)								Issued and outstanding— 33,457,176 shares in 2020 and 33,365,039 in 2019 (including restricted stock)	50,066		45,514
Common stock held in trust for savings restoration plan (105,067 shares in 2020 and 74,798 in 2019)								Common stock held in trust for savings restoration plan (105,067 shares in 2020 and 74,798 in 2019)	(2,087)		(1,592)
Accumulated other comprehensive income (loss):	Accumulated other comprehensive income (loss):							Accumulated other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	(96,940		)	(86,178		)	Foreign currency translation adjustment	(84,149)		(100,663)
Gain (loss) on derivative financial instruments	Gain (loss) on derivative financial instruments	(1,601		)	459			Gain (loss) on derivative financial instruments	2,264		(1,307)
Pension and other postretirement benefit adjustments	Pension and other postretirement benefit adjustments	(81,446		)	(90,950		)	Pension and other postretirement benefit adjustments	(96,519)		(95,681)
Retained earnings	Retained earnings	497,511			487,230			Retained earnings	239,480		530,478
Total shareholders’ equity	Total shareholders’ equity	354,857			343,780			Total shareholders’ equity	109,055		376,749
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	707,373		$	755,743		Total liabilities and shareholders’ equity	$	514,870	$	712,668

See accompanying notes to financial statements.

CONSOLIDATED STATEMENTS OF INCOME

Tredegar Corporation and Subsidiaries


										Years Ended December 31
Years Ended December 31		2018		2017			2016
										2020		2019		2018
(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	$	1,065,471	$	961,330		$	828,341	Sales	$	755,290	$	826,324	$	851,834
Other income (expense), net	Other income (expense), net	30,459		51,713			2,381		Other income (expense), net	(67,294)		28,371		30,455
		1,095,930		1,013,043			830,722			687,996		854,695		882,289
Costs and expenses:	Costs and expenses:								Costs and expenses:
Cost of goods sold	Cost of goods sold	849,756		767,550			659,867		Cost of goods sold	558,967		641,140		679,665
Freight	Freight	36,027		33,683			29,069		Freight	25,686		28,980		27,170
Selling, general and administrative	Selling, general and administrative	85,283		83,386			73,466		Selling, general and administrative	84,246		76,598		67,929
Research and development	Research and development	18,707		18,287			19,122		Research and development	8,398		7,893		6,672
Amortization of identifiable intangibles	Amortization of identifiable intangibles	3,976		6,198			3,978		Amortization of identifiable intangibles	3,017		13,601		3,976
Pension and postretirement benefits	Pension and postretirement benefits	10,406		10,193			11,047		Pension and postretirement benefits	14,720		9,642		10,406
Interest expense	Interest expense	5,702		6,170			3,806		Interest expense	2,587		4,051		5,702
Asset impairments and costs associated with exit and disposal activities		2,913		102,488			2,684
Goodwill impairment charge		46,792		—			—
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	1,725		784		398
Goodwill impairment									Goodwill impairment	13,696		0		0
Total	Total	1,059,562		1,027,955			803,039		Total	713,042		782,689		801,918
Income (loss) before income taxes		36,368		(14,912		)	27,683
Income (loss) from continuing operations before income taxes									Income (loss) from continuing operations before income taxes	(25,046)		72,006		80,371
Income tax expense (benefit)	Income tax expense (benefit)	11,526		(53,163		)	3,217		Income tax expense (benefit)	(8,213)		13,545		18,807
Net income		$	24,842	$	38,251		$	24,466
Net income (loss) from continuing operations									Net income (loss) from continuing operations	(16,833)		58,461		61,564
Income (loss) from discontinued operations, net of tax									Income (loss) from discontinued operations, net of tax	(58,611)		(10,202)		(36,722)
Net income (loss)									Net income (loss)	$	(75,444)	$	48,259	$	24,842

Earnings per share:
Earnings (loss) per share:									Earnings (loss) per share:
Basic:									Basic:
Continuing operations									Continuing operations	$	(0.51)	$	1.76	$	1.86
Discontinued operations									Discontinued operations	(1.75)		(0.31)		(1.11)
Basic earnings (loss) per share									Basic earnings (loss) per share	$	(2.26)	$	1.45	$	0.75
Diluted:									Diluted:
Continuing operations									Continuing operations	$	(0.51)	$	1.76	$	1.86
Discontinued operations									Discontinued operations	(1.75)		(0.31)		(1.11)
Diluted earnings (loss) per share									Diluted earnings (loss) per share	$	(2.26)	$	1.45	$	0.75

Shares used to compute earnings (loss) per share:									Shares used to compute earnings (loss) per share:
Basic	Basic	$	0.75	$	1.16		$	0.75	Basic	33,402		33,236		33,068
Diluted	Diluted	$	0.75	$	1.16		$	0.75	Diluted	33,402		33,258		33,092

(In thousands) Foreign currency translation adjustment Gain (loss) on derivative financial instruments Pension and other post-retirement benefit adjustments Total
Beginning balance, January 1, 2018 $ (86,178 ) $ 459
$ (90,950 ) $ (176,669 )
Other comprehensive income (loss) before reclassifications (10,762 ) (2,978 ) (1,118 ) (14,858 )
Amounts reclassified from accumulated other comprehensive income (loss) —
918
10,622
11,540
Net other comprehensive income (loss) - current period (10,762 ) (2,060 ) 9,504
(3,318 )
Ending balance, December 31, 2018 $ (96,940 ) $ (1,601 ) $ (81,446 ) $ (179,987 )

The following table summarizes the after-tax changes in accumulated other comprehensive income (loss) for the year ended December 31, ~~2017:~~2019:


(In thousands)	Foreign currency translation adjustment		Gain (loss) on derivative financial instruments		Pension and other post-retirement benefit adjustments		Total
Beginning balance, January 1, 2019	$	(96,940)	$	(1,601)	$	(81,446)	$	(179,987)
Other comprehensive income (loss) before reclassifications	(3,723)		(2,686)		(22,508)		(28,917)
Amounts reclassified from accumulated other comprehensive income (loss)	0		2,980		8,273		11,253
Net other comprehensive income (loss) - current period	(3,723)		294		(14,235)		(17,664)
Ending balance, December 31, 2019	$	(100,663)	$	(1,307)	$	(95,681)	$	(197,651)

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income during 2020 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 (loss)
Gain (loss) on derivative financial instruments:
Aluminum future contracts, before taxes	$	(2,717)	Cost of goods sold
Foreign currency forward contracts, before taxes	(6,069)		Selling, general and administrative
Foreign currency forward contracts, before taxes	62		Cost of goods sold
Total, before taxes	(8,724)
Income tax expense (benefit)	(1,868)		Income tax expense (benefit)
Total, net of tax	$	(6,856)
Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes	$	(15,296)	(a)
Income tax expense (benefit)	(3,937)		Income tax expense (benefit)
Total, net of tax	$	(11,359)
Reclassification adjustment of foreign currency translation loss included in income:
Realized loss on foreign currency translation adjustments related to the sale of Personal Care Films	$	(25,295)	Income (loss) from discontinued operations, net of tax
(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) 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 )
Reclassifications of balances out of accumulated other comprehensive income (loss) into net income during 2019 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	$	(2,736)	Cost of goods sold
Foreign currency forward contracts, before taxes	(904)		Selling, general and administrative
Foreign currency forward contracts, before taxes	62		Cost of goods sold
Total, before taxes	(3,578)
Income tax expense (benefit)	(598)		Income tax expense (benefit)
Total, net of tax	$	(2,980)
Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes	$	(10,632)	(a)
Income tax expense (benefit)	(2,359)		Income tax expense (benefit)
Total, net of tax	$	(8,273)
(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 2018 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	$	1,069	Cost of goods sold
Foreign currency forward contracts, before taxes	(1,796)		Selling, general and administrative
Foreign currency forward contracts, before taxes	62		Cost of goods sold
Total, before taxes	(665)
Income tax expense (benefit)	253		Income tax expense (benefit)
Total, net of tax	$	(918)
Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes	$	(13,650)	(a)
Income tax expense (benefit)	(3,028)		Income tax expense (benefit)
Total, net of tax	$	(10,622)
(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) 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 $ 1,069
Cost of goods sold
Foreign currency forward contracts, before taxes 62
Cost of goods sold
Foreign currency forward contracts, before taxes (1,796 ) Selling, general and administrative
Total, before taxes (665 )
Income tax expense (benefit) 253
Income taxes
Total, net of tax $ (918 )
Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes $ (13,650 ) (a)
Income tax expense (benefit) (3,028 ) Income taxes
Total, net of tax $ (10,622 )

(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 2017 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 $ 1,210
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).

~~Recently Issued~~ Accounting Standards Adopted.

~~ASU 2014-09, REVENUE FROM CONTRACTS WITH CUSTOMERS (TOPIC 606)~~

In May 2014, the FASB and International Accounting Standards Board issued their converged standard on revenue recognition. The revised revenue standard contains principles that an entity will apply to direct the measurement of revenue 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 for those goods 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 requires 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 Company adopted the new standard effective January 1, 2018, using the modified retrospective approach applied to all contracts as of the date of adoption. Comparative periods have not been adjusted and continue to be reported under the accounting standards in effect for those periods. The adoption of ASU 2014-09, as amended, had no material impact on the Company’s consolidated financial position, results of operations, equity or cash flows upon adoption. The Company has included the disclosures required by ASU 2014-09.

~~ASU 2016-01, FINANCIAL INSTRUMENTS (SUBTOPIC 825-10)~~

~~In January~~June 2016, the FASB issued ~~amended guidance associated~~ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” The pronouncement replaces the incurred loss methodology to record credit losses with ~~accounting~~a methodology that reflects the expected credit losses for ~~equity investments measured at fair value. The amended guidance requires all equity investments to be measured~~financial assets not accounted for at fair value with ~~changes in the fair value~~gains and losses recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee or those without a readily determinable fair value). 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.income. 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 entities 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 Company adopted this amended guidance in the first quarter of ~~2018~~2020, the Company adopted ASU 2016-13 which resulted in an adjustment of less than $0.2 million and, ~~the adoption~~therefore, did not have a material impact on the Company’s consolidated financial statements.

~~ASU 2016-02, LEASES (TOPIC 842)~~

In ~~February 2016,~~August 2018, the FASB issued ~~a revised standard on lease accounting. Lessees will need~~ASU 2018-13, Fair Value Measurement: Changes to ~~recognize virtually all of their leases with a term longer than 12 months on~~ the ~~balance sheet,~~Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which changes the disclosure requirements for fair value measurements by ~~recording a right-of-use (“ROU”) asset~~removing, adding 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 standardmodifying certain disclosures. ASU 2018-13 is effective for ~~the Company for fiscal years beginning after December 31, 2018, including the interim~~annual periods within those fiscal years. A modified retrospective transition approach which requires a cumulative-effect adjustment to the opening balance of retained earnings on the effective date is required for leases existing at, or entered into after, the effective date, with certain practical expedients available. The Company expects to use certain transition practical expedients that will allow it to elect to not reassess: i) whether expired or existing contracts contain leases under the new definition of a lease; ii) lease classification for expired or existing leases; and iii) whether previously capitalized initial direct costs would qualify for capitalization under Topic 842. The Company has substantially completed its evaluations of the impacts of the accounting and disclosure requirements on its business processes, controls and systems and does not expect that this standard will have a material effect on its consolidated financial statements. The Company has a process in place to analyze the impact of the standard, and the related guidance issued, on all leases throughout the Company. This process includes reviewing all active leases, which have been identified. The most significant impact of the new standard will be the recognition of new ROU assets and lease liabilities for real estate, office equipment and vehicle operating leases. Upon adoption, the Company will recognize operating lease liabilities with corresponding ROU assets calculated based on the present value of the remaining minimum rental payments for existing operating leases.

~~ASU 2016-16, INCOME TAXES (TOPIC 740)~~

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~~2019, with early adoption permitted. This ASU became effective on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings at the beginning of the period of adoption. The Company adopted this guidance in the first quarter of 2018January 1, 2020 and the ~~adoption~~requirements of this ASU did not have a material impact on the ~~Company’s consolidated financial statements.~~Company's fair value disclosures.

~~ASU 2017-04, INTANGIBLES - GOODWILL AND OTHER (TOPIC 350)~~

Accounting Standards Not Yet Adopted.

In ~~January 2017,~~December 2019, the FASB issued ~~amended guidance that eliminates~~ASU 2019-12, which simplifies 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~~accounting for income taxes. The new guidance ~~goodwill impairment testing will be performed~~simplifies the accounting for income taxes by ~~comparing~~eliminating certain exceptions related to the ~~fair value~~approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the ~~reporting unit with its carrying amount and recognizing an impairment charge~~accounting for ~~the amount by which the carrying amount exceeds the reporting unit’s fair value.~~income taxes. The ~~new standard is~~amendments are 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 elected to early adopt for goodwill impairment testing starting in the third quarter of 2018.

~~ASU 2017-07, COMPENSATION - RETIREMENT BENEFITS (TOPIC 715)~~

In March 2017, the FASB issued final guidance on the presentation of net periodic pension and postretirement benefit cost (net benefit cost). Previously, net benefit cost was 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 annual2020 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 adopted this amended guidance in the first quarter of 2018 by separately presenting “Pension and postretirement benefits” expense in its consolidated statements of income.

~~ASU 2017-12, DERIVATIVES AND HEDGING (TOPIC 815)~~

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. Thetherein, with early adoption ~~should be on a cumulative effect basis~~

~~and applied prospectively.~~permitted. 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.~~new guidance.

2 DIVESTITURES AND ASSETS HELD FOR SALE


2	~~ACQUISITIONS~~

Divestitures

Personal Care Films

On ~~February 15, 2017, Bonnell Aluminum acquired 100%~~August 24, 2020, the Company entered into a definitive agreement to sell Personal Care Films for an aggregate purchase price of approximately $60.5 million, subject to customary adjustments. Upon completion of the ~~stock~~sale on October 30, 2020, the Company recognized a pre-tax loss of ~~Futura Industries Corporation (“Futura”)~~$50.0 million ($46.7 million after-tax) for the year ended December 31, 2020, which includes the realization of other comprehensive losses on ~~a net debt-free basis for approximately $92~~foreign currency translation adjustments of $25.3 million ~~(the “Initial Purchase Price”). The amount actually funded~~previously reflected 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.shareholder’s equity. In addition, the Company ~~was refunded $5 million~~agreed to provide certain transition services related to finance, human resources and information technology which are expected to end in the first ~~quarter~~half of ~~2018 since Futura did not meet certain performance requirements for the 2017 fiscal year (“Earnout Provision”). The acquisition, which~~2021. Personal Care Films was ~~funded using Tredegar’s revolving credit facility, was treated as an asset purchase for U.S. federal income tax purposes.~~

~~Futura, headquartered in Clearfield, Utah, with a national sales presence and particular strength~~previously reported 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 and other applications. As a result of this transaction, Futura is now a wholly-owned subsidiary ofPE Films segment.

The following table summarizes the ~~William L. Bonnell Company, Inc. (which is a wholly-owned subsidiary of Tredegar) and operates as a division of Bonnell Aluminum, and its~~financial results of discontinued 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 was 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 and a receivable (“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 $5.0 million, and $0.7 million was recognized as income in the second quarter of 2017 in Other income (expense), netreflected in the Consolidated Statements of ~~Income.~~

~~The net purchase price~~Income 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 were 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.

~~For~~ the year ended December 31, ~~2017, Tredegar’s consolidated results~~2020, 2019 and 2018:


	Years Ended December 31
(In thousands)	2020		2019		2018
Revenues and other items:
Sales	$	110,246	$	146,034	$	213,637
Other income (expense), net	(333)		6,424		4
	109,913		152,458		213,641
Costs and expenses:
Cost of goods sold	92,079		126,371		170,091
Freight	5,229		7,083		8,857
Selling, general and administrative	16,824		17,754		17,354
Research and development	8,863		11,743		12,035
Asset impairments and costs associated with exit and disposal activities, net of adjustments	1,529		3,341		2,515
Goodwill impairment	0		0		46,792
Loss on sale of business	50,027		0		0
Total	174,551		166,292		257,644
Income (loss) from discontinued operations before income taxes	(64,638)		(13,834)		(44,003)
Income tax expense (benefit)	(6,027)		(3,632)		(7,281)
Income (loss) from discontinued operations, net of tax	$	(58,611)	$	(10,202)	$	(36,722)

The assets and liabilities of the discontinued operations reflected in the Consolidated Balance Sheets as of December 31, 2020 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.2019, respectively were as follows:


	December 31
(In thousands)	2020		2019
Assets
Accounts and other receivables, net	$	0	$	18,441
Income tax recoverable	0		1,439
Inventories	0		17,175
Prepaid expenses and other (b)	1,339		363
Total current assets	1,339		37,418
Property, plant and equipment, net	0		69,334
Right-of-use leased assets	0		728
Deferred income taxes	0		694
Other assets	151		105
Total non-current assets	151		70,861
Total assets of discontinued operations	$	1,490	$	108,279

Liabilities
Accounts payable	$	0	$	16,361
Accrued expenses (b)	7,521		6,344
Lease liability, short-term	0		575
Total current liabilities	7,521		23,280
Lease liability, long-term	0		351
Total non-current liabilities	0		351
Total liabilities of discontinued operations (a)	$	7,521	$	23,631

(a) Pension and other postretirement benefit liabilities related to Personal Care Films have been retained by the Company. (b) The consolidated balance sheet of discontinued operations as of December 31, 2020 includes $0.4 million of other receivables related to the settlement of customary post-closing adjustments, deferred assets of $0.9 million and deferred obligations of $5.3 million related to transition services, accrued severance of $2.1 million, and other miscellaneous accrued expenses of $0.2 million.

The following ~~unaudited supplemental pro forma data presents Tredegar’s~~table provides significant operating and investing cash flow information for discontinued operations:


	Year Ended December 31,
(In thousands)	2020		2019		2018
Operating activities:
Depreciation and amortization	$	5,511	$	9,962	$	9,312
Gain from the sale of the Shanghai manufacturing facility assets	0		(6,316)		0
Loss on sale of Personal Care Films	50,027		0		0
Total	55,538		3,646		9,312
Investing activities:
Net proceeds on sale of Personal Care Films	$	55,115	$	0	$	0
Proceeds from the sale of the Shanghai manufacturing facility assets	0		10,936		0
Capital expenditures	(1,912)		(15,353)		(19,475)
Total	$	53,203	$	(4,417)	$	(19,475)

Bright View

In December 2020, the Company entered into a definitive agreement and completed the sale of Bright View for an aggregate purchase price of $1.5 million, subject to customary adjustments, which resulted in the recognition of a pre-tax loss of $2.3 million ($1.8 million after-tax) included in “Other income (expense), net” in the consolidated ~~sales, net~~statements of 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~~year ended December 31, ~~2017~~2020. In addition, the Company agreed to provide certain transition services related to information technology. The sale does not represent a strategic shift nor does it have a major effect on the Company’s

historical 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~~ongoing operations, thus all financial information for ~~2017~~Bright View has been presented ~~above, were adversely impacted by significant disruptions~~as continuing operations. Bright View historically has been reported in the PE Films segment.

Assets Held For Sale

In July 2019, the Company committed to a plan to close its manufacturing ~~operations and sales caused~~facility in Lake Zurich, Illinois, which historically was reported by the ~~renovation~~Company within the personal care component of its ~~anodizing line. The actual accretion~~PE Films segment. In March 2020, this facility was shut down and the production of elastic materials it previously produced was transferred to ~~Tredegar’s diluted earnings per share from Futura~~Terre Haute, Indiana.

In the third quarter of 2020, the held for sale criteria was met since the ~~acquisition date was 12 cents per share for 2017.~~Company expected the sale of the facility to be completed within one year. As of December 31, 2020, the disposal group carrying value of $4.6 million consists of land, building, and building improvements and is reported in "Prepaid expenses and other" in the Consolidated Balance Sheet. These assets were not included as part of the sale of Personal Care Films.

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


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

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


(In thousands)	2020		2019		2018
(Loss) gain on investment in kaléo accounted for under fair value method	$	(60,900)	$	28,482	$	30,600
Loss on sale of Bright View Technologies	(2,299)		0		0
Corporate costs associated with the divestiture of Personal Care Films	(851)		0		0
COVID-19-related expenses (a)	(2,231)		0		0
Other	(1,013)		(111)		(145)
Total	$	(67,294)	$	28,371	$	30,455
(a) Costs associated with operating under COVID-19 conditions include employee overtime expenses associated with absenteeism, personal protective equipment supplies and facility maintenance.

(In thousands) 2018 2017 2016
Gain (loss) on investment in kaléo accounted for under fair value method $ 30,600
$ 33,800
$ 1,600
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 (186 ) —
(1,032 )
Other 45
796
(89 )
Total $ 30,459
$ 51,713
$ 2,381

The gain on investment in kaléo accounted for under the fair value method of $28.5 million includes a cash dividend of $17.6 million received in 2019 from kaléo. See Note 174 for more details on the ~~items broken out separately~~investment in ~~the table above.~~kaléo.

4 INVESTMENTS


4	~~INVESTMENTS~~

In August 2007 and December 2008, the Company 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. 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.~~option. 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. ~~Kalé~~kaléo’s stock is not publicly traded.

The estimated fair value of the Company’s investment was ~~$84.6~~$34.6 million as of December 31, ~~2018~~2020 and ~~$54.0~~$95.5 million as of December 31, ~~2017.~~2019. The Company recognized ~~unrealized gains~~a pre-tax loss on its investment in kaléo of ~~$30.6~~$60.9 million ($~~23.9 million after taxes) and $33.8 million ($24.0~~47.6 million after taxes) in ~~2018~~2020, which was primarily due to: (i) current projections that assume ongoing pricing pressures, (ii) expected changes in market access as well as continued lower market demand for epinephrine delivery devices resulting from COVID-19-driven delays in in-person back-to-school schedules and ~~2017, respectively. Unrealized gains or losses~~social distancing guidelines, and (iii) a higher private company liquidity discount. The net appreciation on its investment of $28.5 million ($23.4 million after taxes) in 2019 included a pre-tax cash dividend of $17.6 million received on April 30, 2019. Future dividends are subject to the discretion of kaléo’s board of directors. Amounts recognized associated with the Company’s investment in kaléo are included in “Other income (expense), net” in the consolidated statements of income and separately stated in the ~~segment operating profit~~EBITDA from ongoing operations table in Note 5.

Kaléo has transitioned from a company with net losses in 2017 to a company with net income in 2018. Tredegar’s assessment of kaléo’s risk profile has improved during this transition resulting in a lower discount rate versus a year ago that is applied to kaléo’s projected unlevered after-tax cash flows to estimate kaléo’s enterprise value (“EV”) (the “DCF Method”) and the Company’s underlying share of kaléo’s equity value. Moreover, with net income as well as earnings before interest, taxes, depreciation and amortization (“EBITDA”), the EV of kaléo can also be estimated by applying the EV-to-adjusted EBITDA multiple of guideline public companies to kaléo’s most recent trailing 12-month adjusted EBITDA (the “EBITDA Multiple Method”).

The Company estimates the fair value of its investment in kaléo by: (i) computing the weighted average estimated EVenterprise value (“EV”) utilizing both the ~~DCF Method~~discounted cash flow method (the “DCF Method”) and ~~EBITDA~~the application of a market multiple to earnings before interest, taxes, depreciation and amortization (the “EBITDA Multiple ~~Method (including~~Method”), (ii) applying adjustments for any surplus or deficient working capital and estimates of contingent ~~liabilities), (ii)~~liabilities, (iii) adding cash and cash equivalents, ~~(iii)~~(iv) subtracting interest-bearing debt, ~~(iv)~~(v) subtracting a private company liquidity discount estimated at ~~15%~~20% at December 31, 2020 (versus 10% at December 31, 2019) of the net result of (i) through ~~(iii)~~(iv), and ~~(v)~~(vi) applying liquidation preferences and fully diluted ownership percentages to the estimated equity value computed in (i) through ~~(iv)~~(v).

The Company’s estimate of kaléo’s EV as of December 31, ~~2018~~2020 was determined by weighting the EBITDA Multiple Method by ~~80%~~20% and the DCF Method by 80% compared to an 80% and 20%~~. The~~ weighting of the EBITDA Multiple Method and DCF Method, respectively, used in the Company's estimate of kaléo’s EV as of December 31, 2019. A heavier weighting towards the ~~EBITDA Multiple~~DCF Method as of December 31, 2020 was ~~due to its heuristic nature and~~used since kaléo’s ~~transition~~projections better reflect ongoing pricing pressures and ~~actual performance~~expected changes in ~~2018, versus the hypothetical nature of the projections used in the DCF Method.~~market access. The DCF Method projections rely on numerous assumptions and Level 3 inputs, including estimating market growth, market share, pricing, net margins (after allowances for temporary discounts, prompt pay discounts, product returns, wholesaler fees, chargebacks, rebates and copays), selling expenses, R&D expenses, general and administrative expenses, income taxes on unlevered pretax income, working capital, capital expenditures and the risk-adjusted discount rate.inputs. In

addition, there are various regulatory and legal enforcement efforts, including an ongoing Department of Justice investigation related to kaléo’s discontinued Evzio business, which could have a material adverse effect on kaléo’s business that require assessment in any valuation method applied.

The table below provides a sensitivity analysis of the estimated fair value of the Company’s investment in kaléo for changes in the EBITDA multiple used in applying the EBITDA Multiple Method and the changes in the weighting of the DCF Method.

($ Millions) EV-to-Adjusted EBITDA Multiple
7.6x 8.6x 9.6x 10.6x 11.6x
Weighting to DCF Method 50 % $ 76.3
$ 81.2
$ 86.1
$ 91.0
$ 95.9
40 % $ 73.8
$ 79.7
$ 85.6
$ 91.5
$ 97.3
30 % $ 71.4
$ 78.3
$ 85.1
$ 92.0
$ 98.8
20 % $ 69.0
$ 76.8
$ 84.6
$ 92.5
$ 100.3
10 % $ 66.5
$ 75.4
$ 84.2
$ 93.0
$ 101.8
— % $ 64.1
$ 73.9
$ 83.7
$ 93.5
$ 103.3

The ultimate value of the Company’s ownership interest in kaléo will be determined and realized only if and when a liquidity event occurs, and the ultimate value could be materially different from the ~~$84.6~~$34.6 million estimated fair value reflected in the Company’s financial statements at December 31, ~~2018.~~2020.

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. The December 31, 2018 and 2017 carrying values in the consolidated balance sheets (included in “Other assets and deferred charges”) were $1.3 million and $1.7 million, respectively. The carrying value at December 31, 2018 reflected Tredegar’s cost basis in its investment in Harbinger, net of total withdrawal proceeds received and losses. Based on an observable price change, the Company recorded a loss of $0.5 million in 2018 (none in 2017 or 2016). No withdrawal proceeds were received in 2018, 2017 or 2016. The timing and amount of future installments of withdrawal proceeds, which commenced in August 2010, was not known as of December 31, 2018. The Company has determined that there is no readily determinable fair value for the Harbinger Fund and has elected to record its investment in the Harbinger Fund at cost, less impairment, adjusted for observable price changes. Gains on the Company’s investment in the Harbinger Fund will be recognized when there are positive observable price changes, including when the amounts expected to be collected from any 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 when management believes through observable methods that it is probable that future withdrawal proceeds will not exceed the remaining carrying value.

In 2018, Tredegar sold all its remaining interest in investment property it had held in Alleghany and Bath counties, Virginia. The total loss recorded on this investment property in 2018 was $0.2 million ($0.2 million after taxes). 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 was 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, 2017.5 BUSINESS SEGMENTS


5	~~BUSINESS SEGMENTS~~

The Company's business segments are Aluminum Extrusions, PE Films and Flexible Packaging ~~Films~~Films. Aluminum Extrusions, also referred to as Bonnell Aluminum, produces high-quality, soft-alloy and ~~Aluminum Extrusions.~~medium-strength custom fabricated and finished aluminum extrusions for the building and construction, automotive and transportation, consumer durables, machinery and equipment, electrical and renewable energy, and distribution markets. PE Films is ~~comprised~~composed of ~~the following operating segments: personal care materials,~~ surface protection films, polyethylene overwrap films and ~~LED-based products.~~films for other markets. Flexible Packaging Films is comprised of the Company’s polyester films business, Terphane Holdings LLC (“Terphane”). ~~Aluminum Extrusions,~~

The Company’s reportable segments are based on its method of internal reporting, which ~~includes Bonnell Aluminum~~is generally segregated by differences in products. Accounting standards for presentation of segments require an approach based on the way the Company organizes the segments for making operating decisions and how the chief operating decision maker (“CODM”) assesses performance.

Earnings before interest, taxes, depreciation and amortization from ongoing operations (“EBITDA from ongoing operations”) is the measure of profit and loss used by the CODM (Tredegar’s President and Chief Executive Officer) for purposes of assessing financial performance. In the fourth quarter of 2019, the Company concluded that “EBITDA from ongoing operations,” instead of “operating profit from ongoing operations,” is the most relevant metric for measuring segment financial performance. This change resulted in a revision of the Company’s segment disclosures for all periods to report EBITDA from ongoing operations as the measure of segment financial performance. The Company uses sales less freight (“net sales”) as its ~~operating divisions, AACOA and Futura, produces high-quality, soft-alloy and medium-strength aluminum extrusions primarily for~~measure of revenues from external customers at the ~~following markets: building and construction, automotive, and specialty, which consists of consumer durables, machinery and equipment, electrical and distribution end-use products.~~segment level. This measure is separately included in the financial information regularly provided to the CODM.

Information by business segment and geographic area for the last three years is provided in the segment tables below. There were no accounting transactions between segments and no allocations to segments. ~~Net~~


Net Sales
(In thousands)	2020		2019		2018
Aluminum Extrusions	$	455,711	$	529,602	$	573,126
PE Films	139,288		133,807		127,708
Flexible Packaging Films	134,605		133,935		123,830
Total net sales	729,604		797,344		824,664
Add back freight	25,686		28,980		27,170
Sales as shown in consolidated statements of income	$	755,290	$	826,324	$	851,834

Refer to Notes to Financial Tables that follow these tables.


EBITDA from Ongoing Operations
(In thousands)	2020		2019		2018
Aluminum Extrusions:
Ongoing operations:
EBITDA	$	55,137	$	65,683	$	65,479
Depreciation & amortization (d)	(17,403)		(16,719)		(16,866)
EBIT	37,734		48,964		48,613
Plant shutdowns, asset impairments, restructurings and other (a)	(3,506)		(561)		(505)
Goodwill impairment charge	(13,696)		0		0
Trade name accelerated amortization (d)	0		(10,040)		0
PE Films:
Ongoing operations:
EBITDA	45,107		41,133		32,404
Depreciation & amortization	(6,762)		(5,860)		(6,201)
EBIT	38,345		35,273		26,203
Plant shutdowns, asset impairments, restructurings and other (a)	(1,974)		(733)		(186)
Flexible Packaging Films:
Ongoing operations:
EBITDA	30,645		14,737		11,154
Depreciation & amortization	(1,761)		(1,517)		(1,262)
EBIT	28,884		13,220		9,892
Plant shutdowns, asset impairments, restructurings and other (a)	(18)		0		(45)
Total	85,769		86,123		83,972
Interest income	44		66		146
Interest expense	2,587		4,051		5,702
Gain (loss) on investment in kaléo accounted for under the fair value method (a)	(60,900)		28,482		30,600
Loss on sale of Bright View (f)	(2,299)		0		0
Loss on sale of investment property (a)	0		0		(38)
Unrealized loss on investment property (a)	0		0		(186)
Stock option-based compensation expense	2,161		4,132		1,156
Corporate expenses, net (a)	42,912		34,482		27,265
Income (loss) from continuing operations before income taxes	(25,046)		72,006		80,371
Income tax expense (benefit) (a)	(8,213)		13,545		18,807
Income (loss) from continuing operations	(16,833)		58,461		61,564
Income (loss) from discontinued operations, net of tax (a)	(58,611)		(10,202)		(36,722)
Net income (loss)	$	(75,444)	$	48,259	$	24,842

Refer to Notes to Financial Tables that follow these tables.


Identifiable Assets
(In thousands)	2020		2019
Aluminum Extrusions	$	244,560	$	265,027
PE Films	119,013		124,269
Flexible Packaging Films	66,453		74,016
Subtotal	430,026		463,312
General corporate	71,508		109,655
Cash and cash equivalents (b)	11,846		31,422
Discontinued operations	1,490		108,279
Total	$	514,870	$	712,668


	Depreciation and Amortization						Capital Expenditures
(In thousands)	2020		2019		2018		2020		2019		2018
Aluminum Extrusions	$	17,403	$	26,759	$	16,866	$	10,260	$	17,855	$	12,966
PE Films	6,762		5,860		6,201		6,024		8,567		2,523
Flexible Packaging Films	1,761		1,517		1,262		4,959		8,866		5,423
Subtotal	25,926		34,136		24,329		21,243		35,288		20,912
General corporate (e)	520		186		163		200		223		427
Discontinued operations	5,511		9,962		9,312		1,912		15,353		19,475
Total	$	31,957	$	44,284	$	33,804	$	23,355	$	50,864	$	40,814


Net Sales by Geographic Area (c)
(In thousands)	2020		2019		2018
United States	$	530,243	$	593,599	$	636,968
Exports from the United States to:
Asia	80,217		82,342		74,499
Canada	18,024		15,022		16,467
Europe	5,440		5,752		3,909
Latin America	2,169		4,135		991
Operations outside the United States:
Brazil	93,511		96,274		85,868
China	0		220		5,962
Total	$	729,604	$	797,344	$	824,664


	Identifiable Assets by Geographic Area (c)				Property, Plant & Equipment, Net by Geographic Area (c)
(In thousands)	2020		2019		2020		2019
United States	$	363,106	$	403,366	$	132,268	$	140,609
Operations outside the United States:
Brazil	49,157		41,890		15,588		15,348
China	17,763		18,056		16,245		16,210
General corporate	71,508		109,655		2,444		1,389
Cash and cash equivalents (b)	11,846		31,422		n/a		n/a
Discontinued operations	1,490		108,279		0		69,334
Total	$	514,870	$	712,668	$	166,545	$	242,890

Refer to Notes to Financial Tables that follow these tables.

The Company’s facilities in Pottsville, PA (“PV”) and Guangzhou, China (“GZ”) have a tolling arrangement whereby certain surface protection films are manufactured in GZ for a fee with raw materials supplied from PV that are then shipped by GZ directly to customers principally in the Asian market but paid by customers directly to PV.Amounts associated with this

intercompany tolling arrangement are reported in the table above as export sales ~~(sales less freight)~~from the U.S. to Asia, and ~~operating profit~~include net sales of $35.1 million in 2020, $32.1 million in 2019 and $28.9 million in 2018.


Net Sales by Product Group
(In thousands)	2020		2019		2018
Aluminum Extrusions:
Nonresidential building & construction	$	253,126	$	272,729	$	289,572
Consumer durables	44,167		57,607		66,416
Automotive	35,895		46,461		48,037
Machinery & equipment	30,649		38,657		41,899
Distribution	28,339		34,753		40,924
Residential building & construction	40,049		43,554		43,943
Electrical	23,486		35,841		42,335
Subtotal	455,711		529,602		573,126
PE Films:
Surface protection films	109,097		103,893		98,126
Packaging	22,700		22,542		22,310
LED-based products	7,491		7,372		7,272
Subtotal	139,288		133,807		127,708
Flexible Packaging Films	134,605		133,935		123,830
Total	$	729,604	$	797,344	$	824,664

(a)See Notes 1, 2, 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)Cash and cash equivalents includes funds held in locations outside the U.S. of $9.4 million and $8.9 million at December 31, 2020 and 2019, respectively.

(c)Information on exports and foreign operations are provided on the previous page. Export sales relate almost entirely to PE Films. Operations in China relate to PE Films. Operations in Brazil relate to Flexible Packaging Films.

(d)Depreciation and amortization for Aluminum Extrusions in 2019 excludes $10.0 million for accelerated amortization of trade names as a result of a rebranding initiative (see Note 8 for more information)

(e)Corporate depreciation and amortization are included in Corporate expenses, net, on the EBITDA from ongoing operations ~~are~~table above.

(f)In December 2020, the ~~measures~~Company entered into a definitive agreement and completed the sale of ~~sales and operating profit used by the chief operating decision maker (Tredegar’s President and Chief Executive Officer)~~Bright View. See Note 2 for purposes of assessing performance. PE Films’ net sales to The Procter & Gamble Company (“P&G”) totaled $106.5 million in 2018, $122.4 million in 2017 and $129.1 million in 2016. These amounts include plastic film sold to others that convert the film into materials used with products manufactured by P&G.more details.

Net Sales
(In thousands) 2018 2017 2016
PE Films $ 332,488
$ 352,459
$ 331,146
Flexible Packaging Films 123,830
108,355
108,028
Aluminum Extrusions 573,126
466,833
360,098
Total net sales 1,029,444
927,647
799,272
Add back freight 36,027
33,683
29,069
Sales as shown in consolidated statements of income $ 1,065,471
$ 961,330
$ 828,341
6 ACCOUNTS AND OTHER RECEIVABLES

Operating Profit
(In thousands) 2018 2017 2016
PE Films:
Ongoing operations $ 36,181
$ 41,546
$ 26,312
Plant shutdowns, asset impairments, restructurings and other (a) (5,905 ) (4,905 ) (4,602 )
Goodwill impairment charge (46,792 ) —
—
Flexible Packaging Films:
Ongoing operations 9,892
(2,626 ) 1,774
Plant shutdowns, asset impairments, restructurings and other (a) (45 ) (89,398 ) (214 )
Aluminum Extrusions:
Ongoing operations 48,613
43,454
37,794
Plant shutdowns, asset impairments, restructurings and other (a) (505 ) 321
(741 )
Total 41,439
(11,608 ) 60,323
Interest income 369
209
261
Interest expense 5,702
6,170
3,806
Gain on investment in kaléo accounted for under the fair value method (a) 30,600
33,800
1,600
Loss on sale of investment property (a) (38 ) —
—
Unrealized loss on investment property (a) 186
—
1,032
Stock option-based compensation expense 1,221
264
56
Corporate expenses, net (a) 28,893
30,879
29,607
Income (loss) before income taxes 36,368
(14,912 ) 27,683
Income tax expense (benefit) (a) 11,526
(53,163 ) 3,217
Net income (loss) $ 24,842
$ 38,251
$ 24,466

Identifiable Assets
(In thousands) 2018 2017
PE Films $ 231,720
$ 289,514
Flexible Packaging Films 58,964
49,915
Aluminum Extrusions 281,372
268,127
Subtotal 572,056
607,556
General corporate (b) 100,920
111,696
Cash and cash equivalents (d) 34,397
36,491
Total $ 707,373
$ 755,743

Depreciation and Amortization Capital Expenditures
(In thousands) 2018 2017 2016 2018 2017 2016
PE Films $ 15,513
$ 14,609
$ 13,653
$ 21,998
$ 15,029
$ 25,759
Flexible Packaging Films 1,262
10,443
9,505
5,423
3,619
3,391
Aluminum Extrusions 16,866
15,070
9,173
12,966
25,653
15,918
Subtotal 33,641
40,122
32,331
40,387
44,301
45,068
General corporate 163
155
141
427
61
389
Total $ 33,804
$ 40,277
$ 32,472
$ 40,814
$ 44,362
$ 45,457

~~See footnotes following the tables.~~

Net Sales by Geographic Area (d)
(In thousands) 2018 2017 2016
United States $ 691,232
$ 584,066
$ 475,734
Exports from the United States to:
Asia 75,904
84,846
73,220
Canada 51,984
46,505
45,683
Europe 6,203
8,505
7,348
Latin America 12,106
15,199
5,561
Operations outside the United States:
Brazil 101,217
87,155
90,571
The Netherlands 45,667
54,380
54,352
Hungary 33,512
24,727
24,207
China 7,814
12,199
14,390
India 3,805
10,065
8,206
Total (c) $ 1,029,444
$ 927,647
$ 799,272

Identifiable Assets
by Geographic Area (d)

Property, Plant & Equipment,
Net by Geographic Area (d)
(In thousands) 2018 2017 2018 2017
United States (b) $ 454,178
$ 475,844
$ 166,550
$ 156,054
Operations outside the United States:
Brazil 52,796
49,536
16,072
13,396
China 21,610
28,833
19,213
23,273
Hungary 23,615
28,573
15,436
18,230
The Netherlands 15,020
17,423
6,005
6,423
India 4,837
7,347
3,692
4,628
General corporate (b) 100,920
111,696
1,401
1,087
Cash and cash equivalents (d) 34,397
36,491
n/a
n/a
Total $ 707,373
$ 755,743
$ 228,369
$ 223,091

Net Sales by Product Group
(In thousands) 2018 2017 2016
PE Films:
Personal care materials $ 227,090
$ 246,416
$ 238,213
Surface protection films 98,126
99,079
84,013
LED lighting products & other films 7,272
6,964
8,920
Subtotal 332,488
352,459
331,146
Flexible Packaging Films 123,830
108,355
108,028
Aluminum Extrusions:
Nonresidential building & construction 289,572
239,713
212,863
Consumer durables 66,416
54,126
39,293
Automotive 48,037
38,261
34,700
Machinery & equipment 41,899
33,450
20,872
Distribution 40,924
30,202
20,506
Residential building & construction 43,943
40,354
20,252
Electrical 42,335
30,727
11,612
Subtotal 573,126
466,833
360,098
Total $ 1,029,444
$ 927,647
$ 799,272

~~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 $81.9 million and $91.8 million as of December 31, 2018 and 2017, 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 $36.0 million in 2018, $33.7 million in 2017 and $29.1 million in 2016.

~~(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 $31.1 million and $32.7 million at December 31, 2018 and 2017, 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. The facility in Shanghai was shut down in the fourth quarter of 2018.


6	~~ACCOUNTS AND OTHER RECEIVABLES~~

As of December 31, ~~2018~~2020 and ~~2017,~~2019, accounts receivable and other receivables, net, were ~~$124.7~~$86.3 million and ~~$120.1~~$89.1 million, respectively, made up of the following:


(In thousands)		2018			2017			(In thousands)	2020		2019
Customer receivables	Customer receivables	$	122,182		$	113,556		Customer receivables	$	85,274	$	88,822
Other accounts and notes receivable	Other accounts and notes receivable	5,482			9,883			Other accounts and notes receivable	3,850		2,199
Total accounts and other receivables	Total accounts and other receivables	127,664			123,439			Total accounts and other receivables	89,124		91,021
Less: Allowance for bad debts and sales returns	Less: Allowance for bad debts and sales returns	(2,937		)	(3,304		)	Less: Allowance for bad debts and sales returns	(2,797)		(1,904)
Total accounts and other receivables, net	Total accounts and other receivables, net	$	124,727		$	120,135		Total accounts and other receivables, net	$	86,327	$	89,117

Years Ended December 31,
(In thousands) 2018 2017 2016
Gross unrecognized tax benefits on uncertain tax positions (reflected in
current income tax, other noncurrent liability accounts, or deferred tax assets in the balance sheet)
$ 3,361
$ 1,962
$ 3,315
Deferred income tax assets related to unrecognized tax benefits on uncertain tax positions (reflected in deferred income tax accounts in the balance sheet) (211 ) (153 ) (345 )
Net unrecognized tax benefits on uncertain tax positions, which would impact the effective tax rate if recognized 3,150
1,809
2,970
Interest and penalties accrued on deductions taken relating to uncertain tax positions (approximately $107, $(1) and $(262) reflected in income tax expense in the income statement in 2018, 2017 and 2016, respectively, with the balance shown in current income tax and other noncurrent liability accounts in the balance sheet) 243
136
135
Related deferred income tax assets recognized on interest and penalties (56 ) (32 ) (49 )
Interest and penalties accrued on uncertain tax positions net of related deferred income tax benefits, which would impact the effective tax rate if recognized 187
104
86
Total net unrecognized tax benefits on uncertain tax positions reflected in the balance sheet, which would impact the effective tax rate if recognized $ 3,337
$ 1,913
$ 3,056

Tredegar, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction, various states and jurisdictions outside the U.S. With few exceptions, Tredegar is no longer subject to U.S. federal, state or non-U.S. income tax examinations by tax authorities for years before ~~2014.~~2017. The Company anticipates that it is reasonably possible that Federal and state income tax audits or statutes may settle or close within the next 12 months, which could result in the recognition of up to approximately ~~$3.2~~$0.5 million of the balance of unrecognized tax positions, including any payments that may be made.


17	~~LOSSES ASSOCIATED WITH PLANT SHUTDOWNS, ASSET IMPAIRMENTS AND RESTRUCTURINGS, UNUSUAL ITEMS, GAINS FROM SALE OF ASSETS AND OTHER ITEMS~~

Losses associated with plant shutdowns, asset impairments, restructurings and other charges in 2018 (as shown in the segment operating profit table in Note 5) totaled $6.5 million ($5.9 million after taxes), and unless otherwise noted below, are also included in “Asset impairments and costs associated with exit and disposal activities” in the consolidated statements of income. Results in 2018 included:17 ASSET IMPAIRMENTS AND COSTS ASSOCIATED WITH EXIT AND DISPOSAL ACTIVITIES

~~Quarterly charges associated~~In connection with the ~~shutdown of PE Films’ manufacturing facility~~anticipated customer product transitions in ~~Shanghai, China, which includes categories of expenses shown in~~Surface Protection, the table below (Accelerated depreciation and a portion of Other facility consolidation-related costs and Severance & employee related expenses, as noted in the table below, are included in “Cost of goods sold” in the consolidated statements of income):

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2018
($ in millions) BT AT BT AT BT AT BT AT BT AT
Severance & employee related expenses —
—
0.4
0.4
1.3
1.3
0.5
0.5
2.2
2.2
Accelerated depreciation —
—
0.1
0.1
0.4
0.4
0.1
0.1
0.6
0.6
Other facility consolidation-related costs —
—
0.1
0.1
0.1
0.1
0.3
0.3
0.5
0.5
Total —
—
0.6
0.6
1.8
1.8
0.9
0.9
3.3
3.3

Amount included in “Cost of goods sold” in the consolidated statements of income —
—
0.2
0.2
0.7
0.7
0.3
0.3
1.2
1.2
Note: BT = before taxes; AT = after taxes

Quarterly charges for professional fees associated with the Terphane Limitada worthless stock deduction, the impairment of assets of Flexible Packaging Films, determining the effect of the new U.S. federal income tax law, and a market study for PE Films of $0.3 million ($0.2 million after taxes), $0.4 million ($0.3 million after taxes) and $0.1 million ($0.1 million after taxes) for the first, third and fourth quarter, respectively (included in “Selling, general and administrative expenses” in the consolidated statements of income);

~~Quarterly charges for~~Company recognized severance and other employee-related ~~costs associated with restructurings in PE Films~~expenses of ~~$0.1~~$1.6 million ($0.1 million after taxes), $0.3 million ($0.2 million after taxes) and $0.3 million ($0.3 million after taxes) for the first, third and fourth quarter, respectively, and in Aluminum Extrusions of $0.1 million ($0.1 million after taxes) in the first quarter;

A fourth quarter charge of $0.5 million ($0.4 million after taxes) associated with business development projects (included in “Selling, general and administrative expense” in the consolidated statements of income and “Corporate expenses, net” in the statement of net sales and operating profit by segment);

A fourth quarter charge of $0.5 million ($0.4 million after taxes) for professional fees associated with the implementation of new accounting guidance and analysis and revisions to the Company’s internal control over financial reporting (included in “Selling, general and administrative expenses” in the consolidated statements of income);

A fourth quarter benefit of $0.3 million ($0.2 million after taxes) (included in “Other income (expense), net” in the consolidated statements of income) from the reversal of a PE Films’ contingent liability related to the acquisition of Bright View Technologies;

A fourth quarter charge of $0.1 million ($0.1 million after taxes) and a third quarter charge of $0.2 million ($0.1 million after taxes) related to expected future environmental costs at the aluminum extrusions manufacturing facility in Carthage, Tennessee (included in “Cost of goods sold” in the consolidated statements of income);

A third quarter charge of $0.1 million ($0.1 million after taxes) related to wind damage that occurred in the third quarter of 2018 at the aluminum extrusions manufacturing facility in Elkhart, Indiana (included in “Selling, general and administrative expenses” in the consolidated statements of income); and

~~A fourth quarter charge of $0.1 million ($0.1 million after taxes) related to a fire that occurred~~ in the fourth quarter of ~~2018 at the PE Films facility in Rétság, Hungary (included in “Selling, general and administrative expenses” in the condensed consolidated statements of income).~~

Results in 2018 include a net unrealized gain on the Company’s investment in kaléo (included in “Other income (expense), net” in the consolidated statements of income) of $30.6 million ($23.9 million after taxes). Losses on the Company’s investment in the Harbinger Fund of $0.2 million ($0.1 million after taxes), $0.1 million ($0.1 million after taxes) and $0.2 million ($0.2 million after taxes) were recognized in the second, third and fourth quarters of 2018, respectively (included in “Other income (expense), net” in the consolidated statements of income). See Note 4 for additional information on investments.

In the third quarter of 2018, the Company recorded a goodwill impairment charge of $46.8 million ($38.2 million after taxes) for goodwill associated with the acquisition of certain components of PE Films. See Note 8 for additional details.

2020. The Company ~~recorded~~recognizes termination benefits that are covered by a contract or an unrealized loss on its investment property in Alleghany and Bath Counties, Virginia (included in “Other income (expense), net” in the consolidated statements of income) of $0.2 million ($0.2 million after taxes) in the third quarter of 2018. This loss was recognizedongoing benefit arrangement when ~~the property was sold in the fourth quarter of 2018.~~

~~In June 2018, the Company announced plans~~it is probable that employees will be entitled to close its facility in Shanghai, China, which primarily produces plastic films used as components for personal care products (“Shanghai transition”). Production ceased at this plant during the fourth quarter of 2018. The Company expects to recognize costs associated with exit and disposal activities of $5.0 million, down from an initial amount of $7.1 million, comprised of: (i) retention, severance and related costs ($2.9 million), (ii) customer-related costs ($0.5 million), and (iii) legal, asset disposal and other cash costs ($1.6 million). In addition, the Company expects non-cash asset write-offs and accelerated depreciation of $0.6 million, down from an initial amount of $0.9 million. Net annual cash savings from consolidating operations of $1.7 million is expected. Proceeds from expected property disposals are uncertain. The Company anticipates that these activities, including property disposals, will require 12-18 months to execute,benefits and the ~~costs are expected~~amount can be reasonably estimated. Other accrued expenses and losses related to ~~be incurred during this period.~~

~~Total expenses associated with the Shanghai transition were $3.3 million ($3.3 million after taxes) in 2018, ($2.1 million included in “Asset~~asset impairments and costs associated with exit and disposal activities ~~net of adjustments” and $1.2 million included in “Cost of goods sold” in the consolidated statements of income). Cash expenditures were $2.5 million in 2018.~~

~~Losses associated with plant shutdowns, asset impairments, restructurings and other charges~~ for continuing operations in 2017 (as shown in the segment operating profit table in Note 5) totaled $94.0 million ($79.2 million after taxes), and unless otherwise noted below, are also included in “Asset impairments and costs associated with exit and disposal activities” in the consolidated statements of income. Results in 2017 included:

A fourth quarter charge of $101.3 million ($87.2 million after taxes) related to the impairment of assets at Flexible Packaging Films. 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;~~

Second quarter income of $11.9 million ($11.9 million after taxes) related to the settlement of an escrow arrangement established upon the acquisition of Terphane Holdings, LLC in 2011 (included in “Other income (expense), net” in the consolidated statements of income). In settling the escrow arrangement, the Company assumed the risk of the claims (and associated legal fees) against which the escrow previously secured the Company. While the ultimate amount of such claims is unknown, the Company believes that it is reasonably possible that it could be liable for some portion of these claims, and currently estimates the amount of such future claims at approximately $3.5 million;

First quarter charges of $3.3 million ($2.0 million after taxes) related to the acquisition of Futura, i) associated with accounting adjustments of $1.7 million made to the value of inventory sold by Aluminum Extrusions after its acquisition of Futura (included in “Cost of goods sold” in the consolidated statements of income), ii) acquisition costs of $1.5 million and, iii) integration costs of $0.1 million (included in “Selling, general and administrative expenses” in the consolidated statements of income), offset in the second quarter by pretax income of $0.7 million ($0.5 million after taxes) related to the fair valuation of an earnout provision (included in “Other income (expense), net” in the consolidated statements of income);

Quarterly charges related to estimated excess costs associated with the ramp-up of new product offerings and additional expenses related to strategic capacity expansion projects by PE Films of $1.4 million ($1.3 million after taxes), $0.9 million ($0.8 million after taxes), $0.6 million ($0.5 million after taxes) and $0.6 million ($0.6 million after taxes)not material for the first, second, third and fourth quarter, respectively, and by Aluminum Extrusions of $0.3 million ($0.2 million after taxes), $0.1 million (less than $0.1 million after taxes) and $0.1 million (less than $0.1 million after taxes) for the first, second, and third quarters, respectively (included in “Cost of goods sold” in the consolidated statements of income);

A third quarter charge of $0.2 million ($0.1 million after taxes) associated with the consolidation of domestic PE Films’ manufacturing facilities for other facility consolidation-related expenses, a second quarter charge of $0.3 million ($0.2 million after taxes), which includes accelerated depreciation of $0.1 million (included in “Cost of goods sold” in the consolidated statements of income) and other facility consolidation-related expenses of $0.2 million ($0.1 million is included in “Cost of goods sold” in the consolidated statements of income), offset by a reversal of severance and other employee-related costs of $0.3 million ($0.2 million after taxes) and a first quarter charge of $0.7 million ($0.4 million after taxes), which includes severance and other employee-related costs of $0.2 million, asset impairments of $0.1 million, accelerated depreciation of $0.1 million (included in “Cost of goods sold” in the consolidated statements of income) and other facility consolidation-related expenses of $0.3 million ($0.2 million is included in “Cost of goods sold” in the consolidated statements of income);

Fourth quarter net gain of $5.1 million ($3.2 million after taxes), related to the explosion that occurred in the second quarter of 2016 at the aluminum extrusions manufacturing facility in Newnan, Georgia, which includes the recognition of a gain on the involuntary conversion of an asset of $5.3 million for insurance proceeds used for the replacement of capital equipment (included in “Other income (expense), net” in the consolidated statements of income), partially offset by excess production costs of $0.2 million ($0.1 million after taxes) (included in “Cost of goods sold” in the consolidated statements of income); a second quarter net gain on the expected recovery of excess production costs of $0.9 million ($0.6 million after taxes) incurred in prior periods for which recovery from insurance carriers was not previously considered to be reasonably assured (included in “Cost of goods sold” in the consolidated statements of income); and a first quarter net loss of $0.4 million ($0.2 million after taxes), which includes $0.3 million for other costs for which recovery from insurance carriers was not considered to be reasonably assured (reversed in the second quarter) and legal and consulting fees of $0.1 million (included in “Selling, general and administrative expenses” in the consolidated statements of income);

A fourth quarter charge of $1.5 million ($1.0 million after taxes) and a first quarter charge of $0.4 million ($0.2 million after taxes) related to expected future environmental costs at the aluminum extrusions manufacturing facilities in Carthage, Tennessee and Newnan, Georgia (included in “Cost of goods sold” in the consolidated statements of income);

A fourth quarter charge of $0.8 million ($0.5 million after taxes) at Corporate related to expected future environmental costs at various shutdown facilities (included in “Cost of goods sold” in the consolidated statements of income);

A fourth quarter charge of $1.3 million ($0.8 million after taxes), a third quarter charge of $0.2 million ($0.1 million after taxes), a second quarter charge of $0.6 million ($0.4 million after taxes), and a first quarter charge of $0.3 million ($0.2 million after taxes), associated with business development projects (included in “Selling, general and administrative expense” in the consolidated statements of income and “Corporate expenses, net” in the statement of net sales and operating profit by segment);

A fourth quarter charge of $0.1 million (less than $0.1 million after taxes) and a third quarter charge of $0.1 million (less than $0.1 million after taxes) for severance and other employee-related costs associated with restructurings in PE Films, and a fourth quarter charge of $0.1 million ($0.1 million after taxes) for severance and other employee-related costs associated with restructurings in Aluminum Extrusions and a fourth quarter charge of $0.1 million ($0.1 million after taxes) and a first quarter charge of $0.3 million ($0.2 million after taxes) for severance and other employee-related costs associated with restructurings in Corporate (included in “Corporate expenses, net” in the statement of net sales and operating profit by segment);

Fourth quarter charges of $0.4 million ($0.2 million after taxes) for professional fees associated with the Terphane Limitada worthless stock deduction and impairment of assets of Flexible Packaging Films;

~~A fourth quarter charge of~~ ~~$0.3 million~~ (~~$0.3 million~~ ~~after taxes) associated with asset impairments at PE Films’ Hungary facility; and~~

A third quarter charge of $0.2 million ($0.1 million after taxes) associated with the settlement of customer claims and other costs related to the previously shutdown aluminum extrusions manufacturing facility in Kentland, Indiana.

Results in 2017 include a net unrealized gain on the Company’s investment in kaléo (included in “Other income (expense), net” in the consolidated statements of income) of $33.8 million ($24.0 million after taxes). See Note 4 for additional information on investments.

Total expenses associated with the North American facility consolidation project were $0.8 million ($0.5 million after taxes) 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 restructuring were $1.9 million in 2017, which included capital expenditures of $0.1 million. Total cash expenditures since project inception were $16.0 million throughyears ended December 31, ~~2017, which includes $11.2 million for capital expenditures. Additional cash payments for remaining accrued costs of $0.4 million were paid in 2018.~~ 2020, 2019 and 2018, respectively.

Losses associated with plant shutdowns, asset impairments, restructurings and other charges for continuing operations in 2016 (as shown in the segment operating profit table in Note 5) totaled $6.1 million ($3.9 million after taxes), and unless otherwise noted below, are also included in “Asset impairments and costs associated with exit and disposal activities” in the consolidated statements of income. Results in 2016 included:

Fourth quarter net loss $0.7 million ($0.4 million after taxes), related to the explosion that occurred in the second quarter of 2016 at the aluminum extrusions manufacturing facility in Newnan, Georgia, which consists of excess production costs for which recovery from insurance is not assured of $0.6 million ($0.4 million after taxes) (included in “Cost of goods sold” in the consolidated statements of income) and legal and consulting fees of $0.1 million ($0.1 million after taxes) (included in “Selling, general and administrative expenses” in the consolidated statements of income), third quarter net income of $1.7 million ($1.1 million after taxes), which includes the recognition of a gain of $1.9 million ($1.2 million after taxes) 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 ($0.2 million after taxes) (net amount included in “Other income (expense), net” in the consolidated statements of income), and the reversal of an accrual for other costs related to the explosion not recoverable from insurance of $0.1 million ($0.0 million after taxes) (included in “Selling, general and administrative expenses” in the consolidated statements of income), and second quarter net loss of $0.6 million ($0.4 million after taxes) for other costs related to the explosion not recoverable from insurance (included in “Selling, general and administrative expenses” in the consolidated statements of income);18 CONTINGENCIES

Quarterly charges associated with the consolidation of domestic PE Films’ manufacturing facilities, which includes categories of expenses shown in the table below (Accelerated depreciation and a portion of Other facility consolidation-related costs as noted in the table below are included in “Cost of goods sold” in the consolidated statements of income):

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2016
($ in millions) BT AT BT AT BT AT BT AT BT AT
Severance 0.3
0.2
0.4
0.2
0.3
0.2
0.3
0.2
1.2
0.8
Asset impairments 0.3
0.2
0.1
0.1
0.1
—
—
—
0.4
0.3
Accelerated depreciation 0.1
0.1
0.1
0.1
0.1
0.1
0.3
0.2
0.6
0.4
Other facility consolidation-related costs 0.5
0.3
0.8
0.5
0.6
0.4
0.2
0.1
2.0
1.3
Total 1.1
0.7
1.3
0.9
1.1
0.7
0.8
0.5
4.3
2.8

Other facility consolidation-related costs included in “Cost of goods sold” in the consolidated statements of income 0.4
0.2
0.7
0.4
0.4
0.2
0.2
0.1
1.6
1.0
Note: BT = before taxes; AT = after taxes

A fourth quarter charge of $0.6 million ($0.4 million after taxes) associated with the acquisition of Futura by Bonnell Aluminum (included in “Selling, general and administrative expenses” in the consolidated statements of income);

A fourth quarter charge of $0.5 million ($0.3 million after taxes) related to expected future environmental costs at the aluminum extrusions manufacturing facility in Newnan, Georgia (included in “Cost of goods sold” in the consolidated statements of income);

A first quarter charge of $0.4 million ($0.2 million after taxes) associated with a non-recurring business development project (included in “Selling, general and administrative expense” in the consolidated statements of income and “Corporate expenses, net” in the statement of net sales and operating profit by segment);

A third quarter charge of $0.3 million ($0.2 million after taxes) for severance and other employee-related costs associated with restructurings in PE Films ($0.1 million) ($0.1 million after taxes) and Corporate ($0.2 million) ($0.1 million after taxes) (included in “Corporate expenses, net” in the statement of net sales and operating profit by segment);

A fourth quarter charge of $0.3 million ($0.2 million after taxes) related to contingencies associated with the application of prior period Brazilian value-added tax credits in Flexible Packaging Films (included in “Cost of goods sold” in the consolidated statements of income);

~~A fourth quarter charge of $0.2 million ($0.1 million after taxes) associated with asset impairments in PE Films;~~

A fourth quarter gain of $0.1 million ($0.0 million after taxes) related to contractual indemnifications associated with the anticipated settlement of a Terphane pre-acquisition contingency (included in “Other income (expense), net” in the consolidated statements of income); and

A fourth quarter gain of $0.1 million ($0.1 million after taxes) associated with the shutdown of the aluminum extrusions manufacturing facility in Kentland, Indiana, which includes a pretax gain of $0.2 million ($0.1 million after taxes) related to the sale of the property, partially offset by pretax charges of $0.1 million ($0.0 million after taxes) associated with the shutdown of this facility and a third quarter charge of $0.3 million ($0.2 million after taxes) associated with shutdown costs.

Results in 2016 include a net unrealized gain on the Company’s investment in kaléo (included in “Other income (expense), net” in the consolidated statements of income) of $1.6 million ($1.2 million after taxes). The Company recorded an unrealized loss on its investment property in Alleghany and Bath Counties, Virginia (included in “Other income (expense), net” in the consolidated statements of income) of $1.0 million ($0.7 million after taxes) in the fourth quarter of 2016. See Note 4 for additional information on investments.


18	~~CONTINGENCIES~~

Tredegar is involved in various stages of investigation and remediation relating to environmental matters at certain current and former plant locations. Where the Company has determined the nature and scope of any required environmental remediation activity, estimates of cleanup costs have been obtained and accrued. As efforts continue to maintain compliance with applicable environmental laws and regulations, additional contingencies may be identified. If additional contingencies are identified in the future, the Company’s practice is to determine at that time the nature and scope of those contingencies, obtain and accrue estimates of the cost of remediation, and perform remediation. ~~The~~While the Company ~~does not believe~~believes it is currently adequately accrued for known environmental issues, it is possible that ~~additional~~unexpected future costs ~~that could arise from those activities will have a material adverse effect on its financial position. However, those costs~~for known or unknown environmental issues could have a material adverse effect on its financial condition, results of operations and cash flows at that time.

The Company is involved in various other legal actions arising in the normal course of business. After taking into consideration the relevant information, the Company believes that it has sufficiently accrued for probable losses and that the actions will not have a material adverse effect on its financial position. ~~However, the resolution of the actions in a future period could have a material adverse effect on quarterly or annual operating results at that time.~~

From time to time, the Company enters into transactions with third parties in connection with the sale of assets or businesses in which it agrees to indemnify the buyers or third parties involved in the transaction, or in which the sellers or third parties involved in the transaction agree to indemnify Tredegar, for certain liabilities or risks related to the assets or business. Also, in the ordinary course of its business, the Company may enter into agreements with third parties for the sale of goods or services that may contain indemnification provisions. In the event that an indemnification claim is asserted, liability for indemnification would be subject to an assessment of the underlying facts and circumstances under the terms of the applicable agreement. ~~Further, any indemnification payments may be limited or barred by a monetary cap, a time limitation, or a deductible or basket.~~ For these reasons, Tredegar is unable to estimate the maximum amount of the potential future liability under the indemnity provisions of these agreements. The Company does, however, accrue for losses for any known contingent

liability, including those that may arise from indemnification provisions, when future payment is probable and the amount is reasonably estimable. The Company discloses contingent liabilities if the probability of loss is reasonably possible and material.

In 2011, Tredegar was notified by U.S. Customs and Border Protection (“U.S. Customs”) that certain film products exported by Terphane Ltda. to the U.S. since November 6, 2008 could be subject to duties associated with an anti-dumping duty order on imported PET films from Brazil. The Company contested the applicability of these anti-dumping duties to the films exported by Terphane Ltda., and it filed a request with the U.S. Department of Commerce (“Commerce”) for clarification about whether the film products at issue are within the scope of the anti-dumping duty order. In December 2014, the U.S. International Trade Commission separately voted to revoke the anti-dumping duty order on imported PET films from Brazil. On February 20, 2015, certain U.S. producers of PET films filed a summons with the U.S. Court of International Trade to appeal the determination by the U.S. International Trade Commission. After lengthy litigation, on June

19 2018, the U.S. Court of International Trade ruled in favor of Terphane Ltda. by upholding the determination by Commerce that Terphane Ltda.’s films are outside the scope of the anti-dumping duty order. The plaintiffs chose not to appeal the U.S. Court of International Trade’s opinion affirming Commerce’s scope ruling. On September 4, 2018, the plaintiffs filed to dismiss their appeal of the December 2014 decision that revoked the anti-dumping duty order on PET films from Brazil. The U.S. Court of International Trade issued an Order of Dismissal on September 5, 2018. The litigation has now ended.SELECTED QUARTERLY FINANCIAL DATA


19	~~SELECTED QUARTERLY FINANCIAL DATA~~

Tredegar Corporation and Subsidiaries

(In Thousands, Except Per-Share Amounts)

(Unaudited)


	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
For the year ended December 31, 2020
Sales	$	192,136	$	186,260	$	184,370	$	192,524
Gross profit	40,092		46,331		41,909		42,305

Income (loss) from continuing operations, net of tax	(20,663)		14,332		(16,976)		6,475
Income (loss) from discontinued operations, net of tax	(1,658)		(3,136)		(48,237)		(5,580)
Net income (loss)	$	(22,321)	$	11,196	$	(65,213)	$	895

Earnings (loss) per share:
Basic:
Continuing operations	$	(0.62)	$	0.43	$	(0.51)	$	0.19
Discontinued operations	(0.05)		(0.10)		(1.44)		(0.17)
Basic	$	(0.67)	$	0.33	$	(1.95)	$	0.02

Diluted:
Continuing operations	$	(0.62)	$	0.43	$	(0.51)	$	0.19
Discontinued operations	(0.05)		(0.10)		(1.44)		(0.17)
Diluted	$	(0.67)	$	0.33	$	(1.95)	$	0.02

For the year ended December 31, 2019
Sales	$	207,948	$	214,095	$	205,968	$	198,313
Gross profit	34,986		44,375		38,892		37,951

Income (loss) from continuing operations, net of tax	22,548		19,871		15,052		990
Income (loss) from discontinued operations, net of tax	(2,763)		(5,394)		2,081		(4,126)
Net income	$	19,785	$	14,477	$	17,133	$	(3,136)

Earnings per share:
Basic:
Continuing operations	$	0.68	$	0.60	$	0.45	$	0.03
Discontinued operations	(0.08)		(0.16)		0.06		(0.12)
Basic	$	0.60	$	0.44	$	0.51	$	(0.09)

Diluted:
Continuing operations	$	0.68	$	0.60	$	0.45	$	0.03
Discontinued operations	(0.08)		(0.16)		0.06		(0.12)
Diluted	$	0.60	$	0.44	$	0.51	$	(0.09)

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter
For the year ended December 31, 2018
Sales $ 258,711
$ 263,759
$ 267,294
$ 275,707
Gross profit 46,732
44,652
40,478
47,826
Net income (loss) $ 18,165
$ 14,722
$ (34,201 ) $ 26,157
Earnings (loss) per share:
Basic $ 0.55
$ 0.45
$ (1.03 ) $ 0.79
Diluted $ 0.55
$ 0.44
$ (1.03 ) $ 0.79
Shares used to compute earnings (loss) per share:
Basic 32,982
33,074
33,110
33,103
Diluted 32,988
33,108
33,110
33,112
For the year ended December 31, 2017
Sales $ 221,026
$ 247,347
$ 247,121
$ 245,836
Gross profit 32,959
44,149
43,992
38,998
Net income $ 3,703
$ 44,204
$ 8,274
$ (17,929 )
Earnings per share:
Basic $ 0.11
$ 1.34
$ 0.25
$ (0.54 )
Diluted $ 0.11
$ 1.34
$ 0.25
$ (0.54 )
Shares used to compute earnings per share:
Basic 32,920
32,961
32,954
32,948
Diluted 32,957
33,051
32,954
32,949

~~The 2017 Gross profit~~Due to rounding, the sum of quarterly amounts ~~have changed from the amounts disclosed~~presented in the ~~prior year due~~table above may not add up precisely to the retrospective adoption of ASU 2017-07, which resulted in the separate presentation of “Pension and postretirement benefits” expense in the consolidated statements of income. Historically the Company had reported a portion of its pension and postretirement benefit expenses in cost of goods sold, a component used in the calculation of Gross profit.corresponding full year amounts.

Item 16. FORM 10-K SUMMARY

Not Applicable.

EXHIBIT INDEX



2.1		Stock Purchase Agreement, made as of October 1, 2012, by and among The William L. Bonnell Company, Inc., AACOA, Inc., the shareholders of AACOA, Inc., and Daniel G. Formsma, as the representative of the shareholders of AACOA, Inc. (filed as Exhibit 2.1 to Tredegar Corporation’s (“Tredegar’s”) Current Report on Form 8-K (File No. 1-10258), filed on October 3, 2012, and incorporated herein by reference). (Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Tredegar agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibit or schedule upon request)

~~2.2~~	Membership Interest Purchase Agreement, dated as of October 14, 2011, by and among TAC Holdings, LLC, Gaucho Holdings B.V. and Tredegar Film Products Corporation (filed as Exhibit 2.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on October 19, 2011, and incorporated herein by reference). (Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Tredegar agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibit or schedule upon request)

~~2.3~~	Stock Purchase Agreement, dated as of February 1, 2017, by and among Futura Industries Corporation, Futura Corporation, Susan D. Johnson, The Susan D. Johnson Trust, Ken Wells, The William L. Bonnell Company, Inc., and, in his capacity as Sellers’ Representative, Brent F. Lloyd (filed as Exhibit 2.1 of to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on February 2, 2017, and incorporated herein by reference). (Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Tredegar agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibit or schedule upon request.)
2.2		Amended and Restated Purchase and Sale Agreement, dated as of October 30, 2020, by and among Fitesa Nao Tecidos S.A., Fitesa US LLC, Miramar Participações Ltda, Tredegar Corporation, Tredegar Far East Corporation, Tredegar Film Products (Latin America), Inc., Tredegar Investments, LLC and Fitesa S.A. (filed as Exhibit 2.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on November 3, 2020, and incorporated herein by reference).
3.1		Amended and Restated Articles of Incorporation of Tredegar (filed as Exhibit 3.1 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference)

3.1.1	Articles of Amendment to Amended and Restated Articles of Incorporation of Tredegar (filed as Exhibit 3.3 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference)

3.1.2	Articles of Amendment to Amended and Restated Articles of Incorporation of Tredegar, as of May 24, 2013 (filed as Exhibit 3.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on May 29, 2013 and incorporated herein by reference)

3.1.3	Articles of Amendment to Amended and Restated Articles of Incorporation of Tredegar, ~~Corporation,~~ as of May 4, 2016 (filed as Exhibit 3.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on May 6, 2016, and incorporated herein by reference).

3.2	Amended and Restated Bylaws of Tredegar (filed as Exhibit 3.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on ~~February 24, 2017,~~March 30, 2020, and incorporated herein by reference)
4.1		Description of Registered Securities (filed as Exhibit 4.1 to Tredegar’s Annual Report on Form 10-K (File No 1-10258) for the year ended December 31, 2019, and incorporated herein by reference)
~~4.1~~10.1		Amended and Restated Credit Agreement, dated as of ~~March 1, 2016,~~June 28, 2019, among Tredegar, ~~Corporation,~~ as borrower, the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, SunTrust Bank, Citizens Bank, ~~of Pennsylvania~~N.A. and PNC Bank, National Association, as co-syndication agents, and U.S. Bank National Association, ~~BMO Harris Bank, N.A.,~~ Bank of America, N.A. and Wells Fargo Bank, National Association, as co-documentation agents, and the other lenders party thereto (filed as Exhibit 4.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on ~~March 3, 2016,~~July 1, 2019, and incorporated herein by reference).

~~4.1.1~~10.1.1	Amended and Restated Guaranty, dated as of ~~March 1, 2016,~~June 28, 2019, by and among the subsidiaries of Tredegar ~~Corporation~~ listed on the signature pages thereto in favor of JPMorgan Chase Bank, N.A., as administrative agent, for the ratable benefit of the Holders of Guaranteed Obligations (as defined therein) ~~(filed~~(filed as Exhibit 4.2 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on ~~March 3, 2016,~~July 1, 2019, and incorporated herein by reference).

~~4.1.2~~10.1.2	Amended and Restated Pledge and Security Agreement, dated as of ~~March 1, 2016,~~June 28, 2019, by and among Tredegar ~~Corporation~~ and the subsidiaries of Tredegar ~~Corporation~~ listed on the signature pages thereto and JPMorgan Chase Bank, N.A., as administrative agent, for the ratable benefit of the Secured Parties (as defined therein) (filed as Exhibit 4.3 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on ~~March 3, 2016,~~July 1, 2019, and incorporated herein by reference).
10.1.3		Amendment No. 1 to the Amended and Restated Credit Agreement, dated as of December 1, 2020, among Tredegar Corporation, as borrower, the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, Truist Bank, Citizens Bank, N.A. and PNC Bank, National Association, as co-syndication agents, and U.S. Bank National Association, Bank of America, N.A. and Wells Fargo Bank, National Association, as co-documentation agents, and the other lenders party thereto (filed as Exhibit 4.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), f iled on December 3, 2020, and incorporated herein by reference)
~~10.1~~10.2		Reorganization and Distribution Agreement, dated as of June 1, 1989, between Tredegar and Ethyl Corporation (filed as Exhibit 10.1 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference)

*~~10.2~~10.3	Employee Benefits Agreement, dated as of June 1, 1989, between Tredegar and Ethyl Corporation (filed as Exhibit 10.2 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference)



~~10.3~~10.4	Tax Sharing Agreement, dated as of June 1, 1989, between Tredegar and Ethyl Corporation (filed as Exhibit 10.3 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference)

~~10.4~~10.5	Indemnification Agreement, dated as of June 1, 1989, between Tredegar and Ethyl Corporation (filed as Exhibit 10.4 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference)

*~~10.5~~10.6	Tredegar Industries, Inc. Retirement Benefit Restoration Plan (filed as Exhibit 10.7 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference)



*~~10.5.1~~10.6.1	Amendment to the Tredegar Industries, Inc. Retirement Benefit Restoration Plan (filed as Exhibit 10.7.1 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference)

*~~10.6~~10.7	Tredegar Industries, Inc. Savings Plan Benefit Restoration Plan (filed as Exhibit 10.6 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2013, and incorporated herein by reference)

*~~10.6.1~~10.7.1	Resolutions of the Executive Committee of the Board of Directors of Tredegar ~~Corporation~~ adopted on December 28, 2004 (effective as of December 31, 2004) amending the Tredegar Corporation Retirement Savings Plan Benefit Restoration Plan (filed as Exhibit 10.9.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on December 30, 2004, and incorporated herein by reference)

*~~10.7~~10.8	Tredegar 2004 Equity Incentive Plan as Amended and Restated Effective March 27, 2009 (filed as Annex 1 to Tredegar’s Definitive Proxy Statement on Schedule 14A (File No. 1-10258) filed on April 14, 2009 and incorporated herein by reference)

*~~10.8~~10.9	Form of Notice of Nonstatutory Stock Option Grant and Nonstatutory Stock Option Terms and Conditions (filed as Exhibit 10.3 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on February 27, 2013, and incorporated herein by reference)

*~~10.9~~10.10	Form of Notice of Stock Unit Award and Stock Unit Award Terms and Conditions (filed as Exhibit 10.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on March 1, 2016, and incorporated herein by reference)

*~~10.10~~10.11	Form of Notice of Stock Award and Stock Award Terms and Conditions (filed as Exhibit 10.2 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on March 1, 2016, and incorporated herein by reference)

~~10.11~~*10.12	~~Agreement, dated as~~Form of ~~February 19, 2014, by~~Notice of Stock Award and ~~among Tredegar Corporation, John D. Gottwald, William M. Gottwald~~Stock Award Terms and ~~Floyd D. Gottwald, Jr.~~Conditions (filed as Exhibit ~~10.1~~10.18 to Tredegar’s ~~Current~~Quarterly Report on Form ~~8-K~~10-Q (File No. 1-10258)~~, filed on February 20, 2014,~~ for the quarterly period ended March 31, 2020, and incorporated herein by reference)

*~~10.12~~10.13	~~Severance Agreement with D. Andrew Edwards, dated June 25, 2015~~Form of Notice of Stock Appreciation Right Grant and Stock Appreciation Right Terms and Conditions (filed as Exhibit ~~10.3~~10.19 to Tredegar’s ~~Current~~Quarterly Report on Form ~~8-K (file~~10-Q (File No. 1-10258) ~~filed on June 29, 2015,~~ for the quarterly period ended March 31, 2020, and incorporated herein by reference)

*~~10.12.1~~10.14	~~First Amendment to Severance Agreement with D. Andrew Edwards, dated February 25, 2016~~Form of Notice of Nonstatutory Stock Option Grant and Nonstatutory Stock Option Terms and Conditions (filed as Exhibit ~~10.3~~10.20 to Tredegar’s ~~Current~~Quarterly Report on Form ~~8-K~~10-Q (File No. 1-10258)~~, filed on~~ for the quarterly period ended March ~~1, 2016,~~31, 2020, and incorporated herein by reference)

*~~10.13~~10.15	Severance Agreement with Michael J. Schewel, dated May 9, 2016 (filed as Exhibit 10.17 to Tredegar’s Annual Report on Form 10-K/A (File No. 1-10258) for the year ended December 31, 2016, and incorporated herein by reference)

*10.14	Tredegar ~~Corporation~~ 2018 Equity Incentive Plan (filed as Annex A to Tredegar’s Definitive Proxy Statement on Schedule 14A (File No. 1-10258) filed on March 22, 2018, and incorporated herein by reference)

*~~10.15~~10.16	Form of Notice of Nonstatutory Stock Option Grant and Nonstatutory Stock Option Terms and Conditions (filed as Exhibit 10.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on May 7, 2018, and incorporated herein by reference)
*10.17		Form of Notice of Nonstatutory Stock Option Grant and Nonstatutory Stock Option Terms and Conditions (filed as Exhibit 10.3 to Tredegar Corporation’s Registration Statement on Form S-8 (Registration No. 333-230386), filed on March 19, 2019 , and incorporated herein by reference)
+21		Subsidiaries of Tredegar

+~~23.1~~23	Consent of KPMG LLP, Independent Registered Public Accounting Firm

+~~23.2~~31.1	~~Consent of PricewaterhouseCoopers, LLP, Independent Registered Public Accounting Firm~~

~~+31.1~~	Certification of ~~John D. Gottwald,~~ President and Chief Executive Officer (Principal Executive Officer) of Tredegar, ~~Corporation,~~ pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



+31.2	Certification of ~~D. Andrew Edwards,~~ Vice President and Chief Financial Officer (Principal Financial Officer) of Tredegar, ~~Corporation,~~ pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

+32.1	Certification of ~~John D. Gottwald,~~ President and Chief Executive Officer (Principal Executive Officer) of Tredegar, ~~Corporation,~~ pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

+32.2	Certification of ~~D. Andrew Edwards,~~ Vice President and Chief Financial Officer (Principal Financial Officer) of Tredegar, ~~Corporation,~~ pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
+101
~~+101~~	XBRL Instance Document and Related Items
+104		Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)



*			Denotes compensatory plans or arrangements or management contracts.



+			Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TREDEGAR CORPORATION
(Registrant)

Dated:

March 16, 2021

~~TREDEGAR CORPORATION~~

~~(Registrant)~~

~~Dated:~~

~~March 18, 2019~~

/s/ John ~~D. Gottwald~~M. Steitz

John ~~D. Gottwald~~M. Steitz

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March ~~18, 2019.~~

16, 2021.


Signature						Title

/s/		John M. Steitz				President, Chief Executive Officer and Director
		(John M. Steitz)				(Principal Executive Officer)

/s/		D. Andrew Edwards				Executive Vice President and Chief Financial Officer
		(D. Andrew Edwards)				(Principal Financial Officer)

/s/		Frasier W. Brickhouse, II				Corporate Treasurer and Controller
		(Frasier W. Brickhouse, II)				(Principal Accounting Officer)

/s/		John D. Gottwald				Chairman of the Board of Directors
		(John D. Gottwald)

/s/		Gregory A. Pratt				Lead Director
~~Signature~~		(Gregory A. Pratt)		~~Title~~

/s/		~~John D. Gottwald~~			~~President, Chief Executive Officer and Director~~
	~~(John D. Gottwald)~~	~~(Principal Executive Officer)~~

~~/s/~~	~~D. Andrew Edwards~~	~~Vice President and Chief Financial Officer~~
	~~(D. Andrew Edwards)~~	~~(Principal Financial Officer)~~

~~/s/~~	~~Frasier W. Brickhouse, II~~	~~Corporate Treasurer and Controller~~
	~~(Frasier W. Brickhouse, II)~~	~~(Principal Accounting Officer)~~

~~/s/~~	~~William M. Gottwald~~	~~Chairman of the Board of Directors~~
	~~(William M. Gottwald)~~

~~/s/~~	George C. Freeman, III		Director
		(George C. Freeman, III)

/s/		William M. Gottwald				Director
		(William M. Gottwald)

/s/		Kenneth R. Newsome				Director
		(Kenneth R. Newsome)

/s/		~~Gregory A. Pratt~~			~~Director~~
	~~(Gregory A. Pratt)~~

~~/s/~~	Thomas G. Snead, Jr.		Director
		(Thomas G. Snead, Jr.)

/s/		~~John M. Steitz~~			~~Director~~
	~~(John M. Steitz)~~

~~/s/~~	Carl E. Tack, III		Director
		(Carl E. Tack, III)

/s/		Anne G. Waleski				Director
		(Anne G. Waleski)

~~102~~


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)



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



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, 2018 (In thousands)
Computations of adjusted EBITDA and adjusted EBIT as defined in revolving credit agreement for the twelve months ended December 31, 2018
Net income	$	24,842
Plus:
After-tax losses related to discontinued operations	—
Total income tax expense for continuing operations	11,526
Interest expense	5,702
Depreciation and amortization expense for continuing operations	33,804
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 $7,774)	55,160
Charges related to stock option grants and awards accounted for under the fair value-based method	1,221
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	(369		)
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	(250		)
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	(30,600		)
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	—
Adjusted EBITDA as defined in revolving credit agreement	101,036
Less: Depreciation and amortization expense for continuing operations (including pro forma for acquisitions and asset dispositions)	(33,804		)
Adjusted EBIT as defined in revolving credit agreement	$	67,232
Computations of leverage and interest coverage ratios as defined in revolving credit agreement at December 31, 2018:
Leverage ratio (indebtedness-to-adjusted EBITDA)	1.03x
Interest coverage ratio (adjusted EBIT-to-interest expense)	11.79x
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)	$	169,844
Maximum leverage ratio permitted	4.00x
Minimum interest coverage ratio permitted	2.50x

Plus:
~~(3)~~After-tax losses related to discontinued operations	~~Includes contractual severance~~58,611
Total income tax expense for continuing operations	—
Interest expense	2,587
Depreciation and ~~other miscellaneous contractual arrangements.~~amortization expense for continuing operations	26,446
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)	26,384
Charges related to stock option grants and awards accounted for under the fair value-based method	2,161
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	60,900
Minus:
After-tax income related to discontinued operations	—
Total income tax benefits for continuing operations	(8,213)
Interest income	(44)
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	—
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	—
Plus cash dividends declared on investments in an amount not to exceed $10,000 for such period	—
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	$	93,388
Computations of leverage and interest coverage ratios as defined in Credit Agreement at December 31, 2020:
Leverage ratio (indebtedness-to-Credit EBITDA)	1.43x
Interest coverage ratio (Credit EBITDA-to-interest expense)	36.1x
Most restrictive covenants as defined in Credit Agreement:
Maximum permitted aggregate amount of dividends that can be paid by Tredegar subsequent to Amendment No. 1 of the Credit Agreement ($75,000)	75,000
Maximum leverage ratio permitted	4.00x
Minimum interest coverage ratio permitted	3.00x



x			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the fiscal year ended December 31, ~~2018~~2020



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



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



*			In determining this figure, an aggregate of ~~7,288,638~~7,133,634 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, ~~2018.~~2020.


•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 Sure&Soft~~^™~~, 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)


•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						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 AquiSoft~~^™~~, AquiDry~~^®conveying systems, medical equipment, 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



% of PE Films Net Sales by Market Segment *
	2018	2017	2016
Personal Care	68%	70%	72%
Surface Protection	30%	28%	25%
Bright View	2%	2%	3%
Total	100%	100%	100%

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



Net Sales (j)
Years Ended December 31	2018		2017		2016		2015		2014
(In thousands)
PE Films	$	332,488	$	352,459	$	331,146	$	385,550	$	464,339
Flexible Packaging Films	123,830		108,355		108,028		105,332		114,348
Aluminum Extrusions	573,126		466,833		360,098		375,457		344,346
Total net sales	1,029,444		927,647		799,272		866,339		923,033
Add back freight	36,027		33,683		29,069		29,838		28,793
Sales as shown in Consolidated Statements of Income	$	1,065,471	$	961,330	$	828,341	$	896,177	$	951,826

Identifiable Assets
As of December 31	2018		2017		2016		2015		2014
(In thousands)
PE Films	$	231,720	$	289,514	$	278,558	$	270,236	$	283,606
Flexible Packaging Films	58,964		49,915		156,836		146,253		262,604
Aluminum Extrusions	281,372		268,127		147,639		136,935		143,328
Subtotal	572,056		607,556		583,033		553,424		689,538
General corporate	100,920		111,696		38,618		25,680		49,032
Cash and cash equivalents	34,397		36,491		29,511		44,156		50,056
Total	$	707,373	$	755,743	$	651,162	$	623,260	$	788,626



Operating Profit
Years Ended December 31	2018				2017				2016				2015				2014
(In thousands)

PE Films:
Ongoing operations	$	36,181			$	41,546			$	26,312			$	48,275			$	60,971
Plant shutdowns, asset impairments, restructurings and other	(5,905		)	(a)	(4,905		)	(b)	(4,602		)	(c)	(4,180		)	(e)	(12,236		)	(f)
Goodwill impairment charge	(46,792		)	(d)	—				—				—				—
Flexible Packaging Films:
Ongoing operations	9,892				(2,626		)		1,774				5,453				(2,917		)
Plant shutdowns, asset impairments, restructurings and other	(45		)	(a)	(89,398		)	(b)	(214		)	(c)	(185		)	(e)	(591		)	(f)
Goodwill impairment charge	—				—				—				(44,465		)	(d)	—
Aluminum Extrusions:
Ongoing operations	48,613				43,454				37,794				30,432				25,664
Plant shutdowns, asset impairments, restructurings and other	(505		)	(a)	321			(b)	(741		)	(c)	(708		)	(e)	(976		)	(f)
Total	41,439				(11,608		)		60,323				34,622				69,915
Interest income	369				209				261				294				588
Interest expense	5,702				6,170				3,806				3,502				2,713
Gain (loss) on investment in kaléo accounted for under the fair value method (k)	30,600				33,800				1,600				(20,500		)		2,000
Gain (loss) on sale of investment property	(38		)		—				—				—				1,208			(f)
Unrealized loss on investment property	186				—				1,032				—				—
Stock option-based compensation expense	1,221				264				56				483				1,272
Corporate expenses, net	28,893			(a)	30,879			(b)	29,607			(c)	33,638			(e)	24,310			(f)
Income (loss) from continuing operations before income taxes	36,368				(14,912		)		27,683				(23,207		)		45,416
Income tax expense (benefit)	11,526				(53,163		)		3,217				8,928				9,387
Income (loss) from continuing operations	24,842				38,251				24,466				(32,135		)		36,029
Income (loss) from discontinued operations, net of tax	—				—				—				—				850			(g)
Net income (loss)	$	24,842			$	38,251			$	24,466			$	(32,135	)		$	36,879



(Title of class)


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


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


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



(In millions)	December 31, 2018		December 31, 2017
Debt	$	101.5	$	152.0
Less: Cash and cash equivalents	34.4		36.5
Net debt	$	67.1	$	115.5



	Payments Due by Period
(In millions)	2019		2020		2021		2022		2023		Remainder		Total
Debt:
Principal payments	$	—	$	—	$	101.5	$	—	$	—	$	—	$	101.5
Estimated interest expense	4.2		4.2		0.7		—		—		—		9.1
Estimated contributions required: ⁽¹⁾
Defined benefit plans	8.3		12.0		12.2		14.8		12.9		18.8		79.0
Other postretirement benefits	0.5		0.5		0.5		0.5		0.5		2.2		4.7
Capital expenditure commitments	14.1		—		—		—		—		—		14.1
Leases	4.5		4.0		3.6		2.4		1.2		2.6		18.3
Estimated obligations relating to uncertain tax positions ⁽²⁾	—		—		—		—		—		2.9		2.9
Other ⁽³⁾	1.1		—		—		—		—		—		1.1
Total	$	32.7	$	20.7	$	118.5	$	17.7	$	14.6	$	26.5	$	230.7



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



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



Tredegar Corporation—Continuing Operations Percentage of Net Sales and Total Assets Related to Foreign Markets
	2018			2017			2016
	% 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	—	—	5	—	—	6	—	—
Europe	1	8	6	1	9	6	1	10	6
Latin America**	1	10	8	2	9	7	—	11	21
Asia	7	1	4	9	2	5	9	3	6
Total % exposure to foreign markets	14	19	18	17	20	18	16	24	33


Tredegar Corporation Percentage of Net Sales and Total Assets Related to Foreign Markets*
	2020			2019			2018
	% 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	—	—	—	—	—
Latin America	—	13	10	1	12	7	—	10	7
Asia	11	—	4	10	—	3	9	1	3
Total	14	13	14	14	12	10	11	11	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.~~ .


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


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


1.	Perform a comprehensive financial risk assessment and internal control gap analysis to ensure that all relevant risks of material misstatement to the Company’s financial statements are identified and that the Company’s internal controls are sufficient to address those risks.


4.	~~Evaluate and enhance the Company’s monitoring activities to ensure the components of internal control under the 2013 COSO Framework are present, functioning, and able to be appropriately evidenced.~~


5.	Design, execute and monitor a plan, with appropriate executive sponsorship, and with the assistance of outside consultants, to enhance the Company’s internal control over financial reporting and accomplish the goals of the remediation plan as set forth above.


6.	~~Continue to seek, train and retain individuals that have the appropriate skills and experience related to designing, operating and documenting internal controls.~~


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



	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	1,319,561	$	19.69	1,548,917
Equity compensation plans not approved by security holders	—	—		—
Total	1,319,561	$	19.69	1,548,917



										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		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
Balance at January 1, 2016	32,682,162	$	29,467	$	453,467		$	(1,467	)	$	(112,807	)	$	(373	)	$	(95,539	)	$	272,748
Net loss	—	—		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
Net income	—	—		24,842			—			—			—			—			24,842
Foreign currency translation adjustment (net of tax of $281)	—	—		—			—			(10,762		)	—			—			(10,762		)
Derivative financial instruments adjustment (net of tax benefit of $503)	—	—		—			—			—			(2,060		)	—			(2,060		)
Net gains or losses and prior service costs (net of tax benefit of $319)	—	—		—			—			—			—			(1,118		)	(1,118		)
Amortization of prior service costs and net gains or losses (net of tax of $3,028)	—	—		—			—			—			—			10,622			10,622
Cash dividends declared ($0.44 per share)	—	—		(14,592		)	—			—			—			—			(14,592		)
Stock-based compensation expense	102,762	3,141		—			—			—			—			—			3,141
Issued upon exercise of stock options & other	55,840	1,004		—			—			—			—			—			1,004
Tredegar common stock purchased by trust for savings restoration plan	—	—		31			(31		)	—			—			—			—
Balance at December 31, 2018	33,176,024	$	38,892	$	497,511		$	(1,559	)	$	(96,940	)	$	(1,601	)	$	(81,446	)	$	354,857



	2018			2017
Dividend yield	2.3		%	1.9		%
Weighted average volatility percentage	38.3		%	38.3		%
Weighted average risk-free interest rate	2.8		%	1.8		%
Holding period (years):
Officers	5			5
Management	5			5
Weighted average exercise price at date of grant (also weighted average market price at date of grant):
Officers	$	19.35		$	15.65
Management	$	19.35		$	15.65



	2018		2017
Stock options granted (number of shares):
Officers	425,228		151,992
Management	25,855		57,559
Total	451,083		209,551
Estimated weighted average fair value of options per share at date of grant:
Officers	$	5.87	$	4.69
Management	$	5.87	$	4.69
Total estimated fair value of stock options granted (in thousands)	$	2,648	$	983



(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



($ Millions)			EV-to-Adjusted EBITDA Multiple
			7.6x		8.6x		9.6x		10.6x		11.6x
Weighting to DCF Method	50	%	$	76.3	$	81.2	$	86.1	$	91.0	$	95.9
	40	%	$	73.8	$	79.7	$	85.6	$	91.5	$	97.3
	30	%	$	71.4	$	78.3	$	85.1	$	92.0	$	98.8
	20	%	$	69.0	$	76.8	$	84.6	$	92.5	$	100.3
	10	%	$	66.5	$	75.4	$	84.2	$	93.0	$	101.8
	—	%	$	64.1	$	73.9	$	83.7	$	93.5	$	103.3

~~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 2019 through 2028 were determined under provisions of the Pension Protection Act of 2006 using the preliminary assumptions chosen by Tredegar for the ~~2019 plan year. Tredegar has determined that it is not practicable to present~~Twelve Months Ended December 31, 2020 (In thousands)

Computations of Credit EBITDA as defined ~~benefit contributions and other postretirement benefit payments beyond 2028.~~in Credit Agreement for the twelve months ended December 31, 2020