(Mark One)



x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2019~~March 31, 2020



¨			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-10258

Tredegar Corporation

(Exact Name of Registrant as Specified in Its Charter)



~~Virginia~~

	~~54-1497771~~
Virginia		54-1497771
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)



1100 Boulders Parkway Richmond, Virginia						23225
(Address of Principal Executive Offices)						(Zip Code)

Registrant’s Telephone Number, Including Area Code: (804) 330-1000

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, no par value	TG	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Smaller reporting company

~~Large accelerated filer~~

~~Accelerated filer~~

~~Smaller reporting company~~

Non-accelerated filer

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of Common Stock, no par value, outstanding as of ~~November 1, 2019: 33,350,128~~

April 30, 2020: 33,510,714

PART I - FINANCIAL INFORMATION


~~Item 1.~~	~~Financial Statements.~~

Item 1. Financial Statements.

Tredegar Corporation

Consolidated Balance Sheets

(In Thousands, Except Share Data)

(Unaudited)


	September 30,			December 31,				March 31,		December 31,
	2019			2018				2020		2019
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	36,886		$	34,397		Cash and cash equivalents	$	35,059	$	31,422
Restricted cash	7,766			—
Accounts and other receivables, net of allowance for doubtful accounts and sales returns of $3,140 in 2019 and $2,937 in 2018	115,661			124,727

Accounts and other receivables, net of allowance for doubtful accounts and sales returns of $3,165 in 2020 and $3,036 in 2019							Accounts and other receivables, net of allowance for doubtful accounts and sales returns of $3,165 in 2020 and $3,036 in 2019	106,211		107,558

Income taxes recoverable	5,263			6,783			Income taxes recoverable	565		4,100
Inventories	85,315			93,810			Inventories	84,215		81,380

Prepaid expenses and other	9,438			9,564			Prepaid expenses and other	8,772		8,696
Total current assets	260,329			269,281			Total current assets	234,822		233,156
Property, plant and equipment, at cost	796,829			793,072			Property, plant and equipment, at cost	801,665		810,801
Less accumulated depreciation	(560,493		)	(564,703		)	Less accumulated depreciation	(568,034)		(567,911)
Net property, plant and equipment	236,336			228,369			Net property, plant and equipment	233,631		242,890
Right-of-use leased assets	19,526			—			Right-of-use leased assets	18,559		19,220
Investment in kaléo (cost basis of $7,500)	95,500			84,600			Investment in kaléo (cost basis of $7,500)	69,400		95,500
Identifiable intangible assets, net	31,010			36,295			Identifiable intangible assets, net	21,571		22,636
Goodwill	81,404			81,404			Goodwill	67,708		81,404
Deferred income taxes	1,740			3,412			Deferred income taxes	13,218		13,129
Other assets	5,089			4,012			Other assets	4,277		4,733
Total assets	$	730,934		$	707,373		Total assets	$	663,186	$	712,668
Liabilities and Shareholders’ Equity							Liabilities and Shareholders’ Equity
Current liabilities:							Current liabilities:
Accounts payable	$	103,926		$	112,758		Accounts payable	$	105,066	$	103,657
Accrued expenses	47,677			42,495			Accrued expenses	46,862		45,809
Lease liability, short-term	2,842			—			Lease liability, short-term	2,973		3,002

Total current liabilities	154,445			155,253			Total current liabilities	154,901		152,468
Lease liability, long-term	18,197			—			Lease liability, long-term	17,010		17,689
Long-term debt	68,000			101,500			Long-term debt	43,000		42,000
Pension and other postretirement benefit obligations, net	80,665			88,124			Pension and other postretirement benefit obligations, net	105,265		107,446
Deferred income taxes	6,816			—			Deferred income taxes	—		11,019
Other noncurrent liabilities	4,976			7,639			Other noncurrent liabilities	4,420		5,297
Total liabilities	333,099			352,516			Total liabilities	324,596		335,919

Shareholders’ equity:							Shareholders’ equity:
Common stock, no par value (issued and outstanding - 33,350,128 shares at September 30, 2019 and 33,176,024 shares at December 31, 2018)	42,708			38,892
Common stock held in trust for savings restoration plan (74,338 shares at September 30, 2019 and 72,883 shares at December 31, 2018)	(1,583		)	(1,559		)
Common stock, no par value (issued and outstanding - 33,510,714 shares at March 31, 2020 and 33,365,039 shares at December 31, 2019)							Common stock, no par value (issued and outstanding - 33,510,714 shares at March 31, 2020 and 33,365,039 shares at December 31, 2019)	46,054		45,514
Common stock held in trust for savings restoration plan (75,200 shares at March 31, 2020 and 74,798 shares at December 31, 2019)							Common stock held in trust for savings restoration plan (75,200 shares at March 31, 2020 and 74,798 shares at December 31, 2019)	(1,601)		(1,592)
Accumulated other comprehensive income (loss):							Accumulated other comprehensive income (loss):
Foreign currency translation adjustment	(103,231		)	(96,940		)	Foreign currency translation adjustment	(112,192)		(100,663)
Gain (loss) on derivative financial instruments	(2,457		)	(1,601		)	Gain (loss) on derivative financial instruments	(5,082)		(1,307)
Pension and other post-retirement benefit adjustments	(75,210		)	(81,446		)	Pension and other post-retirement benefit adjustments	(92,750)		(95,681)
Retained earnings	537,608			497,511			Retained earnings	504,161		530,478
Total shareholders’ equity	397,835			354,857			Total shareholders’ equity	338,590		376,749
Total liabilities and shareholders’ equity	$	730,934		$	707,373		Total liabilities and shareholders’ equity	$	663,186	$	712,668

See accompanying notes to financial statements.

Tredegar Corporation

Consolidated Statements of Income

(In Thousands, Except Per Share Data)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019		2018				2020		2019
Revenues and other items:												Revenues and other items:
Sales	$	243,217		$	267,294		$	739,931	$	789,765		Sales	$	228,302	$	248,466
Other income (expense), net	10,634			(2,557		)	34,840		11,532			Other income (expense), net	(26,211)		17,110
	253,851			264,737			774,771		801,297				202,091		265,576
Costs and expenses:												Costs and expenses:
Cost of goods sold	191,565			217,378			584,799		631,235			Cost of goods sold	175,311		200,653
Freight	8,986			9,438			26,893		26,667			Freight	8,580		9,021
Selling, general and administrative	23,130			20,676			69,006		63,452			Selling, general and administrative	23,169		22,012
Research and development	4,942			5,150			14,877		14,107			Research and development	4,855		4,485
Amortization of identifiable intangibles	3,400			1,022			5,182		3,076			Amortization of identifiable intangibles	758		891
Pension and postretirement benefits	2,415			2,653			7,246		7,809			Pension and postretirement benefits	3,567		2,415
Interest expense	859			1,318			3,354		4,539			Interest expense	555		1,232
Asset impairments and costs associated with exit and disposal activities, net of adjustments	1,464			1,209			3,595		1,799			Asset impairments and costs associated with exit and disposal activities, net of adjustments	461		1,056
Goodwill impairment	—			46,792			—		46,792			Goodwill impairment	13,696		—
Total	236,761			305,636			714,952		799,476			Total	230,952		241,765
Income (loss) before income taxes	17,090			(40,899		)	59,819		1,821			Income (loss) before income taxes	(28,861)		23,811
Income tax expense (benefit)	(43		)	(6,699		)	8,424		3,135			Income tax expense (benefit)	(6,540)		4,026

Net income (loss)	$	17,133		$	(34,200	)	$	51,395	$	(1,314	)	Net income (loss)	$	(22,321)	$	19,785

Earnings (loss) per share:												Earnings (loss) per share:

Basic	$	0.51		$	(1.03	)	$	1.55	$	(0.04	)	Basic	$	(0.67)	$	0.60

Diluted	$	0.51		$	(1.03	)	$	1.55	$	(0.04	)	Diluted	$	(0.67)	$	0.60
Shares used to compute earnings (loss) per share:												Shares used to compute earnings (loss) per share:
Basic	33,271			33,110			33,222		33,056			Basic	33,313		33,123
Diluted	33,285			33,110			33,230		33,056			Diluted	33,313		33,127
Dividends per share	$	0.12		$	0.11		$	0.34	$	0.33		Dividends per share	$	0.12	$	0.11

See accompanying notes to financial statements.

Tredegar Corporation

Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

(Unaudited)


	Three Months Ended September 30,							Three Months Ended March 31,
	2019			2018				2020		2019
Net income (loss)	$	17,133		$	(34,200	)	Net income (loss)	$	(22,321)	$	19,785
Other comprehensive income (loss):							Other comprehensive income (loss):
Unrealized foreign currency translation adjustment (net of tax benefit of $775 in 2019 and tax of $0 in 2018)	(6,008		)	(2,666		)
Derivative financial instruments adjustment (net of tax of $75 in 2019 and tax benefit of $336 in 2018)	(1,124		)	(1,701		)
Amortization of prior service costs and net gains or losses (net of tax of $593 in 2019 and tax of $789 in 2018)	2,078			2,703
Unrealized foreign currency translation adjustment (net of tax benefit of $1,283 in 2020 and tax of $0 in 2019)							Unrealized foreign currency translation adjustment (net of tax benefit of $1,283 in 2020 and tax of $0 in 2019)	(11,529)		(790)
Derivative financial instruments adjustment (net of tax benefit of $1,226 in 2020 and tax of $83 in 2019)							Derivative financial instruments adjustment (net of tax benefit of $1,226 in 2020 and tax of $83 in 2019)	(3,775)		(353)
Amortization of prior service costs and net gains or losses (net of tax of $836 in 2020 and tax of $592 in 2019)							Amortization of prior service costs and net gains or losses (net of tax of $836 in 2020 and tax of $592 in 2019)	2,931		2,079
Other comprehensive income (loss)	(5,054		)	(1,664		)	Other comprehensive income (loss)	(12,373)		936
Comprehensive income (loss)	$	12,079		$	(35,864	)	Comprehensive income (loss)	$	(34,694)	$	20,721

	Nine Months Ended September 30,
	2019			2018
Net income (loss)	$	51,395		$	(1,314	)
Other comprehensive income (loss):
Unrealized foreign currency translation adjustment (net of tax benefit of $775 in 2019 and tax benefit of $0 in 2018)	(6,291		)	(11,571		)
Derivative financial instruments adjustment (net of tax of $24 in 2019 and tax benefit of $316 in 2018)	(856		)	(2,891		)
Amortization of prior service costs and net gains or losses (net of tax of $1,778 in 2019 and tax of $2,312 in 2018)	6,236			7,926
Other comprehensive income (loss)	(911		)	(6,536		)
Comprehensive income (loss)	$	50,484		$	(7,850	)

Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2019 2018 2019 2018
Net Sales
Aluminum Extrusions $ 129,506
$ 147,661
$ 405,310
$ 420,455
PE Films 69,837
76,470
205,778
252,177
Flexible Packaging Films 34,888
33,725
101,950
90,466
Total net sales 234,231
257,856
713,038
763,098
Add back freight 8,986
9,438
26,893
26,667
Sales as shown in the Consolidated Statements of Income $ 243,217
$ 267,294
$ 739,931
$ 789,765
Operating Profit (Loss)
Aluminum Extrusions:
Ongoing operations $ 12,147
$ 11,730
$ 38,751
$ 35,086
Plant shutdowns, asset impairments, restructurings and other (610 ) (297 ) (667 ) (396 )
Trade name accelerated amortization (2,510 ) —
(2,510 ) —
PE Films:
Ongoing operations 6,889
4,145
17,606
26,857
Plant shutdowns, asset impairments, restructurings and other 3,834
(2,355 ) 933
(4,542 )
Goodwill impairment charge —
(46,792 ) —
(46,792 )
Flexible Packaging Films:
Ongoing operations 4,000
3,609
9,376
6,617
Plant shutdowns, asset impairments, restructurings and other —
—
—
—
Total 23,750
(29,960 ) 63,489
16,830
Interest income 56
6
163
290
Interest expense 859
1,318
3,354
4,539
Gain (loss) on investment in kaléo accounted for under fair value method 4,300
(2,100 ) 28,482
11,900
Unrealized loss on investment property —
186
—
186
Stock option-based compensation costs 807
415
2,121
806
Corporate expenses, net 9,350
6,926
26,840
21,668
Income (loss) before income taxes 17,090
(40,899 ) 59,819
1,821
Income tax expense (benefit) (43 ) (6,699 ) 8,424
3,135
Net income (loss) $ 17,133
$ (34,200 ) $ 51,395
$ (1,314 )

The following table presents identifiable assets by segment at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:


(In thousands)	September 30, 2019		December 31, 2018		(In thousands)	March 31, 2020		December 31, 2019
Aluminum Extrusions	$	282,932	$	281,372	Aluminum Extrusions	$	252,844	$	265,027
PE Films	230,236		231,720		PE Films	224,987		230,415
Flexible Packaging Films	58,965		58,964		Flexible Packaging Films	65,869		74,016
Subtotal	572,133		572,056		Subtotal	543,700		569,458
General corporate	114,149		100,920		General corporate	84,427		111,788
Cash, cash equivalents and restricted cash	44,652		34,397
Cash and cash equivalents					Cash and cash equivalents	35,059		31,422
Total	$	730,934	$	707,373	Total	$	663,186	$	712,668

The following tables disaggregate the Company’s revenue by geographic area and product group for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:


Net Sales by Geographic Area (a)
	Three Months Ended March 31,
(In thousands)		2020		2019
United States		$	146,183	$	172,254
Exports from the United States to:
Asia		22,164		13,493
Latin America		3,134		2,867
Canada		4,898		3,605
Europe		1,501		1,360
Operations outside the United States:
Brazil		25,948		28,138
The Netherlands		7,885		9,587
Hungary		6,604		6,834
India		1,405		1,077
China		—		230

Total		$	219,722	$	239,445

Net Sales by Geographic Area (a)
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2019 2018 2019 2018
United States $ 156,469
$ 176,022
$ 491,511
$ 506,769
Exports from the United States to:
Asia 23,344
14,893
61,350
57,370
Latin America 3,332
3,104
8,869
9,810
Canada 2,429
13,451
11,906
40,988
Europe 1,616
1,608
4,493
5,127
Operations outside the United States:
Brazil 29,481
26,591
85,202
73,402
The Netherlands 9,471
11,428
27,508
34,750
Hungary 6,404
7,987
18,400
25,324
India 1,685
396
3,574
3,216
China —
2,376
225
6,342
Total $ 234,231
$ 257,856
$ 713,038
$ 763,098


Net Sales by Product Group
	Three Months Ended March 31,
(In thousands)		2020		2019
Aluminum Extrusions:
Nonresidential building & construction		$	63,139	$	69,638
Consumer durables		12,549		15,545
Automotive		9,471		12,627
Residential building & construction		9,815		11,672
Electrical		7,239		11,069
Machinery & equipment		7,936		9,923
Distribution		7,738		8,573

Subtotal		117,887		139,047
PE Films:
Personal care materials		41,230		44,855
Surface protection films		28,353		19,888
LED lighting products & other films		1,678		2,036
Subtotal		71,261		66,779



Flexible Packaging Films		30,574		33,619
		$	219,722	$	239,445

(a) Export sales relate primarily 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.

12 INCOME TAXES

Net Sales by Product Group
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2019 2018 2019 2018
Aluminum Extrusions:
Nonresidential building & construction $ 64,341
$ 75,870
$ 202,998
$ 213,500
Consumer durables 12,939
14,991
44,865
47,300
Automotive 11,091
13,205
36,214
33,992
Residential building & construction 11,110
11,163
33,060
32,976
Electrical 10,468
12,093
31,910
30,243
Machinery & equipment 10,191
11,191
29,585
30,335
Distribution 9,366
9,148
26,678
32,109
Subtotal 129,506
147,661
405,310
420,455
PE Films:
Personal care materials 40,958
57,356
123,770
174,985
Surface protection films 27,052
17,193
76,194
71,926
LED lighting products & other films 1,827
1,921
5,814
5,266
Subtotal 69,837
76,470
205,778
252,177
Flexible Packaging Films 34,888
33,725
101,950
90,466
Total $ 234,231
$ 257,856
$ 713,038
$ 763,098

~~See the previous page for a reconciliation of net sales to sales (as shown in the consolidated statements of income).~~

~~(a)~~

Export sales relate primarily 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.


12	~~INCOME TAXES~~

Tredegar recorded a tax ~~expense~~benefit of ~~$8.4~~$6.5 million on a pretax ~~net income~~loss of ~~$59.8~~$28.9 million in the first ~~nine~~three months of ~~2019.~~2020. Therefore, the effective tax rate in the first ~~nine~~three months of ~~2019~~2020 was ~~14.1%~~22.7%, compared to ~~172.1%~~16.9% in the first ~~nine~~three months of ~~2018.~~2019. The quarterly effective tax rate is an estimate based on a proration of the components of the Company’s estimated annual effective tax rate and discrete items recorded during the first ~~nine~~three months of the year. The significant differences between the U.S. federal statutory rate and the effective income tax rate for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ are as follows:


(In thousands, except percentages)											(In thousands, except percentages)	2020					2019
Three Months Ended March 31,											Three Months Ended March 31,	Amount		%	Amount		%
Income tax (benefit) expense at federal statutory rate											Income tax (benefit) expense at federal statutory rate	$	(6,061)	21.0	$	5,000	21.0
Foreign tax incentives											Foreign tax incentives	(1,430)		5.0	(436)		(1.8)
Changes in estimates related to prior year tax provision											Changes in estimates related to prior year tax provision	(601)		2.1	—		—
Research and development tax credit											Research and development tax credit	(278)		1.0	(86)		(0.4)
State taxes, net of federal income tax benefit											State taxes, net of federal income tax benefit	(261)		0.8	180		0.8
Valuation allowance due to foreign losses and impairments											Valuation allowance due to foreign losses and impairments	(136)		0.5	(253)		(1.1)
Tax impact of dividend received											Tax impact of dividend received	—		—	(919)		(3.9)

(In thousands, except percentages)	2019					2018
Nine Months Ended September 30,	Amount			%		Amount			%
Income tax expense at federal statutory rate	$	12,562		21.0		$	383		21.0
Foreign Derived Intangible Income (FDII)											Foreign Derived Intangible Income (FDII)	—		—	(194)		(0.8)
Valuation allowance for capital loss carry-forwards											Valuation allowance for capital loss carry-forwards	40		(0.1)	—		—
Non-deductible expenses											Non-deductible expenses	232		(0.8)	73		0.3
Stock-based compensation											Stock-based compensation	252		(0.9)	(133)		(0.6)
U.S. Tax on Foreign Branch Income	2,541			4.2		953			52.3		U.S. Tax on Foreign Branch Income	573		(2.0)	465		2.0
Foreign rate differences	1,864			3.1		1,159			63.6		Foreign rate differences	1,130		(3.9)	329		1.4
State taxes, net of federal income tax benefit	633			1.1		87			4.8
Non-deductible expenses	363			0.6		230			12.6
Goodwill impairment	—			—		1,788			98.2
Valuation allowance for capital loss carry-forwards	—			—		245			13.4
Stock-based compensation	(148		)	(0.2	)	173			9.5
Changes in estimates related to prior year tax provision	(188		)	(0.3	)	(414		)	(22.7	)
Research and development tax credit	(475		)	(0.8	)	(318		)	(17.4	)
Foreign Derived Intangible Income (FDII)	(633		)	(1.1	)	(472		)	(25.9	)
Tax impact of dividend received	(1,016		)	(1.7	)	—			—
Foreign tax incentives	(2,157		)	(3.6	)	(1,344		)	(73.8	)
Valuation allowance due to foreign losses and impairments	(2,395		)	(4.0	)	185			10.1
Tax contingency accruals and tax settlements	(2,527		)	(4.2	)	480			26.4

Effective income tax rate	$	8,424		14.1		$	3,135		172.1		Effective income tax rate	$	(6,540)	22.7	$	4,026	16.9

•loss or gain of sales to significant customers on which our business is highly dependent;

•inability to achieve sales to new customers to replace lost business;

•inability to develop, efficiently manufacture and deliver new products at competitive prices;

•failure of our customers to achieve success or maintain market share;

•failure to protect our intellectual property rights;

•risks of doing business in countries outside the U.S. that affect our substantial international operations;

•political, economic, and regulatory factors concerning our products;

•uncertain economic conditions in countries in which we do business;

•competition from other manufacturers, including manufacturers in lower-cost countries and manufacturers benefiting from government subsidies;

•impact of fluctuations in foreign exchange rates;

•a change in the amount of our underfunded defined benefit ~~(pension)~~pension plan liability;

•an increase in the operating costs incurred by our operating companies, including, for example, the cost of raw materials and energy;

•inability to successfully identify, complete or integrate strategic acquisitions; failure to realize the expected benefits of such acquisitions; and assumption of unanticipated risks in such acquisitions;

•disruption to our manufacturing facilities;

•the impact of public health epidemics on our employees, our production and the global economy, such as the coronavirus (COVID-19) currently impacting the global economy;

•the impact of public health epidemics on our employees, our production and the global economy, such as the coronavirus currently impacting a number of countries;

•an information technology system failure or breach;

•volatility and uncertainty of the valuation of ~~our~~the investment in kaléo;

•the impact of the imposition of tariffs and sanctions on imported aluminum ingot used in our aluminum extrusions;

•the impact of new tariffs or duties imposed as a result of rising trade tensions between the U.S. and other countries;

•failure to establish and maintain effective internal control over financial reporting;

•the termination of anti-dumping duties on products imported to Brazil that compete with products produced by Flexible Packaging;

•An after-tax ~~gain~~loss on the Company’s investment in Kaleo, Inc. (“kaléo”) of ~~$3.4~~$20.4 million ($~~0.10~~0.61 per share), which is accounted for under the fair value method (see Note 7 for more details); and

~~An after-tax gain on the sale of the PE Films’ Personal Care Shanghai manufacturing facility of $5.9 million ($0.18 per share) (see Note 3 for more details).~~

•An after-tax ~~loss~~gain on the Company’s investment in kaléo of ~~$1.6~~$14.3 million ($~~0.05~~0.43 per share), which included an after-tax dividend received from kaléo of $14.7 million ($0.44 per share).

•Maximum ~~indebtedness-to-adjusted~~indebtedness-to-Credit EBITDA (“Leverage Ratio”) of 4.00x;

•Minimum ~~adjusted~~Credit EBITDA-to-interest expense of 3.00x; and

•Maximum aggregate distributions to shareholders over the term of the Credit Agreement of $130 million plus, beginning with the fiscal quarter ended June 30, 2019, 50% of net income and, at a Leverage Ratio of equal to or greater than 3.00x, a limitation on such payments for the succeeding quarter at the greater of (i) $4.75 million and (ii) 50% of consolidated net income for the most recent fiscal quarter.

Computations of Adjusted EBITDA, Leverage Ratio and Interest Coverage Ratio as Defined in the Credit Agreement Along with Related Most Restrictive Covenants as of and for the Twelve Months Ended September 30, 2019 (In Thousands)
Computation of adjusted EBITDA as defined in the Credit Agreement for the twelve months ended September 30, 2019:
Net income (loss) $ 77,550
Plus:
After-tax losses related to discontinued operations —
Total income tax expense for continuing operations 16,815
Interest expense 4,517
Depreciation and amortization expense (excluding amortization of right-of-use lease assets) for continuing operations 36,210
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) 11,079
Charges related to stock option grants and awards accounted for under the fair value-based method 2,536
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 (242 )
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 (47,182 )
Plus cash dividends declared on investments in an amount not to exceed $10,000 for such period 10,000
Plus or minus, as applicable, pro forma EBITDA adjustments associated with acquisitions and asset dispositions —
Adjusted EBITDA as defined in the Credit Agreement 111,033
Computations of leverage and interest coverage ratios as defined in the Credit Agreement at September 30, 2019:
Leverage ratio (indebtedness-to-adjusted EBITDA) .61x
Interest coverage ratio (adjusted EBITDA-to-interest expense) 24.58x
Most restrictive covenants as defined in the Credit Agreement:
Maximum permitted aggregate amount of dividends that can be paid by Tredegar during the term of the Credit Agreement ($130,000 plus 50% of net income generated for each quarter beginning April 1, 2019) $ 145,805
Maximum leverage ratio permitted 4.00
Minimum interest coverage ratio permitted 3.00


Computations of Credit EBITDA and Leverage Ratio and Interest Coverage Ratio as Defined in the Credit Agreement Along with Related Most Restrictive Covenants as of and for the Twelve Months Ended March 31, 2020 (In Thousands)
Computation of Credit EBITDA for the twelve months ended March 31, 2020:
Net income (loss)	$	6,152
Plus:
After-tax losses related to discontinued operations	—
Total income tax expense for continuing operations	—
Interest expense	3,374
Depreciation and amortization expense (excluding amortization of right-of-use lease assets) for continuing operations	44,540
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)	24,831
Charges related to stock option grants and awards accounted for under the fair value-based method	4,378
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	14,700
Minus:
After-tax income related to discontinued operations	—
Total income tax benefits for continuing operations	(653)
Interest income	(289)
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	—
Credit EBITDA	97,033



Computations of leverage and interest coverage ratios as defined in the Credit Agreement at March 31, 2020:
Leverage ratio (indebtedness-to-Credit EBITDA)	.44x
Interest coverage ratio (Credit EBITDA-to-interest expense)	28.76x
Most restrictive covenants as defined in the Credit Agreement:
Maximum permitted aggregate amount of dividends that can be paid by Tredegar during the term of the Credit Agreement ($130,000 plus 50% of net income generated for each quarter beginning April 1, 2019)	$	145,805

Maximum leverage ratio permitted	4.00		x
Minimum interest coverage ratio permitted	3.00		x

from the sale of PE Films’ idle Shanghai manufacturing facility in the third quarter of 2019. The Company is in the process of liquidating the legal entity that previously operated the Shanghai facility and received the funds from the sale. Chinese government regulations limit the use of these funds to the purposes of the liquidating entity until the completion of the liquidation process, which the Company expects to be concluded within the next six months.

The Company believes that existing borrowing availability, current cash balances and cash flow from operations will be sufficient to satisfy its working capital, capital expenditure and dividend requirements for the next 12 months.


~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk.~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Tredegar has exposure to the volatility of interest rates, polyethylene and polypropylene resin prices, Terephthalic Acid (“PTA”) and Monoethylene Glycol (“MEG”) prices, aluminum ingot and scrap prices, energy prices, foreign currencies and emerging markets. See Liquidity and Capital Resources regarding interest rate exposures related to borrowings under the Credit Agreement.

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

In the normal course of business, Aluminum Extrusions enters into fixed-price forward sales contracts with certain customers for the sale of fixed quantities of aluminum extrusions at scheduled intervals. In order to hedge its exposure to aluminum price volatility (see the chart below) under these fixed-price arrangements, which generally have a duration of not more than 12 months, the Company enters into a combination of forward purchase commitments and futures contracts to acquire or hedge aluminum, based on the scheduled deliveries. See Note 8 for additional information.

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



Source: Quarterly averages computed using daily Midwest average prices provided by Platts.

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



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

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



Source: Quarterly averages computed by Tredegar using monthly data provided by IHS, Inc. In ~~January 2015,~~February 2020, IHS reflected a 2132 cents per pound non-market adjustment based on their estimate of the growth of discounts in prior periods. The 4th quarter ~~2014~~2019 average rate of ~~$1.09~~$0.51 per pound is shown on a pro forma basis as if the non-market adjustment was made in the fourth quarter of ~~2014.~~2019.

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

Polyester resins, MEG and PTA used in flexible packaging films produced in Brazil are primarily purchased domestically, with other sources available mostly from Asia and the U.S. Given the nature of these products as commodities, pricing is derived from Asian pricing indexes. The volatility of the average quarterly prices for polyester fibers in Asia,

which is representative of polyester resin (a primary raw material for Flexible Packaging Films) pricing trends, is shown in the chart below:



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

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



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

The Company sells to customers in foreign markets through its foreign operations and through exports from U.S. plants. The percentage of sales for manufacturing operations related to foreign markets for the first ~~nine~~three months of ~~2019~~2020 and ~~2018~~2019 are as follows:


Percentage of Net Sales from Ongoing Operations Related to Foreign Markets*	Percentage of Net Sales from Ongoing Operations Related to Foreign Markets*								Percentage of Net Sales from Ongoing Operations Related to Foreign Markets*
	Nine Months Ended September 30,									Three Months Ended March 31,
	2019				2018					2020						2019
	Exports From U.S.		Foreign Operations		Exports From U.S.		Foreign Operations			Exports From U.S.		Foreign Operations		Exports From U.S.		Foreign Operations
Canada	2	%	—	%	5	%	—	%	Canada	2	%	—	%	2	%	—	%
Europe	1		6		1		8		Europe	1		7		1		7
Latin America	1		12		1		10		Latin America	1		12		1		12
Asia	9		1		8		1		Asia	10		1		6		1
Total	13	%	19	%	15	%	19	%	Total	14	%	20	%	10	%	20	%
* The percentages for foreign markets are relative to Tredegar’s total net sales from ongoing operations	* The percentages for foreign markets are relative to Tredegar’s total net sales from ongoing operations								* The percentages for foreign markets are relative to Tredegar’s total net sales from ongoing operations

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

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

•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 consolidated financial statements.

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

•Risk Assessment:The Company did not have an effective risk assessment process that defined clear financial reporting objectives and evaluated risks, including fraud risks, and risks resulting from changes in the external environment and business operations, at a sufficient level of detail to identify all relevant risks of material misstatement across the entity.

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

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

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

While these material weaknesses did not result in material misstatements of the Company’s financial statements as of and for the year ended December 31, ~~2018,~~2019, these material weaknesses create a reasonable possibility that a material misstatement of account balances or disclosures in annual or interim consolidated financial statements may not be prevented or detected in a timely manner.Accordingly, the Company concluded that the deficiencies represent material weaknesses in its internal control over financial reporting and its internal control over financial reporting was not effective as of December 31, ~~2018.~~2019.

The Company’s independent registered public accounting firm, KPMG LLP, which audited the ~~2018~~2019 consolidated financial statements included in the ~~2018~~2019 Form 10-K, expressed an adverse opinion on the operating effectiveness of the Company's internal control over financial reporting.

Remediation Plan

The Company’s remediation efforts are ongoing and it will continue its initiatives to implement and document policies and procedures, and strengthen the Company’s internal control environment. Remediation of the identified material weaknesses and strengthening the Company’s internal control environment will ~~require a substantial effort throughout 2019, and those efforts will~~ extend into ~~2020.~~ 2021.In addition, the Company is monitoring the impact of COVID-19 on its remediation plan.Depending on the severity and 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.

The material weaknesses cannot be considered completely remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

To remediate the material weaknesses described above, the Company ~~plans to pursue~~is pursuing the six remediation steps identified in the 2018 Third Quarter 10-Q.To date, the Company has accomplished the following as part of those remediation steps:


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.

Review and update, as necessary, documentation of relevant processes, policies and procedures, and design of relevant controls, with respect to the Company’s internal control over financial reporting. The Company intends to implement any necessary changes as a result of deficiencies identified in its relevant processes, policies and procedures as promptly as practical and to satisfy documentation requirements under Section 404 of the Sarbanes-Oxley Act.

Seek to ensure that the Company’s internal control over financial reporting is properly designed, implemented, operating effectively, and appropriately documented by (i) enhancing the design of existing control activities and/or implementing additional control activities, as needed, (ii) monitoring the operating effectiveness of those controls, and (iii) ensuring that sufficient documentation exists to evidence the design, implementation, and operation of those controls.


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.~~

a.Identified material processes and significant locations for the purpose of identifying risks of material misstatement to the Company’s financial statements,

b.Conducted interviews with relevant parties to ensure our understanding of the activities involved in the recording of transactions within material processes,

c.Substantially completed a comprehensive review and update, as necessary, of the documentation of relevant processes with respect to the Company’s internal control over financial reporting,

d.Documented significant elements of a comprehensive risk assessment and internal control gap analysis and commenced the validation thereof with key stakeholders, and

e.Commenced the design of certain new or redesigned internal controls.

The Company ~~has hired~~continues to work with its outside consultant, an internationally recognized accounting firm, ~~as its outside consultant,~~ to assist in ~~achieving the objectives described above. The Company and its outside consultant have prepared and delivered to the Audit Committee~~

~~of the Board a detailed implementation schedule for~~completing the remediation plan.The Company believes that its remediation plan will be sufficient to remediate the identified material weaknesses and strengthen its internal control over financial reporting.As the Company continues to evaluate, and works to improve, its internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary.The Company cannot assure you, however, when it will remediate such weaknesses, nor can it be certain whether additional actions will be required or the costs of any such actions.Moreover, the Company cannot assure you that additional material weaknesses will not arise in the future.

Changes in Internal Control Over Financial Reporting

The Company is in the process of implementing certain changes in its internal controls to remediate the material weaknesses described above. The implementation of the material aspects of this plan began in the second quarter of 2019. ~~During the second and third quarters,~~Except as noted above with the assistance of its outside consultant, the Company visited key locations throughout the organization to understand and document relevant financial processes and to determine relevant systems that support those processes. This is a necessary steprespect to the ~~conduct of a robust risk assessment and associated control gap analysis and the ultimate remediation~~implementation of the weaknesses in the Company’s internal controls over financial reporting. With the assistance of its outside consultant, the Company in the third quarter of 2019 completed the documentation of a substantial portion of its relevant financial processes and began the process of conducting risk assessments. As a result,remediation plan, there has been no change in the Company’s internal control over financial reporting during the quarter ended ~~September 30, 2019,~~March 31, 2020, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

PART II - OTHER INFORMATION


~~Item 1A.~~	Item 1A. Risk Factors.

As disclosed in “Item 1A. Risk Factors” in the ~~2018~~2019 Form 10-K, there are a number of risks and uncertainties that can have a material effect on the operating results of our businesses and our financial condition. ~~There~~Except for the item shown below, there are no additional material updates or changes to our risk factors since the filing of the ~~2018~~2019 Form 10-K.

Our business and operations, and the operations of our customers, suppliers and others we do business with, may be adversely affected by epidemics such as the recent coronavirus (or COVID-19) pandemic, which could adversely affect our financial condition, results of operations and cash flows. We may face risks related to health epidemics or outbreaks of communicable diseases. The outbreak of such a communicable disease could result in a widespread health crisis that could adversely affect general commercial activity and the economies and financial markets of many countries. For example, COVID-19 has spread across the globe to every country in which the Company does business and is impacting worldwide economic activity. A public health epidemic, including COVID-19, poses the risk that we or our contractors, suppliers, customers and other business partners may be prevented or otherwise adversely affected in the conduct of business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities and by other government mandates or policy changes. For example, our PE Films Pune, India plant was temporarily shut by government mandate and our Aluminum Extrusions Newnan, Georgia plant was temporarily shut twice for disinfecting. We may also face staffing issues if our employees become ill from an epidemic, are subject to epidemic-related “stay-at- home” orders, or absenteeism increases because of fear of epidemic-related health risks. Some Company employees have tested positive for COVID-19, with additional employees absent, pending test results or self-quarantined. An epidemic may also cause a significant reduction in demand for one or more of our products as a result of a drop in product-specific demand, because of an epidemic’s impact on the world economy generally, or for other reasons. For example, our AACOA Aluminum Extrusions plants have seen a significant decline in demand for products they sell to customers who serve markets for consumer durable products, building, construction and automobiles. For more information on the effect of COVID-19 on our Bonnell Aluminum business, see “The Impact of COVID-19 – Financial Considerations” above. As a result of an epidemic, we may be unable to meet our supply commitments or otherwise fulfill our customers’ needs due to disruptions in our manufacturing and supply arrangements, including as a result of constrained workforce capacity, interruption of raw material supplies, transportation disruptions or a loss or disruption of other key elements of our manufacturing and distribution capability. An epidemic may cause the failure of, or default in performance by, third parties we rely on to supply our manufacturing operations, to process, transport or purchase our products, to finance our operations, and to otherwise provide products and services to the Company in support of our business and operations.While it is not possible at this time to estimate the impact that any particular epidemic, including COVID-19, could have on the Company’s business, the extent of that impact would likely be affected by factors outside of our control such as the severity, duration and spread of such an epidemic, the measures taken by the governments of countries affected and the ability of our customers and consumers to access government programs providing liquidity and support during the crisis. The impact of an epidemic on our employees, our customers, our supply chains, demand for our products, our ability to supply customers, our operating costs, and our other business activities, could adversely affect our financial condition, results of operations and cash flows.

Item 6. Exhibits.


~~Item 6.~~Exhibit Nos.			~~Exhibits.~~



~~Exhibit~~ ~~Nos.~~ 3.1						Amended and Restated Bylaws of Tredegar Corporation, as of March 26, 2020 (filed as Exhibit 3.1 to Tredegar's Current Report on Form 8-K (File No. 1-10258), filed March 30, 2020 and incorporated herein by reference).

10.18						Form of Notice of Stock Award and Stock Award Terms and Conditions.
~~31.1~~
10.19						Form of Notice of Stock Appreciation Right Grant and Stock Appreciation Right Terms and Conditions.

10.20						Form of Notice of Nonstatutory Stock Option Grant and Nonstatutory Stock Option Terms and Conditions.

31.1						Certification of President and Chief 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 Vice President and Chief 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 President and Chief 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 Vice President and Chief 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						XBRL Instance Document and Related Items.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Tredegar Corporation

(Registrant)

Date:

May 11, 2020

~~Tredegar Corporation~~

~~(Registrant)~~

~~Date:~~

~~November 6, 2019~~

/s/ John M. Steitz

John M. Steitz

President and Chief Executive Officer

(Principal Executive Officer)

Date:

~~November 6, 2019~~May 11, 2020

/s/ D. Andrew Edwards

D. Andrew Edwards

Vice President and Chief Financial Officer

(Principal Financial Officer)

Date:

~~November 6, 2019~~May 11, 2020

/s/ Frasier W. Brickhouse, II

Frasier W. Brickhouse, II

Corporate Treasurer and Controller

(Principal Accounting Officer)


	Nine Months Ended September 30,							Three Months Ended March 31,
	2019			2018				2020		2019
Cash flows from operating activities:							Cash flows from operating activities:
Net income (loss)	$	51,395		$	(1,314	)	Net income (loss)	$	(22,321)	$	19,785
Adjustments for noncash items:							Adjustments for noncash items:
Depreciation	22,572			22,272			Depreciation	7,557		7,168
Amortization of identifiable intangibles	5,182			3,076			Amortization of identifiable intangibles	758		891
Amortization of right-of-use lease asset	1,899			—
Reduction of right-of-use lease asset							Reduction of right-of-use lease asset	696		632
Goodwill impairment	—			46,792			Goodwill impairment	13,696		—
Deferred income taxes	7,404			1,152			Deferred income taxes	(9,804)		2,410
Accrued pension and post-retirement benefits	7,246			7,809			Accrued pension and post-retirement benefits	3,567		2,415
(Gain)/loss on investment in kaléo accounted for under the fair value method	(10,900		)	(11,900		)
(Gain)/loss on asset impairments and divestitures	519			185
Net (gain)/loss on disposal of assets	(6,328		)	(86		)
Changes in assets and liabilities, net of effects of acquisitions and divestitures:
(Gain) loss on investment in kaléo accounted for under the fair value method							(Gain) loss on investment in kaléo accounted for under the fair value method	26,100		(17,082)
(Gain) loss on asset impairments and divestitures							(Gain) loss on asset impairments and divestitures	—		421
Net (gain) loss on disposal of assets							Net (gain) loss on disposal of assets	—		(385)

Changes in assets and liabilities:							Changes in assets and liabilities:
Accounts and other receivables	7,715			(13,020		)	Accounts and other receivables	(2,849)		1,595
Inventories	6,625			(9,204		)	Inventories	(6,982)		(6,794)
Income taxes recoverable/payable	1,439			25,912			Income taxes recoverable/payable	3,478		1,664
Prepaid expenses and other	14			(1,655		)	Prepaid expenses and other	(294)		1,078
Accounts payable and accrued expenses	(223		)	29,452			Accounts payable and accrued expenses	3,588		(2,033)
Lease liability	(1,991		)	—			Lease liability	(741)		(640)
Pension and postretirement benefit plan contributions	(6,692		)	(7,182		)	Pension and postretirement benefit plan contributions	(1,967)		(1,724)
Other, net	447			705			Other, net	595		1,727
Net cash provided by operating activities	86,323			92,994			Net cash provided by operating activities	15,077		11,128
Cash flows from investing activities:							Cash flows from investing activities:
Capital expenditures	(37,214		)	(25,078		)	Capital expenditures	(4,854)		(12,879)
Return of escrowed funds relating to acquisition earn-out	—			4,250

Proceeds from the sale of assets and other	10,931			1,108			Proceeds from the sale of assets and other	—		22
Net cash used in investing activities	(26,283		)	(19,720		)	Net cash used in investing activities	(4,854)		(12,857)
Cash flows from financing activities:							Cash flows from financing activities:
Borrowings	53,000			34,750			Borrowings	16,500		23,750
Debt principal payments	(86,500		)	(95,750		)	Debt principal payments	(15,500)		(15,250)
Dividends paid	(11,322		)	(10,943		)	Dividends paid	(4,005)		(3,652)
Debt financing costs	(1,817		)	—
Proceeds from exercise of stock options and other	(854		)	1,004
Net cash used in financing activities	(47,493		)	(70,939		)

Repurchase of employee common stock for tax withholdings							Repurchase of employee common stock for tax withholdings	(586)		(815)

Net cash (used in) provided by financing activities							Net cash (used in) provided by financing activities	(3,591)		4,033
Effect of exchange rate changes on cash	(2,292		)	(2,050		)	Effect of exchange rate changes on cash	(2,995)		(399)
Increase in cash, cash equivalents and restricted cash	10,255			285
Cash, cash equivalents and restricted cash at beginning of period	34,397			36,491
Cash, cash equivalents and restricted cash at end of period	$	44,652		$	36,776
Increase in cash & cash equivalents							Increase in cash & cash equivalents	3,637		1,905
Cash and cash equivalents at beginning of period							Cash and cash equivalents at beginning of period	31,422		34,397
Cash and cash equivalents at end of period							Cash and cash equivalents at end of period	$	35,059	$	36,302


	March 31,			December 31,
(In thousands)		2020			2019
Customer receivables		$	104,604		$	106,153
Other accounts and notes receivable		4,772			4,441
Total accounts and other receivables		109,376			110,594
Less: Allowance for bad debts and sales returns		(3,165)			(3,036)
Total accounts and other receivables, net		$	106,211		$	107,558



	September 30,			December 31,
(In thousands)	2019			2018
Customer receivables	$	114,112		$	122,182
Other accounts and notes receivable	4,689			5,482
Total accounts and other receivables	118,801			127,664
Less: Allowance for bad debts and sales returns	(3,140		)	(2,937		)
Total accounts and other receivables, net	$	115,661		$	124,727



(In thousands)	Severance			Asset Impairments			Other			Total
Balance at January 1, 2019	$	616		$	—		$	160		$	776
Changes in 2019:
Charges:
Shanghai plant shutdown	101			—			625			726
Lake Zurich plant shutdown	720			206			—			926
PC Europe consolidation	594			96			—			690
Other restructuring charges^(a)	628			573			52			1,253
	2,043			875			677			3,595
Cash payments	(1,212		)	—			(721		)	(1,933		)
Charges against assets	—			(875		)	—			(875		)
Balance at September 30, 2019	$	1,447		$	—		$	116		$	1,563
(a) Asset impairments not related to restructuring or exit and disposal activities are described in a paragraph above.


		September 30,		December 31,			March 31,			December 31,
(In thousands)	(In thousands)	2019		2018		(In thousands)		2020			2019
Finished goods	Finished goods	$	22,638	$	24,938	Finished goods		$	23,116		$	24,504
Work-in-process	Work-in-process	13,565		15,648		Work-in-process		13,939			12,328
Raw materials	Raw materials	29,014		33,741		Raw materials		27,079			24,735
Stores, supplies and other	Stores, supplies and other	20,098		19,483		Stores, supplies and other		20,081			19,813
Total	Total	$	85,315	$	93,810	Total		$	84,215		$	81,380


											Accumulated Other Comprehensive Income (Loss)
	Common Stock		Retained Earnings		Trust for Savings Restoration Plan		Foreign Currency Translation		Gain (Loss) on Derivative Financial Instruments		Pension & Other Post-retirement Benefit Adjustment		Total Shareholders’ Equity
Balance at January 1, 2020	$	45,514	$	530,478	$	(1,592)	$	(100,663)	$	(1,307)	$	(95,681)	$	376,749
Net income (loss)	—		(22,321)		—		—		—		—		(22,321)
Other comprehensive income (loss):
Foreign currency translation adjustment (net of tax benefit of $1,283)	—		—		—		(11,529)		—		—		(11,529)
Derivative financial instruments adjustment (net of tax benefit of $1,226)	—		—		—		—		(3,775)		—		(3,775)
Amortization of prior service costs and net gains or losses (net of tax of $836)	—		—		—		—		—		2,931		2,931
Cash dividends declared ($0.12 per share)	—		(4,005)		—		—		—		—		(4,005)
Stock-based compensation expense	1,126		—		—		—		—		—		1,126
Repurchase of employee common stock for tax withholdings	(586)		—		—		—		—		—		(586)


Tredegar common stock purchased by trust for savings restoration plan	—		9		(9)		—		—		—		—
Balance at March 31, 2020	$	46,054	$	504,161	$	(1,601)	$	(112,192)	$	(5,082)	$	(92,750)	$	338,590



(in millions)	Three Months Ended
	September 30, 2019		December 31, 2019
AACOA - accelerated	$	1.2	$	3.6
Futura - accelerated	1.3		3.9
Futura - ongoing¹	0.1		0.1
Total amortization	$	2.6	$	7.6
1. Amortization based on original useful life.


3	~~ASSET IMPAIRMENTS AND COSTS ASSOCIATED WITH EXIT AND DISPOSAL ACTIVITIES~~


	Three Months Ended		Nine Months Ended			Three Months Ended
	September 30,		September 30,			March 31,
(In thousands)	2019	2018	2019	2018	(In thousands)	2020	2019
Weighted average shares outstanding used to compute basic earnings per share	33,271	33,110	33,222	33,056	Weighted average shares outstanding used to compute basic earnings per share	33,313	33,123
Incremental dilutive shares attributable to stock options and restricted stock	14	—	8	—	Incremental dilutive shares attributable to stock options and restricted stock	—	4
Shares used to compute diluted earnings per share	33,285	33,110	33,230	33,056	Shares used to compute diluted earnings per share	33,313	33,127



(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	(6,291		)	(3,065		)	—			(9,356		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			2,209			6,236			8,445
Net other comprehensive income (loss) - current period	(6,291		)	(856		)	6,236			(911		)
Ending balance, September 30, 2019	$	(103,231	)	$	(2,457	)	$	(75,210	)	$	(180,898	)



(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	$	(816	)	Cost of sales
Foreign currency forward contracts, before taxes	(101		)	Selling, general & administrative
Foreign currency forward contracts, before taxes	15			Cost of sales
Total, before taxes	(902		)
Income tax expense (benefit)	(179		)	Income taxes
Total, net of tax	$	(723	)
Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes	$	(2,672	)	(a)
Income tax expense (benefit)	(593		)	Income taxes
Total, net of tax	$	(2,079	)


~~(a)~~(In Thousands)	~~This component~~Amount reclassified from other comprehensive income (loss)		Location of gain (loss) reclassified from accumulated other comprehensive income (loss) ~~is included in the computation~~to net income (loss)

Gain (loss) on derivative financial instruments:
Aluminum future contracts, before taxes	$	(640)	Cost of sales
Foreign currency forward contracts, before taxes	(794)		Selling, general & administrative
Foreign currency forward contracts, before taxes	15		Cost of sales
Total, before taxes	(1,419)
Income tax expense (benefit)	(306)		Income taxes
Total, net ~~periodic~~of tax	$	(1,113)
Amortization of pension ~~cost (see Note 9 for additional detail).~~and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes	$	(3,767)	(a)
Income tax expense (benefit)	(836)		Income taxes
Total, net of tax	$	(2,931)


~~(a)~~	~~This component of accumulated other comprehensive income (loss) is included in the computation of net periodic pension cost (see Note 9 for additional detail).~~


($ Millions)			EV-to-Adjusted EBITDA Multiple
			5.0 x			6.0 x		7.0 x		8.0x		9.0x
Weighting to DCF Method	50	%	$	58.2		$	63.6	$	69.0	$	74.4	$	79.8
			40		%	$	56.1	$	62.6	$	69.1	$	75.6	$	82.1
			30		%	$	54.1	$	61.7	$	69.3	$	76.9	$	84.4
			20		%	$	52.1	$	60.8	$	69.4	$	78.1	$	86.7
			10		%	$	50.1	$	59.8	$	69.6	$	79.3	$	89.0
			0		%	$	48.0	$	58.9	$	69.7	$	80.5	$	91.3



USD Notional Amount (000s)	Average Forward Rate Contracted on USD/BRL	R$ Equivalent Amount (000s)	Applicable Month	Estimated % of Terphane Ltda. R$ Operating Cost Exposure Hedged

$1,800	3.9203	R$7,056	Oct-19	67%
$1,800	3.9331	R$7,080	Nov-19	67%
$1,800	3.9455	R$7,102	Dec-19	73%
$1,400	3.7966	R$5,315	Jan-20	50%
$1,400	3.8041	R$5,326	Feb-20	51%
$1,400	3.8086	R$5,332	Mar-20	48%
$1,400	3.8163	R$5,343	Apr-20	49%
$1,400	3.8244	R$5,354	May-20	50%
$1,400	3.8323	R$5,365	Jun-20	49%
$1,400	3.8426	R$5,380	Jul-20	47%
$1,400	3.8545	R$5,396	Aug-20	49%
$1,400	3.8656	R$5,412	Sep-20	48%
$1,400	3.8769	R$5,428	Oct-20	49%
$1,400	3.8877	R$5,443	Nov-20	49%
$1,400	3.8997	R$5,460	Dec-20	53%
$22,200	3.8645	R$85,792		53%


1	~~BASIS OF PRESENTATION~~


2	~~REVENUE RECOGNITION~~


4	~~INVENTORIES~~


5	~~EARNINGS PER SHARE~~


(In thousands)	Cash Flow Derivative Hedges															(In thousands)	Cash Flow Derivative Hedges
	Three Months Ended September 30,																Three Months Ended March 31,
	Aluminum Futures Contracts						Foreign Currency Forwards										Aluminum Futures Contracts								Foreign Currency Forwards
	2019			2018			2019		2019			2018		2018			2020		2019		2020		2020			2019		2019
Amount of pretax gain (loss) recognized in other comprehensive income (loss)	$	(449	)	$	(1,176	)	$	—	$	(1,501	)	$	—	(1,353	)	Amount of pretax gain (loss) recognized in other comprehensive income (loss)	$	(1,594)	$	(246)	$	—	$	(4,824)		$	—	(816)
Location of gain (loss) reclassified from accumulated other comprehensive income (loss) into net income (effective portion)	Cost of sales			Cost of sales			Cost of sales		Selling, general & admin			Cost of sales		Selling, general & admin		Location of gain (loss) reclassified from accumulated other comprehensive income (loss) into net income (effective portion)	Cost of sales		Cost of sales		Cost of sales		Selling, general & admin			Cost of sales		Selling, general & admin
Amount of pretax gain (loss) reclassified from accumulated other comprehensive income (loss) to net income effective portion)	$	(816	)	$	300		$	15	$	(101	)	$	15	(807	)	Amount of pretax gain (loss) reclassified from accumulated other comprehensive income (loss) to net income effective portion)	$	(640)	$	(617)	$	15	$	(794)		$	15	(191)
	Nine Months Ended September 30,
	Aluminum Futures Contracts						Foreign Currency Forwards
	2019			2018			2019					2018		2018
Amount of pre-tax gain (loss) recognized in other comprehensive income (loss)	$	(1,887	)	$	(111	)	$	—	$	(1,598	)	$	—	(3,032	)
Location of gain (loss) reclassified from accumulated other comprehensive income (loss) into net income (effective portion)	Cost of sales			Cost of sales			Cost of sales		Selling, general & admin			Cost of sales		Selling, general & admin
Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (effective portion)	$	(2,039	)	$	1,244		$	46	$	(661	)	$	46	(1,226	)


	Pension Benefits						Other Post-Retirement Benefits							Pension Benefits						Other Post-Retirement Benefits
	Three Months Ended September 30,						Three Months Ended September 30,							Three Months Ended March 31,						Three Months Ended March 31,
(In thousands)	2019			2018			2019			2018			(In thousands)	2020		2019		2020		2019
Service cost	$	—		$	7		$	9		$	7		Service cost	$	—	$	—	$	9	$	8
Interest cost	3,067			2,818			72			65			Interest cost	2,535		3,067		60		73
Expected return on plan assets	(3,404		)	(3,736		)	—			—			Expected return on plan assets	(2,804)		(3,404)		—		—
Amortization of prior service costs, (gains) losses and net transition asset	2,729			3,565			(58		)	(75		)	Amortization of prior service costs, (gains) losses and net transition asset	3,814		2,729		(47)		(58)
Net periodic benefit cost	$	2,392		$	2,654		$	23		$	(3	)	Net periodic benefit cost	$	3,545	$	2,392	$	22	$	23

	Pension Benefits						Other Post-Retirement Benefits
	Nine Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2019			2018			2019			2018
Service cost	$	—		$	17		$	25		$	27
Interest cost	9,202			8,582			218			203
Expected return on plan assets	(10,212		)	(11,258		)	—			—
Amortization of prior service costs, (gains) losses and net transition asset	8,188			10,421			(173		)	(183		)
Net periodic benefit cost	$	7,178		$	7,762		$	70		$	47



(In thousands)		As of September 30, 2019
Maturity of Lease Liabilities	Future Lease Payments
2019 (remaining)		$	923
2020		3,686
2021		3,473
2022		2,547
2023		2,411
Thereafter		12,182
Total undiscounted operating lease payments		25,222
Less: Imputed interest		4,183
Present value of operating lease liabilities		$	21,039

Balance Sheet Classification
Lease liabilities, short-term		$	2,842
Lease liabilities, long-term		18,197
Total operating lease liabilities		$	21,039

Other Information:
Weighted-average remaining lease term for operating leases		9 Years
Weighted-average discount rate for operating leases		4.32		%



(In thousands)
2019	$	4,445
2020	4,007
2021	3,591
2022	2,391
2023	1,245
Remainder	2,630
Total minimum lease payments	$	18,309



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


~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~


	Three Months Ended								Favorable/ (Unfavorable) % Change
(In thousands, except percentages)	March 31,
			2020			2019
Sales volume (lbs)	47,317			53,616			(11.7)	%
Net sales	$	117,887		$	139,047		(15.2)	%
Ongoing operations:
EBITDA	$	11,677		$	16,166		(27.8)	%
Depreciation & amortization	$	(4,113)		$	(4,081)		(0.8)	%
EBIT*	$	7,564		$	12,085		(37.4)	%
Capital expenditures	$	1,574		$	4,367
* See the net sales and EBITDA from ongoing operations by segment table in Note 11 for a reconciliation of this non-GAAP measure to GAAP.



($ in millions)			Three Months Ended September 30,
			2019			2018
Aluminum Extrusions:
Losses from sale of assets, investment writedowns and other items:
	Wind damage to roof of Elkhart, Indiana plant²		$	0.3		$	0.1
	Environmental charges at Carthage Tennessee plant¹		0.3			0.2
		Total for Aluminum Extrusions	$	0.6		$	0.3

PE Films:
(Gains)/losses associated with plant shutdowns, asset impairments and restructurings:
	Shanghai plant shutdown:
		Asset-related expenses	$	0.2		$	—
		Employee-related expenses	—			1.1
		Employee related expenses - administrative¹	—			0.2
		Gain from sale of plant³	(6.3		)	—
		Accelerated depreciation¹	—			0.4
	Consolidation of Personal Care manufacturing facilities - U.S. and Europe:⁴
		Severance	0.5			—
	Lake Zurich, Illinois plant shutdown and transfer of production to new elastics lines in Terre Haute, Indiana:⁴
		Severance	0.5			—
		Accelerated depreciation¹	0.5			—
		Product qualifications¹	0.1			—
	Reserve for inventory impairment - Personal Care's Hungary facility		0.2			—
	Other restructuring costs - severance		0.1			0.2
		Total	(4.2		)	1.9

Losses from sale of assets, investment writedowns and other items:
	Estimated excess costs associated with ramp-up of new product offerings and additional expenses related to strategic capacity expansion projects¹		0.3			0.2
	Costs to prepare a market study²		—			0.2
		Total	0.3			0.4

		Total for PE Films	$	(3.9	)	$	2.3

Corporate:
	Professional fees associated with: 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 guidance²		$	1.6		$	0.2
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. 4. See additional details in Note 3.


Net Capitalization and Indebtedness as of March 31, 2020
(In thousands)
Net capitalization:
Cash and cash equivalents	$	35,059
Debt:
Credit Agreement	43,000


Debt, net of cash and cash equivalents	7,941
Shareholders’ equity	338,590
Net capitalization	$	346,531
Indebtedness as defined in Credit Agreement:
Total debt	$	43,000


Other	—
Indebtedness	$	43,000


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



Computations of Adjusted EBITDA, Leverage Ratio and Interest Coverage Ratio as Defined in the Credit Agreement Along with Related Most Restrictive Covenants as of and for the Twelve Months Ended September 30, 2019 (In Thousands)
Computation of adjusted EBITDA as defined in the Credit Agreement for the twelve months ended September 30, 2019:
Net income (loss)	$	77,550
Plus:
After-tax losses related to discontinued operations	—
Total income tax expense for continuing operations	16,815
Interest expense	4,517
Depreciation and amortization expense (excluding amortization of right-of-use lease assets) for continuing operations	36,210
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)	11,079
Charges related to stock option grants and awards accounted for under the fair value-based method	2,536
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	(242		)
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	(47,182		)
Plus cash dividends declared on investments in an amount not to exceed $10,000 for such period	10,000
Plus or minus, as applicable, pro forma EBITDA adjustments associated with acquisitions and asset dispositions	—
Adjusted EBITDA as defined in the Credit Agreement	111,033
Computations of leverage and interest coverage ratios as defined in the Credit Agreement at September 30, 2019:
Leverage ratio (indebtedness-to-adjusted EBITDA)	.61x
Interest coverage ratio (adjusted EBITDA-to-interest expense)	24.58x
Most restrictive covenants as defined in the Credit Agreement:
Maximum permitted aggregate amount of dividends that can be paid by Tredegar during the term of the Credit Agreement ($130,000 plus 50% of net income generated for each quarter beginning April 1, 2019)	$	145,805
Maximum leverage ratio permitted	4.00
Minimum interest coverage ratio permitted	3.00