UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~June~~September 30, 2021


¨			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
(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

¨☐

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 ~~July 30,~~October 29, 2021: ~~33,727,317~~33,742,316

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Tredegar Corporation

Condensed Consolidated Balance Sheets

(In Thousands, Except Share Data)

(Unaudited)


		June 30,		December 31,			September 30,		December 31,
		2021		2020			2021		2020
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	18,298	$	11,846	Cash and cash equivalents	$	30,253	$	11,846
Accounts and other receivables, net of allowance for doubtful accounts and sales returns of $2,848 in 2021 and $2,797 in 2020		99,652		86,327
Accounts and other receivables, net						Accounts and other receivables, net	97,185		86,327
Income taxes recoverable	Income taxes recoverable	141		2,807		Income taxes recoverable	2,013		2,807
Inventories	Inventories	81,161		66,437		Inventories	85,686		66,437
Prepaid expenses and other	Prepaid expenses and other	15,219		19,679		Prepaid expenses and other	13,502		19,679
Current assets of discontinued operations	Current assets of discontinued operations	151		1,339		Current assets of discontinued operations	151		1,339
Total current assets	Total current assets	214,622		188,435		Total current assets	228,790		188,435
Property, plant and equipment, at cost	Property, plant and equipment, at cost	488,580		475,619		Property, plant and equipment, at cost	493,094		475,619
Less accumulated depreciation	Less accumulated depreciation	(320,023)		(309,074)		Less accumulated depreciation	(325,141)		(309,074)
Net property, plant and equipment	Net property, plant and equipment	168,557		166,545		Net property, plant and equipment	167,953		166,545
Right-of-use leased assets	Right-of-use leased assets	14,973		16,037		Right-of-use leased assets	14,453		16,037
Investment in kaléo (cost basis of $7,500)	Investment in kaléo (cost basis of $7,500)	35,200		34,600		Investment in kaléo (cost basis of $7,500)	35,479		34,600
Identifiable intangible assets, net	Identifiable intangible assets, net	17,408		18,820		Identifiable intangible assets, net	16,608		18,820
Goodwill	Goodwill	67,708		67,708		Goodwill	67,708		67,708
Deferred income taxes	Deferred income taxes	14,205		19,068		Deferred income taxes	12,101		19,068
Other assets	Other assets	2,691		3,506		Other assets	2,591		3,506
Non-current assets of discontinued operations	Non-current assets of discontinued operations	151		151		Non-current assets of discontinued operations	151		151
Total assets	Total assets	$	535,515	$	514,870	Total assets	$	545,834	$	514,870
Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity					Liabilities and Shareholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	113,202	$	89,702	Accounts payable	$	115,879	$	89,702
Accrued expenses	Accrued expenses	33,272		40,741		Accrued expenses	31,672		40,741
Lease liability, short-term	Lease liability, short-term	2,078		2,082		Lease liability, short-term	2,086		2,082
Income taxes payable	Income taxes payable	767		706		Income taxes payable	56		706
Current liabilities of discontinued operations	Current liabilities of discontinued operations	1,033		7,521		Current liabilities of discontinued operations	370		7,521
Total current liabilities	Total current liabilities	150,352		140,752		Total current liabilities	150,063		140,752
Lease liability, long-term	Lease liability, long-term	13,904		14,949		Lease liability, long-term	13,376		14,949
Long-term debt	Long-term debt	117,000		134,000		Long-term debt	127,000		134,000
Pension and other postretirement benefit obligations, net	Pension and other postretirement benefit obligations, net	105,161		110,585		Pension and other postretirement benefit obligations, net	102,970		110,585
Other non-current liabilities	Other non-current liabilities	5,758		5,529		Other non-current liabilities	6,146		5,529
Total liabilities	Total liabilities	392,175		405,815		Total liabilities	399,555		405,815
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Common stock, no par value (issued and outstanding 33,713,597 shares at June 30, 2021 and 33,457,176 shares at December 31, 2020)		52,940		50,066
Common stock held in trust for savings restoration plan (106,479 shares at June 30, 2021 and 105,067 shares at December 31, 2020)		(2,109)		(2,087)
Common stock, no par value (issued and outstanding 33,727,317 shares at September 30, 2021 and 33,457,176 shares at December 31, 2020)						Common stock, no par value (issued and outstanding 33,727,317 shares at September 30, 2021 and 33,457,176 shares at December 31, 2020)	53,906		50,066
Common stock held in trust for savings restoration plan (107,397 shares at September 30, 2021 and 105,067 shares at December 31, 2020)						Common stock held in trust for savings restoration plan (107,397 shares at September 30, 2021 and 105,067 shares at December 31, 2020)	(2,122)		(2,087)
Accumulated other comprehensive income (loss):	Accumulated other comprehensive income (loss):					Accumulated other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	(82,804)		(84,149)		Foreign currency translation adjustment	(85,592)		(84,149)
Gain (loss) on derivative financial instruments	Gain (loss) on derivative financial instruments	3,496		2,264		Gain (loss) on derivative financial instruments	2,779		2,264
Pension and other postretirement benefit adjustments	Pension and other postretirement benefit adjustments	(89,882)		(96,519)		Pension and other postretirement benefit adjustments	(86,565)		(96,519)
Retained earnings	Retained earnings	261,699		239,480		Retained earnings	263,873		239,480
Total shareholders’ equity	Total shareholders’ equity	143,340		109,055		Total shareholders’ equity	146,279		109,055
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	535,515	$	514,870	Total liabilities and shareholders’ equity	$	545,834	$	514,870

See accompanying notes to financial statements.

Tredegar Corporation

Condensed Consolidated Statements of Income (Loss)

(In Thousands, Except Per Share Data)

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Revenues and other items:	Revenues and other items:									Revenues and other items:
Sales	Sales	$	211,129	$	186,259	$	395,951	$	378,396	Sales	$	209,517	$	184,370	$	605,468	$	562,766
Other income (expense), net	Other income (expense), net	8,122		168		8,882		(25,964)		Other income (expense), net	391		(37,934)		9,272		(63,898)
		219,251		186,427		404,833		352,432			209,908		146,436		614,740		498,868
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of goods sold	Cost of goods sold	158,692		134,035		299,977		279,204		Cost of goods sold	170,756		136,008		470,733		415,212
Freight	Freight	7,044		5,894		13,267		12,769		Freight	7,264		6,453		20,531		19,222
Selling, general and administrative	Selling, general and administrative	20,275		21,190		38,659		41,234		Selling, general and administrative	16,767		20,420		55,422		61,654
Research and development	Research and development	1,436		2,237		3,157		4,407		Research and development	1,613		1,656		4,770		6,063
Amortization of identifiable intangibles	Amortization of identifiable intangibles	723		753		1,446		1,511		Amortization of identifiable intangibles	724		753		2,170		2,264
Pension and postretirement benefits	Pension and postretirement benefits	3,540		3,567		7,080		7,134		Pension and postretirement benefits	3,540		3,567		10,622		10,701
Interest expense	Interest expense	891		549		1,713		1,104		Interest expense	842		494		2,555		1,598
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	199		10		368		71		Asset impairments and costs associated with exit and disposal activities, net of adjustments	265		3		633		74
Goodwill impairment	Goodwill impairment	0		0		0		13,696		Goodwill impairment	—		—		—		13,696
Total	Total	192,800		168,235		365,667		361,130		Total	201,771		169,354		567,436		530,484
Income (loss) from continuing operations before income taxes	Income (loss) from continuing operations before income taxes	26,451		18,192		39,166		(8,698)		Income (loss) from continuing operations before income taxes	8,137		(22,918)		47,304		(31,616)
Income tax expense (benefit)	Income tax expense (benefit)	5,723		3,860		8,820		(2,366)		Income tax expense (benefit)	1,908		(5,942)		10,728		(8,308)
Net income (loss) from continuing operations	Net income (loss) from continuing operations	20,728		14,332		30,346		(6,332)		Net income (loss) from continuing operations	6,229		(16,976)		36,576		(23,308)
Income (loss) from discontinued operations, net of tax	Income (loss) from discontinued operations, net of tax	508		(3,136)		(79)		(4,794)		Income (loss) from discontinued operations, net of tax	(26)		(48,237)		(104)		(53,031)
Net income (loss)	Net income (loss)	$	21,236	$	11,196	$	30,267	$	(11,126)	Net income (loss)	$	6,203	$	(65,213)	$	36,472	$	(76,339)

Earnings (loss) per share:	Earnings (loss) per share:									Earnings (loss) per share:
Basic:	Basic:									Basic:
Continuing operations	Continuing operations	$	0.62	$	0.43	$	0.91	$	(0.19)	Continuing operations	$	0.19	$	(0.51)	$	1.09	$	(0.70)
Discontinued operations	Discontinued operations	0.02		(0.10)		0		(0.14)		Discontinued operations	—		(1.44)		—		(1.59)
Basic earnings (loss) per share	Basic earnings (loss) per share	$	0.64	$	0.33	$	0.91	$	(0.33)	Basic earnings (loss) per share	$	0.19	$	(1.95)	$	1.09	$	(2.29)
Diluted:	Diluted:									Diluted:
Continuing operations	Continuing operations	$	0.61	$	0.43	$	0.90	$	(0.19)	Continuing operations	$	0.19	$	(0.51)	$	1.09	$	(0.70)
Discontinued operations	Discontinued operations	0.02		(0.10)		0		(0.14)		Discontinued operations	—		(1.44)		—		(1.59)
Diluted earnings (loss) per share	Diluted earnings (loss) per share	$	0.63	$	0.33	$	0.90	$	(0.33)	Diluted earnings (loss) per share	$	0.19	$	(1.95)	$	1.09	$	(2.29)
Shares used to compute earnings (loss) per share:	Shares used to compute earnings (loss) per share:									Shares used to compute earnings (loss) per share:
Basic	Basic	33,594		33,435		33,500		33,374		Basic	33,620		33,439		33,541		33,396
Diluted	Diluted	33,740		33,436		33,692		33,374		Diluted	33,649		33,439		33,678		33,396

See accompanying notes to financial statements.

Tredegar Corporation

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

(Unaudited)


		Three Months Ended June 30,					Three Months Ended September 30,
		2021		2020			2021		2020
Net income (loss)	Net income (loss)	$	21,236	$	11,196	Net income (loss)	$	6,203	$	(65,213)
Other comprehensive income (loss):	Other comprehensive income (loss):					Other comprehensive income (loss):
Unrealized foreign currency translation adjustment (net of tax of $463 in 2021 and net of tax of $177 in 2020)		3,993		(474)
Derivative financial instruments adjustment (net of tax of $547 in 2021 and net of tax of $339 in 2020)		1,468		1,258
Amortization of prior service costs and net gains or losses (net of tax of $922 in 2021 and net of tax of $835 in 2020)		3,318		2,931
Unrealized foreign currency translation adjustment (net of tax benefit of $294 in 2021 and net of tax benefit of $19 in 2020)						Unrealized foreign currency translation adjustment (net of tax benefit of $294 in 2021 and net of tax benefit of $19 in 2020)	(2,788)		927
Derivative financial instruments adjustment (net of tax benefit of $174 in 2021 and net of tax of $618 in 2020)						Derivative financial instruments adjustment (net of tax benefit of $174 in 2021 and net of tax of $618 in 2020)	(717)		2,213
Amortization of prior service costs and net gains or losses (net of tax of $927 in 2021 and net of tax of $836 in 2020)						Amortization of prior service costs and net gains or losses (net of tax of $927 in 2021 and net of tax of $836 in 2020)	3,317		2,931
Other comprehensive income (loss)	Other comprehensive income (loss)	8,779		3,715		Other comprehensive income (loss)	(188)		6,071
Comprehensive income (loss)	Comprehensive income (loss)	$	30,015	$	14,911	Comprehensive income (loss)	$	6,015	$	(59,142)


		Six Months Ended June 30,					Nine Months Ended September 30,
		2021		2020			2021		2020
Net income (loss)	Net income (loss)	$	30,267	$	(11,126)	Net income (loss)	$	36,472	$	(76,339)
Other comprehensive income (loss):	Other comprehensive income (loss):					Other comprehensive income (loss):
Unrealized foreign currency translation adjustment (net of tax of $191 in 2021 and net of tax benefit of $1,106 in 2020)		1,345		(12,003)
Derivative financial instruments adjustment (net of tax of $359 in 2021 and net of tax benefit of $887 in 2020)		1,232		(2,517)
Amortization of prior service costs and net gains or losses (net of tax of $1,846 in 2021 and net of tax of $1,671 in 2020)		6,637		5,862
Unrealized foreign currency translation adjustment (net of tax benefit of $103 in 2021 and net of tax benefit of $1,125 in 2020)						Unrealized foreign currency translation adjustment (net of tax benefit of $103 in 2021 and net of tax benefit of $1,125 in 2020)	(1,443)		(11,076)
Derivative financial instruments adjustment (net of tax of $185 in 2021 and net of tax benefit of $269 in 2020)						Derivative financial instruments adjustment (net of tax of $185 in 2021 and net of tax benefit of $269 in 2020)	515		(304)
Amortization of prior service costs and net gains or losses (net of tax of $2,773 in 2021 and net of tax of $2,507 in 2020)						Amortization of prior service costs and net gains or losses (net of tax of $2,773 in 2021 and net of tax of $2,507 in 2020)	9,954		8,793
Other comprehensive income (loss)	Other comprehensive income (loss)	9,214		(8,658)		Other comprehensive income (loss)	9,026		(2,587)
Comprehensive income (loss)	Comprehensive income (loss)	$	39,481	$	(19,784)	Comprehensive income (loss)	$	45,498	$	(78,926)

See accompanying notes to financial statements.

Tredegar Corporation

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)


		Six Months Ended June 30,					Nine Months Ended September 30,
		2021		2020			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	30,267	$	(11,126)	Net income (loss)	$	36,472	$	(76,339)
Adjustments for noncash items:	Adjustments for noncash items:					Adjustments for noncash items:
Depreciation	Depreciation	10,875		15,357		Depreciation	16,169		23,218
Amortization of identifiable intangibles	Amortization of identifiable intangibles	1,446		1,511		Amortization of identifiable intangibles	2,170		2,264
Reduction of right-of-use lease asset	Reduction of right-of-use lease asset	1,066		1,402		Reduction of right-of-use lease asset	1,582		2,102
Goodwill impairment	Goodwill impairment	0		13,696		Goodwill impairment	—		13,696
Deferred income taxes	Deferred income taxes	2,477		(8,461)		Deferred income taxes	4,120		(19,492)
Accrued pension and post-retirement benefits	Accrued pension and post-retirement benefits	7,080		7,134		Accrued pension and post-retirement benefits	10,622		10,701
Stock-based compensation expense	Stock-based compensation expense	2,444		2,520		Stock-based compensation expense	3,227		4,120
(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	(600)		24,800		(Gain) loss on investment in kaléo accounted for under the fair value method	(879)		61,000
Held for sale impairment loss on divested assets						Held for sale impairment loss on divested assets	—		45,054
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts and other receivables	Accounts and other receivables	(12,840)		2,303		Accounts and other receivables	(11,379)		4,961
Inventories	Inventories	(14,020)		(8,515)		Inventories	(19,902)		(2,761)
Income taxes recoverable/payable	Income taxes recoverable/payable	2,680		8,799		Income taxes recoverable/payable	111		5,332
Prepaid expenses and other	Prepaid expenses and other	7,267		(1,912)		Prepaid expenses and other	3,422		(5,305)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	8,040		(6,936)		Accounts payable and accrued expenses	12,078		(2,112)
Lease liability	Lease liability	(1,051)		(1,496)		Lease liability	(1,566)		(2,245)
Pension and postretirement benefit plan contributions	Pension and postretirement benefit plan contributions	(4,020)		(2,130)		Pension and postretirement benefit plan contributions	(5,510)		(2,254)
Other, net	Other, net	396		(884)		Other, net	750		4,386
Net cash provided by operating activities	Net cash provided by operating activities	41,507		36,062		Net cash provided by operating activities	51,487		66,326
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(11,324)		(8,806)		Capital expenditures	(19,576)		(13,416)

Proceeds from the sale of assets						Proceeds from the sale of assets	4,749		—
Net cash used in investing activities	Net cash used in investing activities	(11,324)		(8,806)		Net cash used in investing activities	(14,827)		(13,416)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Borrowings	Borrowings	34,000		25,000		Borrowings	69,250		25,000
Debt principal payments	Debt principal payments	(51,000)		(33,000)		Debt principal payments	(76,250)		(60,000)
Dividends paid	Dividends paid	(8,070)		(8,025)		Dividends paid	(12,114)		(12,048)
Other	Other	915		(586)		Other	915		(586)
Net cash used in financing activities	Net cash used in financing activities	(24,155)		(16,611)		Net cash used in financing activities	(18,199)		(47,634)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	424		(2,137)		Effect of exchange rate changes on cash	(54)		(1,676)
Increase in cash & cash equivalents	Increase in cash & cash equivalents	6,452		8,508		Increase in cash & cash equivalents	18,407		3,600
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	11,846		31,422		Cash and cash equivalents at beginning of period	11,846		31,422
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	18,298	$	39,930	Cash and cash equivalents at end of period	$	30,253	$	35,022

See accompanying notes to financial statements.

Tredegar Corporation

Condensed Consolidated Statements of Shareholders’ Equity

(In Thousands, Except Share and Per Share Data)

(Unaudited)

The following summarizes the changes in shareholders’ equity for the three month period ended ~~June~~September 30, 2021:
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 April 1, 2021 $ 51,557 $ 244,496 $ (2,097) $ (86,797) $ 2,028 $ (93,200) $ 115,987
Net income (loss) — 21,236 — — — — 21,236
Foreign currency translation adjustment (net of tax of $463) — — — 3,993 — — 3,993
Derivative financial instruments adjustment (net of tax of $547) — — — — 1,468 — 1,468
Amortization of prior service costs and net gains or losses (net of tax of $922) — — — — — 3,318 3,318
Cash dividends declared ($0.12 per share) — (4,045) — — — — (4,045)
Stock-based compensation expense 1,383 — — — — — 1,383
Tredegar common stock purchased by trust for savings restoration plan — 12 (12) — — — —
Balance June 30, 2021 $ 52,940 $ 261,699 $ (2,109) $ (82,804) $ 3,496 $ (89,882) $ 143,340


							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 July 1, 2021	$	52,940	$	261,699	$	(2,109)	$	(82,804)	$	3,496	$	(89,882)	$	143,340
Net income (loss)	—		6,203		—		—		—		—		6,203
Foreign currency translation adjustment (net of tax benefit of $294)	—		—		—		(2,788)		—		—		(2,788)
Derivative financial instruments adjustment (net of tax benefit of $174)	—		—		—		—		(717)		—		(717)
Amortization of prior service costs and net gains or losses (net of tax of $927)	—		—		—		—		—		3,317		3,317
Cash dividends declared ($0.12 per share)	—		(4,042)		—		—		—		—		(4,042)
Stock-based compensation expense	966		—		—		—		—		—		966
Tredegar common stock purchased by trust for savings restoration plan	—		13		(13)		—		—		—		—
Balance September 30, 2021	$	53,906	$	263,873	$	(2,122)	$	(85,592)	$	2,779	$	(86,565)	$	146,279

The following summarizes the changes in shareholders’ equity for the ~~six~~nine month period ended ~~June~~September 30, 2021:


								Accumulated Other Comprehensive Income (Loss)															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			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 January 1, 2021	Balance January 1, 2021	$	50,066	$	239,480	$	(2,087)	$	(84,149)	$	2,264	$	(96,519)	$	109,055	Balance January 1, 2021	$	50,066	$	239,480	$	(2,087)	$	(84,149)	$	2,264	$	(96,519)	$	109,055
Net income (loss)	Net income (loss)	—		30,267		—		—		—		—		30,267		Net income (loss)	—		36,472		—		—		—		—		36,472
Foreign currency translation adjustment (net of tax of $191)		—		—		—		1,345		—		—		1,345
Derivative financial instruments adjustment (net of tax of $359)		—		—		—		—		1,232		—		1,232
Amortization of prior service costs and net gains or losses (net of tax of $1,846)		—		—		—		—		—		6,637		6,637
Cash dividends declared ($0.24 per share)		—		(8,070)		—		—		—		—		(8,070)
Foreign currency translation adjustment (net of tax benefit of $103)																Foreign currency translation adjustment (net of tax benefit of $103)	—		—		—		(1,443)		—		—		(1,443)
Derivative financial instruments adjustment (net of tax of $185)																Derivative financial instruments adjustment (net of tax of $185)	—		—		—		—		515		—		515
Amortization of prior service costs and net gains or losses (net of tax of $2,773)																Amortization of prior service costs and net gains or losses (net of tax of $2,773)	—		—		—		—		—		9,954		9,954
Cash dividends declared ($0.36 per share)																Cash dividends declared ($0.36 per share)	—		(12,114)		—		—		—		—		(12,114)
Stock-based compensation expense	Stock-based compensation expense	1,959		—		—		—		—		—		1,959		Stock-based compensation expense	2,925		—		—		—		—		—		2,925
Issued upon exercise of stock options	Issued upon exercise of stock options	915		—		—		—		—		—		915		Issued upon exercise of stock options	915		—		—		—		—		—		915
Tredegar common stock purchased by trust for savings restoration plan	Tredegar common stock purchased by trust for savings restoration plan	—		22		(22)		—		—		—		—		Tredegar common stock purchased by trust for savings restoration plan	—		35		(35)		—		—		—		—
Balance June 30, 2021		$	52,940	$	261,699	$	(2,109)	$	(82,804)	$	3,496	$	(89,882)	$	143,340
Balance September 30, 2021																Balance September 30, 2021	$	53,906	$	263,873	$	(2,122)	$	(85,592)	$	2,779	$	(86,565)	$	146,279

The following summarizes the changes in shareholders’ equity for the three month period ended ~~June~~September 30, 2020:
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 April 1, 2020 $ 46,054 $ 504,161 $ (1,601) $ (112,192) $ (5,082) $ (92,750) $ 338,590
Net income (loss) — 11,196 — — — — 11,196
Foreign currency translation adjustment (net of tax of $177) — — — (474) — — (474)
Derivative financial instruments adjustment (net of tax of $339) — — — — 1,258 — 1,258
Amortization of prior service costs and net gains or losses (net of tax of $835) — — — — — 2,931 2,931
Cash dividends declared ($0.12 per share) — (4,021) — — — — (4,021)
Stock-based compensation expense 1,394 — — — — — 1,394
Tredegar common stock purchased by trust for savings restoration plan — 9 (9) — — — —
Balance June 30, 2020 $ 47,448 $ 511,345 $ (1,610) $ (112,666) $ (3,824) $ (89,819) $ 350,874


							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 July 1, 2020	$	47,448	$	511,345	$	(1,610)	$	(112,666)	$	(3,824)	$	(89,819)	$	350,874
Net income (loss)	—		(65,213)		—		—		—		—		(65,213)
Foreign currency translation adjustment (net of tax benefit of $19)	—		—		—		927		—		—		927
Derivative financial instruments adjustment (net of tax of $618)	—		—		—		—		2,213		—		2,213
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)	—		(4,023)		—		—		—		—		(4,023)
Stock-based compensation expense	1,600		—		—		—		—		—		1,600
Tredegar common stock purchased by trust for savings restoration plan	—		9		(9)		—		—		—		—
Balance September 30, 2020	$	49,048	$	442,118	$	(1,619)	$	(111,739)	$	(1,611)	$	(86,888)	$	289,309

The following summarizes the changes in shareholders’ equity for the ~~six~~nine month period ended ~~June~~September 30, 2020:


								Accumulated Other Comprehensive Income (Loss)															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			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	Balance at January 1, 2020	$	45,514	$	530,478	$	(1,592)	$	(100,663)	$	(1,307)	$	(95,681)	$	376,749	Balance at January 1, 2020	$	45,514	$	530,478	$	(1,592)	$	(100,663)	$	(1,307)	$	(95,681)	$	376,749
Net income (loss)	Net income (loss)	—		(11,126)		—		—		—		—		(11,126)		Net income (loss)	—		(76,339)		—		—		—		—		(76,339)
Foreign currency translation adjustment (net of tax benefit of $1,106)		—		—		—		(12,003)		—		—		(12,003)
Derivative financial instruments adjustment (net of tax benefit of $887)		—		—		—		—		(2,517)		—		(2,517)
Amortization of prior service costs and net gains or losses (net of tax of $1,671)		—		—		—		—		—		5,862		5,862
Cash dividends declared ($0.24 per share)		—		(8,025)		—		—		—		—		(8,025)
Foreign currency translation adjustment (net of tax benefit of $1,125)																Foreign currency translation adjustment (net of tax benefit of $1,125)	—		—		—		(11,076)		—		—		(11,076)
Derivative financial instruments adjustment (net of tax benefit of $269)																Derivative financial instruments adjustment (net of tax benefit of $269)	—		—		—		—		(304)		—		(304)
Amortization of prior service costs and net gains or losses (net of tax of $2,507)																Amortization of prior service costs and net gains or losses (net of tax of $2,507)	—		—		—		—		—		8,793		8,793
Cash dividends declared ($0.36 per share)																Cash dividends declared ($0.36 per share)	—		(12,048)		—		—		—		—		(12,048)
Stock-based compensation expense	Stock-based compensation expense	2,520		—		—		—		—		—		2,520		Stock-based compensation expense	4,120		—		—		—		—		—		4,120
Repurchase of employee common stock for tax withholdings	Repurchase of employee common stock for tax withholdings	(586)		—		—		—		—		—		(586)		Repurchase of employee common stock for tax withholdings	(586)		—		—		—		—		—		(586)
Tredegar common stock purchased by trust for savings restoration plan	Tredegar common stock purchased by trust for savings restoration plan	—		18		(18)		—		—		—		—		Tredegar common stock purchased by trust for savings restoration plan	—		27		(27)		—		—		—		—
Balance at June 30, 2020		$	47,448	$	511,345	$	(1,610)	$	(112,666)	$	(3,824)	$	(89,819)	$	350,874
Balance at September 30, 2020																Balance at September 30, 2020	$	49,048	$	442,118	$	(1,619)	$	(111,739)	$	(1,611)	$	(86,888)	$	289,309

See accompanying notes to financial statements.

TREDEGAR CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1 BASIS OF PRESENTATION

In the opinion of management, the accompanying condensed consolidated financial statements of Tredegar Corporation and its subsidiaries (“Tredegar,” “the Company,” “we,” “us” or “our”) contain all adjustments necessary to state fairly, in all material respects, Tredegar’s consolidated financial position as of ~~June~~September 30, 2021, the consolidated results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, the consolidated cash flows for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, and the consolidated changes in shareholders’ equity for the ~~six~~three and nine months ended ~~June~~September 30, 2021 and 2020, in accordance with U.S. generally accepted accounting principles (“GAAP”). All such adjustments, unless otherwise detailed in the notes to the condensed consolidated financial statements, are deemed to be of a normal, recurring nature.

The Company operates on a calendar fiscal year except for the Aluminum Extrusions segment, which operates on a 52/53-week fiscal year basis. As such, the fiscal ~~second~~third quarter for 2021 and 2020 for this segment references 13-week periods ended ~~June 27,~~September 25, 2021 and ~~June 28, 2020, respectively.~~September 27, 2020. The Company does not believe the impact of reporting the results of this segment as stated above is material to the consolidated financial results. The Company may fund or receive cash from the Aluminum Extrusions segment based on Aluminum Extrusion’s cash flows from operations during the intervening period from Aluminum Extrusion’s fiscal quarter end and the Company’s fiscal quarter end. There was no intercompany funding with Aluminum Extrusions between ~~June 27,~~September 25, 2021 and ~~June~~September 30, 2021. As of September 30, 2021 and December 31, 2020, the Company’s cash and cash equivalents declined by $0.5 million and $3.8 million, respectively, since the Company made payments to the Aluminum Extrusions segment to fund its working capital during the intervening period.

The financial position data as of December 31, 2020 that is included herein was derived from the audited consolidated financial statements provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”) but does not include all disclosures required by GAAP. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the 2020 Form 10-K.

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

On December 31, 2020, the Company completed the sale of Bright View Technologies, which was part of its PE Films segment. The sale did not represent a strategic shift nor did it have a major effect on the Company's historical and ongoing operations, thus all financial information for Bright View Technologies has been presented in continuing operations.

The results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2021, are not necessarily indicative of the results to be expected for the full year.

Accounting Standards Adopted:

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2019-12, which simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. In the first quarter of 2021, the Company adopted ASU 2019-12, which did not have a material impact on the Company's consolidated financial statements.

2 DIVESTITURES AND ASSETS HELD FOR SALE

Divestitures

Personal Care Films

In 2020, the Company completed the sale of Personal Care Films for an aggregate purchase price of $60.5 million, subject to customary adjustments. The Company agreed to provide certain transition services related to finance, human resources and information technology ("IT") that ended during the second quarter of 2021, resulting in final cash proceeds of $64.1 million. Personal Care Films was previously reported in the PE Films segment.

The following table summarizes the financial results of discontinued operations reflected in the consolidated statements of income for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	(In thousands)	2021		2020		2021		2020		(In thousands)	2021		2020		2021		2020
Revenues and other items:	Revenues and other items:									Revenues and other items:
Sales	Sales	$	0	$	32,378	$	0	$	68,544	Sales	$	—	$	29,509	$	—	$	98,053
Other income (expense), net	Other income (expense), net	0		(180)		0		(261)		Other income (expense), net	—		(37)		—		(298)
		0		32,198		0		68,283			—		29,472		—		97,755
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of goods sold	Cost of goods sold	0		27,785		0		57,927		Cost of goods sold	—		25,481		—		83,408
Freight	Freight	0		1,570		0		3,275		Freight	—		1,436		—		4,711
Selling, general and administrative	Selling, general and administrative	169		4,022		1,219		7,147		Selling, general and administrative	33		6,502		1,251		13,649
Research and development	Research and development	0		2,628		0		5,313		Research and development	—		3,138		—		8,451
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	0		126		0		526		Asset impairments and costs associated with exit and disposal activities, net of adjustments	—		801		—		1,327
Adjustment to the fair value estimates used in the disposal of Personal Care Films(a)	Adjustment to the fair value estimates used in the disposal of Personal Care Films(a)	(819)		0		(1,118)		0		Adjustment to the fair value estimates used in the disposal of Personal Care Films(a)	—		—		(1,118)		—
Held for sale impairment loss on divested assets										Held for sale impairment loss on divested assets	—		45,054		—		45,054
Total	Total	(650)		36,131		101		74,188		Total	33		82,412		133		156,600
Income (loss) from discontinued operations before income taxes	Income (loss) from discontinued operations before income taxes	650		(3,933)		(101)		(5,905)		Income (loss) from discontinued operations before income taxes	(33)		(52,940)		(133)		(58,845)
Income tax expense (benefit)	Income tax expense (benefit)	142		(797)		(22)		(1,111)		Income tax expense (benefit)	(7)		(4,703)		(29)		(5,814)
Income (loss) from discontinued operations, net of tax	Income (loss) from discontinued operations, net of tax	$	508	$	(3,136)	$	(79)	$	(4,794)	Income (loss) from discontinued operations, net of tax	$	(26)	$	(48,237)	$	(104)	$	(53,031)
(a) Represents a net increase to the estimated fair value of Personal Care Films primarily due to lower costs associated with IT transition-related services to provide the seller developed assets, which did not exist at the time of the sale, to support the seller's IT infrastructure.

The assets and liabilities of the discontinued operations reflected in the consolidated balance sheets as of ~~June~~September 30, 2021 and December 31, 2020, respectively, were as follows:
June 30, December 31,
(In thousands) 2021 2020
Assets
Prepaid expenses and other (a)
$ 151 $ 1,339
Other non-current assets 151 151
Total assets of discontinued operations $ 302 $ 1,490
Liabilities
Accrued expenses (a)
$ 1,033 $ 7,521
(a) The consolidated balance sheet of discontinued operations as of June 30, 2021 includes $0.2 million of other receivables related to the settlement of customary post-closing adjustments, accrued severance of $0.6 million, and other miscellaneous accrued expenses of $0.4 million. 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.


	September 30,		December 31,
(In thousands)	2021		2020
Assets
Prepaid expenses and other (a)	$	151	$	1,339
Other non-current assets	151		151
Total assets of discontinued operations	$	302	$	1,490

Liabilities
Accrued expenses (a)	$	370	$	7,521
(a) The consolidated balance sheet of discontinued operations as of September 30, 2021 includes $0.2 million of other receivables related to the settlement of customary post-closing adjustments, accrued severance of $0.3 million, and other miscellaneous accrued expenses of $0.1 million. 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 table provides significant operating and investing cash flow information for discontinued operations:


		Six Months Ended June 30,					Nine Months Ended September 30,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2021		2020
Operating activities	Operating activities					Operating activities
Depreciation and amortization	Depreciation and amortization	$	0	$	4,394	Depreciation and amortization	$	—	$	6,625
Asset impairment		0		334
Held for sale impairment loss on divested assets						Held for sale impairment loss on divested assets	—		45,054
Other	Other	(1,118)		0		Other	(1,118)		—
Total	Total	(1,118)		4,728		Total	(1,118)		51,679
Investing activities	Investing activities					Investing activities
Capital expenditures	Capital expenditures	$	0	$	(1,482)	Capital expenditures	$	—	$	2,989

Assets Held For Sale

In July 2019, the Company committed to a plan to close its manufacturing facility in Lake Zurich, Illinois, which historically was reported by the Company within the Personal Care Films component of its PE Films segment. During the third quarter of 2020, the ~~held for sale criteria was met since the Company expected the sale of the facility to be completed within one year. The~~ disposal group carrying value of $4.6 million ~~consists of land, building, and building improvements and is~~was reported in "Prepaid expenses and other" in the consolidated balance ~~sheet. These assets were not included~~sheet as ~~part~~the held for sale criteria was met. During the third quarter of 2021, the Company completed the sale of ~~Personal Care Films.~~the remaining assets in Lake Zurich, Illinois resulting in total cash proceeds of $4.7 million.

3 LONG-LIVED ASSETS & GOODWILL IMPAIRMENT

The Company assesses its long-lived assets for impairment when events and circumstances indicate that the carrying amount of the assets may not be recoverable. Long-lived assets consist primarily of buildings, machinery and equipment. During the three months ended ~~June~~September 30, 2021, the Company did not identify any indicators of impairment for long-lived assets.

The Company annually assesses goodwill for impairment on December 1st of each year or more frequently when events or circumstances indicate that the carrying amount of a reporting unit that includes goodwill exceeds its fair value. The Company evaluated whether triggering events occurred during the three months ended ~~June~~September 30, 2021 and 2020 for all reporting units that include goodwill and determined no events or circumstances existed that indicated the fair value of the reporting units are below their carrying amounts.

During the first three months of 2020, the Company determined that trigger events did occur for the Aluminum Extrusions’ reporting units created as a result of acquisitions in 2012 (“AACOA”) and in 2017 (“Futura”). As a result of the impairment testing performed, the Company recognized a goodwill impairment charge of $13.7 million ($10.5 million after taxes), which represented the entire amount of goodwill associated with the AACOA reporting unit. No impairment was identified for Futura.

The Company continues to monitor developments related to the coronavirus ("COVID-19") pandemic and may perform updated event-driven analyses during 2021, as necessary.

4 INVENTORIES

The components of inventories are as follows:


(In thousands)	(In thousands)	June 30, 2021		December 31, 2020		(In thousands)	September 30, 2021		December 31, 2020
Finished goods	Finished goods	$	20,378	$	15,251	Finished goods	$	21,614	$	15,251
Work-in-process	Work-in-process	12,271		9,098		Work-in-process	12,586		9,098
Raw materials	Raw materials	29,774		25,913		Raw materials	32,836		25,913
Stores, supplies and other	Stores, supplies and other	18,738		16,175		Stores, supplies and other	18,650		16,175
Total	Total	$	81,161	$	66,437	Total	$	85,686	$	66,437

5 EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income (loss) from continuing and discontinued operations by the weighted average number of shares of common stock outstanding. Diluted earnings per share is computed by dividing net income (loss) from continuing and discontinued operations by the weighted average common and potentially dilutive common equivalent shares outstanding, determined as follows:


		Three Months Ended		Six Months Ended			Three Months Ended		Nine Months Ended
		June 30,		June 30,			September 30,		September 30,
(In thousands)	(In thousands)	2021	2020	2021	2020	(In thousands)	2021	2020	2021	2020
Weighted average shares outstanding used to compute basic earnings per share	Weighted average shares outstanding used to compute basic earnings per share	33,594	33,435	33,500	33,374	Weighted average shares outstanding used to compute basic earnings per share	33,620	33,439	33,541	33,396
Incremental dilutive shares attributable to stock options and restricted stock	Incremental dilutive shares attributable to stock options and restricted stock	146	1	192	0	Incremental dilutive shares attributable to stock options and restricted stock	29	—	137	—
Shares used to compute diluted earnings per share	Shares used to compute diluted earnings per share	33,740	33,436	33,692	33,374	Shares used to compute diluted earnings per share	33,649	33,439	33,678	33,396

Incremental shares attributable to stock options and restricted stock are computed under the treasury stock method using the average market price during the related period. The average out-of-the-money options to purchase shares that were excluded from the calculation of incremental shares attributable to stock options and restricted stock were ~~996,400~~2,433,213 and ~~703,958,~~1,280,376, respectively, for the three and ~~six~~nine months ended ~~June~~September 30, 2021. The Company had a net loss from continuing operations for the ~~six~~three and nine months ended ~~June~~September 30, 2020, so there was no dilutive impact for such shares. ~~For~~If the Company had reported net income from continuing operations for the three and nine months ended ~~June~~September 30, 2020, average out-of-the-money options to purchase shares that were excluded from the calculation of incremental shares attributable to stock options and restricted stock were 1,567,709. If the Company had reported net income from continuing operations for the six months ended June 30, 2020, average out-of-the-money options to purchase shares that would have been excluded from the calculation of incremental shares attributable to stock options1,509,429 and ~~restricted stock would have been 1,125,203.~~1,253,278, respectively.

6 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

~~The following table summarizes the after-tax changes in accumulated other comprehensive income (loss) for the six months ended June 30, 2021:~~
(In thousands) Foreign
currency
translation
adjustment Gain (loss) on
derivative
financial
instruments Pension and other post-retirement benefit adjustments Total
Beginning balance, January 1, 2021 $ (84,149) $ 2,264 $ (96,519) $ (178,404)
Other comprehensive income (loss) before reclassifications 1,345 2,724 0 4,069
Amounts reclassified from accumulated other comprehensive income (loss) 0 (1,492) 6,637 5,145
Net other comprehensive income (loss) - current period 1,345 1,232 6,637 9,214
Ending balance, June 30, 2021 $ (82,804) $ 3,496 $ (89,882) $ (169,190)

~~The following table summarizes the after-tax changes in accumulated other comprehensive income (loss) for the six months ended June 30, 2020:~~
(In thousands) Foreign
currency
translation
adjustment Gain (loss) on
derivative
financial
instruments Pension and other post-retirement benefit adjustments Total
Beginning balance, January 1, 2020 $ (100,663) $ (1,307) $ (95,681) $ (197,651)
Other comprehensive income (loss) before reclassifications (12,003) (6,242) 0 (18,245)
Amounts reclassified from accumulated other comprehensive income (loss) 0 3,725 5,862 9,587
Net other comprehensive income (loss) - current period (12,003) (2,517) 5,862 (8,658)
Ending balance, June 30, 2020 $ (112,666) $ (3,824) $ (89,819) $ (206,309)

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income (loss) for the three months ended ~~June~~September 30, 2021 are summarized as follows:


(In thousands)	Amount reclassified from accumulated 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	$	~~1,372~~2,160	Cost of ~~sales~~goods sold
Foreign currency forward contracts, before taxes	~~(147)~~(34)		Selling, general & administrative
Foreign currency forward contracts, before taxes	1615		Cost of ~~sales~~goods sold
Total, before taxes	~~1,241~~2,141
Income tax expense (benefit)	~~257~~476		Income tax expense (benefit)
Total, net of tax	$	~~984~~1,665
Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes	$	~~(4,240)~~(4,244)	(a)
Income tax expense (benefit)	~~(922)~~(927)		Income tax expense (benefit)
Total, net of tax	$	~~(3,318)~~(3,317)

(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).

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income (loss) for the nine months ended September 30, 2021 are summarized as follows:


(In thousands)	Amount reclassified from accumulated 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	$	4,172	Cost of goods sold
Foreign currency forward contracts, before taxes	(183)		Selling, general & administrative
Foreign currency forward contracts, before taxes	48		Cost of goods sold
Total, before taxes	4,037
Income tax expense (benefit)	880		Income tax expense (benefit)
Total, net of tax	$	3,157
Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes	$	(12,727)	(a)
Income tax expense (benefit)	(2,773)		Income tax expense (benefit)
Total, net of tax	$	(9,954)

(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).

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income for the three months ended September 30, 2020 are summarized as follows:


(In thousands)	Amount reclassified from accumulated 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	$	(575)	Cost of goods sold
Foreign currency forward contracts, before taxes	(1,767)		Selling, general & administrative
Foreign currency forward contracts, before taxes	15		Cost of goods sold
Total, before taxes	(2,327)
Income tax expense (benefit)	(496)		Income tax expense (benefit)
Total, net of tax	$	(1,831)
Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes	$	(3,767)	(a)
Income tax expense (benefit)	(836)		Income tax expense (benefit)
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).

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income ~~(loss)~~ for the ~~six~~nine months ended ~~June~~September 30, ~~2021~~2020 are summarized as follows:


(In thousands)	Amount reclassified from accumulated 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	$	~~2,012~~ (2,766)	Cost of ~~sales~~goods sold
Foreign currency forward contracts, before taxes	~~(149)~~(4,359)		Selling, general & administrative
Foreign currency forward contracts, before taxes	3346		Cost of ~~sales~~goods sold
Total, before taxes	~~1,896~~ (7,079)
Income tax expense (benefit)	~~404~~ (1,523)		Income tax expense (benefit)
Total, net of tax	$	~~1,492~~ (5,556)
Amortization of pension and other post-retirement benefits:
Actuarial gain (loss) and prior service costs, before taxes	$	~~(8,483)~~(11,300)	(a)
Income tax expense (benefit)	~~(1,846)~~(2,507)		Income tax expense (benefit)
Total, net of tax	$	~~(6,637)~~

~~(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).~~

~~Reclassifications of balances out of accumulated other comprehensive income (loss) into net income for the three months ended June 30, 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~~	$	~~(1,551)~~	~~Cost of sales~~
~~Foreign currency forward contracts, before taxes~~	~~(1,798)~~		~~Selling, general & administrative~~
~~Foreign currency forward contracts, before taxes~~	16		~~Cost of sales~~
~~Total, before taxes~~	~~(3,333)~~
~~Income tax expense (benefit)~~	~~(721)~~		~~Income tax expense (benefit)~~
~~Total, net of tax~~	$	~~(2,612)~~
~~Amortization of pension and other post-retirement benefits:~~
~~Actuarial gain (loss) and prior service costs, before taxes~~	$	~~(3,766)~~	~~(a)~~
~~Income tax expense (benefit)~~	~~(835)~~		~~Income tax expense (benefit)~~
~~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).~~

~~Reclassifications of balances out of accumulated other comprehensive income (loss) into net income for the six months ended June 30, 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~~	$	~~(2,191)~~	~~Cost of sales~~
~~Foreign currency forward contracts, before taxes~~	~~(2,592)~~		~~Selling, general & administrative~~
~~Foreign currency forward contracts, before taxes~~	31		~~Cost of sales~~
~~Total, before taxes~~	~~(4,752)~~
~~Income tax expense (benefit)~~	~~(1,027)~~		~~Income tax expense (benefit)~~
~~Total, net of tax~~	$	~~(3,725)~~
~~Amortization of pension and other post-retirement benefits:~~
~~Actuarial gain (loss) and prior service costs, before taxes~~	$	~~(7,533)~~	~~(a)~~
~~Income tax expense (benefit)~~	~~(1,671)~~		~~Income tax expense (benefit)~~
~~Total, net of tax~~	$	~~(5,862)~~(8,793)

(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).

7 INVESTMENTS

The Company's aggregate investment of $7.5 million, for an approximate ~~19%~~18% ownership interest, in kaleo, Inc. (“kaléo”), a privately held specialty pharmaceutical company dedicated to building innovative solutions for serious and life-threatening medical conditions, is accounted for under the fair value method in the condensed consolidated financial statements.

The estimated fair value of the Company’s investment was ~~$35.2~~$35.5 million as of ~~June~~September 30, 2021 and $34.6 million as of December 31, 2020. kaléo’s stock is not publicly traded. The ultimate value of the Company’s ownership interest in kaléo could be materially different from the estimated fair value and will ultimately be determined and realized only if and when a liquidity event occurs. 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 net sales and earnings before interest, taxes, depreciation and amortization ("EBITDA") from ongoing operations by segment table in Note 11.

The Company estimated the fair value of its investment in kaléo at ~~June~~September 30, 2021 by: (i) computing the weighted average estimated enterprise value (“EV”) utilizing both the discounted cash flow method (the “DCF Method”) and the application of a market multiple to EBITDA (the “EBITDA Multiple Method”), (ii) applying adjustments for any surplus or deficient working capital and estimates of contingent liabilities, (iii) adding cash and cash equivalents, (iv) subtracting interest-bearing debt, (v) subtracting a private company liquidity discount estimated at approximately 20% at ~~June~~September 30, 2021 (consistent with 20% at both December 31, 2020 and ~~June~~September 30, 2020) of the net result of (i) through (iv), and (vi) applying liquidation preferences and fully diluted ownership percentages to the estimated equity value computed in (i) through (v).

The Company’s estimate of kaléo’s EV as of ~~June~~September 30, 2021 and December 31, 2020 was determined by weighting the EBITDA Multiple Method by 20% and the DCF Method by 80%. A heavier weighting towards the DCF Method was used since kaléo’s projections better reflect ongoing pricing pressures and expected changes in market access. The DCF Method projections rely on numerous assumptions and Level 3 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.

8 ~~FINANCIAL INSTRUMENTS~~DERIVATIVES

Tredegar uses derivative financial instruments for the purpose of hedging margin exposure from fixed-price forward sales contracts in Aluminum Extrusions and exposure from currency volatility that exists as part of ongoing business operations in Flexible Packaging Films. These derivative financial instruments are designated as and qualify as cash flow hedges and are recognized in the consolidated balance sheet at fair value. The fair value of derivative instruments is recorded on the consolidated balance sheets. If individual derivative instruments with the same counterparty can be settled on a net basis, the Company records the corresponding derivative fair values as a net asset or net liability.

In the normal course of business, Aluminum Extrusions enters into fixed-price forward sales contracts with certain customers for the future sale of fixed quantities of aluminum extrusions at scheduled intervals. In order to hedge margin

exposure created from the fixing of future sales prices relative to volatile raw material (aluminum) costs, Aluminum Extrusions enters into a combination of forward purchase commitments and futures contracts to acquire or hedge aluminum, based on the scheduled purchases for the firm sales commitments. The fixed-price firm sales commitments and related hedging instruments generally have durations of not more than 12 months. The notional amount of aluminum futures contracts that hedged future purchases of aluminum to meet fixed-price forward sales contract obligations was ~~$13.9~~$18.7 million ~~(12.4~~(13.9 million pounds of aluminum) at ~~June~~September 30, 2021 and $12.1 million (13.0 million pounds of aluminum) at December 31, 2020.

The table below summarizes the location and gross amounts of aluminum futures contract fair values (Level 2) in the consolidated balance sheets as of ~~June~~September 30, 2021 and December 31, 2020:

June 30, 2021

December 31, 2020

September 30, 2021

December 31, 2020

(In thousands)

Balance Sheet
Account

Fair
Value

Balance Sheet
Account

Fair
Value

(In thousands)

Balance Sheet
Account

Fair
Value

Balance Sheet
Account

Fair
Value

Derivatives Designated as Hedging Instruments

Asset derivatives:

Aluminum futures contracts

Asset derivatives:

Aluminum futures contracts

Prepaid expenses and other

3,244

Prepaid expenses and other

1,560

Asset derivatives:

Aluminum futures contracts

Prepaid expenses and other

3,996

Prepaid expenses and other

1,560

Liability derivatives:

Aluminum futures contracts

Liability derivatives:

Aluminum futures contracts

Accrued expenses

(8)

Accrued expenses

(22)

Liability derivatives:

Aluminum futures contracts

Accrued expenses

(1)

Accrued expenses

(22)

Net asset

3,236

1,538

Net asset

3,995

1,538

In the event that a counterparty to an aluminum fixed-price forward sales contract chooses not to take delivery of its aluminum extrusions, the customer is contractually obligated to compensate Aluminum Extrusions for any losses on the related aluminum futures and/or forward contracts through the date of cancellation.

The Company's earnings are exposed to foreign currency exchange risk primarily through the translation of the financial statements of subsidiaries that have a functional currency other than the U.S. Dollar. The Company estimates that the net mismatch translation exposure for the Flexible Packaging Film's business unit in Brazil (“Terphane Ltda.”) of its sales and raw materials quoted or priced in U.S. Dollars and its variable conversion, fixed conversion and sales, general and administrative costs (before depreciation and amortization) quoted or priced in Brazilian Real ("R$") is annual net costs of R$~~119~~150 million.

Terphane Ltda. has the following outstanding foreign exchange average forward rate contracts to purchase Brazilian Real and sell U.S. Dollars:


USD Notional Amount (000s)	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	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

$1,450		5.4945	R$7,967	Jul-21	80%
$1,430		5.4993	R$7,864	Aug-21	79%
$1,520		5.5105	R$8,376	Sep-21	84%
$1,400	$1,400	5.5100	R$7,714	Oct-21	78%	$1,400	5.5100	R$7,714	Oct-21	78%
$1,495	$1,495	5.5224	R$8,256	Nov-21	83%	$1,495	5.5224	R$8,256	Nov-21	83%
$1,170	$1,170	5.5060	R$6,442	Dec-21	65%	$1,170	5.5060	R$6,442	Dec-21	65%
$8,465		5.5073	R$46,619		78%
$1,677						$1,677	5.3360	R$8,948	Jan-22	72%
$1,751						$1,751	5.3631	R$9,391	Feb-22	75%
$1,662						$1,662	5.3905	R$8,959	Mar-22	72%
$1,615						$1,615	5.4247	R$8,761	Apr-22	70%
$1,647						$1,647	5.4545	R$8,984	May-22	72%
$1,596						$1,596	5.4890	R$8,760	Jun-22	70%
$1,719						$1,719	5.5200	R$9,489	Jul-22	76%
$1,708						$1,708	5.5560	R$9,489	Aug-22	76%
$1,780						$1,780	5.5915	R$9,953	Sep-22	80%
$1,793						$1,793	5.6264	R$10,088	Oct-22	81%
$1,784						$1,784	5.6597	R$10,097	Nov-22	81%
$1,659						$1,659	5.6962	R$9,450	Dec-22	76%
$24,456						$24,456	5.5112	R$134,781		75%

These foreign currency exchange contracts have been designated and qualify as cash flow hedges of Terphane Ltda.’s forecasted sales to customers quoted or priced in U.S. Dollars over that period. By changing the currency risk associated with

these U.S. Dollar sales, the derivatives have the effect of offsetting operating costs quoted or priced in Brazilian Real and decreasing the net exposure to Brazilian Real in the consolidated statements of income. Pre-tax accumulated ~~losses~~gains of ~~$0.8~~$0.9 million related to the net fair value of the open forward contracts is reported in accumulated other comprehensive income (loss) as of ~~June~~September 30, 2021.

The table below summarizes the location and gross amounts of foreign currency forward contract fair values (Level 2) in the consolidated balance sheets as of ~~June~~September 30, 2021 and December 31, 2020:

June 30, 2021

December 31, 2020

September 30, 2021

December 31, 2020

(In thousands)

Balance Sheet
Account

Fair
Value

Balance Sheet
Account

Fair
Value

(In thousands)

Balance Sheet
Account

Fair
Value

Balance Sheet
Account

Fair
Value

Derivatives Designated as Hedging Instruments

Asset derivatives: