Tredegar Reports Third-Quarter Results

Tredegar does not undertake, and expressly disclaims any duty, to update any forward-looking statement made in this press release to reflect any change in management's expectations or any change in conditions, assumptions or circumstances on which such statements are based.

To the extent that the financial information portion of this release contains non-GAAP financial measures, it also presents both the most directly comparable financial measures calculated and presented in accordance with GAAP and a quantitative reconciliation of the difference between any such non-GAAP measures and such comparable GAAP financial measures. Accompanying the reconciliation is management’s statement concerning the reasons why management believes that presentation of non-GAAP measures provides useful information to investors concerning Tredegar’s financial condition and results of operations. Reconciliations of non-GAAP financial measures are provided in the Notes to the Financial Tables included with this press release and can also be found within Presentations in the Investor Relations section of our website, www.tredegar.com. Tredegar uses its website as a channel of distribution of material company information. Financial information and other material information regarding Tredegar is posted on and assembled in the Investor Relations section of our website.

Tredegar Corporation is primarily a manufacturer of plastic films and aluminum extrusions. A global company headquartered in Richmond, Virginia, Tredegar had 2011 sales of $798 million. With approximately 2,000 employees, the company operates manufacturing facilities in North America, South America, Europe, and Asia.

Tredegar Corporation
Condensed Consolidated Statements of Income
(In Thousands, Except Per-Share Data)
(Unaudited)
		Third Quarter Ended								Nine Months Ended
		September 30								September 30
		2012				2011				2012				2011
Sales		$	218,809			$	202,590			$	652,120			$	595,080
Other income (expense), net (a) (c) (d)			2,939				1,334				8,154				1,957
			221,748				203,924				660,274				597,037
Cost of goods sold (a)			173,814				164,771				526,471				489,754
Freight			6,130				4,636				17,404				13,377
Selling, R&D and general expenses (a)			19,666				21,224				65,275				59,377
Amortization of intangibles			1,305				130				4,047				388
Interest expense			708				367				2,732				1,083
Asset impairments and costs associated with exit and disposal activities (a)			937				193				3,151				1,277
			202,560				191,321				619,080				565,256
Income from continuing operations before income taxes			19,188				12,603				41,194				31,781
Income taxes from continuing operations (e)			4,661				(133	)			11,516				6,329
Income from continuing operations			14,527				12,736				29,678				25,452
Loss from discontinued operations (f)			(7,100	)			-				(11,900	)			(345	)
Net income (a) (b)		$	7,427			$	12,736			$	17,778			$	25,107
Earnings (loss) per share:
Basic:
Continuing operations		$	.45			$	.40			$	.93			$	.80
Discontinued operations (f)			(.22	)			-				(.37	)			(.01	)
Net income		$	.23			$	.40			$	.56			$	.79
Diluted:
Continuing operations		$	.45			$	.40			$	.92			$	.79
Discontinued operations (f)			(.22	)			-			$	(.37	)			(.01	)
Net income		$	.23			$	.40			$	.55			$	.78
Shares used to compute earnings (loss) per share:
Basic			32,052				31,952				32,038				31,918
Diluted			32,101				32,060				32,198				32,175

Tredegar Corporation
Net Sales and Operating Profit by Segment
(In Thousands)
(Unaudited)
		Third Quarter Ended								Nine Months Ended
		September 30								September 30
		2012				2011				2012				2011
Net Sales
Film Products		$	155,296			$	129,733			$	459,221			$	393,289
Aluminum Extrusions			55,222				66,815				172,525				186,712
Other			2,161				1,406				2,970				1,702
Total net sales			212,679				197,954				634,716				581,703
Add back freight			6,130				4,636				17,404				13,377
Sales as shown in the Consolidated Statements of Income		$	218,809			$	202,590			$	652,120			$	595,080
Operating Profit
Film Products:
Ongoing operations		$	21,092			$	15,485			$	49,999			$	43,872
Plant shutdowns, asset impairments, restructurings and other (a)			(87	)			(1,435	)			(1,879	)			(2,519	)
Aluminum Extrusions:
Ongoing operations			1,846				2,301				7,349				2,539
Plant shutdowns, asset impairments, restructurings and other (a)			(1,067	)			(43	)			(3,214	)			19
Other:
Ongoing operations			503				778				687				610
Total			22,287				17,086				52,942				44,521
Interest income			84				278				337				778
Interest expense			708				367				2,732				1,083
Gain on investment accounted for under fair value method (c)			2,700				-				9,000				-
Stock option-based compensation costs			386				474				1,147				1,481
Corporate expenses, net (a) (d)			4,789				3,920				17,206				10,954
Income from continuing operations before income taxes			19,188				12,603				41,194				31,781
Income taxes from continuing operations (e)			4,661				(133	)			11,516				6,329
Income from continuing operations			14,527				12,736				29,678				25,452
Loss from discontinued operations (f)			(7,100	)			-				(11,900	)			(345	)
Net income (a) (b)		$	7,427			$	12,736			$	17,778			$	25,107

Tredegar Corporation
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
		September 30,			December 31,
		2012			2011
Assets
Cash & cash equivalents		$	44,167		$	68,939
Accounts & other receivables, net			95,666			98,027
Income taxes recoverable			-			2,592
Inventories			66,272			61,290
Deferred income taxes			6,437			7,135
Prepaid expenses & other			7,178			7,880
Total current assets			219,720			245,863
Property, plant & equipment, net			236,394			257,274
Goodwill & other intangibles, net			214,477			223,432
Other assets			67,290			54,041
Total assets		$	737,881		$	780,610
Liabilities and Shareholders' Equity
Accounts payable		$	68,379		$	73,742
Accrued expenses			43,531			41,997
Income taxes payable			1,852			-
Total current liabilities			113,762			115,739
Long-term debt			80,000			125,000
Deferred income taxes			68,989			70,754
Other noncurrent liabilities			68,232			72,210
Shareholders' equity			406,898			396,907
Total liabilities and shareholders' equity		$	737,881		$	780,610

Tredegar Corporation
Condensed Consolidated Statement of Cash Flows
(In Thousands)
(Unaudited)
		Nine Months Ended
		September 30
		2012				2011
Cash flows from operating activities:
Net income		$	17,778			$	25,107
Adjustments for noncash items:
Depreciation			34,470				32,139
Amortization of intangibles			4,047				388
Deferred income taxes			(2,828	)			448
Accrued pension income and postretirement benefits			6,258				1,861
Gain on investment accounted for under the fair value method (c)			(9,000	)			-
Loss on asset impairments and divestitures (a) (d)			1,942				798
Gain on sale of assets			(303	)			(1,205	)
Changes in assets and liabilities, net of effects of acquisitions and divestitures:
Accounts and other receivables			1,652				(14,186	)
Inventories			(6,319	)			7,419
Income taxes recoverable/payable			4,122				(3,255	)
Prepaid expenses and other			1,783				715
Accounts payable and accrued expenses			565				675
Other, net			(4,606	)			(2,170	)
Net cash provided by operating activities			49,561				48,734
Cash flows from investing activities:
Capital expenditures			(20,638	)			(11,235	)
Acquisition			(3,311	)			-
Proceeds from the sale of assets and property disposals			1,141				1,622
Net cash used in investing activities			(22,808	)			(9,613	)
Cash flows from financing activities:
Debt principal payments and financing costs			(46,354	)			(89	)
Dividends paid			(4,817	)			(4,319	)
Proceeds from exercise of stock options and other			125				709
Net cash used in financing activities			(51,046	)			(3,699	)
Effect of exchange rate changes on cash			(479	)			790
Increase (decrease) in cash and cash equivalents			(24,772	)			36,212
Cash and cash equivalents at beginning of period			68,939				73,191
Cash and cash equivalents at end of period		$	44,167			$	109,403

Selected Financial Measures
(In Millions)
(Unaudited)
Selected balance sheet and other data as of September 30, 2012:
Net debt (g)	$ 35.8
Shares outstanding	32.1

Notes to the Financial Tables

(a) Plant shutdowns, asset impairments, restructurings and other in the third quarter of 2012 include:

• Net pretax charge of $0.7 million associated with the shutdown of the aluminum extrusions manufacturing facility in Kentland, Indiana, which includes accelerated depreciation for property and equipment of $0.6 million (included in "Cost of goods sold" in the condensed consolidated statements of income), severance and other employee-related costs of $0.2 million and other shutdown-related charges of $0.7 million, partially offset by adjustments to inventories accounted for under the last-in, first-out method of $0.5 million (included in "Cost of goods sold" in the condensed consolidated statements of income) and gains on the sale of equipment of $0.3 million (included in "Other income (expense), net" in the condensed consolidated statement of income);
• Pretax charges of $0.3 million for acquisition-related expenses (included in "Selling, R&D and general expenses" in the condensed consolidated statements of income) associated with the acquisition of AACOA by Aluminum extrusions; and
• Pretax charges of $0.1 million for integration-related expenses and other non-recurring transactions (included in "Selling, R&D and general expenses" in the condensed consolidated statements of income) associated with the acquisition of Terphane by Film Products.

Plant shutdowns, asset impairments, restructurings and other in the first nine months of 2012 include:

• Net pretax charge of $2.7 million associated with the shutdown of the aluminum extrusions manufacturing facility in Kentland, Indiana, which includes accelerated depreciation for property and equipment of $2.4 million (included in "Cost of goods sold" in the condensed consolidated statements of income), severance and other employee-related costs of $1.2 million and other shutdown-related charges of $0.9 million, partially offset by adjustments to inventories accounted for under the last-in, first-out method of $1.5 million (included in "Cost of goods sold" in the condensed consolidated statements of income) and gains on the sale of equipment of $0.3 million (included in "Other income (expense), net" in the condensed consolidated statement of income);
• Pretax charges of $1.0 million for integration-related expenses and other non-recurring transactions (included in "Selling, R&D and general expenses" in the condensed consolidated statements of income) associated with the acquisition of Terphane by Film Products;
• Pretax loss of $0.8 million for asset impairments associated with a previously shutdown film products manufacturing facility in LaGrange, Georgia;
• Pretax charges of $0.3 million for acquisition-related expenses (included in "Selling, R&D and general expenses" in the condensed consolidated statements of income) associated with the acquisition of AACOA by Aluminum Extrusions; and
• Pretax charges of $0.3 million for severance and other employee-related costs in connection with restructurings in Film Products ($71,000) and Aluminum Extrusions ($0.2 million).

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