Tredegar Reports Fourth-Quarter Results

Nancy M. Taylor, Tredegar’s president and chief executive officer, said: “Film Products’ performance for the quarter showed improvement versus the fourth quarter of last year, due to stronger results from Terphane and higher volumes in surface protection films. Overall, 2012 proved to be a challenging year for our Films business, with softness in demand and pricing pressures in several of our markets. Film Products ended the year on a positive note but we remain cautious due to the competitive dynamics in our core markets.”

Ms. Taylor continued, “We are pleased with a strong year of performance for Bonnell Aluminum. Relative to the fourth quarter, Bonnell benefitted from the addition of AACOA. We’re excited about the future opportunities that this acquisition provides, allowing us to broaden our capabilities and more actively participate in markets outside of building and construction.”

Ms. Taylor added, “We also divested our mitigation banking business, Falling Springs, in the fourth quarter. The sale of Fallings Springs is consistent with our strategic intent to focus our efforts on manufacturing.”

OPERATIONS REVIEW

Film Products

A summary of fourth quarter and full year operating results for Film Products is provided below:

Films
		Quarter Ended						Favorable/			Year Ended						Favorable/
(In Thousands,		December 31						(Unfavorable)			December 31						(Unfavorable)
Except Percentages)		2012			2011			% Change			2012			2011			% Change
Sales volume (pounds)			67,187			60,875		10.4	%			270,265			218,727		23.6	%
Net sales		$	152,656		$	142,251		7.3	%		$	611,877		$	535,540		14.3	%
Operating profit from ongoing operations		$	19,951		$	15,621		27.7	%		$	69,950		$	59,493		17.6	%

The improvement in operating results for Film Products in 2012 was primarily driven by the addition of flexible packaging films with the acquisition of Terphane on October 24, 2011. Net sales (sales less freight) for Terphane were $36.4 million and $138.0 million in the fourth quarter of 2012 and full year 2012, respectively, compared to $28.3 million in 2011. Operating profit from ongoing operations for Terphane was $6.4 million in the fourth quarter of 2012, which includes amortization expense of $1.3 million, and $19.1 million for the full year 2012, which includes amortization expense of $5.1 million. In 2011, Terphane had operating profit of $3.0 million, which included $0.9 million in one-time reimbursements for custom duties and $0.9 million of amortization expense. The operating results for Terphane reflect continued progress on addressing production efficiency issues associated with the upgrade of an existing production line highlighted in previous quarters.

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