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Tredegar Reports Third-Quarter Earnings

October 20, 2004 at 5:04 PM EDT

RICHMOND, Va., Oct. 20 /PRNewswire-FirstCall/ -- Tredegar Corporation (NYSE: TG) reported third-quarter income from continuing operations of $15.3 million (40 cents per share) compared to $6.4 million (17 cents per share) in 2003. Earnings from manufacturing operations were $9.9 million (26 cents per share) versus $9.3 million (24 cents per share) last year. Third-quarter sales were $222.5 million compared to $193.1 million in 2003. A summary of third-quarter and year-to-date results from continuing operations is shown below:

     (In millions, except per-share
     data)                             Third Quarter Ended  Nine Months Ended
                                         September 30         September 30
                                         2004     2003        2004     2003
     Income from continuing
      operations as reported under
      generally accepted accounting
      principles (GAAP)                  $15.3     $6.4      $22.9    $13.0
     After-tax effects of:
       Loss related to unusual items         -        -        -         .7
       Loss associated with plant
        shutdowns, asset impairments
        and restructurings                 2.0      2.6       13.0      6.3
       Loss from Therics ongoing
        operations                         1.4      1.7        4.7      6.0
       Gains from sale of assets and
        other items                       (8.8)    (1.4)     (13.0)    (1.4)
     Income from manufacturing
      operations*                         $9.9     $9.3      $27.6    $24.6

     Diluted earnings per share from
      continuing operations as reported
      under GAAP                          $.40     $.17       $.60     $.34
     After-tax effects per diluted share
      of:
       Loss related to unusual items         -        -          -      .02
       Loss associated with plant
        shutdowns, asset impairments and
        restructurings                     .05      .07        .34      .16
       Loss from Therics ongoing
        operations                         .04      .04        .12      .16
       Gains from sale of assets and
        other items                       (.23)    (.04)      (.34)    (.04)
     Diluted earnings per share from
      manufacturing operations*           $.26     $.24       $.72     $.64

* The after-tax effects of unusual items, plant shutdowns, asset impairments and restructurings, Therics' ongoing operations, and gains from sale of assets and other items have been presented separately and removed from income and earnings per share from continuing operations as reported under GAAP to determine Tredegar's presentation of income and earnings per share from manufacturing operations. Income and earnings per share from manufacturing operations are key financial and analytical measures used by Tredegar to gauge the operating performance of its manufacturing businesses. They are not intended to represent the stand-alone results for Tredegar's manufacturing businesses under GAAP and should not be considered as an alternative to net income or earnings per share as defined by GAAP. They exclude items that we believe do not relate to Tredegar's ongoing manufacturing operations. They also exclude Therics, a technology company that cannot be analyzed and valued by historical measures of earnings and cash flow. Therics' prospects and value currently depend on its ability to develop, manufacture, market, sell and profit from its orthopaedic product line. There is no assurance whether or when we might realize any return on our investment in Therics.

Norman A. Scher, Tredegar's president and chief executive officer, said: "Third-quarter profits in Film Products were up slightly despite substantially higher resin costs. The continued escalation of resin prices limits our ability to achieve significant profit growth. Nonetheless, we remain optimistic about our opportunities in this business and expect gradual profit improvement during 2005. Results in Aluminum Extrusions also improved over 2003, but were adversely affected by furnace-related repair costs and appreciation of the Canadian dollar. As we enter the seasonally weak winter months, market conditions are more favorable than they were a year ago and we're hopeful that results in Aluminum will continue to improve."

Regarding Therics, Scher said: "We continue to closely monitor Therics' progress against milestones and evaluate its long-term prospects. We will provide an update with the release of fourth-quarter earnings."

                           MANUFACTURING OPERATIONS
                                Film Products

Third-quarter net sales in Film Products were $104.6 million, up 13% from $92.2 million in 2003. Operating profit from ongoing operations was $11.0 million, up 2% from $10.8 million last year. Volume for the quarter increased 3% to 70.1 million pounds from 67.8 million pounds in 2003. In addition to higher volume, the increase in sales was due to higher raw material-driven selling prices and growth in sales of higher value-added products.

Net sales, operating profit from ongoing operations and volume in the second quarter of 2004 were $101.5 million, $10.9 million and 71.2 million pounds, respectively. Volume on a pro forma basis (excluding the divested films business in Argentina) was 67.7 million pounds in the third quarter of 2004, 67.9 million pounds in the second quarter of 2004 and 64.7 million pounds in the third quarter of 2003.

Results in Film Products continue to be affected by higher resin prices, which have been increasing steadily since early 2002 and have accelerated in recent months. The company estimates the increase in resin prices caused a negative operating profit impact of $1 million to $2 million in the third quarter of 2004. The company has pass-through or cost-sharing agreements with the majority of its customers. However, under certain agreements, the higher resin costs are not passed through for an average period of 90 days. In the current environment, in which resin prices have been rising for more than two years and are expected to continue rising, this lag puts constant downward pressure on profits and lowers margins.

Film Products remains optimistic about its longer term growth prospects. Sales and profits of new apertured, elastic, and specialty films are growing steadily. In particular, the success of P&G's new feminine pad topsheet in Europe and Japan is leading to new opportunities in other regions. Tredegar is expanding production capacity for this new topsheet, which P&G will be introducing in North America. The company also is moving its R&D and technical centers from Terre Haute, Ind., and Lake Zurich, Ill., to Richmond, Va. The move co-locates R&D with sales and marketing, and is expected to shorten product development times and reduce annual operating expenses by approximately $2 million.

Film Products continues to invest aggressively in new products, infrastructure and global growth initiatives. Capital expenditures through September 30 totaled $32.9 million and are expected to be approximately $52 million for the year.

Year-to-date net sales were $301.9 million versus $274.0 million in 2003. Operating profit from ongoing operations was $31.9 million compared to $34.8 million in 2003. Year-to-date volume increased slightly to 210.4 million pounds from 206.6 million pounds in 2003. Volume on a pro forma basis (excluding the divested films business in Argentina) was 201.0 million pounds versus 199.1 million pounds in 2003. Prior-year results include sales of certain domestic backsheet products that were discontinued at the end of the first quarter of 2003.

                             Aluminum Extrusions

Third-quarter net sales in Aluminum Extrusions were $112.1 million, up 17% from $96.0 million in 2003 while operating profit from ongoing operations increased 14% to $7.4 million from $6.5 million in 2003. The improvement in sales and profits was primarily due to higher selling prices and volume. Volume was up 2% to 63.8 million pounds from 62.5 million pounds in 2003.

On a sequential basis, net sales and volume were up 3% while operating profit declined $900,000 or 11% compared to second-quarter results.

Operating profit in the third quarter was adversely affected by approximately $1.5 million related primarily to furnace repairs at the Newnan, Ga., plant and appreciation of the Canadian dollar.

Year-to-date net sales were $316.2 million, up 18% from $269.1 million in 2003. Operating profit from ongoing operations for the nine-month period increased to $19.3 million from $12.6 million in 2003. Year-to-date volume increased 6% to 183.8 million pounds, up from 174.1 million pounds in 2003.

Through September 30, capital expenditures totaled $6.4 million and are expected to be approximately $15 million for the year.

                                   THERICS

The third-quarter operating loss from ongoing operations at Therics was $2.2 million compared to a loss of $2.6 million in 2003. Earlier this year, Therics launched its initial line of bone void filler products. Net sales were $135,000 for the quarter and $266,000 year-to-date. The year-to-date operating loss was $7.2 million compared to $9.2 million in 2003.

                                 OTHER ITEMS

Third-quarter results include a net after-tax charge of $2.0 million (5 cents per share) for plant shutdowns, asset impairments and restructurings, including charges of $627,000 related to the relocation of Film Products' R&D and technical operations to Richmond. Over the next year, the company expects to incur additional after-tax charges of $3.6 million related to the relocation. Last year's third-quarter results included a net after-tax charge of $2.6 million (7 cents per share) related to plant shutdowns, asset impairments and restructurings.

Third-quarter results also include net after-tax gains from the sale of assets and other items of $8.8 million (23 cents per share), including an after-tax gain of $5.4 million on an insurance settlement associated with environmental costs related to prior years and $4.0 million related to the reversal of income tax contingency accruals upon favorable conclusion of IRS and state examinations through 2000. Last year's third-quarter results included an after-tax gain from the sale of securities and corporate real estate of $1.4 million (4 cents per share).

Year-to-date net after-tax charges for plant shutdowns, asset impairments and restructurings were $13.0 million (34 cents per share) in 2004 compared with $6.3 million (16 cents per share) in 2003. Year-to-date net after-tax gains from the sale of assets and other items were $13.0 million (34 cents per share) in 2004 compared with $1.4 million (4 cents per share) in 2003.

Year-to-date results for 2003 include a net loss for discontinued operations of $48.6 million ($1.26 per share) which was related primarily to the company's venture capital activities.

Additional details regarding these items are provided in the financial tables included with this press release.

                              CAPITAL STRUCTURE

Net debt (debt net of cash) was $75.8 million, or less than one times the last twelve months adjusted EBITDA.

See notes to financial tables for reconciliations to comparable GAAP measures.

                          QUARTERLY CONFERENCE CALL

Tredegar management will host a conference call on October 21 at 11:00 a.m. EDT to discuss its earnings results. Individuals can access the call by dialing 877-692-2592. Individuals calling from outside the United States should dial 973-582-2700. A replay of the call will be available through October 28 by dialing 877-519-4471 (domestic) or 973-341-3080 (international), conference ID 5215176.

Alternatively, individuals may listen to the live audio webcast of the presentation by visiting the Tredegar Web site at http://www.tredegar.com. The webcast of the call may be accessed by selecting the "Webcast of third- quarter results" link on the home page. An archived version of the call will be available for replay on the Web site.

                  FORWARD-LOOKING AND CAUTIONARY STATEMENTS

The words "believe," "hope," "expect," "are likely," and similar expressions identify "forward-looking" statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks and uncertainties that could cause actual results to differ materially from those contained in the forward- looking statements, including without limitation the following:

Film Products is highly dependent on sales to one customer, which comprised approximately 30% of Tredegar's net sales in 2003. Film Products' success in this regard depends on its ability to develop products that meet this customer's requirements as well as market acceptance of this customer's products and its marketing and production scheduling. Our ability to grow Film Products and attract new customers depends on developing and delivering new products, especially in the personal care market. Personal care products are now being made with a variety of new materials, replacing traditional backsheet and other components. While we have substantial technical resources, there can be no assurance that our new products can be brought to market successfully, or at the same level of profitability and market share of replaced films. A shift in customer preferences away from our technologies, our inability to develop and deliver new profitable products, or delayed acceptance of our new products in domestic and foreign markets, could have a material adverse effect on our business.

Aluminum Extrusions is a cyclical business that is highly dependent on the economic conditions of its end-use markets in the U.S. and Canada, particularly in the construction, distribution and transportation industries. This business is also subject to seasonal slowdowns during the winter months. Aluminum Extrusions is under increasing domestic and foreign competitive pressures, including a growing presence of foreign imports in a number of its markets.

Therics' prospects and value depend on its ability to develop, manufacture, market, sell and profit from its orthopaedic product line and to achieve specified milestones, all of which will depend on its preclinical, clinical, regulatory, procurement, manufacturing, and sales and marketing capabilities or, where appropriate, its ability to enter into satisfactory arrangements with third parties to provide those functions.

Future performance is also influenced by the costs incurred by Tredegar's businesses. There is no assurance that cost control efforts will offset cost increases or any additional declines in revenues. Likewise, there is no assurance of our ability to pass through to our customers cost increases in raw materials.

Tredegar does not undertake 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 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.

Based in Richmond, Va., Tredegar Corporation is a global manufacturer of plastic films and aluminum extrusions. Tredegar is also developing and marketing bone graft substitutes through its Therics subsidiary.


                 Condensed Consolidated Statements of Income
                    (In Thousands, Except Per-Share Data)
                                 (Unaudited)

                                     Third Quarter Ended   Nine Months Ended
                                        September 30         September 30
                                       2004       2003      2004       2003

    Sales                            $222,515   $193,125  $634,487   $556,744
    Other income (expense), net (c)     8,232      2,379    14,690      3,530
                                      230,747    195,504   649,177    560,274

    Cost of goods sold (c)            185,087    157,426   526,314    456,763
    Freight                             5,759      4,901    16,054     13,621
    Selling, R&D and general
     expenses                          18,708     17,949    55,275     53,529
    Amortization of intangibles            90         67       224        201
    Interest expense                      707      1,213     2,228      4,999
    Asset impairments and costs
     associated with exit and
      disposal activities (a)           2,876      3,973    19,663      9,940
    Unusual items (b)                       -          -         -      1,067
                                      213,227    185,529   619,758    540,120

    Income before income taxes         17,520      9,975    29,419     20,154
    Income taxes (c)                    2,228      3,556     6,519      7,195

    Income from continuing
     operations                        15,292      6,419    22,900     12,959
    Discontinued operations (d):
      Loss from venture capital
       investment activities
       (including an after-tax loss
       on the sale of the venture
       capital investment portfolio
       of $49.2 million in 2003)            -          -         -    (49,516)
      Gain on the sale of
       intellectual property of
       Molecumetics in 2003                 -          -         -        891

    Net income (loss) (a) (b) (c)
     (d) (e)                          $15,292     $6,419   $22,900   $(35,666)

    Earnings (loss) per share:
      Basic:
        Continuing operations            $.40       $.17      $.60       $.34
        Discontinued operations             -          -         -      (1.28)
        Net income (loss)                $.40       $.17      $.60      $(.94)

      Diluted:
        Continuing operations            $.40       $.17      $.60       $.34
        Discontinued operations             -          -         -      (1.26)
        Net income (loss)                $.40       $.17      $.60      $(.92)

    Shares used to compute earnings
     (loss) per share:
      Basic                            38,317     38,058    38,261     38,094
      Diluted                          38,519     38,383    38,457     38,459



                             Tredegar Corporation
                  Net Sales and Operating Profit by Segment
                                (In Thousands)
                                 (Unaudited)

                                     Third Quarter Ended   Nine Months Ended
                                        September 30         September 30
                                       2004       2003      2004       2003
    Net Sales
    Film Products                    $104,570    $92,188  $301,940   $273,982
    Aluminum Extrusions               112,051     96,036   316,227    269,141
    Therics                               135          -       266          -
    Total net sales                   216,756    188,224   618,433    543,123
    Add back freight                    5,759      4,901    16,054     13,621
    Sales as shown in the
     Consolidated Statements
     of Income                       $222,515   $193,125  $634,487   $556,744

    Operating Profit
    Film Products:
      Ongoing operations              $10,966    $10,807   $31,853    $34,839
      Plant shutdowns, asset
       impairments and
       restructurings (a)              (2,681)    (1,566)   (8,718)    (4,260)

    Aluminum Extrusions:
      Ongoing operations                7,376      6,542    19,340     12,608
      Plant shutdowns, asset
       impairments and
       restructurings (a)                (195)      (256)   (9,921)      (644)
      Other (c)                         7,316          -     7,316          -

    Therics:
      Ongoing operations               (2,204)    (2,618)   (7,238)    (9,221)
      Restructurings (a)                    -     (2,151)   (1,024)    (3,855)
      Unusual items (b)                     -          -         -     (1,067)
    Total                              20,578     10,758    31,608     28,400
    Interest income                        86        253       232      1,086
    Interest expense                      707      1,213     2,228      4,999
    Gain on sale of corporate
     assets (c)                             -      2,231     6,547      2,231
    Corporate expenses, net (a)         2,437      2,054     6,740      6,564
    Income before income taxes         17,520      9,975    29,419     20,154
    Income taxes (c)                    2,228      3,556     6,519      7,195
    Income from continuing
     operations                        15,292      6,419    22,900     12,959
    Income (loss) from discontinued
     operations (d)                         -          -         -    (48,625)
    Net income (loss) (a) (b) (c)
     (d) (e)                          $15,292     $6,419   $22,900   $(35,666)



                             Tredegar Corporation
                    Condensed Consolidated Balance Sheets
                                (In Thousands)
                                 (Unaudited)

                                                 September 30,    December 31,
                                                     2004             2003
    Assets

    Cash & cash equivalents                         $25,347          $19,943
    Accounts & notes receivable                     117,785           84,110
    Income taxes recoverable                              -           61,508
    Inventories                                      55,964           49,572
    Deferred income taxes                            12,128           10,998
    Prepaid expenses & other                          5,087            5,015
    Total current assets                            216,311          231,146

    Property, plant & equipment, net                300,902          297,476
    Other assets                                     89,691           83,855
    Goodwill & other intangibles                    141,868          140,548

    Total assets                                   $748,772         $753,025

    Liabilities and Shareholders' Equity

    Accounts payable                                $57,563          $46,706
    Accrued expenses                                 44,349           42,456
    Income taxes payable                                454                -
    Current portion of long-term debt                12,500            8,750
    Total current liabilities                       114,866           97,912

    Long-term debt                                   88,680          130,879
    Deferred income taxes                            66,545           66,276
    Other noncurrent liabilities                     10,856           10,559
    Shareholders' equity                            467,825          447,399

    Total liabilities and shareholders'
     equity                                        $748,772         $753,025



                             Tredegar Corporation
                Condensed Consolidated Statement of Cash Flows
                                (In Thousands)
                                 (Unaudited)

                                                       Nine Months Ended
                                                          September 30
                                                     2004             2003
    Cash flows from operating activities:
      Net income (loss)                            $22,900          $(35,666)
      Adjustments for noncash items:
        Depreciation                                24,919            23,818
        Amortization of intangibles                    224               201
        Deferred income taxes                         (614)           31,257
        Accrued pension income and
         postretirement benefits                    (3,065)           (3,996)
        Loss on venture capital investments              -            70,256
        Gain on sale of corporate assets            (6,547)           (2,231)
        Loss on asset impairments and
         divestitures                               13,831             2,968
      Changes in assets and liabilities,
       net of effects of acquisitions
       and divestitures:
        Accounts and notes receivables             (34,718)           (2,674)
        Inventories                                 (6,292)            1,202
        Income taxes recoverable                    61,505           (41,895)
        Prepaid expenses and other                    (603)           (1,423)
        Accounts payable                            11,181            10,323
        Accrued expenses and income taxes
         payable                                     1,238             4,930
      Other, net                                      (460)              376
        Net cash provided by operating
         activities                                 83,499            57,446
    Cash flows from investing activities:
      Capital expenditures                         (39,983)          (44,190)
      Acquisitions                                  (1,420)                -
      Novalux investment in 2004 and venture
       capital investments in 2003                  (5,000)           (2,807)
      Proceeds from sale of venture capital
       investments                                       -            21,504
      Proceeds from the sale of corporate
       assets and property disposals                 8,230             2,385
      Other, net                                         7             1,600
        Net cash used in investing activities      (38,166)          (21,508)
    Cash flows from financing activities:
      Dividends paid                                (3,068)           (4,573)
      Debt principal payments                      (67,724)          (42,205)
      Borrowings                                    29,275                 -
      Repurchase of Tredegar common stock                -            (5,170)
      Proceeds from exercise of stock options        1,588               932
        Net cash used in financing activities      (39,929)          (51,016)
    (Decrease) increase in cash and cash
     equivalents                                     5,404           (15,078)
    Cash and cash equivalents at beginning
     of period                                      19,943           109,928
    Cash and cash equivalents at end of
     period                                        $25,347           $94,850



                         Selected Financial Measures
                                (In Millions)
                                 (Unaudited)

                                             For the Twelve Months Ended
                                                  September 30, 2004
                                          Film    Aluminum
                                        Products Extrusions  Therics   Total
    Operating profit (loss) from
     ongoing operations                   $42.7     $21.8    $(9.7)    $54.8
    Allocation of corporate overhead       (5.7)     (3.0)       -      (8.7)
    Add back depreciation and
     amortization                          21.1      11.0      1.4      33.5
    Adjusted EBITDA (f)                   $58.1     $29.8    $(8.3)    $79.6

    Selected balance sheet and other data
     as of September 30, 2004:
      Cash invested to date in Therics    $71.2
      Net debt (g)                        $75.8
      Shares outstanding                   38.6

    Notes to the Financial Tables

    (a) Plant shutdowns, asset impairments and restructurings in the third
        quarter of 2004 include:
        * Pretax charges of $828,000 related to accelerated depreciation from
          plant shutdowns and restructurings in Film Products;
        * A pretax charge of $709,000 related to severance and other employee-
          related costs associated with the restructuring of the research and
          development operations in Film Products;
        * Pretax charges of $617,000 related to severance and other costs
          associated with the planned shutdown of the films manufacturing
          facility in New Bern, North Carolina;
        * A pretax charge of $357,000 related to the sale of the films
          business in Argentina;
        * A pretax charge of $195,000 related to the planned shutdown of the
          aluminum extrusions facility in Aurora, Ontario; and
        * A pretax charge of $170,000 for additional costs incurred related to
          a plant shutdown in Film Products.

        Plant shutdowns, asset impairments and restructurings in the first
        nine months of 2004 include:
        * A pretax charge of $9.8 million related to the planned shutdown of
          the aluminum extrusions facility in Aurora, Ontario, including asset
          impairment charges of $7.1 million and severance and other costs of
          $2.7 million;
        * A pretax charge of $3 million related to the sale of the films
          business in Argentina;
        * Pretax charges of $2.5 million related to accelerated depreciation
          from plant shutdowns and restructurings in Film Products;
        * Pretax charges of $1.5 million related to severance and other costs
          associated with the planned shutdown of the films manufacturing
          facility in New Bern, North Carolina;
        * A pretax charge of $879,000 related to the estimated loss on the
          sub-lease of a portion of the Therics facility in Princeton, New
          Jersey;
        * A pretax charge of $709,000 related to severance and other employee-
          related costs associated with the restructuring of the research and
          development operations in Film Products;
        * Pretax charges of $575,000 in Film Products and $146,000 in Aluminum
          Extrusions related to asset impairments;
        * Pretax charges of $470,000 for additional costs incurred related to
          plant shutdowns in Film Products; and
        * A pretax charge of $145,000 related to severance costs in Therics.

        Plant shutdowns, asset impairments and restructurings in the third
        quarter of 2003 include:
        * Pretax charges for severance costs in connection with restructurings
          in Film Products ($321,000) and Aluminum Extrusions ($256,000);
        * A pretax charge of $945,000 for asset impairments in Film Products;
        * A pretax charge of $2.2 million related to the estimated loss on the
          sub-lease of a portion of the Therics facility in Princeton, New
          Jersey; and
        * Pretax charges of $300,000 for additional costs incurred related to
          plant shutdowns in Film Products.

        Plant shutdowns, asset impairments and restructurings in the first
        nine months of 2003 include:
        * Pretax charges for severance costs in connection with restructurings
          in Film Products ($1.9 million), Aluminum Extrusions ($256,000),
          Therics ($1.2 million) and at corporate headquarters ($1.2 million;
          included in "Corporate expenses, net" in the operating profit by
          segment table);
        * Pretax charges of $1.9 million for asset impairments in Film
          Products;
        * A pretax charge of $388,000 related to an early retirement program
          in Aluminum Extrusions;
        * Pretax charges of $2.7 million related to the estimated loss on the
          sub-lease of a portion of the Therics facility in Princeton, New
          Jersey; and
        * Pretax charges of $437,000 for additional costs incurred related to
          plant shutdowns in Film Products.

    (b) Unusual items in 2003 include a first-quarter pretax charge of $1.1
        million related to an adjustment for depreciation at Therics based on
        Tredegar's decision to suspend divestiture efforts.

    (c) Gain on the sale of corporate assets in 2004 include gains of $6.1
        million related to the sale of public equity securities and $413,000
        on the sale of corporate real estate.  There were no public equity
        securities held at September 30, 2004. Gains on the sale of corporate
        assets in 2003 include pretax gains of $942,000 on the sale of public
        securities and $1.3 million on the sale of corporate real estate.
        These gains are included in "Other income (expense), net" in the
        condensed consolidated statements of income.

        Income taxes in 2004 include a third-quarter tax benefit of $4 million
        related to the reversal of income tax contingency accruals upon
        favorable conclusion of IRS and state examinations through 2000.

        The other pretax gain of $7.3 million included in the Aluminum
        Extrusions section of the operating profit by segment table is
        comprised of the present value of an insurance settlement of $8.4
        million (future value of $8.5 million) associated with environmental
        costs related to prior years, partially offset by accruals for
        expected future environmental costs of $1 million.   The company
        received $5.2 million of the $8.5 million insurance settlement in
        September of 2004 and recognized receivables at present value for
        future amounts due ($1.5 million due in February of 2005 and $1.8
        million due in February 2006).   The gain from the insurance
        settlement is included in "Other income (expense), net" in the
        condensed consolidated statements of income, while the accruals for
        expected future environmental costs are included in "Cost of goods
        sold."

    (d) On March 7, 2003, Tredegar announced that Tredegar Investments had
        reached definitive agreements to sell substantially all of its venture
        capital investment portfolio.  The operating results associated with
        venture capital investment activities have been reported as
        discontinued operations.  Discontinued operations for 2003 also
        include a gain of $891,000 after-taxes on the sale of intellectual
        property of Molecumetics and a loss on the divestiture of the venture
        capital investment portfolio of $49.2 million after taxes.

        Operations were ceased at Molecumetics on July 2, 2002.  The operating
        results of Molecumetics have been reported as discontinued operations.

    (e) Comprehensive income (loss), defined as net income and other
        comprehensive income (loss), was income of $19.5 million for the third
        quarter of 2004 and income of $10.1 million for the third quarter of
        2003. Comprehensive income (loss) was income of $22.5 million for the
        first nine months of 2004 and a loss of $21.4 million for the first
        nine months of 2003.  Other comprehensive income (loss) includes
        changes in unrealized gains and losses on available-for-sale
        securities, foreign currency translation adjustments, unrealized gains
        and losses on derivative financial instruments and minimum pension
        liability recorded net of deferred taxes directly in shareholders'
        equity.

    (f) Adjusted EBITDA represents income from continuing operations before
        interest, taxes, depreciation, amortization, unusual items and losses
        associated with plant shutdowns, asset impairments and restructurings
        and gains from the sale of assets and other items.  Adjusted EBITDA is
        not intended to represent cash flow from operations as defined by GAAP
        and should not be considered as either an alternative to net income
        (as an indicator of operating performance) or to cash flow (as a
        measure of liquidity). Tredegar uses Adjusted EBITDA as a measure of
        unlevered (debt-free) operating cash flow.  We also use it when
        comparing relative enterprise values of manufacturing companies and
        when measuring debt capacity.  When comparing the valuations of a peer
        group of manufacturing companies, we express enterprise value as a
        multiple of Adjusted EBITDA.  We believe Adjusted EBITDA is preferable
        to operating profit and other GAAP measures when applying a comparable
        multiple approach to enterprise valuation because it excludes
        depreciation and amortization, unusual items and losses associated
        with plant shutdowns, asset impairments and restructurings, measures
        of which may vary among peer companies.

    (g) Net debt is calculated as follows (in millions):

          Debt                               $101.2
          Less: cash and cash equivalents     (25.4)
          Net debt                            $75.8
SOURCE  Tredegar Corporation
    -0-                             10/20/2004
    /CONTACT:  Mitzi S. Reynolds of Tredegar Corporation, +1-804-330-1134,
fax: +1-804-330-1177, or mitzireynolds@tredegar.com/
    /Web site:  http://www.tredegar.com /
    (TG)

CO:  Tredegar Corporation; Therics
ST:  Virginia
IN:  MNG CHM TEX
SU:  ERN CCA

JA-RJ 
-- DCW038 --
8068 10/20/2004 17:02 EDT http://www.prnewswire.com
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