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Tredegar Reports Third-Quarter Results

November 2, 2005 at 5:15 PM EST

RICHMOND, Va., Nov 02, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- Tredegar Corporation (NYSE: TG) reported third-quarter income from continuing operations of $7.6 million (20 cents per share) compared to $15.3 million (40 cents per share) in 2004. Earnings from manufacturing operations were $8.8 million (23 cents per share) versus $9.9 million (26 cents per share) last year. Third-quarter sales were up to $240.7 million from $222.5 million in 2004. A summary of third-quarter and year-to-date results from continuing operations is shown below:

Third Quarter      Nine Months
     (In millions, except per-share data)       Ended             Ended
                                             September 30      September 30
                                            2005     2004     2005     2004
     Sales                                  $240.7   $222.5   $717.2   $634.5

     Income from continuing operations as
      reported under generally accepted
      accounting principles (GAAP)            $7.6    $15.3    $15.3    $22.9
     After-tax effects of:
      Loss associated with plant shutdowns,
       asset impairments and restructurings    1.1      2.0      9.5     13.0
      Loss from AFBS (formerly Therics)
       ongoing operations                       .1      1.4      2.3      4.7
      Gains from sale of assets and other
       items                                     -     (8.8)    (1.8)   (13.0)
     Income from manufacturing operations*    $8.8     $9.9    $25.3    $27.6

     Diluted earnings per share from
      continuing operations as reported
      under GAAP                              $.20     $.40     $.40     $.60
     After-tax effects per diluted share
      of:
      Loss associated with plant shutdowns,
       asset impairments and restructurings    .03      .05      .25      .34
      Loss from AFBS (formerly Therics)
       ongoing operations                        -      .04      .06      .12
      Gains from sale of assets and other
       items                                     -     (.23)    (.05)    (.34)
     Diluted earnings per share from
      manufacturing operations*               $.23     $.26     $.66     $.72

* The after-tax effects of unusual items, plant shutdowns, asset impairments and restructurings, AFBS' (formerly Therics, Inc.) 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 AFBS. On June 30, 2005, substantially all of the assets of AFBS were sold or assigned to a newly- created limited liability company, Therics, LLC, controlled and managed by an individual not affiliated with Tredegar.

Norman A. Scher, Tredegar's president and chief executive officer, said: "Third-quarter earnings from manufacturing were down compared to last year, with strong results in films being offset by substantially lower profits in aluminum. Higher energy and resin costs continue to affect overall performance, making it very difficult to forecast future results. Profits in films were significantly higher, reflecting growth in surface protection, elastic and apertured materials. Given the intense upward pressure on resin costs, and the timing lag between these rising costs and corresponding price increases, we expect a significant decline in fourth-quarter profits from year-ago levels."

Scher added: "Third-quarter profits in aluminum were down from 2004 due mainly to the continuing escalation of energy costs. Results were also hurt by strength in the Canadian Dollar and weakness in Canadian markets. While we've raised prices to help offset increasing costs, we expect higher energy costs to continue to suppress profits in this business, especially as we enter the seasonally weak winter months. In summary, rising energy and resin costs will certainly dampen near-term results. The extent and duration of this negative impact is very difficult to predict."

MANUFACTURING OPERATIONS

                                Film Products

Third-quarter net sales in Film Products were $116.4 million, up 11% from $104.6 million in 2004. The increase in sales was due to the pass-through of higher raw material costs and growth in new product sales. Operating profit from ongoing operations improved to $13.8 million, up 25% from $11.0 million last year. The profit improvement was driven primarily by continued growth in higher value-added products including surface protection, elastic and apertured materials. Volume was 66.1 million pounds, down 6% from 70.1 million pounds last year. Last year's volume included 2.4 million pounds associated with the divested films business in Argentina.

Compared to the second quarter ended June 30, net sales and volume in the third quarter increased 5% and 3%, respectively. Third-quarter operating profit from ongoing operations was up 21% over the second quarter due to higher sales of value-added products.

Fourth-quarter profits in films are expected to decline significantly from year-ago levels. Hurricane-related supply shortages have driven resin prices to record levels. The continuing rise in resin prices, combined with the lag in related selling price adjustments, are causing greater volatility in quarter-to-quarter profit levels.

In the third quarter, average domestic prices for low-density polyethylene (LDPE) resin in the U.S. increased 5% over second-quarter levels, while actual resin prices increased 32% from June to September. Since the bulk of the resin price increases occurred late in the quarter, the impact on third- quarter operating profit was relatively minor. Significant increases have already occurred in October and are expected to continue during the fourth quarter. Resin prices in Europe are exhibiting similar trends.

To mitigate the impact of resin price fluctuations, Film Products has index-based pass-through agreements for the majority of its business. However, under certain agreements, changes in resin costs are not passed through for an average period of 90 days. This lag between cost increases and corresponding selling price adjustments is expected to have a significant negative impact on fourth-quarter profits. For non-indexed customers, Film Products has announced price increases, which the company hopes will further mitigate the impact of rising resin and freight costs.

Year-to-date net sales were $344.3 million, up 14%, versus $301.9 million in 2004. Operating profit from ongoing operations was $36.8 million, up 15% compared to $31.9 million in 2004. Year-to-date volume decreased to 197.8 million pounds from 210.4 million pounds.

Capital spending in Film Products for the first nine months of 2005 totaled $39 million and is expected to be approximately $55 million for the year. Expenditures have been directed primarily at capacity expansions for surface protection, elastic and apertured materials and a new global information system.

Aluminum Extrusions

Third-quarter net sales in Aluminum Extrusions were $118.1 million, up 5% from $112.1 million in 2004 due to higher raw material-driven selling prices. Operating profit from ongoing operations declined 41% to $4.4 million, down from $7.4 million in 2004. The profit decline was due to a $2.3 million increase in energy costs and a negative impact of $900,000 caused by appreciation of the Canadian Dollar. Third-quarter volume was flat versus last year at 63.9 million pounds, as a relatively strong performance in U.S. operations was offset by softer demand across all Canadian markets.

Costs for natural gas, electricity and diesel fuel continue to increase. Natural gas prices have risen more than 75% since the second quarter, with the NYMEX natural gas monthly settlement increasing from $6.12 mmBtu in June to $10.85 mmBtu in September. For every $1 mmBtu change in the price of natural gas, the company expects a corresponding operating profit impact of approximately $150,000 per month. Aluminum Extrusions has increased selling prices in an effort to buffer the negative impact of rising energy costs.

Year-to-date net sales were $354.0 million, up 12% from $316.2 million in 2004. Operating profit from ongoing operations for the nine-month period declined 24% to $14.6 million from $19.3 million in 2004 due to higher energy costs (approximately $4 million) and strength of the Canadian Dollar (about $3 million). Year-to-date volume increased slightly to 185.7 million pounds from 183.8 million pounds in 2004.

Capital expenditures for the first nine months of 2005 totaled $10 million and are expected to be approximately $15 million for the year.

OTHER ITEMS

Third-quarter results include a net after-tax charge of $1.1 million (3 cents per share) for plant shutdowns, asset impairments and restructurings primarily associated with charges related to Film Products' relocation of its R&D and technical operations to Richmond. The after-tax charge for plant shutdowns, asset impairments and restructurings for the third quarter of 2004 was $2.0 million (5 cents per share).

Year-to-date net after-tax charges for plant shutdowns, asset impairments and restructurings were $9.5 million (25 cents per share) and were primarily related to the second-quarter sale of AFBS (formerly Therics, Inc.). Comparable charges in 2004 totaled $13.0 million (34 cents per share). Year- to-date after-tax gains from the sale of assets and other items were $1.8 million (5 cents per share) compared to $13.0 million (34 cents per share) in 2004.

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 $95.6 million or about one times the last twelve months adjusted EBITDA from manufacturing operations. The company expects to refinance its debt, which matures on September 30, 2006, by the end of 2005 with a new multi-year revolving credit facility.

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

QUARTERLY CONFERENCE CALL

Tredegar management will host a conference call on November 3 at 10:00 a.m. EST to discuss its earnings results. Individuals can access the call by dialing 800-772-8997. Individuals calling from outside the United States should dial 416-695-9712. A replay of the call will be available through November 10 by dialing 888-509-0082 (domestic) or 416-695-5275 (international).

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 may constitute "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on our then current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. Factors that may cause such a difference include, but are not limited to the following:

Film Products is highly dependent on sales to one customer, which comprised approximately 27% of Tredegar's net sales in 2004. The loss or significant reduction of sales associated with this customer would have a material adverse effect on our business, as would delays in this customer rolling out products utilizing new technologies developed by Film Products.

Growth of Film Products depends on its ability to develop and deliver new products at competitive prices, 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 Film Products has substantial technical resources, there can be no assurance that its new products can be brought to market successfully, or if brought to market successfully, at the same level of profitability and market share of replaced films. A shift in customer preferences away from Film Products' technologies, its inability to develop and deliver new profitable products, or delayed acceptance of its new products in domestic or foreign markets, could have a material adverse effect on Tredegar. In the long term, growth will depend on Film Products' ability to provide innovative materials at or below current material costs, including lowering equipment and other capital costs.

Sales volume and profitability of Aluminum Extrusions is cyclical and highly dependent on economic conditions of end-use markets in the U.S. and Canada, particularly in the construction, distribution and transportation industries. Aluminum Extrusions' market segments are also subject to seasonal slowdowns during the winter months. The markets for Aluminum Extrusions' products are marked by differences between the Canadian and U.S. markets. They are also highly competitive with product quality, service, delivery performance and price being the principal competitive factors. Although Aluminum Extrusions targets complex, customized, service-intensive business compared to higher volume, standard extrusion applications, Aluminum Extrusions is under increasing domestic and foreign competitive pressures. Foreign imports, primarily from China, currently represent less than 5% of the North American aluminum extrusion market. Foreign competition to date has been primarily large volume, standard extrusion profiles that impact some of our less strategic end-use markets. Market share erosion in other end-use markets remains possible.

Tredegar's substantial international operations subject us to risks of doing business in foreign countries, which could adversely affect our business, financial condition and results of operations. Risks inherent in international operations include the following, by way of example: changes in general economic conditions, potential difficulty enforcing agreements and intellectual property rights, restrictions on foreign trade or investment, fluctuations in exchange rates, imposition of additional taxes on our foreign income, nationalization of private enterprises and unexpected adverse changes in foreign laws and regulatory requirements.

Tredegar's future performance is also influenced by the costs incurred by Tredegar's operating companies, including the cost of energy and raw materials. These costs include, without limitation, the cost of resin (the raw material on which Film Products primarily depends), natural gas (the principal fuel necessary for Aluminum Extrusions' plants to operate), electricity and diesel fuel. Resin and natural gas prices have risen significantly and may continue to do so in the future. There is no assurance that cost control efforts will be sufficient to offset any additional future declines in revenues or increases in energy, raw materials or other costs. Tredegar attempts to mitigate the effects of increased costs through price increases, but there are no assurances that higher selling prices can be effectively passed through to Tredegar's customers.

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

                                     Third Quarter Ended   Nine Months Ended
                                        September 30         September 30
                                       2005       2004      2005       2004

    Sales                            $240,716   $222,515  $717,197   $634,487
    Other income (expense), net (a)
     (c)                                 (394)     8,232     3,104     14,690
                                      240,322    230,747   720,301    649,177

    Cost of goods sold (a)            201,917    185,087   604,346    526,314
    Freight                             6,281      5,759    18,626     16,054
    Selling, R&D and general
     expenses (a)                      17,597     18,708    56,417     55,275
    Amortization of intangibles            50         90       262        224
    Interest expense                    1,196        707     3,252      2,228
    Asset impairments and costs
     associated with exit and
     disposal activities (a) (b)        1,159      2,876    12,517     19,663
                                      228,200    213,227   695,420    619,758

    Income before income taxes         12,122     17,520    24,881     29,419
    Income taxes (c)                    4,465      2,228     9,542      6,519

    Net income (a) (b) (c) (d)         $7,657    $15,292   $15,339    $22,900


    Earnings per share:
      Basic                              $.20       $.40      $.40       $.60
      Diluted                             .20        .40       .40        .60

    Shares used to compute earnings
     per share:
      Basic                            38,465     38,317    38,453     38,261
      Diluted                          38,565     38,519    38,598     38,457



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

                                     Third Quarter Ended   Nine Months Ended
                                        September 30         September 30
                                       2005       2004      2005       2004
    Net Sales
    Film Products                    $116,350   $104,570  $344,305   $301,940
    Aluminum Extrusions               118,085    112,051   354,014    316,227
    AFBS (formerly Therics) (b)             -        135       252        266
    Total net sales                   234,435    216,756   698,571    618,433
    Add back freight                    6,281      5,759    18,626     16,054
    Sales as shown in the
     Consolidated Statements of
     Income                          $240,716   $222,515  $717,197   $634,487

    Operating Profit
    Film Products:
      Ongoing operations              $13,822    $10,966   $36,796    $31,853
      Plant shutdowns, asset
       impairments and
       restructurings, net of gains
       on sale of assets (a)           (1,225)    (2,681)     (812)    (8,718)

    Aluminum Extrusions:
      Ongoing operations                4,362      7,376    14,580     19,340
      Plant shutdowns, asset
       impairments and
       restructurings (a)                (406)      (195)   (1,246)    (9,921)
      Other (c)                             -      7,316         -      7,316

    AFBS (formerly Therics) (b):
      Ongoing operations                    -     (2,204)   (3,467)    (7,238)
      Loss on investment in Therics,
       LLC                                (91)         -       (91)         -
      Plant shutdowns, asset
       impairments and
       restructurings (a)                   -          -   (10,049)    (1,024)
    Total                              16,462     20,578    35,711     31,608
    Interest income                       146         86       386        232
    Interest expense                    1,196        707     3,252      2,228
    Gain on the sale of corporate
     assets (c)                             -          -        61      6,547
    Corporate expenses, net (a)         3,290      2,437     8,025      6,740
    Income before income taxes         12,122     17,520    24,881     29,419
    Income taxes (c)                    4,465      2,228     9,542      6,519
    Net income (a) (b) (c) (d)         $7,657    $15,292   $15,339    $22,900



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

                                               September 30,    December 31,
                                                   2005             2004
    Assets

    Cash & cash equivalents                         $23,447          $22,994
    Accounts & notes receivable, net                131,816          117,314
    Income taxes recoverable                          8,627                -
    Inventories                                      52,806           65,360
    Deferred income taxes                             6,657           10,181
    Prepaid expenses & other                          3,947            4,689
    Total current assets                            227,300          220,538

    Property, plant & equipment, net                326,768          316,692
    Other assets                                     97,476           89,261
    Goodwill & other intangibles                    138,091          142,983

    Total assets                                   $789,635         $769,474

    Liabilities and Shareholders' Equity

    Accounts payable                                $63,401          $63,852
    Accrued expenses                                 40,485           38,141
    Income taxes payable                                  -            1,446
    Current portion of long-term debt (e)           115,197           13,125
    Total current liabilities                       219,083          116,564

    Long-term debt                                        -           90,327
    Deferred income taxes                            72,016           71,141
    Other noncurrent liabilities                     11,030           11,000
    Shareholders' equity                            487,506          480,442

    Total liabilities and shareholders' equity     $789,635         $769,474



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

                                                        Nine Months Ended
                                                          September 30
                                                     2005              2004
    Cash flows from operating activities:
      Net income                                   $15,339           $22,900
      Adjustments for noncash items:
        Depreciation                                28,203            24,919
        Amortization of intangibles                    262               224
        Deferred income taxes                        6,801              (614)
        Accrued pension income and
         postretirement benefits                    (1,611)           (3,065)
        Gain on sale of assets                      (2,507)           (6,547)
        Loss on asset impairments and
         divestitures                                6,556            13,831
      Changes in assets and liabilities,
       net of effects of acquisitions
       and divestitures:
        Accounts and notes receivables             (15,327)          (34,718)
        Inventories                                 12,631            (6,292)
        Income taxes recoverable                    (8,627)           61,505
        Prepaid expenses and other                     789              (603)
        Accounts payable                            (3,169)           11,181
        Accrued expenses and income taxes payable   (1,132)            1,238
      Other, net                                    (2,767)             (460)
        Net cash provided by operating
         activities                                 35,441            83,499
    Cash flows from investing activities:
      Capital expenditures                         (49,027)          (39,983)
      Acquisitions                                       -            (1,420)
      Novalux investment                                 -            (5,000)
      Proceeds from the sale of assets and
       property disposals                            3,368             8,230
      Other, net                                       737              (197)
        Net cash used in investing
         activities                                (44,922)          (38,370)
    Cash flows from financing activities:
      Dividends paid                                (4,641)           (3,068)
      Debt principal payments                      (33,875)          (67,724)
      Borrowings                                    45,620            29,275
      Book overdrafts                                3,642                 -
      Proceeds from exercise of stock options          406             1,588
        Net cash provided by (used in)
         financing activities                       11,152           (39,929)
    Effect of exchange rate changes on cash         (1,218)              204
    Increase in cash and cash equivalents              453             5,404
    Cash and cash equivalents at beginning
     of period                                      22,994            19,943
    Cash and cash equivalents at end of
     period                                        $23,447           $25,347



                         Selected Financial Measures
                                (In Millions)
                                 (Unaudited)

                                             For the Twelve Months Ended
                                                  September 30, 2005
                                                              AFBS
                                           Film   Aluminum  (formerly
                                         Products Extrusions  Therics) Total
                                                               (b)
    Operating profit (loss) from ongoing
     operations                             $48.2    $17.9    $(6.1)   $60.0
    Allocation of corporate overhead         (7.9)    (3.2)       -    (11.1)
    Add back depreciation and
     amortization                            25.6     11.3       .7     37.6
    Adjusted EBITDA (f)                     $65.9    $26.0    $(5.4)   $86.5

    Selected balance sheet and other data
     as of September 30, 2005:
      Net debt (g)                          $95.6
      Shares outstanding                     38.6

    Notes to the Financial Tables

(a) Plant shutdowns, asset impairments and restructurings in the third quarter of 2005 include:

* Pretax charges of $906,000 for severance and other employee-related
          costs in connection with restructurings in Film Products ($514,000),
          Aluminum Extrusions ($207,000), and at corporate headquarters
          ($185,000; included in "Corporate expenses, net" in the Operating
          Profit by Segment table);
        * A net pretax charge of $595,000 related to severance and other
          employee-related costs associated with the restructuring of the
          research and development operations in Film Products (of this
          amount, $657,000 in pretax charges for employee relocation and
          recruitment is included in "Selling, R&D and general expenses" in
          the condensed consolidated statements of income);
        * A pretax charge of $198,000 related to the shutdown of the aluminum
          extrusions facility in Aurora, Ontario; and
        * Pretax charges of $117,000 for accelerated depreciation related to
          restructurings in Film Products.

Plant shutdowns, asset impairments and restructurings in the first nine months of 2005 include:

* A pretax charge of $10 million related to the sale or assignment of
          substantially all of AFBS' (formerly Therics) assets, including
          asset impairment charges of $5.6 million, lease-related losses of $3
          million and severance and other transaction-related costs of $1.4
          million (see Note (b) for additional information);
        * Pretax charges of $1.8 million related to severance and other
          employee-related costs in connection with restructurings in Film
          Products ($991,000), Aluminum Extrusions ($648,000) and at corporate
          headquarters ($185,000; included in "Corporate expenses, net" in the
          Operating Profit by Segment table);
        * A pretax gain of $1.6 million related to the shutdown of the films
          manufacturing facility in New Bern, North Carolina, including a $1.8
          million gain on the sale of the facility (included in "Other income
          (expense), net" in the condensed consolidated statements of income),
          partially offset by shutdown-related expenses of $225,000;
        * A pretax charge of $1 million for process reengineering costs
          associated with the implementation of a global information system in
          Film Products (included in "Costs of goods sold" in the condensed
          consolidated statements of income);
        * A net pretax charge of $725,000 related to severance and other
          employee-related costs associated with the restructuring of the
          research and development operations in Film Products (of this
          amount, $1.2 million in pretax charges for employee relocation and
          recruitment is included in "Selling, R&D and general expenses" in
          the condensed consolidated statements of income);
        * A pretax gain of $653,000 related to the shutdown of the films
          manufacturing facility in Carbondale, Pennsylvania, including a
          $630,000 gain on the sale of the facility (included in "Other income
          (expense), net" in the condensed consolidated statements of income),
          and the reversal to income of certain shutdown-related accruals of
          $23,000;
        * A net pretax charge of $597,000 related to the shutdown of the
          aluminum extrusions facility in Aurora, Ontario, including $1.1
          million of shutdown-related costs, partially offset by the reversal
          to income of certain severance and employee-related accruals of
          $474,000;
        * A pretax gain of $508,000 for interest receivable on tax refund
          claims (included in "Corporate expenses, net" in the net sales and
          operating profit by segment table and "Other income (expense), net"
          in the condensed consolidated statements of income); and
        * Pretax charges of $322,000 for accelerated depreciation related to
          restructurings in Film Products.

Plant shutdowns, asset impairments and restructurings in the third quarter of 2004 include:

* Pretax charges of $828,000 for accelerated depreciation related to
          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 AFBS (formerly 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 AFBS
          (formerly Therics).

    (b) On June 30, 2005, substantially all of the assets of AFBS, Inc.
        (formerly Therics, Inc.), a wholly-owned subsidiary of Tredegar, were
        sold or assigned to a newly-created limited liability company,
        Therics, LLC, controlled and managed by an individual not affiliated
        with Tredegar.  AFBS retained substantially all of its liabilities in
        the transaction, which included customary indemnification provisions
        for pre-transaction liabilities.  AFBS received a 17.5% equity
        interest in the new company valued at $170,000 and a 3.5% interest in
        Theken Spine, LLC valued at $800,000, along with potential future
        payments on the sale of certain products by Therics, LLC.

    (c) Gain on the sale of corporate assets for the first nine months of 2005
        include a gain of $61,000 related to the sale of corporate real
        estate. Gain on the sale of corporate assets for the first nine months
        of 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.

        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 in 2004 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 received 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) Comprehensive income (loss), defined as net income and other
        comprehensive income (loss), was income of $11.4 million for the third
        quarter of 2005 and income of $19.5 million for the third quarter of
        2004. Comprehensive income (loss) was income of $10.9 million for the
        first nine months of 2005 and income of $22.5 million for the first
        nine months of 2004. 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.

    (e) Tredegar expects to refinance its debt by the end of 2005 with a new
        multi-year revolving credit facility.  Under the current credit
        agreement, $3.8 million is due for each of the next three quarters
        with the remainder due on September 30, 2006.

    (f) Adjusted EBITDA represents income from operations before interest,
        taxes, depreciation, amortization, unusual items and losses associated
        with plant shutdowns, asset impairments and restructurings, 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                                        $115.2
          Less:  Cash and cash equivalents,
           net of overdrafts                           (19.6)
          Net debt                                     $95.6

SOURCE Tredegar Corporation

Mitzi S. Reynolds of Tredegar Corporation, +1-804-330-1134, Fax: +1-804-330-1177,
mitzireynolds@tredegar.com
http://www.prnewswire.com
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