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Tredegar Reports Fourth-Quarter Results

RICHMOND, Va., Feb. 12 /PRNewswire-FirstCall/ -- Tredegar Corporation (NYSE: TG) reported fourth-quarter net income from continuing operations of $5.9 million (17 cents per share) compared to $7.0 million (19 cents per share) in the fourth quarter of 2007. Earnings from continuing manufacturing operations in the fourth quarter were $10.2 million (30 cents per share) versus $6.3 million (17 cents per share) last year. Fourth-quarter sales from continuing operations decreased to $192.7 million from $208.5 million in 2007. On February 12, 2008, Tredegar sold its aluminum extrusions business in Canada. All historical results for this business have been reflected as discontinued operations in the accompanying financial tables.

A summary of results for continuing operations for the three months and years ended December 31, 2008 and 2007 is shown below:



    (In Millions, Except Per-Share Data)
                                               Three Months
                                                  Ended        Year Ended
                                               December 31     December 31
                                               -----------     -----------
                                               2008    2007    2008    2007
                                               ----    ----    ----    ----
    Sales                                     $192.7  $208.5  $883.9  $922.6

    Income from continuing operations as
     reported under generally accepted
     accounting principles (GAAP)               $5.9    $7.0   $29.6   $34.9
    After-tax effects of:
        Loss associated with plant
         shutdowns, asset impairments
         and restructurings                      5.1     1.0     8.9     4.1
        (Gains) losses from sale of
         assets and other items                  (.8)   (1.7)   (6.6)    (.6)
                                                 ---    ----    ----     ---
    Income from continuing manufacturing
     operations*                               $10.2    $6.3   $31.9   $38.4
                                               -----    ----   -----   -----


    Diluted earnings per share from
     continuing operations as reported
     under GAAP                                 $.17    $.19    $.87    $.90
    After-tax effects per diluted share of:
        Loss associated with plant shutdowns,
         asset impairments and restructurings    .15     .03     .26     .11
        (Gains) losses from sale of assets
         and other items                        (.02)   (.05)   (.20)   (.02)
                                                ----    ----    ----    ----
    Diluted earnings per share from
     continuing manufacturing operations*       $.30    $.17    $.93    $.99
                                                ----    ----    ----    ----


    * The after-tax effects of unusual items, plant shutdowns, asset
      impairments and restructurings, and gains or losses from sale of
      assets and other items have been presented separately and removed
      from net income and earnings per share from continuing operations as
      reported under GAAP to determine Tredegar's presentation of income and
      earnings per share from continuing manufacturing operations.  Income
      and earnings per share from continuing manufacturing operations are
      key financial and analytical measures used by Tredegar to gauge the
      operating performance of its continuing manufacturing businesses.
      They are not intended to represent the stand-alone results for
      Tredegar's continuing 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.

John D. Gottwald, Tredegar's president and chief executive officer, said: "Earnings from continuing manufacturing operations increased by 13 cents per share or 76% in the fourth quarter of 2008 compared with the fourth quarter of 2007 despite significantly lower volumes in both our films and aluminum extrusions businesses. Operating profits in films, which improved by $6.3 million or 48.6% in the fourth quarter of 2008 compared with 2007, would have declined without the positive impact of the lag in the pass-through of substantially lower resin costs and adjustments for inventories accounted for under the last-in first-out method. Volume and operating profits in films are expected to continue to be adversely impacted by competitive pressures and the global economic downturn. More than ever, we are focused on reducing costs and managing the business under significantly greater economic uncertainty."

Mr. Gottwald continued: "Operating profits for our ongoing U.S. operations in aluminum extrusions decreased by $318,000, or 12.0%, in the fourth quarter of 2008 compared with the fourth quarter of last year. The profit drop was primarily due to an 11.8% decline in volume. Volume declined for the year by 12.6%, which was on top of a volume decrease in 2007 versus 2006 of 15.9%. The timing of any recovery is virtually impossible to predict. We continue to be focused on reducing costs in light of anticipated further declines in volume based on current market conditions."

Mr. Gottwald further stated: "Our balance sheet remains strong with cash in excess of debt of $23.3 million at December 31, 2008, an improvement from debt in excess of cash of $33.8 million at December 31, 2007."

    MANUFACTURING OPERATIONS

    Film Products

Fourth-quarter net sales (sales less freight) in Film Products were $123.8 million, down 5.2% from $130.6 million in the fourth quarter of 2007, while operating profit from ongoing operations increased 48.6% to $19.2 million in the fourth quarter of 2008 from $12.9 million in 2007. Volume was 50.3 million pounds in the fourth quarter of 2008, down 14.2% from 58.6 million pounds in the fourth quarter of 2007.

Net sales in Film Products for 2008 were $522.8 million, a 1.5% decrease from $531.0 million in 2007. Operating profit from ongoing operations was $53.9 million in 2008, down 9.3% from $59.4 million in the prior year. Volume was 221.2 million pounds in 2008, down 9.5% from 244.3 million pounds in 2007.

Volume was down in the quarter and year ended December 31, 2008 compared with last year in most product segments, including personal care, surface protection and packaging materials. Net sales in 2008 declined in both the fourth quarter and year compared to 2007 due to lower volume, partially offset by higher selling prices from the pass-through of increased resin costs. A significant portion of the substantially lower resin costs realized in the fourth quarter of 2008 are not passed through to customers via lower selling prices until the first quarter of 2009.

Operating profit from ongoing operations increased in the fourth quarter of 2008 versus 2007 due primarily to the lag in the pass-through of substantially lower resin costs, adjustments for inventories accounted for under the last-in first-out method (LIFO) and cost reduction efforts, partially offset by lower volume. Operating profit for 2008 in comparison to 2007 decreased as a result of lower volume, partially offset by cost reduction efforts and the favorable impact of changes in the U.S. dollar value of currencies for operations outside of the U.S. The company estimates that the impact on operating profit of the lag in the pass-through of changes in average resin costs and adjustments for LIFO was positive $6.6 million in the fourth quarter of 2008 and negative $2.0 million in the fourth quarter of 2007. The company estimates that the impact on operating profit of resin pass-through lag and adjustments for LIFO was negative $600,000 in all of 2008 and negative $2.5 million in all of 2007. The company estimates that changes in the U.S. dollar value of currencies for operations outside of the U.S. had an unfavorable impact on operating profit of $200,000 in the fourth quarter of 2008 compared with the fourth quarter of 2007, and a favorable impact of approximately $3.6 million in all of 2008 compared with all of 2007.

Capital expenditures in Film Products were $11.1 million in 2008 compared with $15.3 million in 2007, and are projected to be approximately $22 million in 2009. Depreciation expense was $34.5 million in 2008 compared with $33.9 million in the prior year, and is projected to be approximately $27 million in 2009.

Aluminum Extrusions

Fourth-quarter net sales from ongoing U.S. operations in Aluminum Extrusions were $64.5 million, down 12.3% from $73.5 million in the fourth quarter of 2007. Operating profit from ongoing U.S. operations was $2.3 million in the fourth quarter of 2008, a 12.0% decrease from $2.6 million in the fourth quarter of 2007. Volume from ongoing operations decreased to 28.4 million pounds in the fourth quarter of 2008, down 11.8% from 32.2 million pounds in the fourth quarter of 2007.

Net sales for ongoing U.S. operations in Aluminum Extrusions for 2008 were $340.3 million, down 8.5% from $371.8 million in 2007. Operating profit from ongoing U.S. operations was $10.1 million in 2008, down 38.7% from $16.5 million for last year. Volume was 136.2 million pounds in 2008, down 12.6% from 155.8 million pounds in 2007.

The decreases in net sales in the fourth quarter and full year of 2008 compared with last year was mainly due to lower volume. Shipments declined in most markets. Shipments in non-residential construction, which comprised approximately 72% of total volume in 2008, declined by approximately 2.7% in 2008 compared with 2007. Operating profit from ongoing operations declined during the fourth quarter and all of 2008 versus the same periods last year mainly due to lower volume.

Capital expenditures for continuing operations in Aluminum Extrusions were $9.7 million in 2008 compared with $4.4 million in the prior year, and are projected to be approximately $24 million in 2009. In January 2008, Tredegar announced plans to spend approximately $24 million over the following 18 months to expand the capacity at its plant in Carthage, Tennessee. The Company had expenditures of $5.7 million in 2008 for this project, which will be dedicated to serving customers in the non-residential construction sector. Depreciation expense was $8.0 million in 2008 compared with $8.5 million in 2007, and is projected to be approximately $8.6 million in 2009.

On February 12, 2008, Tredegar sold its aluminum extrusions business in Canada for approximately $25 million to an affiliate of H.I.G. Capital. Tredegar realized cash income tax benefits in 2008 from the sale of approximately $12 million. All historical results for this business have been reflected as discontinued operations in the accompanying financial tables.

OTHER ITEMS

Net pension income from continuing operations was $1.2 million in the fourth quarter and $4.9 million in 2008, a favorable change of $481,000 (1 cent per share after taxes) and $2.1 million (4 cents per share after taxes), respectively, from amounts recognized in the comparable periods of 2007. Most of the favorable change in 2008 relate to a pension plan that is reflected in "Corporate expenses, net" in the operating profit by segment table. The company contributed approximately $122,000 to its pension plans for continuing operations in 2008.

At December 31, 2008, the fair value of the assets of Tredegar's pension plans was approximately $194.5 million, down from $284.1 million at December 31, 2007. The significant decline was mainly due to the drop in global stock prices and benefit payments to retirees of approximately $2.6 million per quarter. The projected benefit obligation at December 31, 2008 is approximately $211.7 million at a discount rate of 6.5%. The minimum required contribution to Tredegar's pension plans in 2009 is estimated at $4.4 million and net pension income in 2009 is estimated at $3.2 million.

The effective tax rate used to compute income taxes from continuing manufacturing operations was 41.2% in the fourth quarter of 2008 compared with 44.7% in the fourth quarter of 2007, and 39.9% in 2008 compared with 38.8% in 2007. The increase in the effective tax rate for continuing manufacturing operations for all of 2008 versus 2007, which had an adverse impact of 2 cents per share, was mainly due to higher effective tax rates for operations outside of the U.S.

Overall results for continuing operations for the quarter include special items. After-tax net charges for continuing operations for plant shutdowns, asset impairments and restructurings and gains and losses from the sale of assets and other items were after-tax net losses of 13 cents per share in the fourth quarter of 2008 and after-tax net gains of 2 cents per share in the fourth quarter of 2007. After-tax net charges for continuing operations for plant shutdowns, asset impairments and restructurings and gains and losses from the sale of assets and other items were after-tax net losses of 6 cents per share and 9 cents per share in 2008 and 2007, respectively. Further details regarding these items are provided in the financial tables included with this press release.

Tredegar's investment in Harbinger Capital Partners Special Situations Fund, L.P. had a reported capital account value of $10.1 million at December 31, 2008, compared with $23.0 million at December 31, 2007. This investment has a carrying value in Tredegar's balance sheet of $10 million, which represents the amount invested on April 2, 2007.

CAPITAL STRUCTURE AND ADJUSTED EBITDA

Cash in excess of debt was $23.3 million at December 31, 2008, compared with debt in excess of cash of $33.8 million at December 31, 2007. Adjusted EBITDA from continuing manufacturing operations, a key valuation and borrowing capacity measure, was $98.0 million for the year ended December 31, 2008, down from $107.9 million for the year ended December 31, 2007. Cash in excess of debt, net debt and adjusted EBITDA are non-GAAP measures. See notes to financial statements and tables for reconciliations to comparable GAAP measures.

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

Some of the information contained in this press release may constitute "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. When we use the words "believe," "estimate," "anticipate," "expect," "project," "likely," "may" and similar expressions, we do so to identify forward-looking statements. 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. It is possible that our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Factors that could cause actual results to differ from expectations include, without limitation: Film Products is highly dependent on sales to one customer -- The Procter & Gamble Company; growth of Film Products depends on its ability to develop and deliver new products at competitive prices; sales volume and profitability of continuing operations in Aluminum Extrusions is cyclical and highly dependent on economic conditions of end-use markets in the U.S., particularly in the construction, distribution and transportation industries and are also subject to seasonal slowdowns; our 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; our future performance is influenced by costs incurred by our operating companies including, for example, the cost of energy and raw materials; and the other factors discussed in the reports Tredegar files with or furnishes to the Securities and Exchange Commission (the "SEC") from time-to-time, including the risks and important factors set forth in "Risk Factors" in Part I, Item 1A of Tredegar's 2008 Annual Report on Form 10-K that will be filed with the SEC.

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 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.

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)

                               Fourth Quarter Ended    Year Ended
                                  December 31          December 31
                                  -----------          -----------
                                 2008        2007      2008      2007
                                 ----        ----      ----      ----

    Sales                    $192,702    $208,462  $883,899  $922,583
    Other income (expense),
     net (a) (e)                1,412       3,315    10,341     1,782
                                -----       -----    ------     -----
                              194,114     211,777   894,240   924,365
                              -------     -------   -------   -------

    Cost of goods sold (a)    153,795     171,396   739,721   761,509
    Freight                     4,434       4,352    20,782    19,808
    Selling, R&D and
     general expenses          16,967      21,135    69,704    76,855
    Amortization of
     intangibles                   30          37       123       149
    Interest expense              472         712     2,393     2,721
    Asset impairments and
     costs associated with
     exit and disposal
     activities (a)             7,231       1,456    12,390     4,027
                                -----       -----    ------     -----
                              182,929     199,088   845,113   865,069
                              -------     -------   -------   -------

    Income from continuing
     operations before
     income taxes              11,185      12,689    49,127    59,296
    Income taxes (e)            5,272       5,653    19,486    24,366
                                -----       -----    ------    ------
    Income from continuing
     operations                 5,913       7,036    29,641    34,930
    Income (loss) from
     discontinued operations (b)  225       6,321      (705)  (19,681)
                                  ---       -----      ----   -------

    Net income (loss) (a)(c)   $6,138     $13,357   $28,936   $15,249
                               ------     -------   -------   -------


    Earnings (loss) per share:
      Basic:
        Continuing operations    $.17        $.19      $.87      $.91
        Discontinued operations   .01         .17      (.02)     (.51)
                                  ---         ---      ----      ----
        Net income (loss)        $.18        $.36      $.85      $.40
                                 ----        ----      ----      ----
      Diluted:
        Continuing operations    $.17        $.19      $.87      $.90
        Discontinued operations   .01         .17      (.02)     (.51)
                                  ---         ---      ----      ----
        Net income (loss)        $.18        $.36      $.85      $.39
                                 ----        ----      ----      ----

    Shares used to compute
     earnings (loss) per share:
      Basic                    33,782      36,494    33,977    38,532
      Diluted                  33,990      36,587    34,194    38,688



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

                             Fourth Quarter Ended      Year Ended
                                  December 31          December 31
                                  -----------          -----------
                                 2008        2007      2008      2007
                                 ----        ----      ----      ----
    Net Sales
    Film Products            $123,809    $130,587  $522,839  $530,972
    Aluminum Extrusions        64,459      73,523   340,278   371,803
                               ------      ------   -------   -------
    Total net sales           188,268     204,110   863,117   902,775
    Add back freight            4,434       4,352    20,782    19,808
                                -----       -----    ------    ------
    Sales as shown in the
     Consolidated
     Statements of Income    $192,702    $208,462  $883,899  $922,583
                             --------    --------  --------  --------

    Operating Profit
    Film Products:
      Ongoing operations       19,195      12,915    53,914    59,423
      Plant shutdowns, asset
       impairments,
       restructurings and
       gain on sale of
       assets (a)              (6,648)       (256)  (11,297)     (649)

    Aluminum Extrusions (b):
      Ongoing operations        2,323       2,641    10,132    16,516
      Plant shutdowns, asset
       impairments and
       restructurings (a)         (72)          -      (687)     (634)

    AFBS:
      Gain on sale of
       investments in Theken
       Spine and Therics,
       LLC (d)                      -           -     1,499         -
      Plant shutdowns, asset
       impairments and
       restructurings (a)           -      (1,200)        -    (2,786)
                                  ---      ------       ---    ------
    Total                      14,798      14,100    53,561    71,870
    Interest income               351         252     1,006     1,212
    Interest expense              472         712     2,393     2,721
    Gain on the sale of
     corporate assets (e)           -       2,699     1,001     2,699
    Gain from write-up of an
     investment accounted for
     under the fair value
     method (e)                   600           -     5,600         -
    Loss from write-down of
     an investment (e)              -           -         -     2,095
    Stock option-based
     compensation costs           266         277       782       978
    Corporate expenses, net     3,826       3,373     8,866    10,691
                                -----       -----     -----    ------
    Income before income
     taxes                     11,185      12,689    49,127    59,296
    Income taxes (e)            5,272       5,653    19,486    24,366
                                -----       -----    ------    ------
    Income from continuing
     operations                 5,913       7,036    29,641    34,930
    Income (loss) from
     discontinued operations (b)  225       6,321      (705)  (19,681)
                                  ---       -----      ----   -------
    Net income (loss) (a)(c)   $6,138     $13,357   $28,936   $15,249
                               ------     -------   -------   -------



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

                                                    As of December 31
                                                       2008      2007
                                                       ----      ----
    Assets

    Cash & cash equivalents                         $45,975   $48,217
    Accounts & notes receivable, net                 91,400    97,064
    Income taxes recoverable                         12,549       323
    Inventories                                      36,809    48,666
    Deferred income taxes                             7,654     9,172
    Prepaid expenses & other                          5,374     4,077
    Current assets of discontinued operation (b)          -    37,750
                                                        ---    ------
    Total current assets                            199,761   245,269

    Property, plant & equipment, net                236,870   269,083
    Other assets (f)                                 38,926   116,759
    Goodwill & other intangibles                    135,075   135,907
    Noncurrent assets of discontinued
     operation (b)                                        -    17,460
                                                        ---    ------
    Total assets                                   $610,632  $784,478
                                                   --------  --------

    Liabilities and Shareholders' Equity

    Accounts payable                                $54,990   $67,161
    Accrued expenses                                 38,349    33,676
    Current portion of long-term debt                   529       540
    Current liabilities of discontinued
     operation (b)                                        -    17,152
                                                        ---    ------
    Total current liabilities                        93,868   118,529

    Long-term debt                                   22,173    81,516
    Deferred income taxes                            45,152    68,625
    Other noncurrent liabilities (f)                 29,023    15,662
    Noncurrent liabilities of discontinued
     operation (b)                                        -     8,818
    Shareholders' equity (f)                        420,416   491,328

                                                   --------  --------
    Total liabilities and shareholders' equity     $610,632  $784,478
                                                   --------  --------



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

                                                         Year Ended
                                                         December 31
                                                         -----------
                                                       2008      2007
                                                       ----      ----
    Cash flows from operating activities:
      Net income                                    $28,936   $15,249
      Adjustments for noncash items:
        Depreciation                                 43,068    45,892
        Amortization of intangibles                     123       149
        Deferred income taxes                        22,183   (24,241)
        Accrued pension income and postretirement
         benefits                                    (4,426)   (1,735)
        Gain on the write-up of an investment
         accounted for under the fair value
         method (e)                                  (5,600)        -
        Loss from write-down of investment                -     2,095
        Gain on sale of assets                       (3,083)   (2,699)
        Loss on asset impairments and divestitures   10,136    32,287
      Changes in assets and liabilities, net of
       effects of acquisitions and divestitures:
        Accounts and notes receivables                 (678)   15,786
        Inventories                                  13,374     4,099
        Income taxes recoverable                    (12,092)   10,478
        Prepaid expenses and other                   (1,873)      764
        Accounts payable and accrued expenses       (18,900)   (2,932)
      Other, net                                      4,238       362
                                                      -----       ---
        Net cash provided by operating activities    75,406    95,554
                                                     ------    ------
    Cash flows from investing activities:
      Capital expenditures (net of related
       accounts payable of $1.7 million in 2008)    (19,235)  (20,643)
      Investment in a drug delivery company
       ($1 million in 2008 and $6.5 million in
       2007), real estate in 2008 and 2007 and
       Harbinger ($10 million in 2007)               (5,391)  (23,513)
      Proceeds from the sale of the aluminum
       extrusions business in Canada (net of
       cash included in sale and transaction costs)  23,407         -
      Proceeds from the sale of assets and
       property disposals & reimbursements from
       customers for purchases of equipment
       in 2007                                        4,691     7,871
                                                      -----     -----
        Net cash provided by (used in) investing
         activities                                   3,472   (36,285)
                                                      -----   -------
    Cash flows from financing activities:
      Dividends paid                                 (5,447)   (6,126)
      Debt principal payments                       (84,489)  (39,964)
      Borrowings                                     25,000    59,500
      Repurchases of Tredegar common stock,
       including settlement of $3,368 in 2008 and
       net of settlement payable of $3,368 in 2007  (19,792)  (73,959)
      Proceeds from exercise of stock options         4,069     6,471
                                                      -----     -----
        Net cash used in financing activities       (80,659)  (54,078)
                                                    -------   -------
    Effect of exchange rate changes on cash            (461)    2,128
                                                       ----     -----
    (Decrease) Increase in cash and cash
     equivalents                                     (2,242)    7,319
    Cash and cash equivalents at beginning of
     period                                          48,217    40,898
                                                     ------    ------
    Cash and cash equivalents at end of period      $45,975   $48,217
                                                    -------   -------



                        Selected Financial Measures
                               (In Millions)
                                (Unaudited)

                                              For the Twelve Months
                                             Ended December 31, 2008
                                             -----------------------
                                           Film     Aluminum
                                         Products  Extrusions    Total
                                         --------  ----------    -----
    Operating profit from continuing
     ongoing operations                    $53.9       $10.1     $64.0
    Allocation of corporate overhead        (7.2)       (1.5)     (8.7)
    Add back depreciation and
     amortization from continuing
     operations                             34.7         8.0      42.7
                                            ----         ---      ----
    Adjusted EBITDA from continuing
     operations (g)                        $81.4       $16.6     $98.0
                                           -----       -----     -----

    Selected balance sheet and other
     data as of December 31, 2008:
      Net debt (cash) (h)                 $(23.3)
      Shares outstanding                    33.9

    Notes to the Financial Tables
    -----------------------------

    (a) Plant shutdowns, asset impairments and restructurings in the fourth
         quarter of 2008 include:
        -- Pretax charges of $7.2 million for asset impairments in Film
           Products;
        -- A pretax gain of $583,000 related to the sale of land rights
           and related improvements at Film Products facility in Shanghai,
           China (included in "Other income (expense), net" in the condensed
           consolidated statements of income); and
        -- A pretax charge of $72,000 related to expected future
           environmental costs at Aluminum Extrusions facility in Newnan,
           Georgia (included in "Cost of goods sold" in the condensed
           consolidated statement of income).

        Plant shutdowns, asset impairments and restructurings in 2008
         include:
        -- Pretax charges of $9.7 million for asset impairments in Film
           Products;
        -- Pretax charges of $2.7 million for severance and other
           employee-related costs in connection with restructurings in Film
           Products ($2.2 million) and Aluminum Extrusions ($510,000);
        -- A pretax gain of $583,000 related to the sale of land rights
           and related improvements at Film Products facility in Shanghai,
           China (included in "Other income (expense), net" in the condensed
           consolidated statements of income); and
        -- A pretax charge of $177,000 related to expected future
           environmental costs at Aluminum Extrusions facility in Newnan,
           Georgia (included in "Cost of goods sold" in the condensed
           consolidated statements of income).

        Plant shutdowns, asset impairments and restructurings in the fourth
         quarter of 2007 include:
        -- A pretax charge of $1.2 million related to the estimated loss on
           the sub-lease of a portion of the AFBS (formerly Therics)
           facility in Princeton, New Jersey; and
        -- A pretax charge of $256,000 for asset impairments in Film
           Products.

        Plant shutdowns, asset impairments and restructurings in 2007
         include:
        -- A pretax charge of $2.8 million related to the estimated loss on
           the sub-lease of a portion of the AFBS (formerly Therics)
           facility in Princeton, New Jersey;
        -- Pretax charges of $594,000 for asset impairments in Film Products;
        -- A pretax charge of $592,000 for severance and other
           employee-related costs in Aluminum Extrusions;
        -- A pretax charge of $55,000 for costs related to the shutdown of
           the films manufacturing facility in LaGrange, Georgia; and
        -- A pretax charge of $42,000 related to expected future
           environmental costs at the aluminum extrusions facility in Newnan,
           Georgia (included in "Cost of goods sold" in the condensed
           consolidated statements of income).

    (b) On February 12, 2008, Tredegar sold its aluminum extrusions business
        in Canada for approximately $25 million to an affiliate of H.I.G.
        Capital. Tredegar realized cash income tax benefits in 2008 from the
        sale of approximately $12 million. All historical results for this
        business have been reflected as discontinued operations in the
        accompanying financial tables. The components of income (loss) from
        discontinued operations are presented below:

                                       Fourth Quarter Ended     Year Ended
                                            December 31         December 31
                                            -----------         -----------
    (In thousands)                       2008      2007      2008      2007
                                         ----      ----      ----      ----

    Income (loss) from operations
     before income taxes                   $-     $(376)    $(391)  $(6,366)
    Income tax cost (benefit) on
     operations                             -      (108)      (98)   (2,199)
                                          ---     -----      ----   -------
                                            -      (268)     (293)   (4,167)
                                          ---     -----     -----   -------
    Loss associated with asset
     impairments and disposal
     activities                             -    (4,144)   (1,337)  (31,755)
    Income tax cost (benefit) on asset
     impairments and costs associated
     with disposal activities            (225)  (10,733)     (925)  (16,241)
                                         ----   -------      ----   -------
                                          225     6,589      (412)  (15,514)
                                          ---     -----      ----   -------
    Income (loss) from discontinued
     operations                          $225    $6,321     $(705) $(19,681)
                                         ----    ------     -----  ---------

    (c) Comprehensive income (loss), defined as net income and other
        comprehensive income (loss), was a loss of $67.9 million for the
        fourth quarter of 2008 and income of $33.0 million for the fourth
        quarter of 2007.  Comprehensive income (loss) was a loss of $54.7
        million for 2008 and income of $49.9 million for 2007.  Other
        comprehensive income (loss) includes changes in foreign currency
        translation adjustments, unrealized gains and losses on derivative
        financial instruments and prior service cost and net gains or
        losses from pension and other postretirement benefit plans arising
        during the period and the related amortization of these prior
        service cost and net gains or losses recorded net of deferred
        taxes directly in shareholders' equity.  The loss in comprehensive
        income for the fourth quarter and full year of 2008 relates to the
        significant reduction since the end of 2007 in the funded status
        of our pension plans (see Note (f)).

    (d) The gain on the sale of the investments in Theken Spine and Therics,
        LLC of $1.5 million is included in "Other income (expense), net" in
        the condensed consolidated statements of income.  AFBS (formerly
        Therics, Inc.) received these investments in 2005, when
        substantially all of the assets of AFBS, 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.

    (e) Gain on the sale of corporate assets in 2008 includes a realized
        gain related to the sale of equity securities ($509,000) and a
        realized gain on the sale of corporate real estate ($492,000).
        These gains are included in "Other income (expense), net" in the
        condensed consolidated statements of income.  The unrealized gain
        from the write-up of an investment accounted for under the fair
        value method of $5.6 million in 2008 is included in "Other income
        (expense), net" in the condensed consolidated statements of income.
        The write-up was based on the valuation of Tredegar's investment
        implied from a new round of equity financing completed for the
        investee in the fourth quarter of 2008.  The loss from the
        write-down of an investment of $2.1 million in 2007 is included in
        "Other income (expense), net" in the condensed consolidated
        statements of income.

        Income taxes for 2008 include the reversal of a valuation
        allowance recognized in the third quarter of 2007 of $1.1 million
        that originally related to expected limitations on the utilization
        of assumed capital losses on certain investments.

    (f) In accordance with SFAS No. 158, "Employers' Accounting for Defined
        Benefit Pension and Other Postretirement Plans" (SFAS 158), we
        recognize in the balance sheets the funded status of each of our
        defined benefit pension and other postretirement plans. As of
        December 31, 2008, the funded status of our defined benefit pension
        plan was a net liability of $17.1 million in "Other noncurrent
        liabilities" compared with an asset of $86.3 million in "Other
        assets" and a liability of $2.3 million in "Other noncurrent
        liabilities" as of December 31, 2007. The impact of the change in
        the funded status, net of deferred taxes, is recognized directly
        in shareholders' equity and comprehensive income or loss.
        Adjustments made as a result of this change in the funded status of
        our plans will not impact our debt covenant computations since our
        credit agreement allows us to elect to use generally accepted
        accounting principles in effect when the agreement was signed, which
        was prior to our adoption of SFAS 158.

    (g) Adjusted EBITDA for the twelve months ended December 31, 2008,
        represents income from continuing operations before interest, taxes,
        depreciation, amortization, unusual items and losses associated with
        plant shutdowns, asset impairments and restructurings, gains from the
        sale of assets, investment write-downs or write-ups, charges related
        to stock option awards accounted for under the fair value-based
        method 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 the items noted above, measures of which may vary among
        peer companies.

    (h) Net debt is calculated as follows (in millions):
            Debt                                                    $22.7
            Less:  Cash and cash equivalents                        (46.0)
                                                                   ------
            Net debt (cash)                                        $(23.3)
                                                                   ------

    Net debt is not intended to represent total debt or debt defined by
    GAAP.  Net debt is utilized by management in evaluating the company's
    financial leverage and equity valuation and the Company believes that
    investors also may find net debt to be helpful for the same purposes.

SOURCE Tredegar Corporation
CONTACT: D. Andrew Edwards of Tredegar Corporation, +1-804-330-1041,
Fax: +1-804-330-1777, daedward@tredegar.com/ Web Site: http://www.tredegar.com /

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