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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 1-10258 
Tredegar Corporation
(Exact Name of Registrant as Specified in Its Charter)
 
Virginia 54-1497771
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)

1100 Boulders Parkway
Richmond,Virginia 23225
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (804) 330-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, no par valueTGNew York Stock Exchange
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨Accelerated filerxSmaller reporting company¨
Non-accelerated filer
¨ 
Emerging growth company¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
The number of shares of Common Stock, no par value, outstanding as of November 6, 2020: 33,497,768



PART I - FINANCIAL INFORMATION 

Item 1.    Financial Statements.
Tredegar Corporation
Consolidated Balance Sheets
(In Thousands, Except Share Data)
(Unaudited)
September 30,December 31,
20202019
Assets
Current assets:
Cash and cash equivalents$35,022 $31,422 
Accounts and other receivables, net of allowance for doubtful accounts and sales returns of $2,746 in 2020 and $2,829 in 2019
82,089 89,117 
Income taxes recoverable58 2,661 
Inventories63,543 64,205 
Prepaid expenses and other13,421 8,333 
Current assets of discontinued operations45,955 37,418 
Total current assets240,088 233,156 
Property, plant and equipment, at cost488,684 482,721 
Less accumulated depreciation(323,744)(309,165)
Net property, plant and equipment164,940 173,556 
Right-of-use leased assets16,965 18,492 
Investment in kaléo (cost basis of $7,500)
34,500 95,500 
Identifiable intangible assets, net19,985 22,636 
Goodwill67,708 81,404 
Deferred income taxes19,761 12,435 
Other assets3,693 4,628 
Non-current assets of discontinued operations 70,861 
Total assets$567,640 $712,668 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable$76,049 $87,296 
Accrued expenses44,582 39,465 
Lease liability, short-term2,705 2,427 
Income taxes payable2,296  
Current liabilities of discontinued operations21,333 23,280 
Total current liabilities146,965 152,468 
Lease liability, long-term15,583 17,338 
Long-term debt7,000 42,000 
Pension and other postretirement benefit obligations, net104,563 107,446 
Deferred income taxes 11,019 
Other non-current liabilities4,220 5,297 
Non-current liabilities of discontinued operations 351 
Total liabilities278,331 335,919 
Shareholders’ equity:
Common stock, no par value (issued and outstanding - 33,513,280 shares at September 30, 2020 and 33,365,039 shares at December 31, 2019)
49,048 45,514 
Common stock held in trust for savings restoration plan (76,388 shares at September 30, 2020 and 74,798 shares at December 31, 2019)
(1,619)(1,592)
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment(111,739)(100,663)
Loss on derivative financial instruments(1,611)(1,307)
Pension and other post-retirement benefit adjustments(86,888)(95,681)
Retained earnings442,118 530,478 
Total shareholders’ equity289,309 376,749 
Total liabilities and shareholders’ equity$567,640 $712,668 
See accompanying notes to financial statements.
2


Tredegar Corporation
Consolidated Statements of Income
(In Thousands, Except Per Share Data)
(Unaudited)
 
Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Revenues and other items:
Sales$184,370 $205,968 $562,766 $628,011 
Other income (expense), net(37,934)4,272 (63,898)28,508 
146,436 210,240 498,868 656,519 
Costs and expenses:
Cost of goods sold136,008 159,989 415,212 488,320 
Freight6,453 7,088 19,222 21,438 
Selling, general and administrative20,420 19,154 61,654 56,399 
Research and development1,656 2,008 6,063 5,951 
Amortization of identifiable intangibles753 3,400 2,264 5,182 
Pension and postretirement benefits3,567 2,415 10,701 7,246 
Interest expense494 859 1,598 3,354 
Asset impairments and costs associated with exit and disposal activities, net of adjustments
3 98 74 608 
Goodwill impairment
  13,696  
Total169,354 195,011 530,484 588,498 
Income (loss) from continuing operations before income taxes(22,918)15,229 (31,616)68,021 
Income tax expense (benefit)(5,942)177 (8,308)10,550 
Net income (loss) from continuing operations(16,976)15,052 (23,308)57,471 
Income (loss) from discontinued operations, net of tax(48,237)2,081 (53,031)(6,076)
Net income (loss)$(65,213)$17,133 $(76,339)$51,395 
Earnings (loss) per share:
Basic:
Continuing operations$(0.51)$0.45 $(0.70)$1.73 
Discontinued operations(1.44)0.06 (1.59)(0.18)
Basic earnings (loss) per share$(1.95)$0.51 $(2.29)$1.55 
Diluted:
Continuing operations$(0.51)$0.45 $(0.70)$1.73 
Discontinued operations(1.44)0.06 (1.59)(0.18)
Diluted earnings (loss) per share$(1.95)$0.51 $(2.29)$1.55 
Shares used to compute earnings (loss) per share:
Basic33,439 33,271 33,396 33,222 
Diluted33,439 33,285 33,396 33,230 
See accompanying notes to financial statements.

3


Tredegar Corporation
Consolidated Statements of Comprehensive Income (Loss)
(In Thousands)
(Unaudited)

Three Months Ended September 30,
 20202019
Net income (loss)$(65,213)$17,133 
Other comprehensive income (loss):
Unrealized foreign currency translation adjustment (net of tax benefit of $19 in 2020 and tax benefit of $775 in 2019)
927 (6,008)
Derivative financial instruments adjustment (net of tax of $618 in 2020 and tax of $75 in 2019)
2,213 (1,124)
Amortization of prior service costs and net gains or losses (net of tax of $836 in 2020 and tax of $593 in 2019)
2,931 2,078 
Other comprehensive income (loss)6,071 (5,054)
Comprehensive income (loss)$(59,142)$12,079 


Nine Months Ended September 30,
20202019
Net income (loss)$(76,339)$51,395 
Other comprehensive income (loss):
Unrealized foreign currency translation adjustment (net of tax benefit of $1,125 in 2020 and tax benefit of $775 in 2019)
(11,076)(6,291)
Derivative financial instruments adjustment (net of tax benefit of $269 in 2020 and tax of $24 in 2019)
(304)(856)
Amortization of prior service costs and net gains or losses (net of tax of $2,507 in 2020 and tax of $1,778 in 2019)
8,793 6,236 
Other comprehensive income (loss)(2,587)(911)
Comprehensive income (loss)$(78,926)$50,484 
See accompanying notes to financial statements.

4


Tredegar Corporation
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Nine Months Ended September 30,
20202019
Cash flows from operating activities:
Net income (loss)$(76,339)$51,395 
Adjustments for noncash items:
Depreciation23,218 22,572 
Amortization of identifiable intangibles2,264 5,182 
Reduction of right-of-use lease asset2,102 1,899 
Goodwill impairment13,696  
Deferred income taxes(19,492)7,404 
Accrued pension and post-retirement benefits10,701 7,246 
(Gain) loss on investment in kaléo accounted for under the fair value method61,000 (10,900)
Held for sale impairment loss on divested assets45,054  
Net gain on disposal of assets (6,328)
Changes in assets and liabilities:
Accounts and other receivables4,961 7,715 
Inventories(2,761)6,625 
Income taxes recoverable/payable5,332 1,439 
Prepaid expenses and other(5,305)14 
Accounts payable and accrued expenses(2,112)(223)
Lease liability(2,245)(1,991)
Pension and postretirement benefit plan contributions(2,254)(6,692)
Other, net8,506 966 
Net cash provided by operating activities66,326 86,323 
Cash flows from investing activities:
Capital expenditures(13,416)(37,214)
Proceeds from the sale of assets and other 10,931 
Net cash used in investing activities(13,416)(26,283)
Cash flows from financing activities:
Borrowings25,000 53,000 
Debt principal payments(60,000)(86,500)
Dividends paid(12,048)(11,322)
Debt financing costs (1,817)
Repurchase of employee common stock for tax withholdings(586)(854)
Net cash used in financing activities(47,634)(47,493)
Effect of exchange rate changes on cash(1,676)(2,292)
Increase in cash & cash equivalents3,600 10,255 
Cash and cash equivalents at beginning of period31,422 34,397 
Cash and cash equivalents at end of period$35,022 $44,652 
See accompanying notes to financial statements.

5


Tredegar Corporation
Consolidated Statement of Shareholders’ Equity
(In Thousands, Except Share and Per Share Data)
(Unaudited)

The following summarizes the changes in shareholders’ equity for the three month period ended September 30, 2020:
Accumulated Other Comprehensive Income (Loss)
Common StockRetained EarningsTrust for Savings Restoration PlanForeign Currency TranslationGain (Loss) on Derivative Financial InstrumentsPension & Other Post-retirement Benefit AdjustmentTotal Shareholders’ Equity
Balance July 1, 2020$47,448 $511,345 $(1,610)$(112,666)$(3,824)$(89,819)$350,874 
Net loss— (65,213)— — — — (65,213)
Other comprehensive income (loss):
Foreign currency translation adjustment (net of tax benefit of $19)
— — — 927 — — 927 
Derivative financial instruments adjustment (net of tax of $618)
— — — — 2,213 — 2,213 
Amortization of prior service costs and net gains or losses (net of tax of $836)
— — — — — 2,931 2,931 
Cash dividends declared ($0.12 per share)
— (4,023)— — — — (4,023)
Stock-based compensation expense
1,600 — — — — — 1,600 
Tredegar common stock purchased by trust for savings restoration plan
— 9 (9)— — — — 
Balance September 30, 2020$49,048 $442,118 $(1,619)$(111,739)$(1,611)$(86,888)$289,309 


6


The following summarizes the changes in shareholders’ equity for the nine month period ended September 30, 2020:
  Accumulated Other
Comprehensive Income (Loss)
 
 Common
Stock
Retained
Earnings
Trust for
Savings
Restoration
Plan
Foreign
Currency
Translation
Gain
(Loss) on
Derivative
Financial
Instruments
Pension & Other Post-retirement Benefit AdjustmentTotal
Shareholders’
Equity
Balance at January 1, 2020$45,514 $530,478 $(1,592)$(100,663)$(1,307)$(95,681)$376,749 
Net loss— (76,339)— — — — (76,339)
Other comprehensive income (loss):
Foreign currency translation adjustment (net of tax benefit of $1,125)
— — — (11,076)— — (11,076)
Derivative financial instruments adjustment (net of tax benefit of $269)
— — — — (304)— (304)
Amortization of prior service costs and net gains or losses (net of tax of $2,507)
— — — — — 8,793 8,793 
Cash dividends declared ($0.36 per share)
— (12,048)— — — — (12,048)
Stock-based compensation expense
4,120 — — — — — 4,120 
Repurchase of employee common stock for tax withholdings
(586)— — — — — (586)
Tredegar common stock purchased by trust for savings restoration plan
— 27 (27)— — — — 
Balance at September 30, 2020$49,048 $442,118 $(1,619)$(111,739)$(1,611)$(86,888)$289,309 
7



The following summarizes the changes in shareholders’ equity for the three month period ended September 30, 2019:
  Accumulated Other
Comprehensive Income (Loss)
 
 Common
Stock
Retained
Earnings
Trust for
Savings
Restoration
Plan
Foreign
Currency
Translation
Gain
(Loss) on
Derivative
Financial
Instruments
Pension & Other Post-retirement Benefit AdjustmentTotal
Shareholders’
Equity
Balance at July 1, 2019$41,227 $524,468 $(1,575)$(97,223)$(1,333)$(77,288)$388,276 
Net income— 17,133 — — — — 17,133 
Other comprehensive income (loss):
Foreign currency translation adjustment (net of tax benefit of $775)
— — — (6,008)— — (6,008)
Derivative financial instruments adjustment (net of tax of $75)
— — — — (1,124)— (1,124)
Amortization of prior service costs and net gains or losses (net of tax of $593)
— — — — — 2,078 2,078 
Cash dividends declared ($0.12 per share)
— (4,001)— — — — (4,001)
Stock-based compensation expense
1,481 — — — — — 1,481 
Tredegar common stock purchased by trust for savings restoration plan
— 8 (8)— — — — 
Balance at September 30, 2019$42,708 $537,608 $(1,583)$(103,231)$(2,457)$(75,210)$397,835 
8



The following summarizes the changes in shareholders’ equity for the nine month period ended September 30, 2019:
  Accumulated Other
Comprehensive Income (Loss)
 
 Common
Stock
Retained
Earnings
Trust for
Savings
Restoration
Plan
Foreign
Currency
Translation
Gain
(Loss) on
Derivative
Financial
Instruments
Pension & Other Post-retirement Benefit AdjustmentTotal
Shareholders’
Equity
Balance at January 1, 2019
$38,892 $497,511 $(1,559)$(96,940)$(1,601)$(81,446)$354,857 
Net income— 51,395 — — — — 51,395 
Other comprehensive income (loss):
Foreign currency translation adjustment (net of tax benefit of $775)
— — — (6,291)— — (6,291)
Derivative financial instruments adjustment (net of tax of $24)
— — — — (856)— (856)
Amortization of prior service costs and net gains or losses (net of tax of $1,778)
— — — — — 6,236 6,236 
Cash dividends declared ($0.34 per share)
— (11,322)— — — — (11,322)
Stock-based compensation expense
4,670 — — — — — 4,670 
Repurchase of employee common stock for tax withholdings
(854)— — — — — (854)
Tredegar common stock purchased by trust for savings restoration plan
— 24 (24)— — — — 
Balance at September 30, 2019$42,708 $537,608 $(1,583)$(103,231)$(2,457)$(75,210)$397,835 
See accompanying notes to financial statements.

9


TREDEGAR CORPORATION
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
 
1    BASIS OF PRESENTATION
In the opinion of management, the accompanying consolidated financial statements of Tredegar Corporation and its subsidiaries (“Tredegar,” “the Company,” “we,” “us” or “our”) contain all adjustments necessary to state fairly, in all material respects, Tredegar’s consolidated financial position as of September 30, 2020, the consolidated results of operations for the three and nine months ended September 30, 2020 and 2019, the consolidated cash flows for the nine months ended September 30, 2020 and 2019, and the consolidated changes in shareholders’ equity for the three and nine months ended September 30, 2020 and 2019, in accordance with U.S. generally accepted accounting principles (“GAAP”). All such adjustments, unless otherwise detailed in the notes to the consolidated interim financial statements, are deemed to be of a normal, recurring nature.
The Company operates on a calendar fiscal year except for the Aluminum Extrusions segment, which operates on a 52/53-week fiscal year basis.  As such, the fiscal third quarter for 2020 and 2019 for this segment references 13-week periods ended September 27, 2020 and September 29, 2019, respectively.  The Company does not believe the impact of reporting the results of this segment as stated above is material to the consolidated financial results.
The financial position data as of December 31, 2019 that is included herein was derived from the audited consolidated financial statements provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Form 10-K”) but does not include all disclosures required by GAAP. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the 2019 Form 10-K.
On August 24, 2020, the Company entered into a definitive agreement to sell its Personal Care Films business ("Personal Care business"), which excludes the packaging film lines and related operations located at the Pottsville, Pennsylvania manufacturing site ("Pottsville Packaging"). The Company completed this divestiture at the end of October 2020. All historical results for the Personal Care business have been presented as discontinued operations. The surface protection component of its PE Films segment now includes Pottsville Packaging.
The results of operations for the three and nine months ended September 30, 2020, are not necessarily indicative of the results to be expected for the full year. Certain prior year balances have been reclassified to conform with current year presentation.
Adoption of ASU 2016-13, Financial Instruments - Credit Losses
In the first quarter of 2020, the Company adopted ASU 2016-13 related to the measurement of credit losses on financial instruments. The pronouncement replaces the incurred loss methodology to record credit losses with a methodology that reflects the expected credit losses for financial assets not accounted for at fair value with gains and losses recognized through net income. The adoption of the updated guidance in the first quarter of 2020 resulted in an adjustment of less than $0.2 million and, therefore, did not have a material impact on the Company’s consolidated financial statements. The Company's policy on Accounts and Other Receivables as described in the 2019 Form 10-K was revised to read as follows:
Accounts and Other Receivables
Accounts receivable are stated at the amount invoiced to customers less allowances for doubtful accounts and sales returns. Accounts receivable are non-interest bearing and arise from the sale of product to customers under typical industry trade terms. Notes receivable are not significant. Past due amounts are determined based on established terms and charged-off when deemed uncollectible. The allowance for doubtful accounts is determined based on an assessment of probable losses taking into account past due amounts, customer credit profile, historical experience and current economic conditions. For receivables that do not have a specific allowance, the loss rate is computed by segment to apply to the remaining receivables balance, using each segment’s historic loss rate. Other receivables include value-added taxes related to certain foreign subsidiaries and other miscellaneous receivables due within one year. For certain customers, the Company has arrangements in place with financial institutions whereby certain customer receivables are sold to the financial institution at a discount and without recourse.  Upon sale, the associated receivable is unrecognized and the discount is recognized as a reduction of sales.
As of September 30, 2020 and December 31, 2019, accounts receivable and other receivables, net, were $82.1 million and $89.1 million, respectively, made up of the following:
10


September 30,December 31,
(In thousands)20202019
Customer receivables$82,369 $89,747 
Other receivables2,466 2,199 
      Total accounts and other receivables84,835 91,946 
Less: Allowance for bad debts and sales returns(2,746)(2,829)
Total accounts and other receivables, net$82,089 $89,117 

Risk and Uncertainties
While it is not possible to estimate the impact that the coronavirus pandemic ("COVID-19") may have on the Company’s business, estimates related to the accounting for impairment of long-lived assets and goodwill, an investment accounted for under the fair value method, pension benefits and income taxes could be materially adversely affected in future periods. Due to the uncertainty with respect to the magnitude of the impact and duration of COVID-19, future developments associated with COVID-19 may adversely affect the Company's financial condition, results of operations and cash flows. The Company continues to monitor the impact of COVID-19 on the business and its effect on the consolidated financial statements.

2    DIVESTITURES AND ASSETS HELD FOR SALE
Divestitures
On August 24, 2020, the Company entered into a definitive agreement to sell its Personal Care business for an aggregate purchase price of approximately $60.5 million, subject to customary adjustments. The Company completed this divestiture at the end of October 2020. In connection with the execution of the definitive agreement and classification of the Personal Care business as discontinued operations, a non-cash impairment charge of $45.1 million was recognized during the three months ended September 30, 2020. In addition, the Company agreed to provide certain transition services related to finance, human resources and information technology. The Personal Care business was previously reported in the PE Films segment.
The following table summarizes the financial results of discontinued operations reflected in the Consolidated Statements of Income for the three and nine months ended September 30, 2020 and 2019:

11


Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Revenues and other items:
Sales$29,509 $37,249 $98,053 $111,920 
Other income (expense), net(37)6,362 (298)6,332 
29,472 43,611 97,755 118,252 
Costs and expenses:
Cost of goods sold25,481 31,576 83,408 96,479 
Freight1,436 1,898 4,711 5,455 
Selling, general and administrative6,502 3,977 13,649 12,607 
Research and development3,138 2,933 8,451 8,926 
Asset impairments and costs associated with exit and disposal activities, net of adjustments801 1,366 1,327 2,987 
Held for sale impairment loss on divested assets45,054  45,054  
Total82,412 41,750 156,600 126,454 
Income (loss) from discontinued operations before income taxes(52,940)1,861 (58,845)(8,202)
Income tax expense (benefit)(4,703)(220)(5,814)(2,126)
Income (loss) from discontinued operations, net of tax$(48,237)$2,081 $(53,031)$(6,076)

The assets and liabilities of the discontinued operations reflected in the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively were as follows:

12


September 30,December 31,
20202019
Assets
Accounts and other receivables, net$15,455 $18,441 
Income tax recoverable1,082 1,439 
Inventories15,839 17,175 
Prepaid expenses and other394 363 
Total current assets (a)37,418 
Property, plant and equipment, net57,068 69,334 
Right-of-use leased assets342 728 
Deferred income taxes679 694 
Other assets150 105 
Total non-current assets (a)70,861 
Valuation allowance on assets held for sale
(45,054) 
Total assets of discontinued operations classified as held for sale$45,955 $108,279 
Liabilities
Accounts payable$13,844 $16,361 
Accrued expenses7,058 6,344 
Lease liability, short-term231 575 
Income taxes payable87  
Total current liabilities (a)23,280 
Lease liability, long-term113 351 
Deferred income taxes  
Total non-current liabilities (a)351 
Total liabilities of discontinued operations classified as held for sale (b)$21,333 $23,631 
(a) The assets and liabilities of the disposal group classified as held for sale are classified as current on the September 30, 2020 Consolidated Balance Sheet as it was probable that sale of the Personal Care business would occur and proceeds would be collected within one year of September 30, 2020.
(b) Pension and other postretirement benefit liabilities related to the Personal Care business have been retained by the Company.

Additional information related to the amounts recognized in the discontinued operations balance sheet as of September 30, 2020 is summarized below:

September 30,
(In thousands)2020
Total carrying value of assets of discontinued operations classified as held for sale before valuation allowances $91,009 
Total liabilities of discontinued operations classified as held for sale(21,333)
Carrying value of net assets of discontinued operations classified as held for sale before valuation allowances$69,676 
Valuation allowance to reflect net assets at fair value less cost to sell(20,509)
Estimated fair value less cost to sell of net assets of discontinued operations classified as held for sale$49,167 
Valuation allowance for other comprehensive loss on foreign currency translation adjustments reflected in shareholder’s equity (“FCTA”) to be released into earnings along with the FCTA upon sale
(24,545)
Net assets of discontinued operations classified as held for sale reflected in the Company’s consolidated balance sheets$24,622 
13



The following table provides significant operating and investing cash flow information for discontinued operations:

Nine Months Ended September 30,
(In thousands)20202019
Operating activities
Depreciation and amortization$6,625 $6,362 
Held for sale impairment loss on divested assets45,054  
Total51,679 6,362 
Investing activities
Capital expenditures$2,989 $13,921 

Assets Held For Sale
In July 2019, the Company committed to a plan to close its manufacturing facility in Lake Zurich, Illinois, which historically was reported by the Company within the personal care component of its PE Films segment. In March 2020, this facility was shut down and the production of elastic materials it previously produced was transferred to Terre Haute, Indiana.
As of September 30, 2020, the held for sale criteria was met since the Company expects the sale of the facility to be completed within one year. The disposal group carrying value of $4.6 million consists of land, building, and building improvements and is reported in "Prepaid expenses and other" in the Consolidated Balance Sheet. These assets were not included as part of the sale of the Personal Care business.

3    LONG-LIVED ASSETS & GOODWILL IMPAIRMENT
The Company assesses its long-lived assets for impairment when events and circumstances indicate that the carrying amount of the assets may not be recoverable. Long-lived assets consist primarily of buildings, machinery and equipment. During the three months ended September 30, 2020, the Company did not identify any indicators of impairment for such assets in light of the economic impacts from COVID-19 or otherwise.
The Company annually assesses goodwill for impairment on December 1st of each year or more frequently when events or circumstances indicate that the carrying amount of a reporting unit that includes goodwill exceeds its fair value. The Company evaluated whether triggering events occurred for all reporting units that include goodwill and determined that triggering events did occur during the first three months of 2020 for the Aluminum Extrusions’ reporting units created as a result of acquisitions in 2012 (“AACOA”) and in 2017 (“Futura”).
During the first three months of 2020, the Company performed goodwill impairment tests for the AACOA and Futura reporting units using a combination of income and market approaches and determined that the fair value of the Futura reporting unit exceeded its carrying value. As a result, the Company recognized a goodwill impairment charge of $13.7 million ($10.5 million after taxes), which represented the entire amount of goodwill associated with the AACOA reporting unit. The operations of the AACOA reporting unit, which includes the Niles, Michigan and Elkhart, Indiana facilities, was expected to be severely impacted by COVID-19, with over 80% of the aluminum extrusions manufactured at these facilities sold to customers that make consumer durable products, such as recreational boating and power sports vehicles, and to customers serving the building and construction and automotive markets.
The Company evaluated whether triggering events occurred during the three months ended September 30, 2020 for all reporting units that include goodwill and determined no events or circumstances existed that indicated the fair value of the reporting units are below their carrying amounts.
Recent disruptions to the global economy from COVID-19 make it reasonably possible that future impairment tests for long-lived assets and goodwill may be required during 2020. The Company continues to monitor developments and perform updated analyses as necessary.
14


4    INVENTORIES
The components of inventories are as follows:
(In thousands)September 30, 2020December 31, 2019
Finished goods$15,666 $18,217 
Work-in-process10,716 12,123 
Raw materials20,347 20,121 
Stores, supplies and other16,814 13,744 
Total$63,543 $64,205 
 
5    EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income (loss) from continuing and discontinued operations by the weighted average number of shares of common stock outstanding. Diluted earnings per share is computed by dividing net income (loss) from continuing and discontinued operations by the weighted average common and potentially dilutive common equivalent shares outstanding, determined as follows:
Three Months EndedNine Months Ended
 September 30,September 30,
(In thousands)2020201920202019
Weighted average shares outstanding used to compute basic earnings per share
33,439 33,271 33,396 33,222 
Incremental dilutive shares attributable to stock options and restricted stock
 14  8 
Shares used to compute diluted earnings per share
33,439 33,285 33,396 33,230 
Incremental shares attributable to stock options and restricted stock are computed under the treasury stock method using the average market price during the related period. The Company had a net loss from continuing operations for the three and nine months ended September 30, 2020, so there is no dilutive impact for such shares. If the Company had reported net income from continuing operations for the three and nine months ended September 30, 2020, average out-of-the-money options to purchase shares that were excluded from the calculation of incremental shares attributable to stock options and restricted stock were 1,509,429 and 1,253,278, respectively. For the three and nine months ended September 30, 2019, average out-of-the-money options to purchase shares that were excluded from the calculation of incremental shares attributable to stock options and restricted stock were 1,222,000 and 1,224,222, respectively.