SEC Filing | Tredegar Corporation

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tg-20200930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020


¨			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 class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, no par value	TG	New 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 filer

Smaller 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,
	2020		2019
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 recoverable	58		2,661
Inventories	63,543		64,205

Prepaid expenses and other	13,421		8,333
Current assets of discontinued operations	45,955		37,418
Total current assets	240,088		233,156
Property, plant and equipment, at cost	488,684		482,721
Less accumulated depreciation	(323,744)		(309,165)
Net property, plant and equipment	164,940		173,556
Right-of-use leased assets	16,965		18,492
Investment in kaléo (cost basis of $7,500)	34,500		95,500
Identifiable intangible assets, net	19,985		22,636
Goodwill	67,708		81,404
Deferred income taxes	19,761		12,435
Other assets	3,693		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 expenses	44,582		39,465
Lease liability, short-term	2,705		2,427
Income taxes payable	2,296		—
Current liabilities of discontinued operations	21,333		23,280
Total current liabilities	146,965		152,468
Lease liability, long-term	15,583		17,338
Long-term debt	7,000		42,000
Pension and other postretirement benefit obligations, net	104,563		107,446
Deferred income taxes	—		11,019
Other non-current liabilities	4,220		5,297
Non-current liabilities of discontinued operations	—		351
Total liabilities	278,331		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 earnings	442,118		530,478
Total shareholders’ equity	289,309		376,749
Total liabilities and shareholders’ equity	$	567,640	$	712,668

See accompanying notes to financial statements.

Tredegar Corporation

Consolidated Statements of Income

(In Thousands, Except Per Share Data)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
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 sold	136,008		159,989		415,212		488,320
Freight	6,453		7,088		19,222		21,438
Selling, general and administrative	20,420		19,154		61,654		56,399
Research and development	1,656		2,008		6,063		5,951
Amortization of identifiable intangibles	753		3,400		2,264		5,182
Pension and postretirement benefits	3,567		2,415		10,701		7,246
Interest expense	494		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		—
Total	169,354		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:
Basic	33,439		33,271		33,396		33,222
Diluted	33,439		33,285		33,396		33,230

See accompanying notes to financial statements.

Tredegar Corporation

Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

(Unaudited)


	Three Months Ended September 30,
	2020		2019
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,
	2020		2019
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.

Tredegar Corporation

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)


	Nine Months Ended September 30,
	2020		2019
Cash flows from operating activities:
Net income (loss)	$	(76,339)	$	51,395
Adjustments for noncash items:
Depreciation	23,218		22,572
Amortization of identifiable intangibles	2,264		5,182
Reduction of right-of-use lease asset	2,102		1,899
Goodwill impairment	13,696		—
Deferred income taxes	(19,492)		7,404
Accrued pension and post-retirement benefits	10,701		7,246
(Gain) loss on investment in kaléo accounted for under the fair value method	61,000		(10,900)
Held for sale impairment loss on divested assets	45,054		—
Net gain on disposal of assets	—		(6,328)

Changes in assets and liabilities:
Accounts and other receivables	4,961		7,715
Inventories	(2,761)		6,625
Income taxes recoverable/payable	5,332		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, net	8,506		966
Net cash provided by operating activities	66,326		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:
Borrowings	25,000		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 equivalents	3,600		10,255
Cash and cash equivalents at beginning of period	31,422		34,397
Cash and cash equivalents at end of period	$	35,022	$	44,652

See accompanying notes to financial statements.

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 Stock		Retained Earnings		Trust for Savings Restoration Plan		Foreign Currency Translation		Gain (Loss) on Derivative Financial Instruments		Pension & Other Post-retirement Benefit Adjustment		Total 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

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 Adjustment		Total 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

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 Adjustment		Total 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

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 Adjustment		Total 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.

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:


	September 30,		December 31,
(In thousands)	2020		2019
Customer receivables	$	82,369	$	89,747
Other receivables	2,466		2,199
Total accounts and other receivables	84,835		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:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
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 sold	25,481		31,576		83,408		96,479
Freight	1,436		1,898		4,711		5,455
Selling, general and administrative	6,502		3,977		13,649		12,607
Research and development	3,138		2,933		8,451		8,926
Asset impairments and costs associated with exit and disposal activities, net of adjustments	801		1,366		1,327		2,987
Held for sale impairment loss on divested assets	45,054		—		45,054		—
Total	82,412		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:


	September 30,		December 31,
	2020		2019
Assets
Accounts and other receivables, net	$	15,455	$	18,441
Income tax recoverable	1,082		1,439
Inventories	15,839		17,175
Prepaid expenses and other	394		363
Total current assets (a)			37,418
Property, plant and equipment, net	57,068		69,334
Right-of-use leased assets	342		728
Deferred income taxes	679		694
Other assets	150		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 expenses	7,058		6,344
Lease liability, short-term	231		575
Income taxes payable	87		—
Total current liabilities (a)			23,280
Lease liability, long-term	113		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

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


	Nine Months Ended September 30,
(In thousands)	2020		2019
Operating activities
Depreciation and amortization	$	6,625	$	6,362
Held for sale impairment loss on divested assets	45,054		—
Total	51,679		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.

4 INVENTORIES

The components of inventories are as follows:


(In thousands)	September 30, 2020		December 31, 2019
Finished goods	$	15,666	$	18,217
Work-in-process	10,716		12,123
Raw materials	20,347		20,121
Stores, supplies and other	16,814		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 numb