SEC Filing | Tredegar Corporation

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-Q (Mark One) ___ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) / X / OF THE SECURITIES EXCHANGE ACT OF 1934 - ---- For the quarterly period ended June 30, 2000 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 (I.R.S. Employer Incorporation or Organization) 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 -------------- Indicate by check 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 ----- ----- The number of shares of Common Stock, no par value, outstanding as of July 25, 2000: 37,986,967.

PART I - FINANCIAL INFORMATION Item 1. Financial Statements. Tredegar Corporation Consolidated Balance Sheets (In Thousands) (Unaudited) June 30, Dec. 31, 2000 1999 --------- --------- Assets Current assets: Cash and cash equivalents $ 15,431 $ 25,752 Receivable from securities brokers 1,984 - Accounts and notes receivable 114,968 121,820 Inventories 50,081 53,129 Deferred income taxes 12,085 11,230 Prepaid expenses and other 4,314 2,657 --------- --------- Total current assets 198,863 214,588 --------- --------- Property, plant and equipment, at cost 487,714 467,565 Less accumulated depreciation and amortization 230,163 224,158 --------- --------- Net property, plant and equipment 257,551 243,407 --------- --------- Venture capital investments 262,277 140,698 Other assets and deferred charges 44,188 41,250 Goodwill and other intangibles 149,164 152,544 --------- --------- Total assets $912,043 $792,487 ========= ========= Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 53,512 $ 61,476 Accrued expenses 40,236 45,030 Income taxes payable 466 1,736 --------- --------- Total current liabilities 94,214 108,242 Long-term debt 275,000 270,000 Deferred income taxes 62,632 33,205 Other noncurrent liabilities 9,339 8,812 --------- --------- Total liabilities 441,185 420,259 --------- --------- Shareholders' equity: Common stock, no par value 106,814 103,327 Common stock held in trust for savings restoration plan (1,212) (1,212) Unrealized gain on available-for-sale securities 62,387 8,330 Foreign currency translation adjustment (2,380) (1,672) Retained earnings 305,249 263,455 --------- --------- Total shareholders' equity 470,858 372,228 --------- --------- Total liabilities and shareholders' equity $912,043 $792,487 ========= ========= See accompanying notes to financial statements. 2

Tredegar Corporation Consolidated Statements of Income (In Thousands) (Unaudited) Second Quarter Six Months Ended June 30 Ended June 30 ------------------- ------------------- 2000 1999 2000 1999 --------- --------- -------- ---------- Revenues: Net sales $ 223,503 $ 194,840 $455,731 $ 374,381 Other income (expense), net 20,694 (1,277) 33,926 (1,018) --------- --------- -------- ---------- Total 244,197 193,563 489,657 373,363 --------- --------- -------- ---------- Costs and expenses: Cost of goods sold 178,608 153,986 365,002 294,225 Selling, general and administrative 13,323 11,149 25,925 22,522 Research and development 5,687 5,753 11,977 9,850 Amortization of intangibles 1,276 782 2,552 869 Interest 4,307 1,517 8,602 1,806 Unusual items (525) 4,628 4,959 4,628 --------- --------- -------- ---------- Total 202,676 177,815 419,017 333,900 --------- --------- -------- ---------- Income before income taxes 41,521 15,748 70,640 39,463 Income taxes 15,153 5,558 25,809 13,975 --------- --------- -------- ---------- Net income $ 26,368 $ 10,190 $ 44,831 $ 25,488 ========= ========= ======== ========== Earnings per share: Basic $ .70 $ .28 $ 1.19 $ .69 Diluted .68 .26 1.15 .65 Shares used to compute earnings per share: Basic 37,911 36,852 37,815 36,789 Diluted 39,067 38,798 38,999 38,770 Dividends per share $ .04 $ .04 $ .08 $ .08 See accompanying notes to financial statements. 3

Tredegar Corporation Consolidated Statements of Cash Flows (In Thousands) (Unaudited) Six Months Ended June 30 -------------------- 2000 1999 --------- --------- Cash flows from operating activities: Net income $ 44,831 $ 25,488 Adjustments for noncash items: Depreciation 16,189 12,544 Amortization of intangibles 2,552 869 Write-off of in-process R&D acquired - 3,458 Deferred income taxes (1,446) (1,492) Accrued pension income and postretirement benefits (3,809) (1,837) (Gain) loss on sale of venture capital investments (33,541) 1,183 Loss on equipment writedowns and divestitures 4,768 1,170 Changes in assets and liabilities, net of effects from acquisitions and divestitures: Accounts and notes receivable 4,783 (1,088) Inventories 702 4,350 Income taxes recoverable - (1,219) Prepaid expenses and other (1,701) 1,923 Accounts payable (7,337) 5,596 Accrued expenses and income taxes payable (7,679) 2,907 Other, net 480 (1,482) --------- --------- Net cash provided by operating activities 18,792 52,370 --------- --------- Cash flows from investing activities: Capital expenditures (39,489) (23,182) Acquisitions - (213,665) Venture capital investments (47,011) (31,837) Proceeds from the sale of venture capital investments 41,451 2,189 Proceeds from property disposals and divestitures 9,357 252 Other, net 1,129 (126) --------- --------- Net cash used in investing activities (34,563) (266,369) --------- --------- Cash flows from financing activities: Dividends paid (3,037) (2,940) Net increase (decrease) in borrowings 5,000 209,000 Proceeds from exercise of stock options (including related income tax benefits realized) 3,487 2,397 --------- -------- Net cash provided by financing activities 5,450 208,457 --------- -------- (Decrease) increase in cash and cash equivalents (10,321) (5,542) Cash and cash equivalents at beginning of period 25,752 25,409 --------- -------- Cash and cash equivalents at end of period $ 15,431 $ 19,867 ========= ========= See accompanying notes to financial statements. 4

TREDEGAR CORPORATION NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) 1. In the opinion of management, the accompanying consolidated financial statements of Tredegar Corporation and Subsidiaries ("Tredegar") contain all adjustments necessary to present fairly, in all material respects, Tredegar's consolidated financial position as of June 30, 2000, and the consolidated results of operations and cash flows for the six months ended June 30, 2000 and 1999. All such adjustments are deemed to be of a normal recurring nature. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in Tredegar's Annual Report on Form 10-K for the year ended December 31, 1999. The results of operations for the six months ended June 30, 2000 are not necessarily indicative of the results to be expected for the full year. 2. See pages 9 through 11 for information on unusual items recognized during the quarter and the six months ended June 30, 2000 and 1999. On April 10, 2000, we announced the completion of the sale of Fiberlux, Inc., a U.S. producer of vinyl extrusions to Westech Windows, Inc., an affiliate of the Westlake Group based in Houston, Texas. In the second quarter, we recognized a gain of $525,000 ($336,000 after income taxes) in connection with this transaction. Fiberlux had sales of $9.1 million and operating profit of $57,000 for the year ended December 31, 1999 and net assets of $7.2 million at March 31, 2000. 3. A summary of our venture capital activities for the quarter and six months ended June 30, 2000 and 1999, is provided below: (In Thousands) Second Quarter Six Months Ended June 30 Ended June 30 ------------------- ------------------- 2000 1999 2000 1999 --------- --------- --------- --------- Carrying value, beginning of period $224,980 $ 73,311 $140,698 $ 60,024 Activity for period (pre-tax): New investments 25,408 16,427 47,011 31,837 Proceeds from the sale of investments (25,112) - (43,435) (2,189) Realized gains 20,746 - 37,005 1,926 Realized losses, write-offs and write-downs (310) (1,351) (3,464) (3,109) Transfer of carrying value of Therics out of portfolio (acquired by Tredegar) - (3,380) - (3,380) Increase in net unrealized gain on available-for-sale securities 16,565 147 84,462 45 --------- --------- --------- --------- Carrying value, end of period $262,277 $ 85,154 $262,277 $ 85,154 ========= ========= ========= ========= Our remaining unfunded commitments to private venture capital funds totaled approximately $48 million at June 30, 2000, and $30 million at December 31, 1999. A schedule of investments is provided on the following two pages. 5

- ----------------------------------------------------------------------------------------------------------------------------------- Tredegar Corporation Schedule of Investments at June 30, 2000 and December 31, 1999 (In Thousands, Except Per-Share Amounts) Yrs. Web Site Investment Symbol Held (a) Description (www.) - ----------------------------------------------------------------------------------------------------------------------------------- Securities of Public Companies Held: Software.com, Inc. SWCM .6 Infrastructure applications for the Internet software.com Superconductor Tech, Inc. SCON 1.0 Manufactures filters for wireless networks suptech.com Eprise Corporation EPRS 2.5 Web site maintenance & development tool eprise.com Watchguard Technologies WGRD 3.1 Computer and network perimeter defense system watchguard.com Eclipse Surgical Tech., Inc. ESTI 6.1 Coronary revascularization eclipsesurg.com Cisco Systems CSCO 1.0 Networking for the Internet cisco.com Yahoo! Inc. YHOO 1.4 Internet media company yahoo.com Akamai Technologies, Inc. AKAM .9 Global delivery service of Internet content akamai.com America Online, Inc. AOL 1.1 Internet services aol.com Copper Mountain Networks CMTN .4 Digital subscriber line communication products coppermountain.com Caliper Technologies Corp. CALP 2.9 Lab on a chip calipertech.com - ----------------------------------------------------------------------------------------------------------------------------------- Total securities of public companies held - ----------------------------------------------------------------------------------------------------------------------------------- Securities of Private Companies Held: CyroGen 4.8 Micro-cryogenic catheters for medical applications cyrogen-inc.com Sensitech Inc. 3.3 Perishable product management solutions sensitech.com Rosetta Inpharmatics, Inc. 3.1 Gene function/drug screening on a chip rii.com Bell Geospace 3.0 Presentation of 3D data to the oil & gas industry bellgeo.com Songbird Medical, Inc. 2.9 Disposable hearing aids RedCreek Communications 2.9 Internet and intranet security redcreek.com Appliant, Inc. 2.7 Software tools for managing executable software appliant.com Ellipsys Technologies, Inc. 2.7 Telephone system error detection ellipsystech.com HemoSense 2.6 Point of care blood coagulation time test device hemosense.com Moai Technologies, Inc. 2.5 System for holding auctions on the Internet moai.com Vascular Solutions 2.5 Vascular access site closure system vascularsolutions.com Babycare, Ltd. 2.4 Direct retailing of baby care products in China SignalSoft Corporation 2.3 Wireless caller location detection software signalsoftcorp.com EPiCON 2.3 Network software manager epicon.com NovaLux, Inc. 2.1 Blue-green light lasers novalux.com IRSI 2.1 Optical inspection systems irsinc.com Xycte Therapies, Inc. 1.9 Develops drugs to treat cancer & other disorders xcytetherapies.com Illumina, Inc. 1.6 Fiber optic sensor technology for drug screening illumina.com Advanced Diagnostics, Inc. 1.6 3-D medical imaging equipment Adolor Corporation 1.6 Develops pain-management therapeutic drugs adolor.com Praxon, Inc. 1.5 Integrated business communications equipment praxon.com AdiCom Wireless, Inc. 1.5 Wireless local loop technology adicomwireless.com EndoVasix, Inc. 1.4 Device for treatment of ischemic strokes endovasix.com eWireless, inc. 1.4 Technology linking cell phone users & advertising ewireless.com Cooking.com, Inc. 1.3 Sales of cooking-related items over the Internet cooking.com MediaFlex.com 1.2 Internet-based printing & publishing mediaflex.com eBabyCare Ltd. 1.1 Sales of babycare products over the Internet in China Kodiak Technologies, Inc. 1.0 Cooling products for organ & pharma transport kodiaktech.com Genesis Medical, Inc. 1.0 Medical devices for breast cancer surgery CEPTYR, Inc. .9 Develops small molecule drugs ceptyr.com GreaterGood.com .9 Internet marketing targeted at donors to charities greatergood.com Etera Corporation .8 Sales of branded perennial plants over the Internet etera.com - ----------------------------------------------------------------------------------------------------------------------------------- Subtotal securities of private companies held - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Tredegar Corporation Schedule of Investments at June 30, 2000 and December 31, 1999 (In Thousands, Except Per-Share Amounts) Public Common Stock or Equivalents at 6/30/00 6/30/00 12/31/99 -------------------------------- -------------------------------------------------------------- Estimated Restricted Estimated Estimated Shares Closing Stock Dis- Fair Carrying Cost Fair Carrying Cost Investment Held (b) Price count (c) Value (b) Value (b) Basis Value (b) Value (b) Basis - ------------------------------------------------------------------------------------------------------------------------------------ Securities of Public Companies Held: Software.com, Inc. 400 $ 129.88 20% $ 41,545 $ 41,545 $ 3,000 $ 2,000 $ 2,000 $ 2,000 Superconductor Tech, Inc. 1,214 39.31 20% 38,169 38,169 3,360 4,613 3,000 3,000 Eprise Corporation 1,838 16.44 20% 24,179 24,179 2,900 7,309 2,900 2,900 Watchguard Technologies 40 54.94 n/a 2,191 2,191 56 - - - Eclipse Surgical Tech., Inc. 453 4.38 n/a 1,984 1,984 2,464 3,342 3,342 2,464 Cisco Systems 12 63.56 20% 630 630 200 6,276 6,276 2,000 Yahoo! Inc. 3 123.88 n/a 394 394 50 - - - Akamai Technologies, Inc. 3 118.73 7% 361 361 58 536 536 57 America Online, Inc. 3 52.88 n/a 133 133 20 - - - Copper Mountain Networks - - 20% - - - 1,460 1,460 1,460 Caliper Technologies Corp. - - 20% - - - 8,386 8,386 1,000 - ------------------------------------------------------------------------------------------------------------------------------------ Total securities of public companies held 109,586 109,586 12,108 33,922 27,900 14,881 - ------------------------------------------------------------------------------------------------------------------------------------ Securities of Private Companies Held: CyroGen 4,070 2,911 2,911 3,759 2,553 2,553 Sensitech Inc. 2,000 2,000 2,000 2,000 2,000 2,000 Rosetta Inpharmatics, Inc. 9,703 4,688 4,688 4,558 3,000 3,000 Bell Geospace - - 3,500 - - 3,500 Songbird Medical, Inc. 5,850 3,960 3,960 5,922 3,960 3,960 RedCreek Communications 549 549 2,256 2,071 2,071 2,256 Appliant, Inc. 6,233 3,899 3,899 5,036 2,599 2,599 Ellipsys Technologies, Inc. 201 201 2,275 1,987 1,987 2,737 HemoSense 2,682 2,485 2,485 1,735 1,485 1,485 Moai Technologies, Inc. 30,767 2,021 2,021 7,389 2,021 2,021 Vascular Solutions 4,340 2,450 2,450 4,409 2,450 2,450 Babycare, Ltd. 1,009 1,009 1,009 1,009 1,009 1,009 SignalSoft Corporation 5,547 3,006 3,006 5,624 2,996 2,996 EPiCON 2,899 750 750 2,945 750 750 NovaLux, Inc. 5,112 3,183 3,183 5,193 3,183 3,183 IRSI 7,907 3,325 4,200 2,848 2,825 3,700 Xycte Therapies, Inc. 5,583 3,795 3,795 3,000 3,000 3,000 Illumina, Inc. 6,746 3,925 3,925 6,853 3,925 3,925 Advanced Diagnostics, Inc. 1,337 1,371 1,371 705 705 705 Adolor Corporation 3,536 3,000 3,000 2,613 2,000 2,000 Praxon, Inc. 2,619 2,309 2,309 2,661 2,309 2,309 AdiCom Wireless, Inc. 3,254 3,254 3,254 3,000 3,000 3,000 EndoVasix, Inc. 4,324 4,000 4,000 2,500 2,500 2,500 eWireless, inc. 32,107 2,250 2,250 2,250 2,250 2,250 Cooking.com, Inc. 6,911 4,500 4,500 7,021 4,500 4,500 MediaFlex.com 3,833 3,500 3,500 1,500 1,500 1,500 eBabyCare Ltd. 314 314 314 120 120 120 Kodiak Technologies, Inc. 1,194 1,194 1,194 1,194 1,194 1,194 Genesis Medical, Inc. 800 800 800 800 800 800 CEPTYR, Inc. 1,750 1,750 1,750 1,750 1,750 1,750 GreaterGood.com 3,678 3,678 3,678 3,200 3,200 3,200 Etera Corporation 4,000 4,000 4,000 3,000 3,000 3,000 - ------------------------------------------------------------------------------------------------------------------------------------ Subtotal securities of private companies held 170,855 80,077 88,233 98,652 70,642 75,952 - ------------------------------------------------------------------------------------------------------------------------------------ See notes on page 7. 6

- ----------------------------------------------------------------------------------------------------------------------------- Tredegar Corporation Schedule of Investments at June 30, 2000 and December 31, 1999 (In Thousands, Except Per-Share Amounts) Yrs. Web Site Investment Held (a) Description (www.) - ---------------------------------------------------------------------------------------------------------------------------------- Total securities of public companies held (from page 6) - ---------------------------------------------------------------------------------------------------------------------------------- Subtotal securities of private companies held (from page 6) ThinkFree.com .7 Java-based software complementary to Microsoft Office thinkfree.com PurePacket Communications, Inc. .6 Next generation packet-based CLEC (phone carrier) purepacket.com Quarry Technologies, Inc. .6 Technology for delivery of differentiated service levels quarrytech.com Norborn Medical, Inc. .5 Device for treatment of cardiovascular disease FastTrack Systems, Inc. .4 Clinical trial data management information systems Riveon .4 Web-based data mining software for business managers Medmanage Systems, Inc. .2 Management of prescription drug sampling program Linx Communications, Inc. - Unified communications and messaging system Infinicon, Inc. - Manufacturer of infiniband input/output products - ---------------------------------------------------------------------------------------------------------------------------------- Total securities of private companies held - ---------------------------------------------------------------------------------------------------------------------------------- Limited partnership interests in private venture capital funds (period held of .1 - 7.5 years) (d) - ---------------------------------------------------------------------------------------------------------------------------------- Total investments Estimated income taxes on assumed disposal at fair value - ---------------------------------------------------------------------------------------------------------------------------------- Estimated net asset value ("NAV") - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Tredegar Corporation Schedule of Investments at June 30, 2000 and December 31, 1999 6/30/00 12/31/99 (In Thousands, Except Per-Share Amounts) ---------------------------------------------------------------- Estimated Estimated Fair Carrying Cost Fair Carrying Cost Investment Value (b) Value (b) Basis Value (b) Value (b) Basis - ----------------------------------------------------------------------------------------------------------------------------------- Total securities of public companies held (from page 6) 109,586 109,586 12,108 33,922 27,900 14,881 - ----------------------------------------------------------------------------------------------------------------------------------- Subtotal securities of private companies held (from page 6) 170,855 80,077 88,233 98,652 70,642 75,952 ThinkFree.com 1,491 1,491 1,491 1,001 1,001 1,001 PurePacket Communications, Inc. 2,408 2,408 2,408 1,797 1,797 1,797 Quarry Technologies, Inc. 3,000 3,000 3,000 3,000 3,000 3,000 Norborn Medical, Inc. 188 188 188 188 188 188 FastTrack Systems, Inc. 3,000 3,000 3,000 - - - Riveon 600 600 600 - - - Medmanage Systems, Inc. 4,000 4,000 4,000 Linx Communications, Inc. 3,000 3,000 3,000 Infinicon, Inc. 3,485 3,485 3,485 - ----------------------------------------------------------------------------------------------------------------------------------- Total securities of private companies held 192,027 101,249 109,405 104,638 76,628 81,938 - ----------------------------------------------------------------------------------------------------------------------------------- Limited partnership interests in private venture capital funds (period held of .1 - 7.5 years) (d) 141,799 51,442 54,536 66,803 36,170 38,650 - ----------------------------------------------------------------------------------------------------------------------------------- Total investments 443,412 $ 262,277 $ 176,049 205,363 $ 140,698 $ 135,469 ------------------------ -------------------- Estimated income taxes on assumed disposal at fair value 96,250 25,162 - ----------------------------------------------------------------------------- ---------- Estimated net asset value ("NAV") $ 347,162 $ 180,201 - ----------------------------------------------------------------------------- ---------- Notes: - ------ (a) The period held for an investment in a company or a venture capital fund is computed using the initial investment date and the current valuation date. If a company has merged with another company, then the initial investment date is the date of the investment in the predecessor company. (b) Amounts are shown net of carried interest estimated using realized and unrealized net gains to date. Amounts may change due to changes in estimated carried interest, and such changes are not expected to be material. Carried interest is the portion of value payable to portfolio managers based on realized net gains and is a customary incentive in the venture capital industry. (c) Restricted securities are securities for which an agreement exists not to sell shares for a specified period of time, usually 180 days. Also included within the category of restricted securities are unregistered securities, the sale of which must comply with an exemption to the Securities Act of 1933 (usually SEC Rule 144). These unregistered securities are either the same class of stock that is registered and publicly traded or are convertible into a class of stock that is registered and publicly traded. (d) At June 30, 2000, Tredegar had ownership interests in 26 venture capital funds, including an indirect interest in the following public companies, among others (disposition of shares held by venture funds, including distributions to limited partners, is at the sole discretion of the general partner of the fund): (e) Our portfolio is subject to risks typically associated with investments in technology start-up companies, which include business failure, illiquidity and stock market volatility. Indirect Investment Symbol Description - -------------------------------------------------------------------------------------------------------------------- Lucent Technologies, Inc. LU Developer and manufacturer of communications systems (lucent.com) Universal Access, Inc. UAXS Wholesale provider of high bandwidth services (universalaccessinc.com) Sonus Networks SONS Provider of voice infrastructure products (sonusnet.com) Digital Island ISLD Web site management (digisle.net) Cobalt Networks, Inc. COBT Network servers (cobalt.com) Loudeye Technologies, Inc. LOUD Internet media infrastructure services and applications (loudeye.com) Tut Systems, Inc. TUTS Local area network products (tutsys.com) Siebel Systems, Inc. SEBL Provider of eBusiness applications Telaxis Communications TLXS High speed wireless access equipment (telaxiscomm.com) Paradigm Genetics, Inc. PDGM Industrialization of the process of determining gene function (paragen.com) - -------------------------------------------------------------------------------------------------------------------- Total - -------------------------------------------------------------------------------------------------------------------- Indirect Average Indirect Interest in Restricted Estimated Common Closing Stock Dis- Fair Cost Indirect Investment Shares Price count Value Basis - --------------------------------------------------------------------------------------------------------- Lucent Technologies, Inc. 684 $ 58.31 20% $ 31,898 $ 624 Universal Access, Inc. 594 24.50 20% 11,644 521 Sonus Networks 58 157.88 20% 7,297 169 Digital Island 68 48.63 20% 2,645 131 Cobalt Networks, Inc. 53 57.88 20% 2,440 99 Loudeye Technologies, Inc. 159 17.44 20% 2,221 437 Tut Systems, Inc. 29 57.38 n/a 1,659 145 Siebel Systems, Inc. 12 163.56 20% 1,587 173 Telaxis Communications 47 31.25 20% 1,171 207 Paradigm Genetics, Inc. 116 12.19 20% 1,129 183 - --------------------------------------------------------------------------------------------------------- Total $ 63,691 $ 2,689 - --------------------------------------------------------------------------------------------------------- 7

4. Comprehensive income, defined as net income and other comprehensive income, was $36.7 million for the second quarter of 2000 and $11.1 million for the second quarter of 1999. Comprehensive income was $98.2 million for the first six months of 2000 and $26.5 million for the first six months of 1999. Other comprehensive income includes changes in unrealized gains and losses on available-for-sale securities and foreign currency translation adjustments recorded net of deferred income taxes directly in shareholders' equity. 5. The components of inventories are as follows: (In Thousands) June 30 Dec. 31 2000 1999 -------------- -------------- Finished goods $8,593 $9,928 Work-in-process 4,443 4,322 Raw materials 27,178 29,174 Stores, supplies and other 9,867 9,705 -------------- -------------- Total $50,081 $53,129 -------------- -------------- 6. Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding. Diluted earnings per share is computed by dividing net income by the weighted average common and potentially dilutive common equivalent shares outstanding, determined as follows: (In Thousands) Second Quarter Six Months Ended June 30 Ended June 30 ---------------------- ----------------------- 2000 1999 2000 1999 --------- --------- --------- ----------- Weighted average shares outstanding used to compute basic earnings per share 37,911 36,852 37,815 36,789 Incremental shares issuable upon the assumed exercise of stock options 1,156 1,946 1,184 1,981 --------- --------- --------- ----------- Shares used to compute diluted earnings per share 39,067 38,798 38,999 38,770 ========= ========= ========= =========== Incremental shares issuable upon the assumed exercise of outstanding stock options are computed using the average market price during the related period. 7. The Financial Accounting Standards Board has issued a new standard affecting the accounting for derivative instruments and hedging activities. This standard is not expected to significantly change our operating results, financial condition or disclosures. The new standard will be adopted in the first quarter of 2001. 8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Second Quarter 2000 Compared with Second Quarter 1999 Net income for the second quarter of 2000 was $26.4 million, up from $10.2 million in 1999 (68 cents per share versus 26 cents per share). Results in the second quarter of 2000 include $12.2 million (31 cents per share) of realized after-tax gains from venture capital investments compared to an after-tax loss of $1.2 million (3 cents per share) in the second quarter of 1999. Pretax realized gains and losses from venture capital investment activities are included in "Other income (expense), net" in the consolidated statements of income on page 3 and "Venture capital investments" in the operating profit table on page 12. Operating expenses (primarily employee compensation, benefits and leased office space and equipment) for our venture capital investment activities are classified in "Selling, general and administrative expenses" ("SG&A") in the consolidated statements of income and "Venture capital investments" in the operating profit table. After-tax appreciation in the net asset value ("NAV") of the venture capital investment portfolio during the second quarter was $61.8 million. At June 30, 2000, the NAV of the portfolio was $347.2 million. For more information on our venture capital investment activities, see pages 13 through 15 and Note 3 on pages 5 through 7. Net sales in the second quarter of 2000 increased by 15% over 1999 due primarily to the acquisition of Exxon Chemical Company's plastic film business ("Exxon Films") on May 17, 1999, continued strong demand in Aluminum Extrusions, and overall higher selling prices driven by higher raw material costs. On a pro forma basis, net sales were up 7% in the second quarter of 2000 versus 1999. Pro forma net sales assume that the acquisition of Exxon Films occurred at the beginning of 1999. For more information on net sales, see the business segment review beginning on page 12. The gross profit margin during the second quarter of 2000 declined to 20.1% from 21% in 1999 due to lower margins in Film Products. SG&A expenses in the second quarter of 2000 were $13.3 million, up from $11.1 million in 1999 due primarily to the acquisition of Exxon Films and increased operating expenses relative to our venture capital portfolio. As a percentage of sales, SG&A expenses increased to 6% in the second quarter of 2000 compared with 5.7% in 1999. R&D expenses remained relatively flat at $5.7 million in the second quarter of 2000 versus $5.8 million in 1999. Unusual items in the second quarter of 2000 include a gain of $525,000 ($336,000 after income taxes) on the sale of Fiberlux, Inc., a producer of vinyl extrusions. 9

Unusual items in the second quarter of 1999 totaled $4.6 million ($3.0 million after income taxes) and included: - - a charge of $3.5 million ($2.2 million after income taxes) related to the write-off of purchased in-process research and development expenses associated with the Therics acquisition; and - - a charge of $1.2 million ($749,000 after income taxes) for the write-off of excess packaging film capacity. Interest income, which is included in "Other income (expense), net" in the consolidated statements of income, was $503,000 in the second quarter of 2000 and $257,000 in 1999. The average tax-equivalent yield earned on cash equivalents was approximately 6.3% in the second quarter of 2000 and 4.8% in the second quarter of last year. Our policy permits investment of excess cash in marketable securities that have the highest credit ratings and maturities of less than one year. The primary objectives of our policy are safety of principal and liquidity. Interest expense increased to $4.3 million in the second quarter of 2000 from $1.5 million in 1999 due to higher average debt outstanding (up $143 million) from acquisitions and investments made in 1999. The average rate on variable-rate debt ($250 million in 2000 versus $102 million in 1999) was 7.1% in the second quarter of 2000 versus 5.2% in 1999. The average rate on fixed-rate debt ($19 million in the second quarter of 2000 and $24 million in the second quarter of 1999) was 7.2% in both periods. The effective tax rate, excluding unusual items, increased to 36.5% in the second quarter of 2000 from 35.5% in 1999 due to higher taxes accrued on income from foreign operations. Six Months 2000 Compared with Six Months 1999 Net income for the first six months of 2000 was $44.8 million, up from $25.5 million in 1999 ($1.15 per share versus 65 cents per share). Results for 2000 include $20 million (51 cents per share) of realized after-tax gains from venture capital investments compared to a loss of $1.5 million (4 cents per share) in 1999. The after-tax appreciation in the NAV through the first six months of this year was $148.6 million. Net sales for the six months ended June 30, 2000, increased by 22% over the same period of last year. The improved net sales are due primarily to the acquisition of Exxon Films, higher volume in Aluminum Extrusions (up 6%), and overall higher selling prices driven by higher raw material costs. On a pro forma basis, net sales increased 9%. For more information on net sales, see the business segment review beginning on page 12. The gross profit margin for the first six months of 2000 decreased to 19.9% from 21.4% in 1999 due to increases in average plastic resin and aluminum ingot prices. SG&A expenses were $25.9 million in 2000, up from $22.5 million in 1999 due primarily to the acquisition of Exxon Films. As a percentage of sales, SG&A expenses decreased to 5.7% in the first six months of 2000 compared with 6% in the same period of 1999 due to higher sales from raw material-driven price increases. 10

R&D expenses increased to $12 million in 2000 from $9.9 million in 1999 due to the acquisition of Therics (impact of $1.6 million), higher spending at Molecumetics in support of collaboration programs (up $320,000) and slightly higher product development spending at Film Products (up $180,000). Unusual items for the six months ended June 30, 2000, totaled $5 million ($3.2 million after income taxes) and included: - - a charge of $5.3 million ($3.4 million after income taxes) for the planned shutdown of a plastic films manufacturing facility in Manchester, Iowa, including an impairment loss for building and equipment ($4.1 million), severance costs ($700,000), and excess inventory and other items ($450,000); - - a charge of $191,000 ($122,000 after income taxes) for costs associated with the evaluation of financing and structural options for the Technology Group; and - - a gain of $525,000 ($336,000 after income taxes) for the sale of Fiberlux, Inc. Unusual items for the six months ended June 30, 1999, totaled $4.6 million ($3.0 million after income taxes) and included: - - a charge of $3.5 million ($2.2 million after income taxes) related to the write-off of purchased in-process research and development expenses associated with the Therics acquisition; and - - a charge of $1.2 million ($749,000 after income taxes) for the write-off of excess packaging film capacity. Interest income for 2000 was $897,000 versus $582,000 in 1999. The average tax-equivalent yield earned on cash equivalents was approximately 6.02% for 2000 and 4.9% for 1999. Interest expense increased to $8.6 million in 2000 from $1.8 million in 1999 due to higher average debt outstanding (up $194 million) from acquisitions and investments made in 1999. The average rate on variable-rate debt ($250 million) was 7% in 2000 versus 5.2% in 1999. The average rate on fixed-rate debt ($20 million in 2000 and $25 million in 1999) was 7.2% in both periods. The effective income tax rate, excluding unusual items, increased to 36.5% in 2000 from 35.5% in 1999 due to higher taxes accrued on income from foreign operations. 11

Business Segment Review The following tables present Tredegar's net sales and operating profit by segment for the second quarter and six months ended June 30, 2000 and 1999. Net Sales by Segment (In Thousands) (Unaudited) Second Quarter Six Months Ended June 30 Ended June 30 ---------------------- ----------------------- 2000 1999 2000 1999 ----------- ---------- ----------- ----------- Film Products $ 93,904 $ 75,267 $ 193,390 $ 143,019 Fiberlux 74 2,218 1,856 4,478 Aluminum Extrusions 127,605 115,435 256,845 223,119 Technology: Molecumetics 1,826 1,920 3,452 3,765 Therics 94 - 188 - ----------- ---------- ----------- ----------- Total net sales $ 223,503 $ 194,840 $ 455,731 $ 374,381 =========== ========== =========== =========== Operating Profit by Segment (In Thousands) (Unaudited) Second Quarter Six Months Ended June 30 Ended June 30 ---------------------- ----------------------- 2000 1999 2000 1999 ----------- ---------- ----------- ----------- Film Products: Ongoing operations $ 12,781 $ 12,344 $ 28,531 $ 25,548 Unusual items - (1,170) (5,293) (1,170) ----------- ---------- ----------- ----------- Total Film Products 12,781 11,174 23,238 24,378 ----------- ---------- ----------- ----------- Fiberlux: Ongoing operations (55) (53) (264) (141) Unusual items 525 - 525 - ----------- ---------- ----------- ----------- Total Fiberlux 470 (53) 261 (141) ----------- ---------- ----------- ----------- Aluminum Extrusions 17,131 14,634 32,845 28,480 ----------- ---------- ----------- ----------- Technology: Molecumetics (1,278) (893) (2,507) (1,747) Therics (2,054) (1,597) (3,853) (1,597) Venture capital investments 19,060 (1,956) 31,203 (2,347) Unusual items - (3,458) (191) (3,458) ----------- ---------- ----------- ----------- Total technology 15,728 (7,904) 24,652 (9,149) ----------- ---------- ----------- ----------- Total operating profit 46,110 17,851 80,996 43,568 Interest income 503 257 897 582 Interest expense 4,307 1,517 8,602 1,806 Corporate expenses, net 785 843 2,651 2,881 ----------- ---------- ----------- ----------- Income before income taxes 41,521 15,748 70,640 39,463 Income taxes 15,153 5,558 25,809 13,975 ----------- ---------- ----------- ----------- Net income $ 26,368 $ 10,190 $ 44,831 $ 25,488 =========== ========== =========== =========== 12

Second quarter sales in Film Products rose 25% to $93.9 million while operating profit (excluding unusual items) was $12.8 million, up 3.5% versus the second quarter of 1999. On a year-to-date basis, sales in Film Products increased 35% to $193.4 million while operating profit (excluding unusual items) was $28.5 million, up 11.7%. The increase in sales and profits was due to the mid-1999 acquisition of Exxon Films. On a pro forma basis (i.e., assuming the acquisition had occurred at the beginning of 1999), second-quarter sales in films were up 5.5% while year-to-date sales increased 3.8% due to raw material-driven price increases. On a pro forma basis, year-to-date operating profit decreased by 7.6% due to lower volume, continued delays in new product introductions, and higher spending on new product development and commercialization. In Aluminum Extrusions, second quarter sales rose 11% to $127.6 million while operating profit was $17.1 million, up 17% versus the second quarter of 1999. On a year-to-date basis, sales rose 15% to $256.9 million while operating profit was $32.9 million, up 15% compared to the same period of the prior year. Sales and operating profit increased due to higher volumes (up 2.6% for the quarter and 5.9% for the six months), reflecting continued strong demand and due to higher selling prices, reflecting higher raw material costs. For the technology operating companies, revenue was relatively flat for both the quarter and six months ended June 30, 2000 compared to the same periods of the prior year. The second quarter operating loss for the technology operating companies in 2000, excluding unusual items, was $3.3 million versus $2.5 million in 1999. On a year-to-date basis, excluding unusual items, the operating loss was $6.4 million in 2000 versus $3.3 million in 1999. The higher losses in 2000 were due primarily to the acquisition of Therics in April 1999 and to increased spending at Molecumetics. The appreciation in NAV related to venture capital investment activities for the second quarter and six months ended June 30, 2000 and 1999 is summarized below: (In Millions) Second Quarter Six Months Ended June 30 Ended June 30 ---------------------- ---------------------- 2000 1999 2000 1999 --------- ---------- ---------- ---------- Net realized gains, losses, write-downs and related operating expenses for venture capital investments reflected in Tredegar's consolidated statements of income (net of tax) $ 12.2 $ (1.3) $ 20.0 $ (1.5) Change in unrealized appreciation of venture capital investments (net of tax) 49.6 .6 128.6 1.6 ---------- --------- --------- --------- Appreciation (depreciation) in net asset value ("NAV") related to investment performance $ 61.8 $ (.7) $ 148.6 $ .1 ========== ========= ========= ========= The appreciation was driven by a combination of events including acquisitions, IPOs, and private investment asset write-ups. The following companies held directly in the portfolio, or indirectly through our interests in other venture capital funds, accounted for most of the net appreciation in NAV during the quarter and six months ended June 30, 2000: 13

(In Millions) Appreciation (Depreciation) in Estimated NAV --------------------------- 2nd Quarter Six Months Ended Ended Investment Reason for Change 6/30/00 6/30/00 - ------------------------------------------------------------------------------------------------------------------------------------ Public companies: Software.com, Inc Acquisition of @mobile.com, Inc., a direct holding $ 21.4 $ 26.4 Superconductor Tech., Inc. Change in stock price (1.8) 21.2 Lucent Technologies, Inc. Acquisition of Chromatis Networks, an indirect holding 19.6 19.6 Eprise Corporation Initial public offering, a direct holding 0.8 11.7 Copper Mountain Networks Acquisition of OnPrem Networks, Inc, a direct holding 1.1 8.4 Universal Access, Inc. Change in stock price (2.7) 6.9 Sonus Networks Initial public offering, an indirect holding 4.5 4.5 Cisco Systems, Inc. Change in stock price (0.6) 3.9 Watchguard Technologies, Inc. Change in stock price (0.6) 1.2 Loudeye Technologies, Inc. Change in stock price (1.3) 1.1 Eclipse Surgical Technologies Change in stock price (1.0) (1.0) Caliper Technologies Corp. Change in stock price (2.1) (1.1) Cobalt Networks, Inc. Change in stock price 0.3 (1.4) Digital Island, Inc. Change in stock price (0.4) (1.6) Private companies: eWireless, Inc. New round of financing at higher valuation 19.1 19.1 Moai Technologies, Inc. New round of financing at higher valuation - 15.0 Venture capital funds Various 6.9 9.7 IRSI New round of financing at higher valuation (0.1) 2.9 Rosetta Inpharmatics, Inc. New round of financing at higher valuation - 2.2 Ellipsys Technologies, Inc. Write-down - (0.8) RedCreek Communications Write-down - (1.0) Other public and private companies Various (0.4) 3.0 ------------- ------------ Appreciation in NAV before operating expenses 62.7 150.1 After-tax operating expenses (0.9) (1.5) ------------- ------------ Appreciation in NAV related to investment performance $ 61.8 $ 148.6 ============= ============ The cost basis, carrying value and NAV of the venture capital portfolio is reconciled below: (In Millions) June 30, Dec. 31, 2000 1999 ----------------------- Cost basis of investments $ 176.0 $ 135.5 Write-downs taken on securities held (charged to earnings) (11.2) (7.8) Unrealized appreciation on public securities held by Tredegar (reflected directly in equity net of deferred income taxes) 97.5 13.0 ----------- ----------- Carrying value of investments reflected in the balance sheet 262.3 140.7 Unrealized appreciation in private securities held by Tredegar and in its indirect interest in all securities held by venture capital funds 181.1 64.7 ----------- ----------- Estimated fair value of venture capital investments 443.4 205.4 Estimated income taxes on assumed disposal at fair value (96.2) (25.2) ----------- ----------- NAV of venture capital investments $ 347.2 $ 180.2 =========== =========== 14

Changes in NAV for the quarter and six months ended June 30, 2000 and 1999 are summarized below: (In Millions) Second Quarter Six Months Ended June 30 Ended June 30 ---------------------- ----------------------- 2000 1999 2000 1999 ---------- ---------- ----------- ----------- NAV at beginning of period $ 276.7 $ 82.2 $ 180.2 $ 67.2 ---------- ---------- ----------- ----------- After-tax appreciation (depreciation) in NAV related to investment performance (net of operating expenses) 61.8 (.7) 148.6 .1 After-tax operating expenses funded by Tredegar .9 .4 1.5 .7 New investments 25.4 16.4 47.0 31.8 Transfer of the NAV of Therics out of portfolio (acquired by Tredegar) - (4.3) - (4.3) Reduction in NAV due to the sale of investments (17.6) - (30.1) (1.5) ---------- ---------- ----------- ----------- Increase in NAV 70.5 11.8 167.0 26.8 ---------- ---------- ----------- ----------- NAV at end of the period $ 347.2 $ 94.0 $ 347.2 $ 94.0 ========== ========== =========== =========== Our internal rate of return ("IRR") since inception in 1992 through June 30, 2000, is estimated at 83% (62% after income taxes), but is not necessarily indicative of the IRR that we will generate in the future. IRR is the discount rate that equates the net present value of investment cash inflows with investment cash outflows. The IRR is calculated as an annualized compounded rate of return using actual investment cash flows, modified to incorporate our share of the current valuation of unliquidated holdings and operating expenses (and taxes in case of the after-tax IRR). Our portfolio is subject to risks typically associated with investments in technology start-up companies, which include business failure, illiquidity and stock market volatility. Liquidity and Capital Resources Tredegar's total assets increased to $912 million at June 30, 2000, from $792.5 million at December 31, 1999, due primarily to an increase in the venture capital investments. The carrying value of the venture capital investments increased compared to December 31, 1999, due to an increase in unrealized gains on available-for-sale securities of $84.5 million and an increase in the cost basis of investments of $37.1 million, net of write-downs taken. 15

The reasons for the decrease in cash and cash equivalents to $15.4 million at June 30, 2000, from $25.8 million at December 31, 1999, are summarized below: (In Thousands) Six Months Ended June 30 ---------------------- 2000 1999 ---------- ----------- Cash and cash equivalents, beginning of period $ 25,752 $ 25,409 ---------- ----------- Cash provided by operating activities net of capital expenditures and dividends (23,734) 26,248 Proceeds from the exercise of stock options 3,487 2,397 Net increase in borrowings 5,000 209,000 Acquisitions - (213,665) New venture capital investments, net of proceeds from disposals (5,560) (29,648) Proceeds from divestitures and property disposals 9,357 252 Other, net 1,129 (126) ---------- ----------- Net (decrease) increase in cash and cash equivalents (10,321) (5,542) ---------- ----------- Cash and cash equivalents, end of period $ 15,431 $ 19,867 ========== =========== Cash provided by operating activities decreased from $52.4 million in 1999 to $18.8 million in 2000 due mainly to higher working capital and higher income taxes (approximately $12.5 million) on realized gains from venture capital activities. Capital expenditures have increased from $23.2 million in 1999 to $39.5 million in 2000. Capital expenditures in 2000 reflect the normal replacement of machinery and equipment and the following key capital projects: - - A new feminine pad topsheet film production line at the plant in Terre Haute, Indiana; - - Machinery and equipment purchased for the manufacture of breathable and elastomeric films (these films are replacing conventional diaper backsheet and other components in order to improve comfort and fit); - - Expansion of capacity in Brazil for disposable films for hygiene products, such as feminine pads and diapers; - - Continued expansion of capacity at the Hungary facility, which produces disposable films for hygiene products marketed in Europe; - - A new plastic film manufacturing facility in Shanghai, China (this plant, which is expected to begin production in the second quarter of 2001, will make film used primarily for hygiene products); and - - The second phase of a modernization program at the aluminum extrusion plant in Newnan, Georgia. Quantitative and Qualitative Disclosures About Market Risk Tredegar has exposure to the volatility of interest rates, polyethylene and polypropylene resin prices, aluminum ingot and scrap prices, foreign currencies, emerging markets and technology stocks. Changes in resin prices, and the timing of those changes, could have a significant impact on profit margins in Film Products; however, those changes are generally followed by a corresponding change in selling prices. Profit margins in Aluminum Extrusions are sensitive to fluctuations in aluminum ingot and scrap prices but are also generally followed by a corresponding 16

change in selling prices; however, there is no assurance that higher ingot costs can be passed along to customers. In the normal course of business, we enter into fixed-price forward sales contracts with certain customers for the sale of fixed quantities of aluminum extrusions at scheduled intervals. In order to hedge our exposure to aluminum price volatility under these fixed-price arrangements, which generally have a duration of not more than 12 months, we enter into a combination of forward purchase commitments and futures contracts to acquire aluminum, based on the scheduled deliveries. We sell to customers in foreign markets through our foreign operations and through exports from U.S. plants. The percentage of consolidated pretax income earned by geographic area for the six months ended June 30, 2000 and 1999 are presented below: Percentage of Consolidated Pretax Income Earned by Geographic Area* ---------------------------------- Six Months Ended June 30 ------------------- 2000 1999 -------- -------- United States 48 % 58 % Canada 21 17 Europe 10 9 Latin America 13 8 Asia 8 8 --------- --------- Total 100 % 100 % ========= ========= * Based on consolidated pretax income from continuing operations excluding venture capital activities and unusual items. We attempt to match the pricing and cost of our products in the same currency and generally view the volatility of foreign currencies and emerging markets, and the corresponding impact on earnings and cash flow, as part of the overall risk of operating in a global environment. Exports from the U.S. are generally denominated in U.S. Dollars. Our foreign operations in emerging markets have agreements with certain customers that index the pricing of our products to the U.S. Dollar, the German Mark or the Euro. Our foreign currency exposure on income from foreign operations in Europe primarily relates to the German Mark and the Euro. We believe that our exposure to the Canadian Dollar has been substantially neutralized by the U.S. Dollar-based spread (the difference between selling prices and aluminum costs) generated from Canadian casting operations and exports from Canada to the U.S. The acquisition of Exxon Films on May 17, 1999, has increased the proportion of assets located in the U.S. It has also increased the amount of operating profit earned in the U.S., partially offset by higher U.S. Dollar interest expense on higher debt related to the acquisition. We have investments in private venture capital fund limited partnerships and early-stage technology companies, including the stock of privately-held companies and the restricted and unrestricted stock of companies that have recently registered shares in initial public offerings. The portfolio is subject to risks typically associated with investments in technology start-up companies, which include business failure, illiquidity and stock market volatility. Furthermore, publicly 17

traded stocks of emerging, technology-based companies have higher volatility and risk than the U.S. stock market as a whole. See pages 13-15 and Note 3 on pages 5-7 for more information. New Accounting Standards The Financial Accounting Standards Board has issued a new standard affecting the accounting for derivative instruments and hedging activities. This standard is not expected to significantly change our operating results, financial condition or disclosures. The new standard will be adopted in the first quarter of 2001. 18

PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. Tredegar's Annual Meeting of Shareholders was held on May 24, 2000. The following sets forth the vote results with respect to each of the matters voted upon at the meeting: (a) Election of Directors No. of No. of Votes Nominee Votes "For" "Withheld" ------- ----------- ---------- Austin Brockenbrough, III 34,503,886 728,374 William M. Gottwald 34,458,993 773,267 Richard L. Morrill 34,493,367 738,893 Norman A. Scher 34,485,107 747,153 There were no broker non-votes with respect to the election of directors. (b) Approval of Auditors Approval of the designation of PricewaterhouseCoopers LLP as the auditors for Tredegar for the fiscal year ending December 31, 2000: No. of Votes No. of Votes No. of "For" "Against" Abstentions ----- --------- ----------- 35,093,134 96,634 42,492 There were no broker non-votes with respect to the approval of auditors. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibit No. 10 Consulting Agreement made as of April 1, 2000 between Tredegar Corporation and Richard W. Goodrum 27 Financial Data Schedule (b) Reports on Form 8-K. No reports on Form 8-K have been filed for the quarter ended June 30, 2000. 19

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Tredegar Corporation (Registrant) Date: August 2, 2000 /s/ N. A. Scher ---------------------- -------------------------------------- Norman A. Scher Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: August 2, 2000 /s/ Michelle O. Mosier ---------------------- -------------------------------------- Michelle O. Mosier Corporate Controller (Principal Accounting Officer) 20

EXHIBIT INDEX Exhibit No. Description 10 Consulting Agreement made as of April 1, 2000 between Tredegar Corporation and Richard W. Goodrum 27 Financial Data Schedule 21

CONSULTING AGREEMENT THIS CONSULTING AGREEMENT is made and entered into as of the 1st day of April, 2000, by and between Tredegar Corporation, a Virginia corporation, 1100 Boulders Parkway, Richmond, Virginia (hereinafter called "Tredegar"), and Richard W. Goodrum, an individual residing at 12830 River Hills Drive, Midlothian, Virginia (hereinafter called "Goodrum"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Tredegar and Goodrum entered into a consulting agreement dated as of March 31, 1996, as amended as of July 1, 1997 (the "1996 Agreement"); WHEREAS, Tredegar and Goodrum desire to terminate the 1996 Agreement and enter into a new relationship. NOW THEREFORE, the parties hereto mutually agree as follows: 1. Effective as of the date hereof, the 1996 Agreement is terminated. 2. During the term of this Agreement, Goodrum agrees to serve as a member of Tredegar's Executive Committee for such period as may be requested by Tredegar and its Board of Directors. 3. Goodrum agrees to remain generally familiar with the affairs of Tredegar and its subsidiaries and make himself available for advice, meetings and consultation (by telephone or in person). 4. Tredegar agrees to provide Goodrum with office space, limited secretarial assistance and access to business publications and internal documents so as to enable Goodrum to be effective in performing his duties hereunder. Goodrum shall be invited to attend, but is not required to be present at, all Management Committee meetings. 5. For the services rendered hereunder by Goodrum (including his service as a member of Tredegar's Executive Committee), Tredegar shall pay Goodrum and Goodrum hereby accepts as full compensation therefor the annual amount of $20,000, which payment will be made in quarterly installments in advance and prorated for any partial year. 6. Tredegar will reimburse Goodrum for his reasonable expenses incurred in the performance of his services hereunder, provided that such expenses shall be approved by another member of Tredegar's Executive Committee. 7. During the term of this Agreement, Goodrum shall be deemed for all purposes an independent contractor and not an "employee" of Tredegar.

8. This Agreement shall be in effect so long as Goodrum remains a member of Tredegar's Executive Committee. 9. This Agreement shall be construed and interpreted under the laws of Virginia. IN WITNESS WHEREOF, Tredegar Corporation has caused this instrument to be signed in its name by its duly authorized officer and Richard W. Goodrum has hereunto set his hand, all as of the day and year first above written. TREDEGAR CORPORATION By /s/ John D. Gottwald ------------------------ John D. Gottwald President /s/ Richard W. Goodrum --------------------------- Richard W. Goodrum -2-

5 THE SCHEDULE CONTAINS UNAUDITED SUMMARY FINANCIAL INFORMATION FOR TREDEGAR CORPORATION AND SUBSIDIARIES EXTRACTED FROM THE BALANCE SHEET FOR THE PERIOD ENDED JUNE 30, 2000, AND THE STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-2000 JUN-30-2000 15,431 0 120,633 3,681 50,081 198,863 487,714 230,163 912,043 94,214 275,000 0 0 106,814 364,044 912,043 455,731 489,657 365,002 365,002 45,046 367 8,602 70,640 25,809 44,831 0 0 0 44,831 1.19 1.15