What changed in this filing

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Item 1. Financial Statements

2021-11-05 compared with 2021-08-06 · 126 added, 141 removed, 558 unchanged (32% of the section changed)

3 unchanged sentences

(In Thousands, Except Share Data)

June 30, December 31,

September 30, December 31,

Current assets:

Cash and cash equivalents $ 30,253 $ 11,846

Accounts and other receivables, net of allowance for doubtful accounts and sales returns of $ 2,848 in 2021 and $ 2,797 in 2020

99,652 86,327

Accounts and other receivables, net 97,185 86,327

Income taxes recoverable 2,013 2,807

29 unchanged sentences

Shareholders’ equity:

Common stock, no par value (issued and outstanding 33,713,597 shares at June 30, 2021 and 33,457,176 shares at December 31, 2020)

Common stock, no par value (issued and outstanding 33,727,317 shares at September 30, 2021 and 33,457,176 shares at December 31, 2020)

53,906 50,066

Common stock held in trust for savings restoration plan ( 106,479 shares at June 30, 2021 and 105,067 shares at December 31, 2020)

Common stock held in trust for savings restoration plan ( 107,397 shares at September 30, 2021 and 105,067 shares at December 31, 2020)

( 2,122 ) ( 2,087 )

10 unchanged sentences

(In Thousands, Except Per Share Data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

33 unchanged sentences

(In Thousands)

Three Months Ended June 30,

Three Months Ended September 30,

Net income (loss) $ 6,203 $ ( 65,213 )

Other comprehensive income (loss):

Unrealized foreign currency translation adjustment (net of tax of $ 463 in 2021 and net of tax of $ 177 in 2020)

Unrealized foreign currency translation adjustment (net of tax benefit of $ 294 in 2021 and net of tax benefit of $ 19 in 2020)

( 2,788 ) 927

Derivative financial instruments adjustment (net of tax of $ 547 in 2021 and net of tax of $ 339 in 2020)

Derivative financial instruments adjustment (net of tax benefit of $ 174 in 2021 and net of tax of $ 618 in 2020)

( 717 ) 2,213

Amortization of prior service costs and net gains or losses (net of tax of $ 927 in 2021 and net of tax of $ 836 in 2020)

1 unchanged sentence

Comprehensive income (loss) $ 6,015 $ ( 59,142 )

Six Months Ended June 30,

Nine Months Ended September 30,

Net income (loss) $ 36,472 $ ( 76,339 )

Other comprehensive income (loss):

Unrealized foreign currency translation adjustment (net of tax of $ 191 in 2021 and net of tax benefit of $ 1,106 in 2020)

Unrealized foreign currency translation adjustment (net of tax benefit of $ 103 in 2021 and net of tax benefit of $ 1,125 in 2020)

( 1,443 ) ( 11,076 )

Derivative financial instruments adjustment (net of tax of $ 185 in 2021 and net of tax benefit of $ 269 in 2020)

1,232 ( 2,517 )

Amortization of prior service costs and net gains or losses (net of tax of $ 2,773 in 2021 and net of tax of $ 2,507 in 2020)

5 unchanged sentences

(In Thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

9 unchanged sentences

(Gain) loss on investment in kaléo accounted for under the fair value method ( 879 ) 61,000

Held for sale impairment loss on divested assets — 45,054

Changes in assets and liabilities:

10 unchanged sentences

Capital expenditures ( 19,576 ) ( 13,416 )

Proceeds from the sale of assets 4,749 —

Net cash used in investing activities ( 14,827 ) ( 13,416 )

13 unchanged sentences

(In Thousands, Except Share and Per Share Data)

The following summarizes the changes in shareholders’ equity for the three month period ended June 30, 2021:

The following summarizes the changes in shareholders’ equity for the three month period ended September 30, 2021:

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 April 1, 2021 $ 51,557 $ 244,496 $ ( 2,097 ) $ ( 86,797 ) $ 2,028 $ ( 93,200 ) $ 115,987

Balance July 1, 2021 $ 52,940 $ 261,699 $ ( 2,109 ) $ ( 82,804 ) $ 3,496 $ ( 89,882 ) $ 143,340

Net income (loss) — 6,203 — — — — 6,203

Foreign currency translation adjustment (net of tax of $ 463 )

Foreign currency translation adjustment (net of tax benefit of $ 294 )

— — — ( 2,788 ) — — ( 2,788 )

Derivative financial instruments adjustment (net of tax of $ 547 )

Derivative financial instruments adjustment (net of tax benefit of $ 174 )

— — — — ( 717 ) — ( 717 )

5 unchanged sentences

Tredegar common stock purchased by trust for savings restoration plan — 13 ( 13 ) — — — —

Balance June 30, 2021

Balance September 30, 2021

$ 53,906 $ 263,873 $ ( 2,122 ) $ ( 85,592 ) $ 2,779 $ ( 86,565 ) $ 146,279

The following summarizes the changes in shareholders’ equity for the six month period ended June 30, 2021:

The following summarizes the changes in shareholders’ equity for the nine month period ended September 30, 2021:

Accumulated Other Comprehensive Income (Loss)

2 unchanged sentences

Net income (loss) — 36,472 — — — — 36,472

Foreign currency translation adjustment (net of tax of $ 191 )

Foreign currency translation adjustment (net of tax benefit of $ 103 )

— — — ( 1,443 ) — — ( 1,443 )

8 unchanged sentences

Tredegar common stock purchased by trust for savings restoration plan — 35 ( 35 ) — — — —

Balance June 30, 2021

Balance September 30, 2021

$ 53,906 $ 263,873 $ ( 2,122 ) $ ( 85,592 ) $ 2,779 $ ( 86,565 ) $ 146,279

The following summarizes the changes in shareholders’ equity for the three month period ended June 30, 2020:

The following summarizes the changes in shareholders’ equity for the three month period ended September 30, 2020:

Accumulated Other Comprehensive Income (Loss)

Balance April 1, 2020 $ 46,054 $ 504,161 $ ( 1,601 ) $ ( 112,192 ) $ ( 5,082 ) $ ( 92,750 ) $ 338,590

Balance July 1, 2020 $ 47,448 $ 511,345 $ ( 1,610 ) $ ( 112,666 ) $ ( 3,824 ) $ ( 89,819 ) $ 350,874

Net income (loss) — ( 65,213 ) — — — — ( 65,213 )

Foreign currency translation adjustment (net of tax of $ 177 )

Foreign currency translation adjustment (net of tax benefit of $ 19 )

— — — 927 — — 927

7 unchanged sentences

Tredegar common stock purchased by trust for savings restoration plan — 9 ( 9 ) — — — —

Balance June 30, 2020

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 six month period ended June 30, 2020:

The following summarizes the changes in shareholders’ equity for the nine month period ended September 30, 2020:

Accumulated Other

18 unchanged sentences

Tredegar common stock purchased by trust for savings restoration plan — 27 ( 27 ) — — — —

Balance at June 30, 2020 $ 47,448 $ 511,345 $ ( 1,610 ) $ ( 112,666 ) $ ( 3,824 ) $ ( 89,819 ) $ 350,874

Balance at September 30, 2020 $ 49,048 $ 442,118 $ ( 1,619 ) $ ( 111,739 ) $ ( 1,611 ) $ ( 86,888 ) $ 289,309

See accompanying notes to financial statements.

2 unchanged sentences

1 BASIS OF PRESENTATION

In the opinion of management, the accompanying condensed 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 June 30, 2021 , the consolidated results of operations for the three and six months ended June 30, 2021 and 2020, the consolidated cash flows for the six months ended June 30, 2021 and 2020, and the consolidated changes in shareholders’ equity for the six months ended June 30, 2021 and 2020, in accordance with U.S.

In the opinion of management, the accompanying condensed 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, 2021, the consolidated results of operations for the three and nine months ended September 30, 2021 and 2020, the consolidated cash flows for the nine months ended September 30, 2021 and 2020, and the consolidated changes in shareholders’ equity for the three and nine months ended September 30, 2021 and 2020, in accordance with U.S.

generally accepted accounting principles (“GAAP”).

1 unchanged sentence

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 second quarter for 2021 and 2020 for this segment references 13-week periods ended June 27, 2021 and June 28, 2020, respectively.

As such, the fiscal third quarter for 2021 and 2020 for this segment references 13-week periods ended September 25, 2021 and September 27, 2020.

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 Company may fund or receive cash from the Aluminum Extrusions segment based on Aluminum Extrusion’s cash flows from operations during the intervening period from Aluminum Extrusion’s fiscal quarter end and the Company’s fiscal quarter end.

There was no intercompany funding with Aluminum Extrusions between June 27, 2021 and June 30, 2021.

As of December 31, 2020, the Company’s cash and cash equivalents declined by $ 3.8 million since the Company made payments to the Aluminum Extrusions segment to fund its working capital during the intervening period.

There was no intercompany funding with Aluminum Extrusions between September 25, 2021 and September 30, 2021.

As of September 30, 2021 and December 31, 2020, the Company’s cash and cash equivalents declined by $ 0.5 million and $ 3.8 million, respectively, since the Company made payments to the Aluminum Extrusions segment to fund its working capital during the intervening period.

The financial position data as of December 31, 2020 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, 2020 (“2020 Form 10-K”) but does not include all disclosures required by GAAP.

5 unchanged sentences

The sale did not represent a strategic shift nor did it have a major effect on the Company's historical and ongoing operations, thus all financial information for Bright View Technologies has been presented in continuing operations.

The results of operations for the three and six months ended June 30, 2021 , are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three and nine months ended September 30, 2021, are not necessarily indicative of the results to be expected for the full year.

Accounting Standards Adopted:

7 unchanged sentences

Personal Care Films 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 six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,

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, 2021 and 2020:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 2021 2020

11 unchanged sentences

— — ( 1,118 ) —

Held for sale impairment loss on divested assets — 45,054 — 45,054

Total 33 82,412 133 156,600

3 unchanged sentences

(a) Represents a net increase to the estimated fair value of Personal Care Films primarily due to lower costs associated with IT transition-related services to provide the seller developed assets, which did not exist at the time of the sale, to support the seller's IT infrastructure.

The assets and liabilities of the discontinued operations reflected in the consolidated balance sheets as of June 30, 2021 and December 31, 2020, respectively, were as follows:

June 30, December 31,

The assets and liabilities of the discontinued operations reflected in the consolidated balance sheets as of September 30, 2021 and December 31, 2020, respectively, were as follows:

September 30, December 31,

(In thousands) 2021 2020

5 unchanged sentences

$ 370 $ 7,521

(a) The consolidated balance sheet of discontinued operations as of June 30, 2021 includes $ 0.2 million of other receivables related to the settlement of customary post-closing adjustments, accrued severance of $ 0.6 million, and other miscellaneous accrued expenses of $ 0.4 million.

(a) The consolidated balance sheet of discontinued operations as of September 30, 2021 includes $ 0.2 million of other receivables related to the settlement of customary post-closing adjustments, accrued severance of $ 0.3 million, and other miscellaneous accrued expenses of $ 0.1 million.

The consolidated balance sheet of discontinued operations as of December 31, 2020 includes $ 0.4 million of other receivables related to the settlement of customary post-closing adjustments, deferred assets of $ 0.9 million and deferred obligations of $ 5.3 million related to transition services, accrued severance of $ 2.1 million, and other miscellaneous accrued expenses of $ 0.2 million.

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

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2021 2020

1 unchanged sentence

Depreciation and amortization $ — $ 6,625

Asset impairment — 334

Held for sale impairment loss on divested assets — 45,054

Other ( 1,118 ) —

4 unchanged sentences

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 Films component of its PE Films segment.

During the third quarter of 2020, the held for sale criteria was met since the Company expected 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 Personal Care Films.

During the third quarter of 2020, the disposal group carrying value of $ 4.6 million was reported in "Prepaid expenses and other" in the consolidated balance sheet as the held for sale criteria was met.

During the third quarter of 2021, the Company completed the sale of the remaining assets in Lake Zurich, Illinois resulting in total cash proceeds of $ 4.7 million.

3 LONG-LIVED ASSETS & GOODWILL IMPAIRMENT

1 unchanged sentence

Long-lived assets consist primarily of buildings, machinery and equipment.

During the three months ended June 30, 2021 , the Company did not identify any indicators of impairment for long-lived assets.

During the three months ended September 30, 2021, the Company did not identify any indicators of impairment for long-lived assets.

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 during the three months ended June 30, 2021 and 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.

The Company evaluated whether triggering events occurred during the three months ended September 30, 2021 and 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.

During the first three months of 2020, the Company determined that trigger events did occur for the Aluminum Extrusions’ reporting units created as a result of acquisitions in 2012 (“AACOA”) and in 2017 (“Futura”).

1 unchanged sentence

No impairment was identified for Futura.

The Company continues to monitor developments related to the coronavirus ("COVID-19") pandemic and may perform updated analyses during 2021 as necessary.

The Company continues to monitor developments related to the coronavirus ("COVID-19") pandemic and may perform updated event-driven analyses during 2021, as necessary.

4 INVENTORIES

The components of inventories are as follows:

(In thousands) June 30, 2021 December 31, 2020

(In thousands) September 30, 2021 December 31, 2020

Finished goods $ 21,614 $ 15,251

6 unchanged sentences

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 Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(In thousands) 2021 2020 2021 2020

3 unchanged sentences

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 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 996,400 and 703,958 , respectively, for the three and six months ended June 30, 2021 .

The Company had a net loss from continuing operations for the six months ended June 30, 2020, so there was no dilutive impact for such shares.

For the three months ended June 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 1,567,709 .

If the Company had reported net income from continuing operations for the six months ended June 30, 2020, average out-of-the-money options to purchase shares that would have been excluded from the calculation of incremental shares attributable to stock options and restricted stock would have been 1,125,203 .

The 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 2,433,213 and 1,280,376 , respectively, for the three and nine months ended September 30, 2021.

The Company had a net loss from continuing operations for the three and nine months ended September 30, 2020, so there was 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.

6 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the after-tax changes in accumulated other comprehensive income (loss) for the six months ended June 30, 2021 :

(In thousands) Foreign

adjustment Gain (loss) on

instruments Pension and other post-retirement benefit adjustments Total

Beginning balance, January 1, 2021 $ ( 84,149 ) $ 2,264 $ ( 96,519 ) $ ( 178,404 )

Other comprehensive income (loss) before reclassifications 1,345 2,724 — 4,069

Amounts reclassified from accumulated other comprehensive income (loss) — ( 1,492 ) 6,637 5,145

Net other comprehensive income (loss) - current period 1,345 1,232 6,637 9,214

Ending balance, June 30, 2021 $ ( 82,804 ) $ 3,496 $ ( 89,882 ) $ ( 169,190 )

The following table summarizes the after-tax changes in accumulated other comprehensive income (loss) for the six months ended June 30, 2020:

(In thousands) Foreign

adjustment Gain (loss) on

instruments Pension and other post-retirement benefit adjustments Total

Beginning balance, January 1, 2020 $ ( 100,663 ) $ ( 1,307 ) $ ( 95,681 ) $ ( 197,651 )

Other comprehensive income (loss) before reclassifications ( 12,003 ) ( 6,242 ) — ( 18,245 )

Amounts reclassified from accumulated other comprehensive income (loss) — 3,725 5,862 9,587

Net other comprehensive income (loss) - current period ( 12,003 ) ( 2,517 ) 5,862 ( 8,658 )

Ending balance, June 30, 2020 $ ( 112,666 ) $ ( 3,824 ) $ ( 89,819 ) $ ( 206,309 )

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income (loss) for the three months ended June 30, 2021 are summarized as follows:

(In thousands) Amount reclassified from other comprehensive income (loss) Location of gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (loss)

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income (loss) for the three months ended September 30, 2021 are summarized as follows:

(In thousands) Amount reclassified from accumulated other comprehensive income (loss) Location of gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (loss)

Gain (loss) on derivative financial instruments:

Aluminum future contracts, before taxes $ 1,372 Cost of sales

Aluminum future contracts, before taxes $ 2,160 Cost of goods sold

Foreign currency forward contracts, before taxes ( 34 ) Selling, general & administrative

Foreign currency forward contracts, before taxes 16 Cost of sales

Foreign currency forward contracts, before taxes 15 Cost of goods sold

Total, before taxes 2,141

6 unchanged sentences

(a) This component of accumulated other comprehensive income (loss) is included in the computation of net periodic pension cost (see Note 9 for additional detail).

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income (loss) for the six months ended June 30, 2021 are summarized as follows:

(In thousands) Amount reclassified from other comprehensive income (loss) Location of gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (loss)

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income (loss) for the nine months ended September 30, 2021 are summarized as follows:

(In thousands) Amount reclassified from accumulated other comprehensive income (loss) Location of gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (loss)

Gain (loss) on derivative financial instruments:

Aluminum future contracts, before taxes $ 2,012 Cost of sales

Aluminum future contracts, before taxes $ 4,172 Cost of goods sold

Foreign currency forward contracts, before taxes ( 183 ) Selling, general & administrative

Foreign currency forward contracts, before taxes 33 Cost of sales

Foreign currency forward contracts, before taxes 48 Cost of goods sold

Total, before taxes 4,037

6 unchanged sentences

(a) This component of accumulated other comprehensive income (loss) is included in the computation of net periodic pension cost (see Note 9 for additional detail).

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income for the three months ended June 30, 2020 are summarized as follows:

(In thousands) Amount reclassified from other comprehensive income (loss) Location of gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (loss)

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income for the three months ended September 30, 2020 are summarized as follows:

(In thousands) Amount reclassified from accumulated other comprehensive income (loss) Location of gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (loss)

Gain (loss) on derivative financial instruments:

Aluminum future contracts, before taxes $ ( 1,551 ) Cost of sales

Aluminum future contracts, before taxes $ ( 575 ) Cost of goods sold

Foreign currency forward contracts, before taxes ( 1,767 ) Selling, general & administrative

Foreign currency forward contracts, before taxes 16 Cost of sales

Foreign currency forward contracts, before taxes 15 Cost of goods sold

Total, before taxes ( 2,327 )

6 unchanged sentences

(a) This component of accumulated other comprehensive income (loss) is included in the computation of net periodic pension cost (see Note 9 for additional detail).

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income for the six months ended June 30, 2020 are summarized as follows:

(In thousands) Amount reclassified from other comprehensive income (loss) Location of gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (loss)

Reclassifications of balances out of accumulated other comprehensive income (loss) into net income for the nine months ended September 30, 2020 are summarized as follows:

(In thousands) Amount reclassified from accumulated other comprehensive income (loss) Location of gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (loss)

Gain (loss) on derivative financial instruments:

Aluminum future contracts, before taxes $ ( 2,191 ) Cost of sales

Aluminum future contracts, before taxes $ ( 2,766 ) Cost of goods sold

Foreign currency forward contracts, before taxes ( 4,359 ) Selling, general & administrative

Foreign currency forward contracts, before taxes 31 Cost of sales

Foreign currency forward contracts, before taxes 46 Cost of goods sold

Total, before taxes ( 7,079 )

7 unchanged sentences

7 INVESTMENTS

T he Company's aggregate investment of $ 7.5 million, for an approximate 19 % ownership interest, in kaleo, Inc.

The Company's aggregate investment of $ 7.5 million, for an approximate 18 % ownership interest, in kaleo, Inc.

(“kaléo”), a privately held specialty pharmaceutical company dedicated to building innovative solutions for serious and life-threatening medical conditions, is accounted for under the fair value method in the condensed consolidated financial statements.

The estimated fair value of the Company’s investment was $ 35.2 million as of June 30, 2021 and $ 34.6 million as of December 31, 2020.

The estimated fair value of the Company’s investment was $35.5 million as of September 30, 2021 and $34.6 million as of December 31, 2020.

kaléo’s stock is not publicly traded.

1 unchanged sentence

Amounts recognized associated with the Company’s investment in kaléo are included in “Other income (expense), net” in the consolidated statements of income and separately stated in the net sales and earnings before interest, taxes, depreciation and amortization ("EBITDA") from ongoing operations by segment table in Note 11.

The Company estimated the fair value of its investment in kaléo at June 30, 2021 by:

(i) computing the weighted average estimated enterprise value (“EV”) utilizing both the discounted cash flow method (the “DCF Method”) and the application of a market multiple to EBITDA (the “EBITDA Multiple Method”), (ii) applying adjustments for any surplus or deficient working capital and estimates of contingent liabilities, (iii) adding cash and cash equivalents, (iv) subtracting interest-bearing debt, (v) subtracting a private company liquidity discount estimated at approximately 20 % at June 30, 2021 (consistent with 20 % at both December 31, 2020 and June 30, 2020) of the net result of (i) through (iv), and (vi) applying liquidation preferences and fully diluted ownership percentages to the estimated equity value computed in (i) through (v).

The Company’s estimate of kaléo’s EV as of June 30, 2021 and December 31, 2020 was determined by weighting the EBITDA Multiple Method by 20 % and the DCF Method by 80 %.

The Company estimated the fair value of its investment in kaléo at September 30, 2021 by:

(i) computing the weighted average estimated enterprise value (“EV”) utilizing both the discounted cash flow method (the “DCF Method”) and the application of a market multiple to EBITDA (the “EBITDA Multiple Method”), (ii) applying adjustments for any surplus or deficient working capital and estimates of contingent liabilities, (iii) adding cash and cash equivalents, (iv) subtracting interest-bearing debt, (v) subtracting a private company liquidity discount estimated at approximately 20 % at September 30, 2021 (consistent with 20 % at both December 31, 2020 and September 30, 2020) of the net result of (i) through (iv), and (vi) applying liquidation preferences and fully diluted ownership percentages to the estimated equity value computed in (i) through (v).

The Company’s estimate of kaléo’s EV as of September 30, 2021 and December 31, 2020 was determined by weighting the EBITDA Multiple Method by 20 % and the DCF Method by 80 %.

A heavier weighting towards the DCF Method was used since kaléo’s projections better reflect ongoing pricing pressures and expected changes in market access.

1 unchanged sentence

In addition, there are various regulatory and legal enforcement efforts, including an ongoing Department of Justice investigation related to kaléo’s discontinued Evzio business, which could have a material adverse effect on kaléo’s business that require assessment in any valuation method applied.

8 FINANCIAL INSTRUMENTS

8 DERIVATIVES

Tredegar uses derivative financial instruments for the purpose of hedging margin exposure from fixed-price forward sales contracts in Aluminum Extrusions and exposure from currency volatility that exists as part of ongoing business operations in Flexible Packaging Films.

3 unchanged sentences

In the normal course of business, Aluminum Extrusions enters into fixed-price forward sales contracts with certain customers for the future sale of fixed quantities of aluminum extrusions at scheduled intervals.

In order to hedge margin exposure created from the fixing of future sales prices relative to volatile raw material (aluminum) costs, Aluminum Extrusions enters into a combination of forward purchase commitments and futures contracts to acquire or hedge aluminum, based on the scheduled purchases for the firm sales commitments.

In order to hedge margin

exposure created from the fixing of future sales prices relative to volatile raw material (aluminum) costs, Aluminum Extrusions enters into a combination of forward purchase commitments and futures contracts to acquire or hedge aluminum, based on the scheduled purchases for the firm sales commitments.

The fixed-price firm sales commitments and related hedging instruments generally have durations of not more than 12 months.

The notional amount of aluminum futures contracts that hedged future purchases of aluminum to meet fixed-price forward sales contract obligations was $ 13.9 million ( 12.4 million pounds of aluminum) at June 30, 2021 and $ 12.1 million ( 13.0 million pounds of aluminum) at December 31, 2020.

The table below summarizes the location and gross amounts of aluminum futures contract fair values (Level 2) in the consolidated balance sheets as of June 30, 2021 and December 31, 2020:

June 30, 2021 December 31, 2020

The notional amount of aluminum futures contracts that hedged future purchases of aluminum to meet fixed-price forward sales contract obligations was $ 18.7 million ( 13.9 million pounds of aluminum) at September 30, 2021 and $ 12.1 million ( 13.0 million pounds of aluminum) at December 31, 2020.

The table below summarizes the location and gross amounts of aluminum futures contract fair values (Level 2) in the consolidated balance sheets as of September 30, 2021 and December 31, 2020:

September 30, 2021 December 31, 2020

(In thousands) Balance Sheet

16 unchanged sentences

R$ Operating Cost Exposure Hedged

$ 1,400 5.5100 R$ 7,714 Oct-21 78 %

$ 1,495 5.5224 R$ 8,256 Nov-21 83 %

$ 1,170 5.5060 R$ 6,442 Dec-21 65 %

$ 1,677 5.3360 R$ 8,948 Jan-22 72 %

$ 1,751 5.3631 R$ 9,391 Feb-22 75 %

$ 1,662 5.3905 R$ 8,959 Mar-22 72 %

$ 1,615 5.4247 R$ 8,761 Apr-22 70 %

$ 1,647 5.4545 R$ 8,984 May-22 72 %

$ 1,596 5.4890 R$ 8,760 Jun-22 70 %

$ 1,719 5.5200 R$ 9,489 Jul-22 76 %

7 unchanged sentences

Dollars over that period.

By changing the currency risk associated with these U.S.

By changing the currency risk associated with

Dollar sales, the derivatives have the effect of offsetting operating costs quoted or priced in Brazilian Real and decreasing the net exposure to Brazilian Real in the consolidated statements of income.

Pre-tax accumulated losses of $ 0.8 million related to the net fair value of the open forward contracts is reported in accumulated other comprehensive income (loss) as of June 30, 2021 .

The table below summarizes the location and gross amounts of foreign currency forward contract fair values (Level 2) in the consolidated balance sheets as of June 30, 2021 and December 31, 2020:

June 30, 2021 December 31, 2020

Pre-tax accumulated gains of $ 0.9 million related to the net fair value of the open forward contracts is reported in accumulated other comprehensive income (loss) as of September 30, 2021.

The table below summarizes the location and gross amounts of foreign currency forward contract fair values (Level 2) in the consolidated balance sheets as of September 30, 2021 and December 31, 2020:

September 30, 2021 December 31, 2020

(In thousands) Balance Sheet

12 unchanged sentences

The counterparties to the Company’s foreign currency cash flow hedge contracts are major financial institutions.

The pretax effect on net income (loss) and other comprehensive income (loss) of derivative instruments classified as cash flow hedges and described in the previous paragraphs for the three and six month periods ended June 30, 2021 and 2020 is summarized in the table below:

The pretax effect on net income (loss) and other comprehensive income (loss) of derivative instruments classified as cash flow hedges and described in the previous paragraphs for the three and nine month periods ended September 30, 2021 and 2020 is summarized in the table below:

Cash Flow Derivative Hedges

Three Months Ended June 30,

Three Months Ended September 30,

Aluminum Futures Contracts Foreign Currency Forwards

1 unchanged sentence

Amount of pretax gain (loss) recognized in other comprehensive income (loss) $ 2,919 $ 1,158 $ — $ ( 1,670 ) $ — $ ( 655 )

Location of gain (loss) reclassified from accumulated other comprehensive income (loss) into net income (effective portion) Cost of

sales Cost of

sales Selling, general & admin Cost of

sales Selling, general & admin

Location of gain (loss) reclassified from accumulated other comprehensive income (loss) into net income (effective portion) Cost of goods sold Cost of goods sold Cost of goods sold Selling, general & admin Cost of goods sold Selling, general & admin

Amount of pretax gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (effective portion) $ 2,160 $ ( 575 ) $ 15 $ ( 34 ) $ 15 $ ( 1,767 )

Six Months Ended June 30,

Nine Months Ended September 30,

Aluminum Futures Contracts Foreign Currency Forwards

3 unchanged sentences

Location of gain (loss) reclassified from accumulated other comprehensive income (loss) into net income (effective portion)

sales Cost of

sales Selling, general & admin Cost of

sales Selling, general & admin

Cost of goods sold Cost of goods sold Cost of goods sold Selling, general & admin Cost of goods sold Selling, general & admin

Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (effective portion)

$ 4,172 $ ( 2,766 ) $ 48 $ ( 183 ) $ 46 $ ( 4,359 )

As of June 30, 2021 , the Company expects $ 2.4 million of unrealized after-tax gains on derivative instruments reported in accumulated other comprehensive income (loss) to be reclassified to earnings within the next 12 months.

For the three and six month periods ended June 30, 2021 and 2020, net gains or losses realized, from previously unrealized net gains or losses on hedges that had been discontinued, were not material.

As of September 30, 2021, the Company expects $ 2.9 million of unrealized after-tax gains on Aluminum Extrusions derivative instruments reported in accumulated other comprehensive income (loss) to be reclassified to earnings within the next 12 months.

For the three and nine month periods ended September 30, 2021 and 2020, net gains or losses realized, from previously unrealized net gains or losses on hedges that had been discontinued, were not material.

9 PENSION AND OTHER POSTRETIREMENT BENEFITS

1 unchanged sentence

As of January 31, 2018, the plan no longer accrued benefits associated with crediting employees for service, thereby freezing all future benefits under the plan.

The components of net periodic benefit cost for the pension and other postretirement benefit programs reflected in the consolidated statements of income for the three and six months ended June 30, 2021 and 2020, are shown below:

The components of net periodic benefit cost for the pension and other postretirement benefit programs reflected in the consolidated statements of income for the three and nine months ended September 30, 2021 and 2020, are shown below:

Pension Benefits Other Post-Retirement Benefits

Three Months Ended June 30, Three Months Ended June 30,

Three Months Ended September 30, Three Months Ended September 30,

(In thousands) 2021 2020 2021 2020

5 unchanged sentences

Pension Benefits Other Post-Retirement Benefits

Six Months Ended June 30, Six Months Ended June 30,

Nine Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 2021 2020

5 unchanged sentences

Net periodic benefit cost $ 10,517 $ 10,634 $ 105 $ 67

Pension and other postretirement liabilities were $ 105.9 million and $ 111.3 million at June 30, 2021 and December 31, 2020, respectively ($ 0.7 million included in “Accrued expenses” at June 30, 2021 and December 31, 2020, with the remainder included in “Pension and other postretirement benefit obligations, net” in the consolidated balance sheets).

Pension and other postretirement liabilities were $ 103.7 million and $ 111.3 million at September 30, 2021 and December 31, 2020, respectively ($ 0.7 million included in “Accrued expenses” at September 30, 2021 and December 31, 2020, with the remainder included in “Pension and other postretirement benefit obligations, net” in the consolidated balance sheets).

As of December 31, 2020, the required minimum pension contributions were $ 11.7 million for 2021.

Contributions to the pension plan during the first six months of 2021 were $ 3.8 million.

Contributions to the pension plan during the first nine months of 2021 were $ 5.1 million.

In addition, the United States government enacted the American Rescue Plan Act of 2021 in March 2021, which, among other impacts, has reduced the Company's 2021 required minimum pension contributions to zero as a result of the Company's election of the interest rate relief used in the present value of the pension obligation and extension of the shortfall amortization period that is used to determine the minimum pension funding requirements.

3 unchanged sentences

Other income (expense), net consists of the following:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 2021 2020

2 unchanged sentences

One-time tax credit in Brazil for unemployment/social security insurance non-income taxes resulting from a favorable decision by Brazil’s Supreme Court regarding the calculation of such tax (b)

8,486 — 8,486 —

Transition service fees, net of corporate costs associated with the divested Personal Care business ( 85 ) ( 1,130 ) 486 ( 1,130 )

3 unchanged sentences

( 6 ) ( 115 ) ( 517 ) ( 296 )

Gain associated with the sale of Lake Zurich manufacturing facility assets 377 — 377 —

Other ( 15 ) 5 ( 163 ) 122

Total $ 391 $ ( 37,934 ) $ 9,272 $ ( 63,898 )

(a) The gain in the first six months of 2021 includes a $ 0.3 million dividend received from kaléo in the first quarter of 2021.

(a) The gain in the first nine months of 2021 includes a $ 0.3 million dividend received from kaléo in the first quarter of 2021.

(b) See Note 13 for additional information.

1 unchanged sentence

(d) Represents the unrealized loss on the Company’s investment in Harbinger Capital Partners Special Situations Fund L.P.

that had a fair value of $ 0.2 million and $ 0.9 million as of June 30, 2021 and 2020, respectively, and $ 0.7 million as of December 31, 2020 reported in "Other assets" in the condensed consolidated balance sheet.

that had a fair value of $ 0.2 million and $ 0.8 million as of September 30, 2021 and 2020, respectively, and $ 0.7 million as of December 31, 2020 reported in "Other assets" in the condensed consolidated balance sheet.

11 BUSINESS SEGMENTS

9 unchanged sentences

This measure is separately included in the financial information regularly provided to the CODM.

The following table presents net sales and EBITDA from ongoing operations by segment for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,

The following table presents net sales and EBITDA from ongoing operations by segment for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 2021 2020

35 unchanged sentences

Net income (loss) $ 6,203 $ ( 65,213 ) $ 36,472 $ ( 76,339 )

The following table presents identifiable assets by segment at June 30, 2021 and December 31, 2020:

(In thousands) June 30, 2021 December 31, 2020

The following table presents identifiable assets by segment at September 30, 2021 and December 31, 2020:

(In thousands) September 30, 2021 December 31, 2020

Aluminum Extrusions $ 274,183 $ 244,560

6 unchanged sentences

Total $ 545,834 $ 514,870

The following tables disaggregate the Company’s revenue by geographic area and product group for the three and six months ended June 30, 2021 and 2020:

The following tables disaggregate the Company’s revenue by geographic area and product group for the three and nine months ended September 30, 2021 and 2020:

Net Sales by Geographic Area (a)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 2021 2020

12 unchanged sentences

Amounts associated with this intercompany tolling arrangement are reported in the table above as export sales from the U.S.

to Asia, and include net sales of $ 10.8 million and $ 10.0 million in the second quarters of 2021 and 2020, respectively, and $ 17.7 million and $ 19.3 million in the first six months of 2021 and 2020, respectively.

to Asia, and include net sales of $ 7.4 million and $ 5.9 million in the third quarters of 2021 and 2020, respectively, and $ 25.0 million and $ 25.1 million in the first nine months of 2021 and 2020, respectively.

Net Sales by Product Group

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 2021 2020

15 unchanged sentences

12 INCOME TAXES

Tredegar recorded tax expense of $ 8.8 million on pretax income from continuing operations of $ 39.2 million in the first six months of 2021.

Therefore, the effective tax rate in the first six months of 2021 was 22.5 %, compared to 27.1 % in the first six months of 2020.

The quarterly effective tax rate is an estimate based on a proration of the components of the Company’s estimated annual effective tax rate and discrete items recorded during the first six months of the year.

Tredegar recorded tax expense of $ 10.7 million pretax income from continuing operations of $ 47.3 million in the first nine months of 2021.

Therefore, the effective tax rate in the first nine months of 2021 was 22.7 %, compared to 26.2 % in the first nine months of 2020.

The significant differences between the U.S.

federal statutory rate and the effective income tax rate for the six months ended June 30, 2021 and 2020 are as follows:

federal statutory rate and the effective income tax rate for the nine months ended September 30, 2021 and 2020 are as follows:

(In thousands, except percentages) 2021 2020

Six Months Ended June 30, Amount % Amount %

Nine Months Ended September 30, Amount % Amount %

Income tax (benefit) expense at federal statutory rate $ 9,934 21.0 % $ ( 6,639 ) 21.0 %

20 unchanged sentences

The incentives have been granted for a 13-year period, from the commencement date of January 1, 2015.

The benefit from the tax incentives was $ 5.9 million and $ 3.0 million in the first six months of 2021 and 2020, respectively.

The benefit from the tax incentives was $ 8.8 million and $ 3.4 million in the first nine months of 2021 and 2020, respectively.

Tredegar and its subsidiaries file income tax returns in the U.S., various states, and jurisdictions outside the U.S.

5 unchanged sentences

13 ACCOUNTS AND OTHER RECEIVABLES

As of June 30, 2021 and December 31, 2020, accounts receivable and other receivables include the following:

June 30, December 31,

As of September 30, 2021 and December 31, 2020, accounts receivable and other receivables include the following:

September 30, December 31,

(In thousands) 2021 2020

4 unchanged sentences

Total accounts and other receivables, net $ 97,185 $ 86,327

As of June 30, 2021, other receivables include $ 5.6 million related to a one-time tax credit in Brazil for unemployment/social security insurance non-income taxes ("PIS/COFINS") that is available and expected to be applied to future required Brazilian federal tax payments in 2021.

As of September 30, 2021, other receivables include $ 1.5 million related to a one-time tax credit in Brazil for unemployment/social security insurance non-income taxes ("PIS/COFINS") that is available and expected to be applied to future required Brazilian federal tax payments in 2021.

In May 2021, the Brazil Supreme Court ruled in a leading case related to the amount of Brazilian value-added tax to exclude from the calculation of PIS/COFINS.

As a result, in the second quarter of 2021, the Company recorded a pre-tax gain of $ 8.5 million for certain excess PIS/COFINS paid from 2003 to 2021, plus applicable interest, which the Company expects to apply to future required Brazilian federal tax payments.

As a result, in the second quarter of 2021, the Company recorded a pre-tax gain of $ 8.5 million for certain excess PIS/COFINS paid from 2003 to 2021, that included applicable interest, which the Company expects to apply to future required Brazilian federal tax payments.

The pretax gain was recorded in “Other income (expense), net” in the condensed consolidated statements of income.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements