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Item 9A. Controls and Procedures

2024-03-15 compared with 2023-03-16 · 413 added, 415 removed, 1096 unchanged (43% of the section changed)

CONTROLS AND PROCEDURES

On November 1, 2018, the Company filed a Current Report on Form 8-K (the “November 2018 Form 8-K”) to disclose certain material weaknesses in internal control over financial reporting.

For further information, see the November 2018 Form 8-K and Item 4.

“Controls and Procedures” of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018.

As of December 31, 2022, the Company continues to revise and execute management’s remediation plan, including the implementation of the new and revised internal controls over financial reporting.

The results of management’s testing of the design, implementation and operating effectiveness of controls identified that the Company continued to have material weaknesses in its internal control over financial reporting as of December 31, 2022;

however, the material weaknesses existing as of December 31, 2022 were limited to certain discrete items within the previously identified material weaknesses.

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Form 10-K, pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company carried out an evaluation with the participation of its management, including its Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2023.

Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, because of the material weaknesses in internal control over financial reporting discussed below, the Company’s disclosure controls and procedures were not effective as of December 31, 2022, to ensure:

(i) that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (ii) that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2023, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting using the criteria in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “2013 COSO Framework”).

Based on management’s assessment, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2022.

The Company did not sufficiently attract, develop, and retain competent resources to fulfill internal control responsibilities and did not have an effective information and communication process that identified and assessed the source of and controls necessary to ensure the reliability of information used in financial reporting.

Based on management’s assessment, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal control over financial reporting was effective as of December 31, 2023.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included in Item 15 “ Exhibits and Financial Statement Schedules ”.

Remediation of Previously Disclosed Material Weaknesses

As previously disclosed under “Item 9a – Controls and Procedures” in our annual report on Form 10-K for the period ended December 31, 2022, the Company did not sufficiently attract, develop, and retain competent resources to fulfill internal control responsibilities and did not have an effective information and communication process that identified and assessed the source of and controls necessary to ensure the reliability of information used in financial reporting.

As a consequence of these material weaknesses, the Company did not effectively design, implement and operate process-level controls across its financial reporting processes.

While these material weaknesses did not result in material misstatements of the Company’s consolidated financial statements as of and for the year ended December 31, 2022, these material weaknesses create a reasonable possibility that a material misstatement of account balances or disclosures in annual or interim consolidated financial statements may not be prevented or detected in a timely manner.

Accordingly, the Company concluded that the deficiencies represent material weaknesses in its internal control over financial reporting and its internal control over financial reporting was not effective as of December 31, 2022.

The Company’s independent registered public accounting firm, KPMG LLP, which audited the 2022 consolidated financial statements included in this Form 10-K, has expressed an adverse opinion on the operating effectiveness of the Company's internal control over financial reporting.

KPMG LLP’s report appears on page 42 of this Form 10-K.

Remediation Plan and Efforts to Address the Identified Material Weaknesses

With the oversight of the Audit Committee of the Board of Directors (the “Audit Committee”), the Company commenced remediation efforts in the first quarter of 2019 pursuant to the original six step remediation plan that was designed with the assistance of management’s outside consultant, an internationally recognized accounting firm.

As of December 31, 2022, the Company continues to revise and execute management’s remediation plan to implement new and revised internal controls over financial reporting.

Since 2019, significant resources have been invested in the remediation efforts principally related to:

• the assistance from management’s outside consultant;

• the design of internal controls for various antiquated information technology systems that lead to highly manual processes supporting financial reporting objectives;

• the hiring of additional resources with technical internal control over financial reporting expertise;

• the establishment and execution of training programs for management on relevant internal control over financial reporting matters.

In addition, the Aluminum Extrusions business commenced the implementation of a new Board-approved enterprise resource planning and manufacturing execution systems (“ERP/MES”) in the first quarter of 2022, which is expected to cost approximately $30 million over a two-year time span.

The implementation will benefit the Aluminum Extrusion internal control environment by standardizing process-level controls and general information technology controls and significantly reduce the manual processes across the organization by replacing various antiquated information technology systems.

While progress has been made since 2019, including the remediation of a significant number of process-level control deficiencies throughout our financial reporting processes, the Company experienced significant turnover in positions relevant to its internal control over financial reporting during 2021 and 2022 that impacted the effectiveness of prior training programs and management’s ability to implement control activities that operated for a sufficient period of time to allow management, through testing, to conclude that the control activities were operating effectively during 2022.

To remediate the material weaknesses described above, the Company, with the oversight of the Audit Committee and the assistance of management’s outside consultant, has continued to revise its remediation strategy with the following remediation steps:

• Continue to hire, train and retain individuals with appropriate skills and experience related to designing, operating and documenting internal control over financial reporting;

• Continue to enhance controls as needed as the Company remediates control deficiencies identified;

• Develop a targeted training program to educate control owners on the principles and requirements of internal control activities associated with the material weaknesses above including, but not limited to;

◦ Addressing the reliability of the underlying information used in the performance of internal control activities;

◦ Retaining adequate documentary evidence for internal control activities, including the retention of evidence to support the precision of review and evidence of review procedures performed to demonstrate effective design, implementation and operation of such controls;

◦ Ensuring timely and consistent performance of the controls as designed.

The material weaknesses cannot be considered remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

The Company is committed to the improvement of its internal control over financial reporting and management continues to work with its outside consultant to assist in those efforts, as necessary.

The Company continues to monitor the impact of employee turnover and other external factors on its remediation plan and its assessment of internal control over financial reporting.

The Company cannot assure you when it will remediate the identified material weaknesses, nor can it be certain whether additional actions will be required.

Moreover, the Company cannot assure you that additional material weaknesses will not arise in the future.

“Risk Factors” of this Form 10-K for risks and uncertainties associated with management’s report on internal control over financial reporting as of and for the year ended December 31, 2022.

During the year ended December 31, 2023, the Company, with the oversight of the Audit Committee of our Board of Directors, continued to design and implement measures pursuant to management’s overall internal controls over financial reporting remediation plan and also completed testing of the design and operating effectiveness of all remediated controls.

The remediation efforts to date included the following:

• Performed walkthroughs of the Company’s financial reporting processes including identifying all information used within the Company’s control environment;

• Completed a comprehensive review of, and update to, the documentation of relevant processes with respect to the Company’s internal control over financial reporting;

• Developed internal control remediation plans to enhance controls for deficiencies associated with the material weaknesses above, including an assessment of personnel skills and experience related to the design and operation of internal control activities;

• Implemented all new and revised internal controls to address the previously identified deficiencies associated with the material weaknesses above;

• Expanded the internal control compliance department with personnel who have appropriate internal control experience and identified resources for control owner positions that had previously experienced turnover;

• Executed a targeted training program to educate control owners on the requirements of internal control activities, including maintaining adequate documentary evidence for internal control activities.

Based on management’s evaluation of the effectiveness of the Company’s internal controls as of December 31, 2023, including newly remediated controls, management concluded that the Company’s internal control over financial reporting framework was effectively designed and operated effectively for a sufficient period of time to enable us to conclude that all previously identified material weaknesses have been remediated as of December 31, 2023.

Changes in Internal Control Over Financial Reporting

The Company is in the process of implementing certain changes in its internal controls to remediate the material weaknesses described above.

Except as noted above with respect to the completion of certain steps in the remediation plan, there has been no change in the Company’s internal control over financial reporting during the quarter ended December 31, 2022, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

Except as noted above with respect to the completion of the steps in the remediation plan, there has been no change in the Company’s internal control over financial reporting during the year ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

OTHER INFORMATION

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Steitz was elected President and Chief Executive Officer effective March 19, 2019.

He previously served as President and Chief Executive Officer of Addivant Corporation, a leading global supplier of antioxidants, intermediates, inhibitors, modifiers, UV stabilizers and other additives to the plastic and rubber industries, from March 2015 until January 2019, as President and Chief Operating Officer of PQ Corporation, a leading worldwide producer of specialty inorganic performance chemicals and catalysts, from October 2013 until March 2015, as President and Chief Executive Officer of Avantor Performance Materials, a global supplier of ultra-high-purity life sciences materials with strict regulatory and performance specifications, from September 2012 until September 2013, as President and Chief Operating Officer of Albemarle Corporation, a global specialty chemicals company, from March 2012 until August 2012, and as Chief Operating Officer and Executive Vice President of Albemarle from April 2007 until March 2012.

He previously served as President and Chief Executive Officer of Addivant Corporation, a leading global supplier of antioxidants, intermediates, inhibitors, modifiers, UV stabilizers and other additives to the plastic and rubber industries, from March 2015 until January 2019, as President and Chief Operating Officer of PQ Corporation, a leading worldwide producer of specialty inorganic performance chemicals and catalysts, from October 2013 until March 2015, as President and Chief Executive Officer of Avantor Performance Materials, a global supplier of ultra-high-purity life sciences materials with strict regulatory and performance specifications, from September 2012 through September 2013, as President and Chief Operating Officer of Albemarle Corporation, a global specialty chemicals company, from March 2012 through August 2012, and as Chief Operating Officer and Executive Vice President of Albemarle from April 2007 until March 2012.

Andrew Edwards.

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 16, 2023 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 15, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express

an opinion on these consolidated financial statements based on our audits.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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Goodwill impairment in the Surface Protection reporting unit

As discussed in Notes 1 and 5 to the consolidated financial statements, the Company’s goodwill balance as of December 31, 2022 was $70.6 million, including $57.3 million related to the Surface Protection reporting unit.

As discussed in Notes 1 and 5 to the consolidated financial statements, the Company’s goodwill balance as of December 31, 2023 was $35.7 million, including $22.4 million related to the Surface Protection reporting unit, within the PE Films reportable segment.

The Company assesses goodwill for impairment when events or circumstances indicate that the carrying value may not be recoverable, or, at a minimum, on an annual basis (December 1st of each year).

During the three months ended September 30, 2022, events and circumstances indicated that the Surface Protection reporting unit might be impaired.

The Company performed a quantitative impairment test of the Surface Protection reporting unit as of September 30, 2022, and concluded that no impairment existed.

Management estimated the fair value of the Surface Protection reporting unit based on a weighted average enterprise value utilizing the discounted cash flow and market multiple methods.

We identified the assessment of goodwill impairment in the Surface Protection reporting unit as a critical audit matter.

During the three months ended June 30, 2023 and September 30, 2023, events and circumstances indicated that the Surface Protection reporting unit might be impaired.

The Company performed quantitative impairment tests of the Surface Protection reporting unit as of June 30, 2023 and September 30, 2023, and concluded that an impairment existed as of June 30, 2023 and September 30, 2023.

Management estimated the fair value of the Surface Protection reporting unit utilizing the discounted cash flow method.

We identified the assessment of goodwill impairment of the Surface Protection reporting unit as a critical audit matter.

The estimation of fair value of the reporting unit is complex and includes estimation uncertainties that required a higher level of subjective auditor judgment.

Specifically, the discount rate and the revenue growth projections used in the discounted cash flow method required subjective and challenging auditor judgment as they represented subjective determinations of current and future market and economic conditions.

Additionally, the audit effort associated with the discount rate and the revenue growth projections required specialized skills and knowledge.

Specifically, the revenue growth projections used in the discounted cash flow method required subjective and challenging auditor judgment as they represented subjective determinations of market and economic conditions.

Additionally, the audit effort associated with the discount rate and the revenue growth projections required specialized skills

and knowledge.

Changes to those assumptions could have had a significant effect on the Company’s estimate of the fair value of the reporting unit.

The following are the primary procedures we performed to address this critical audit matter.

We performed sensitivity analyses over the Company’s discount rate and the revenue growth projections to assess their impact on the determination of the fair value of the Surface Protection reporting unit.

We compared the revenue growth projections used in the discounted cash flow model to underlying business strategies and growth plans of the Company.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s goodwill impairment assessment process, including controls over the selection of the discount rate and development of the revenue growth projections.

We assessed the revenue growth projections by considering correspondence with customers, as well as the underlying business strategies and growth plans of the Company.

We also evaluated the revenue growth projections by comparing them to third-party market data and to historical actual results.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

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We have audited Tredegar Corporation and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, because of the effect of the material weaknesses, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income (loss), comprehensive income (loss), cash flows, and shareholders’ equity for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated March 15, 2024 expressed an unqualified opinion on those consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses related to the Company not sufficiently attracting, developing, and retaining competent resources to fulfill internal control responsibilities and not having an effective information and communication process that identified and assessed the source of and controls necessary to ensure the reliability of information used in financial reporting.

As a consequence, the Company did not effectively design, implement and operate process-level controls across its financial reporting processes.

The material weaknesses have been identified and included in management’s assessment.

The material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

Basis for Opinion

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Cash and cash equivalents $ 9,660 $ 19,232

Restricted cash 3,795 —

Accounts and other receivables, net 67,938 84,544

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Prepaid expenses and other 12,065 10,304

Current assets of discontinued operations — 178

Total current assets 176,677 242,584

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Total property, plant and equipment 541,046 531,921

Less accumulated depreciation ( 345,510 ) ( 327,930 )

accumulated depreciation ( 357,591 ) ( 345,510 )

Net property, plant and equipment 183,455 186,411

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Lease liability, short-term 2,107 2,035

ABL revolving facility (matures on June 30, 2026) 126,322 —

Income taxes payable 1,210 1,137

Current liabilities of discontinued operations — 193

Total current liabilities 249,104 149,713

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Shareholders’ equity:

Common stock (no par value):

Authorized 150,000,000 shares;

Issued and outstanding— 34,000,642 shares in 2022 and 33,736,629 in 2021 (including restricted stock)

Common stock, no par value (authorized 150,000,000 shares, issued and outstanding— 34,408,638 shares at December 31, 2023 and 34,000,642 at December 31, 2022)

61,606 58,824

Common stock held in trust for savings restoration plan ( 113,316 shares in 2022 and 108,433 in 2021)

Common stock held in trust for savings restoration plan ( 118,543 shares at December 31, 2023 and 113,316 at December 31, 2022)

( 2,233 ) ( 2,188 )

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2023 2022 2021

(In thousands, except per-share data)

(In thousands, except share data)

Revenues and other:

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Asset impairments and costs associated with exit and disposal activities, net of adjustments 5,167 622 1,127

Pension settlement loss 92,291 — —

Goodwill impairment 34,891 — —

Total 862,708 906,729 779,610

Income (loss) from continuing operations before income taxes 32,770 67,221 ( 25,046 )

Income (loss) before income taxes ( 160,030 ) 32,844 67,110

Income tax expense (benefit) ( 54,125 ) 4,389 9,284

Net income (loss) from continuing operations 28,381 57,937 ( 16,833 )

Income (loss) from discontinued operations, net of tax 74 ( 111 ) ( 58,611 )

Net income (loss) $ ( 105,905 ) $ 28,455 $ 57,826

Earnings (loss) per share:

Continuing operations $ 0.84 $ 1.72 $ ( 0.51 )

Discontinued operations — — ( 1.75 )

Basic earnings (loss) per share $ 0.84 $ 1.72 $ ( 2.26 )

Continuing operations $ 0.84 $ 1.72 $ ( 0.51 )

Discontinued operations — — ( 1.75 )

Diluted earnings (loss) per share $ 0.84 $ 1.72 $ ( 2.26 )

Basic $ ( 3.10 ) $ 0.84 $ 1.72

Diluted $ ( 3.10 ) $ 0.84 $ 1.72

Shares used to compute earnings (loss) per share:

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Other comprehensive income (loss):

Unrealized foreign currency translation adjustment (net of tax expense of $ 290 in 2022, net of tax benefit of $ 365 in 2021 and net of tax benefit of $ 897 in 2020)

Unrealized foreign currency translation adjustment (net of tax expense of $ 469 in 2023, net of tax expense of $ 290 in 2022 and net of tax benefit of $ 365 in 2021)

3,042 ( 287 ) ( 1,643 )

Reclassification of foreign currency translation loss realized on the sale of Personal Care Films — — 25,295

Derivative financial instruments adjustment (net of tax benefit of $ 336 in 2022, net of tax benefit of $ 351 in 2021 and net of tax expense of $ 790 in 2020)

Derivative financial instruments adjustment (net of tax expense of $ 933 in 2023, net of tax benefit of $ 336 in 2022 and net of tax benefit of $ 351 in 2021)

3,281 ( 3,381 ) ( 1,363 )

Pension & other postretirement benefit adjustments:

Net gains (losses) and prior service costs (net of tax benefit of $ 1,400 in 2022, net of tax expense of $ 5,212 in 2021 and net of tax benefit of $ 4,228 in 2020)

Recognition in earnings of actuarial loss for pension settlement (net of tax expense of $ 41,294 )

Net gains (losses) and prior service costs (net of tax expense of $ 422 in 2023, net of tax benefit of $ 1,400 in 2022 and net of tax expense of $ 5,212 in 2021)

1,513 ( 5,064 ) 18,720

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Accrued pension and postretirement benefits 10,844 14,602 14,160

Pension settlement loss 92,291 — —

Stock-based compensation expense 1,978 3,619 5,167

(Gain) loss on investment in kaléo ( 1,406 ) ( 12,462 ) 60,900

Loss on sale of divested businesses — — 52,326

Gain on investment in kaléo ( 262 ) ( 1,406 ) ( 12,462 )

Impairment of Richmond, Virginia Technical Center assets 3,454 — —

Changes in assets and liabilities:

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Other, net 2,827 870 310

Net cash (used in) provided by operating activities ( 20,844 ) 70,583 74,373

Net cash provided by (used in) operating activities 23,995 ( 20,844 ) 70,583

Cash flows from investing activities:

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Proceeds from the sale of kaléo 262 1,406 47,062

Net proceeds on sale of divested businesses — — 56,236

Proceeds from the sale of assets and other — 10 4,749

Net cash (used in) provided by investing activities ( 35,459 ) 24,450 32,881

Net cash provided by (used in) investing activities ( 26,184 ) ( 35,459 ) 24,450

Cash flows from financing activities:

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Effect of exchange rate changes on cash 896 ( 371 ) 484

(Decrease) increase in cash and cash equivalents ( 11,289 ) 18,675 ( 19,576 )

Cash and cash equivalents at beginning of period 30,521 11,846 31,422

Cash and cash equivalents at end of period $ 19,232 $ 30,521 $ 11,846

Increase (decrease) in cash, cash equivalents and restricted cash ( 5,777 ) ( 11,289 ) 18,675

Cash, cash equivalents and restricted cash at beginning of period 19,232 30,521 11,846

Cash, cash equivalents and restricted cash at end of period $ 13,455 $ 19,232 $ 30,521

Supplemental cash flow information:

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Foreign currency translation adjustment — — — — ( 1,643 ) ( 1,643 )

Foreign currency translation loss realized on the sale of Personal Care Films — — — — 25,295 25,295

Derivative financial instruments adjustment — — — — ( 1,363 ) ( 1,363 )

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Repurchase of employee common stock for tax withholdings ( 17,266 ) ( 590 ) — — — ( 590 )

Issued upon exercise of stock options 67,705 915 — — — 915

Tredegar common stock purchased by trust for savings restoration plan — — 48 ( 48 ) — —

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Repurchase of employee common stock for tax withholdings ( 30,751 ) ( 396 ) — — — ( 396 )

Issued upon exercise of stock options 67,705 915 — — — 915

Tredegar common stock purchased by trust for savings restoration plan — — 53 ( 53 ) — —

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Amortization of prior service costs and net gains or losses — — — — 7,065 7,065

Recognition in earnings of net actuarial loss for pension settlement — — — — 50,997 50,997

Cash dividends declared ($ 0.26 per share)

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custom aluminum extrusions for the North American building & construction, automotive and specialty end-use markets;

surface protection films for high-technology applications in the global electronics industry and polyethylene overwrap films used in bathroom tissue and paper towels;

surface protection films for high-technology applications in the global electronics industry and polyethylene overwrap films used for bathroom tissue and paper towels;

and polyester-based films for use in packaging applications that have specialized properties primarily for the Latin American and the United States (“U.S.”) flexible packaging markets.

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More information on the Company’s business segments is provided in Note 13.

On October 30, 2020, the Company completed the sale of its personal care films business (“Personal Care Films”), which was part of its PE Films segment.

The transaction excluded the packaging film lines and related operations located at the Pottsville, Pennsylvania manufacturing site (“Pottsville Packaging”), which are now being reported with the Surface Protection component of PE Films.

Commencing in the third quarter of 2020, all historical results for Personal Care Films have been presented as discontinued operations.

For more information on this transaction, see Note 15.

On September 1, 2023, the Company announced that it had entered into a definitive agreement to sell Terphane to Oben Group (the “Contingent Terphane Sale”).

Completion of the sale is contingent upon the satisfaction of customary closing conditions, including the receipt of certain competition filing approvals by authorities in Brazil and Colombia.

On October 27, 2023, the Company filed the requisite competition forms with the Administrative Council for Economic Defense (“CADE”) in Brazil.

The regulatory review process is ongoing and in line with the Company’s expectations.

CADE’s maximum deadline for completing its review is no later than November 18, 2024.

The merger review regarding the transaction was cleared by the Colombian authority in early February 2024.

Basis of Presentation and Principles of Consolidation.

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The Company operates on a calendar fiscal year except for the Aluminum Extrusions segment, which operates on a 52/53-week fiscal year basis.

References to Aluminum Extrusions for 2022, 2021 and 2020 relate to the 52-week fiscal years ended December 25, 2022, December 26, 2021 and December 27, 2020, respectively.

References to Aluminum Extrusions for 2023, 2022 and 2021 relate to the 53-week fiscal years ended December 31, 2023 and 52-week fiscal years ended December 25, 2022 and December 26, 2021, respectively.

The Company does not believe the impact of reporting the results of this segment in this manner 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 year end to the Company’s calendar year end.

There was no intercompany funding with Aluminum Extrusions between December 25, 2022 and December 31, 2022 nor between December 27, 2021 and December 31, 2021.

There was no intercompany funding with Aluminum Extrusions between December 25, 2022 and December 31, 2022.

Use of Estimates.

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Dollar is the functional currency.

Transaction and remeasurement gains or losses included in income were losses of $ 0.4 million, losses of $ 0.5 million and gains of $ 0.6 million in 2022, 2021 and 2020, respectively.

Transaction and remeasurement gains or losses included in income were gains of $ 0.2 million, losses of $ 0.4 million and losses of $ 0.5 million in 2023, 2022 and 2021, respectively.

These amounts do not include the effects between reporting periods that exchange rate changes have on income of the locations outside the U.S.

that result from translation into U.S.

Cash and Cash Equivalents.

Cash and cash equivalents consist of cash on hand in excess of daily operating requirements and highly liquid investments with original maturities of three months or less.

At December 31, 2022 and 2021, Tredegar had cash and cash equivalents of $ 19.2 million and $ 30.5 million, respectively, including funds held in locations outside the U.S.

Cash, Cash Equivalents and Restricted cash.

Cash, cash equivalents and restricted cash consist of cash on hand in excess of daily operating requirements and highly liquid investments with original maturities of three months or less.

At December 31, 2023 and 2022, Tredegar had cash, cash equivalents and restricted cash of $ 13.5 million and $ 19.2 million, respectively, including funds held in locations outside the U.S.

of $ 9.8 million and $ 10.3 million, respectively.

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The primary objectives of the policy are safety of principal and liquidity.

The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts shown in the consolidated statements of cash flows:

December 31, December 31,

(In thousands) 2023 2022

Cash and cash equivalents $ 9,660 $ 19,232

Restricted cash 3,795 —

Total cash, cash equivalents and restricted cash $ 13,455 $ 19,232

Restricted cash as of December 31, 2023 consists of $3.4 million of receipts that have not yet been applied to the ABL Facility (defined below).

See Note 7 for additional information.

Accounts and Other Receivables, net.

Accounts receivable are stated at the amount invoiced to customers less allowances for doubtful accounts.

Accounts receivable are non-interest bearing and arise from the sale of product to customers under typical industry trade terms.

Notes receivable are immaterial.

Accounts receivables are stated at the amount invoiced to customers less allowances for doubtful accounts.

Accounts receivables are non-interest bearing and arise from the sale of products to customers under typical industry trade terms.

Notes receivables are immaterial.

Past due amounts are determined based on established terms and charged-off when deemed uncollectible.

The allowance for doubtful accounts is determined based on an assessment of probable losses taking into account past due amounts, customer credit profile, historical experience and current economic conditions.

receivables that do not have a specific allowance, the loss rate is computed by segment to apply to the remaining receivables balance, using each segment’s historic loss rate.

For receivables that do not have a specific allowance, the loss rate is computed by segment to apply to the remaining receivables balance, using each segment’s historic loss rate.

Other receivables include value-added taxes related to certain foreign subsidiaries and other miscellaneous receivables due within one year.

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Upon sale, the associated receivable is unrecognized, and the discount is recognized.

For more information on accounts receivable and other receivables, net, see Note 2.

For more information on accounts and other receivables, net, see Note 2.

Inventories are stated at the lower of cost or market, with cost determined using the last in, first out (“LIFO”) method, the weighted average cost or the first in, first out (“FIFO”) method.

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If the Company's Step 0 analysis indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company would perform a quantitative impairment test (“Step 1 analysis”).

During the three months ended September 30, 2022, events and circumstances indicated that the Surface Protection reporting unit (“Surface Protection”), which is also the asset group, might be impaired.

The Company performed a Step 1 analysis and long-lived impairment analysis for Surface Protection and determined that the fair value of Surface Protection exceeded its carrying value by 18.6 %.

Customer demand for electronics has continued to deteriorate since the third quarter of 2022, causing manufacturers in the supply chain to experience reduced capacity utilization and inventory corrections.

In addition, these depressed market conditions, which are expected to continue through the first half of 2023, are adversely impacting mix through reduced sales to our highest value-added customers and products.

Given the uncertain demand for Surface Protections products, it is reasonably possible that the cash flow estimates used in deriving such fair value measurements may change in the future.

During 2023, uncertainty about the timing of a recovery in the consumer electronics market persisted, and manufacturers in the supply chain for consumer electronics continued to experience reduced capacity utilization and inventory corrections.

In light of the limited visibility on the timing of a recovery and the expected adverse future impact to the Surface Protection business, coupled with a cautious outlook on new product development opportunities, the Company performed a Step 1 goodwill impairment analysis, as of June 30, 2023 and September 30, 2023, of the Surface Protection component of PE Films.

The analyses concluded that the fair value of Surface Protection was less than its carrying value, thus a non-cash partial goodwill impairment of $ 34.9 million ($ 27.0 million after deferred income tax benefits) was recognized during 2023.

The Company estimated the fair value of Surface Protection by:

(i) computing an estimated enterprise value (“EV”) utilizing the discounted cash flow method (the “DCF Method”), (ii) applying adjustments for any surplus or deficient working capital, (iii) adding cash and cash equivalents, and (iv) subtracting interest-bearing debt.

The DCF Method was used, incorporating Surface Protection’s latest projections, which reflect updated expected market recovery levels, feasibility of

launching new product applications, competitive pricing and cash flows associated with production efficiencies, as well as consideration of cost savings and inventory corrections.

As of December 1, 2023, the Company’s reporting units with goodwill were Surface Protection in PE Films and Futura in Aluminum Extrusions.

Both of these reporting units have separately identifiable operating net assets (operating assets including goodwill and identifiable intangible assets net of operating liabilities).

The Company's Step 0 analyses as of December 1, 2022 of these reporting units concluded that it is not more likely than not that the fair values of each reporting unit was less than its carrying amount.

Therefore, the Step 1 quantitative goodwill impairment tests for these reporting units were not necessary as of December 1, 2022.

As of December 31, 2022, Surface Protection had goodwill of $ 57.3 million and long-lived identifiable assets of $ 29.3 million.

During the first three months of 2020, the Company performed goodwill impairment tests and recognized a goodwill impairment charge of $ 13.7 million ($ 10.5 million after taxes), which represented the entire amount of goodwill associated with Aluminum Extrusions’ AACOA reporting unit.

The operations of the AACOA reporting unit, which includes the Niles, Michigan and Elkhart, Indiana facilities, were expected to be severely impacted by COVID-19, with over 80% of the aluminum extrusions manufactured at these facilities sold to customers that make consumer durable products, such as recreational boating and power sports vehicles, and to customers serving the building and construction and automotive markets.

The Company's Step 0 analysis of these reporting units concluded that it is more likely than not that the fair value of each reporting unit was greater than its carrying value.

Therefore, the Step 1 quantitative goodwill impairment tests for these reporting units were not necessary.

The Surface Protection and Futura reporting units had goodwill in the amounts of $ 22.4 million and $ 13.3 million, respectively, at December 31, 2023.

For more information on goodwill and identifiable intangibles, see Note 5.

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Measurement of the impairment loss is the amount by which the carrying amount exceeds the estimated fair value of the asset group.

As of December 31, 2022 and 2021, no events were identified that indicated long-lived assets may be impaired.

Assets that are held for sale are reported at the lower of their carrying amount or estimated fair value less cost to sell, with an impairment loss recognized for any write-down required.

As of December 31, 2023 and 2022, no events, other than the Richmond Technical Center assets that went held for sale in the third quarter of 2023, were identified that indicated long-lived assets may be impaired.

Pension Costs and Postretirement Benefit Costs Other than Pensions.

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The Company recognizes the funded status of its pension and other postretirement plans in the accompanying consolidated balance sheets.

Tredegar’s policy is to fund its pension plans at amounts not less than the minimum requirements of the Employee Retirement Income Security Act (“ERISA”) of 1974 and to fund postretirement benefits other than pensions when claims are incurred.

On February 10, 2022, Tredegar announced the initiation of a process to terminate and settle its frozen defined benefit pension plan, which could take up to 24 months to complete.

In connection therewith, on February 9, 2022, the Company contributed $ 50 million to the pension plan (the “Special Contribution”).

As a result, the Company expects there will be no required minimum contributions to the pension plan until final settlement.

As the settlement process occurs, the Company expects to recognize a non-cash reclassification adjustment to net income or loss of other comprehensive net actuarial losses associated with the pension plan currently reflected directly in shareholders’ equity.

Other comprehensive net actuarial losses associated with the pension plan were approximately $ 104 million on a pre-tax basis as of December 31, 2022.

Additional disclosure regarding Tredegar’s pension costs and postretirement benefit costs other than pensions is included in Note 8.

Tredegar’s policy has been to fund its pension plans at amounts not less than the minimum requirements of the Employee Retirement Income Security Act (“ERISA”) of 1974 and to fund postretirement benefits other than pensions when claims are incurred.

In February 2022, Tredegar announced the initiation of a process to terminate and settle its frozen defined benefit pension plan through lump sum distributions and the purchase of annuity contracts.

On November 3, 2023, the pension plan termination and settlement process for the Company was completed.

For more information, see Note 8.

Revenue Recognition.

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Those sales predominantly contain a single performance obligation and revenue is recognized at the point in time when control of the product is transferred to customers, along with the title, risk of loss and rewards of ownership.

Depending on the arrangement with the customer, these criteria are met either at the time the product is shipped or when the product is made available or delivered at the destination specified in the agreement with the customer.

Depending on the arrangement with the customer, these criteria are met either at the time the product is shipped or when the product is made available or delivered to the destination specified in the agreement with the customer.

Sales revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for that finished product.

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Certain allowances are fixed and determinable at the time of sale and are recorded at the time of sale as a reduction to revenues.

Other allowances can vary depending on future outcomes such as sales returns and customer sales volume, thus represents variable consideration.

Other allowances can vary depending on future outcomes such as sales returns and customer sales volume, thus representing variable consideration.

Amounts billed to customers related to freight are classified as sales revenue and the cost of freight is classified as a separate line in the accompanying consolidated statements of income.

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Revenue expected to be recognized in any future period related to remaining performance obligations, excluding i) revenue pertaining to contracts that have an original expected duration of one year or less, ii) contracts where revenue is recognized as invoiced and iii) variable consideration related to unsatisfied performance obligations, is not expected to materially impact the Company’s financial results.

Research & Development (“R&D”) Costs.

Research and Development (“R&D”) Costs.

R&D costs are expensed as incurred and include primarily salaries, wages, employee benefits, equipment depreciation, facility costs and the cost of materials consumed relating to R&D efforts.

R&D costs include a reasonable allocation of indirect costs.

In August 2023, the Company adopted a plan to close the PE Films technical center in Richmond, VA and reduce its efforts to develop and sell films supporting the semiconductor market.

Future research and development activities for PE Films will be performed at the facility in Pottsville, PA.

PE Films continues to have new business opportunities primarily relating to surface protection films that protect components of flat panel and flexible displays.

The Company anticipates all activities to cease at the PE Films technical center in Richmond, VA, by the end of the first quarter of 2024.

The Company recognized total expense incurred through December 31, 2023 associated with exit activities of $ 1.3 million for:

(i) severance and related costs ($ 0.9 million) and (ii) building closure costs ($ 0.4 million).

In addition, the Company recognized a non-cash asset impairment ($ 3.5 million), accelerated depreciation ($ 0.3 million) and a gain on the lease modification ($ 0.1 million).

A reconciliation of the beginning and ending balances of accrued expense associated with exit and disposal activities and charges associated with asset impairments reported as "Asset impairments and costs associated with exit and disposal activities, net of adjustments" in the consolidated statements of income for the year ended December 31, 2023 is shown below.

(In thousands) Severance Asset impairment Other Total

Balance at January 1, 2023 $ — $ — $ — $ —

Richmond Technical Center 895 3,454 628 4,977

Charges 895 3,454 628 4,977

Cash Spend 510 — 312 822

Charges against assets — 3,454 188 3,642

Balance at December 31, 2023 $ 385 $ — $ 128 $ 513

At inception, the Company determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease.

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federal income taxes to the extent required under GAAP on unremitted earnings of all foreign subsidiaries where required.

However, due to changes in the taxation of dividends under the Tax Cuts and Jobs Act (the “TCJA”) enacted by the U.S.

government in December 2017, Tredegar only records U.S.

However, Tredegar only records U.S.

federal income taxes on unremitted earnings of its foreign subsidiaries where Tredegar cannot take steps to eliminate any potential tax on future distributions from its foreign subsidiaries.

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The establishment and removal of a valuation allowance requires the Company to consider all positive and negative evidence and make a judgmental decision regarding the amount of valuation allowance required as of a reporting date.

The benefit of an uncertain tax position is included in the accompanying financial statements when the Company determines that it is more likely than not that the position will be sustained, based on the technical merits of the position, if the taxing authority examines the position and the dispute is litigated.

technical merits of the position, if the taxing authority examines the position and the dispute is litigated.

This determination is made on the basis of all the facts, circumstances and information available as of the reporting date.

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Shares used to compute diluted earnings per share 34,133,078 33,826,430 33,670,250

Incremental shares attributable to stock options and restricted stock are computed 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 2,760,983 and 1,582,222 for the year ended December 31, 2022 and 2021, respectively.

The Company had a net loss from continuing operations for the year ended December 31, 2020, so there is no dilutive impact for such shares.

If the Company had reported net income from continuing operations for the year ended December 31, 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 1,212,375 .

Incremental shares attributable to stock options and restricted stock are computed under the treasury stock method using the average market price during the related period.

The Company had a net loss for the year ended December 31, 2023, so there is no dilutive impact for such shares.

If the Company had reported net income for the year ended December 31, 2023, 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 would have been 2,925,091 .

Stock-Based Employee Compensation Plans.

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A change in the fair value of the derivative that is highly effective and that is designated and qualifies as a cash flow hedge is recorded in other comprehensive income.

Gains and losses reported in other

comprehensive income (loss) are reclassified to earnings in the periods in which earnings are affected by the variability of cash flows of the hedged transaction.

Gains and losses reported in other comprehensive income (loss) are reclassified to earnings in the periods in which earnings are affected by the variability of cash flows of the hedged transaction.

Such gains and losses are reported in the same line as the underlying hedged item, and the cash flows related to financial instruments are classified in the consolidated statements of cash flows in a manner consistent with those of the transactions being hedged.

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Comprehensive income (loss) is defined as net income or loss as adjusted by other comprehensive income or loss items.

Other comprehensive income (loss) includes changes in foreign currency translation adjustments, unrealized gains and losses on derivative financial instruments, prior service costs and net gains or losses from pension and other postretirement benefit plans arising during the period and amortization of these prior service costs and net gain or loss adjustments, all recorded net of deferred income taxes.

Other comprehensive income (loss) includes changes in foreign currency translation adjustments;

unrealized gains and losses on derivative financial instruments;

prior service costs and net gains or losses from pension and other postretirement benefit plans arising during the period;

and amortization of these prior service costs and net gain or loss adjustments;

and during the period, realized net actuarial loss for pension settlement all recorded net of deferred income taxes.

The changes in accumulated other comprehensive income (loss) by component are summarized as follows:

Foreign Currency Translation Gain (Loss) on Derivative Financial Instruments Pension & Other Postretirement Benefit Adjust Total Accumulated Other Comprehensive Income (Loss)

(In thousands) Foreign Currency Translation Gain (Loss) on Derivative Financial Instruments Pension & Other Postretirement Benefit Adjust Total Accumulated Other Comprehensive Income (Loss)

Balance at January 1, 2021 $ ( 84,149 ) $ 2,264 $ ( 96,519 ) $ ( 178,404 )

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Balance at December 31, 2023 $ ( 83,037 ) $ 801 $ 539 $ ( 81,697 )

The amounts reclassified out of accumulated other comprehensive income (loss) related to pension and other postretirement benefits is included in the computation of net periodic pension costs, see Note 8 for additional details.

Accounting Standards Adopted .

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04 “Reference Rate Reform (Topic 848)”, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate or by another reference rate expected to be discontinued because of reference rate reform.

The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2024.

In January 2021, the FASB issued ASU 2021-01, which clarified the scope and application of the original guidance.

In the second quarter of 2022, the Company adopted ASU 2020-04, which did not have a material impact on the Company’s consolidated financial statements.

In September 2022, the FASB issued ASU 2022-04 “Liabilities - Supplier Finance Programs (Subtopic 405-50)”, which requires that a buyer in a supplier finance program disclose sufficient information about the program to allow users of the financial statements to understand the program’s nature, activity during the period, changes from period to period and potential magnitude.

The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on roll forward information, which is effective for fiscal years beginning after December 15, 2023.

In the fourth quarter of 2022, the Company adopted ASU 2022-04, which did not have a material impact on the Company’s consolidated financial statements.

See Note 17 for more details.

The amounts reclassified out of accumulated other comprehensive income (loss) related to pension and other postretirement benefits are included in the computation of net periodic pension costs, see Note 8 for additional details.

Recently Issued Accounting Standards.

New accounting pronouncements adopted in 2023:

In July 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Updated ("ASU") 2023-03 to amend various Securities and Exchange Commission (“SEC”) paragraphs in the Accounting Standards Codification (“ASC”) to primarily reflect the issuance of SEC Staff Accounting Bulletin No.

2023-03, “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

120, SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force ("EITF") Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X:

Income or Loss Applicable to Common Stock.” ASU 2023-03 amends the ASC for SEC updates pursuant to SEC Staff Accounting Bulletin No.

SEC Staff Announcement at the March 24, 2022 EITF Meeting;

and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X:

Income or Loss Applicable to Common Stock.

These updates were immediately effective and did not have a material impact on the Company's consolidated financial statements.

Accounting standards not yet adopted:

In October 2023, the FASB issued ASU 2023-06 to amend various paragraphs in the ASC to primarily reflect the issuance of SEC Staff Bulletin No.

ASU 2023-06 will impact various disclosure areas, including the statement of cash flows, accounting changes and error corrections, earnings per share, debt, equity, derivatives, and transfers of financial assets.

The amendments in this ASU 2023-06 will be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027.

Early adoption is not permitted.

The Company does not expect a material impact from the adoption of this standard on our consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07 to improve reportable segment disclosure and requirements, primarily through the enhanced disclosures about significant segment expenses.

ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment.

This ASU is effective for fiscal years beginning after December 15, 2023 and interim period beginning after December 15, 2024, with early adoption permitted.

The amendments in this ASU are to be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09 to improve the income tax disclosures related to the rate reconciliation and income taxes paid information and to improve the effectiveness of income tax disclosures.

The amendments in this ASU will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions.

This ASU is effective for annual periods beginning after December 15, 2024, early adoption is permitted.

The Company is currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

ACCOUNTS AND OTHER RECEIVABLES

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Customer receivables $ 67,183 $ 83,667

Other accounts and notes receivable 3,874 2,958

Other receivables 3,056 3,874

Total accounts and other receivables 70,239 87,541

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$ 13,270 $ 57,338 $ 70,608

Out-of-period adjustment 2,900 — 2,900

Net carrying value of goodwill at December 31, 2022

13,270 57,338 70,608

Goodwill impairment — ( 34,891 ) ( 34,891 )

Net carrying value of goodwill at December 31, 2023

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(a) The goodwill of Aluminum Extrusions and PE Films is carried by the Futura and Surface Protection reporting units, respectively.

During the fourth quarter of 2021, the Company recorded an out-of-period adjustment in connection with the original valuation of intangible assets and goodwill related to the acquisition of Futura in February 2017.

This adjustment resulted in a reclassification of $ 2.9 million from acquired customer relationship intangible assets to goodwill and a $ 0.9 million decrease to accumulated amortization and amortization expense as of and for the period ended December 31, 2021.

A reconciliation of identifiable intangibles at December 31, 2023 and 2022 is as follows:

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$ 11,082 $ 54 $ 554 $ 11,690

Gross carrying value at December 31, 2021 (a)

Gross carrying value at December 31, 2023

$ 26,575 $ 3,732 $ 13,460 $ 43,767

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$ 9,305 $ 45 $ 501 $ 9,851

(a) Includes a $ 2.9 million gross reclassification from customer relationship intangible assets to goodwill offset by a $ 0.9 million decrease to accumulated amortization as a result of the out-of-period adjustment.

Amortization expense over the next five years is expected to be as follows:

(In thousands)

Amortization expense over the next five years is expected to be as $ 1.9 million per year.

ACCRUED EXPENSES

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(In thousands) 2023 2022

Incentive compensation $ 6,103 $ 7,016

Payrolls, related taxes and medical and other benefits 6,261 5,916

Vacation 2,602 3,502

Derivative contract liability 3,260 1,254

Accrued freight 2,298 2,337

Accrued utilities 2,099 1,938

Workers’ compensation and disabilities 2,178 2,051

Environmental liabilities 1,627 1,634

Group annuity contract premium liability 2,000 —

Customer rebates 1,891 1,154

Environmental liabilities 1,563 1,627

Accrued utilities 1,321 2,099

Accrued interest 1,236 407

Incentive compensation 612 6,103

Derivative contract liability 483 3,260

Accrued freight 440 2,298

Other 3,855 3,186

Total $ 24,442 $ 31,603

In the fourth quarter of 2021, the Company changed its vacation policy such that effective January 1, 2022 substantially all U.S.

employees earn their vacation for the current year on a monthly basis throughout the year and forfeit any unused vacation at the end of the year, with the exception of a partial rollover allowance subject to a cap or where forfeiture is prohibited by applicable state or local law or a collective bargaining agreement.

Under the previous policy, vacation was granted at the beginning of the year in advance of work being performed for the subsequent year.

As a result of this policy change, the Company recorded in the fourth quarter of 2021 a reduction of $ 3.9 million to accrued expenses and a decrease to selling, general, and administrative expense ($ 1.3 million) and cost of goods sold ($ 2.6 million) within the consolidated statements of income.

DEBT AND CREDIT AGREEMENTS

On June 29, 2022, Tredegar entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”) that replaced its existing $ 375 million five-year, secured revolving credit facility that was due to expire on June 28, 2024.

The Credit Agreement is a five-year, revolving, secured credit facility that permits aggregate borrowings of $ 375 million and matures on June 29, 2027.

Borrowings under the Credit Agreement bear an interest rate equal to Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment of 10 basis points ("Adjusted Term SOFR Rate") and an amount depending on the type of borrowing and commitment fees charged on the unused amount under the Credit Agreement at various Total Net Leverage Ratio levels as follows:

Pricing Under the Credit Agreement (Basis Points)

Total Net Leverage Ratio Term Benchmark Spread Commitment

<= 1.0x 150.0 20

>1.0x but <=2.0x 162.5 25

>2.0x but <=3.0x 175.0 30

>3.0x but <=3.5x 187.5 35

>3.5x 200.0 40

At December 31, 2022, $ 137.0 million of the outstanding debt was principally priced at an interest rate equal to the Adjusted Term SOFR Rate plus the applicable credit spread of 162.5 basis points.

Prior to the Credit Agreement, the interest rate on borrowings was based on London Inter-Bank Offered Rate plus an applicable credit spread.

The primary restrictive covenants in the Credit Agreement include:

• Total Net Leverage Ratio of 4.00 x;

• Interest Coverage Ratio of 3.00 x;

• Unlimited payments for dividends and stock repurchases during the term of the Credit Agreement so long as the Total Net Leverage Ratio is equal to or less than 2.00 x, and otherwise restrictions on payments for dividends and stock repurchases for the term of the Credit Agreement at $ 75 million (provided that the $ 75 million basket will reset at the end of each fiscal quarter when the Total Net Leverage ratio is less than or equal to 2.00 x).

Under the Credit Agreement:

• Total Net Leverage Ratio is defined as the ratio of (a)(i) total indebtedness minus (ii) liquidity (the lesser of $ 50,000,000 and the aggregate amount of cash and cash equivalents) to (b) EBITDA (as defined in Credit Agreement "Credit EBITDA");

• Interest Coverage Ratio is defined as the ratio of Credit EBITDA to interest expense.

The Credit Agreement is secured by substantially all assets of the Company and its domestic subsidiaries, including equity in certain material first-tier foreign subsidiaries.

At December 31, 2022, based upon the most restrictive covenant within the Credit Agreement, available credit under the Credit Agreement was approximately $ 201 million.

Tredegar was in compliance with all of its debt covenants as of December 31, 2022.

On August 3, 2023, the Company entered into Amendment No.

2 to the Second Amended and Restated Credit Agreement (collectively the “Prior Credit Agreement”), which amended the financial covenants and decreased aggregate borrowings from $ 375 million to $ 200 million.

On December 27, 2023, the Company entered into Amendment No.

3 (the “ABL Facility”) to the Prior Credit Agreement, which provides the Company with $ 180 million senior secured asset-based revolving credit facility that will expire on June 30, 2026.

The ABL Facility is secured by substantially all assets of the Company and its domestic subsidiaries, including equity in certain material first-tier foreign subsidiaries.

Availability for borrowings under the ABL Facility is governed by a borrowing base, determined by the application of specified advance rates against eligible assets, including a portion of trade accounts receivable, inventory, cash and cash equivalents, owned real properties, and owned machinery and equipment.

Upon the earlier of March 31, 2025 or the date the Company receives the proceeds from the sale of Terphane (the “ABL Adjustment Date”), the $ 180 million ABL Facility will be reduced to $ 125 million.

As of December 31, 2023, availability under the ABL Facility was $ 22.9 million, after reducing the availability by the aggregate outstanding borrowings of $ 126.3 million, standby letters of credit of $ 13.1 million, and the Minimum Liquidity (as defined in the ABL Facility) financial covenant.

The Company incurred $ 2.6 million of debt issuance costs in conjunction with the ABL Facility, which are being amortized on a straight-line basis over the remaining term of the ABL Facility.

Outstanding borrowings accrue interest at the rates elected by the Company depending on the type of loan and denomination of such borrowing.

With respect to revolving loans denominated in U.S.

Dollars, the Company may elect interest rates at:

• Alternate Base Rate (“ABR”) plus 2.50 % before the ABL Adjustment Date and the applicable ABR Spread (as defined in the ABL Facility) after the ABL Adjustment Date are determined in accordance with an excess availability-based pricing grid.

ABR is defined, in part, as the greater of (a) the Prime Rate in effect on such day, (b) the Federal Reserve Bank of New York Rate in effect on such day plus ½ of 1% and (c) the Adjusted Term SOFR Rate (defined below) for a one-month period plus 1%;

• The Adjusted Term SOFR Rate plus 3.50 % before the ABL Adjustment Date and the applicable Term Benchmark Spread (as defined in the ABL Facility) are determined in accordance with an excess availability-based pricing grid after the ABL Adjustment Date.

Adjusted Term SOFR Rate is defined as the Term SOFR Rate plus 0.10%, subject to an initial Floor (as defined in the ABL Facility) of 0%.

Interest rate indices for select non-U.S.

dollar borrowings, including borrowings denominated in Euro, Pounds Sterling, Swiss Francs and Japanese Yen, remain consistent with the terms of the Prior Credit Agreement.

Based upon the quarterly average of daily availability under the ABL Facility, the interest rate pricing grid applicable after the ABL Adjustment Date will be as follows:

Pricing under the ABL Facility (Basis Points)

Quarter Average of Daily Availability Term Benchmark

Spread Commitment

> 66% of $125 million aggregate commitment 225.0 125.0 40.0

≤ 66% but > 33% of $125 million aggregate commitment 250.0 150.0 40.0

≤ 33% of $125 million aggregate commitment 275.0 175.0 40.0

* The Commitment Fee before the ABL Adjustment Date and after the ABL Adjustment Date remain the same as reflected in this table.

Under the terms of the ABL Facility, certain domestic bank accounts are subject to blocked account agreements, each of which contains a springing feature whereby the lenders may exercise control over those accounts during a cash dominion period (any such period, a “Cash Dominion Period”).

A Cash Dominion Period was implemented on the date of the closing of the ABL Facility and will remain in effect at all times prior to the ABL Adjustment Date.

After the ABL Adjustment Date, a Cash Dominion Period goes into effect if availability under the ABL Facility falls below 12.5 % or an Event of Default (as defined in the ABL Facility) occurs.

The Company would then be subject to the Cash Dominion Period until the Event of Default is waived or ABL Facility availability is above 12.5 % of the $ 125 million aggregate commitment for 30 consecutive days.

Receipts that have not yet been applied to the ABL Facility are classified as restricted cash in the Company’s consolidated balance sheets.

The financial covenants in the ABL Facility, which are reported to lenders on a monthly basis, include:

• Until the ABL Adjustment Date, the Company is required to maintain (i) minimum Credit EBITDA (as defined in the ABL Facility), as of the end of each fiscal month for the 12-month period then ended (presented below) and (ii) a Minimum Liquidity (as defined in the ABL Facility) of $ 10.0 million.

Minimum Credit EBITDA (In thousands)

December 2023 $ 21,070

January 2024 21,110

February 2024 18,750

March 2024 16,640

April 2024 19,780

May 2024 19,660

June 2024 19,450

July 2024 21,860

August 2024 22,830

September 2024 25,370

October 2024 26,070

November 2024 27,640

December 2024 29,640

January 2025 29,740

February 2025 29,850

March 2025 $ 29,980

• Following the ABL Adjustment Date, the foregoing financial covenants will cease to exist and will be replaced with a minimum fixed charge coverage ratio of 1.00:1.00 that will be triggered in the event that availability is less than 10 % of $ 125 million commitment amount and continuing thereafter until availability is greater than 10 % of the $ 125 million commitment amount for 30 consecutive days.

In addition to the financial covenants, the ABL Facility contains restrictive covenants, including covenants that restrict the Company’s ability to pay dividends and repurchase shares of its common stock.

If at any time the availability under the ABL facility is less than 10 % (but on and after the ABL Adjustment Date, 20 %) of the maximum aggregate principal amount in effect at such time or an Event of Default occurs, the Company’s current monthly reporting requirements to lenders changes to a weekly cadence until the Event of Default is waived, cured or the availability under the ABL facility is above 10 % (but on and after the ABL Adjustment Date, 20%) of the maximum aggregate principal amount for 30 consecutive days.

The ABL Facility has customary representations and warranties including, as a condition to each borrowing, that all such representations and warranties are true and correct in all material respects (including a representation that no Material

Adverse Effect (as defined in the ABL Facility) has occurred since December 31, 2022).

In the event that the Company cannot certify that all conditions to the borrowing have been met, the lenders can restrict the Company’s future borrowings under the ABL Facility.

Because a Cash Dominion Period is currently in effect and the Company is required to represent that no Material Adverse Effect has occurred as a condition to borrowing, the outstanding debt under the ABL Facility (all contractual payments due on June 30, 2026) is classified as a current liability in the consolidated balance sheets.

In accordance with the ABL Facility, the lenders have been provided with the Company’s financial statements, covenant compliance certificates and projections to facilitate their ongoing assessment of the Company.

Accordingly, the Company believes the likelihood that lenders would exercise the subjective acceleration clause whereby prohibiting future borrowings is remote.

As of December 31, 2023, the Company was in compliance with all debt covenants.

Terphane Brazil Loan

On October 26, 2023, Flexible Packaging Film's business unit in Brazil (“Terphane Ltda.”), the Company’s wholly owned subsidiary in Brazil, borrowed $ 20 million secured by certain of its assets (“Terphane Brazil Loan”).

Dollar borrowing matures on October 30, 2028, with interest payable quarterly at an annual floating interest rate of the Secured Overnight Financing Rate (“SOFR”) plus 5.99 %.

The SOFR rate was 5.36 % as of December 31, 2023.

Quarterly principal payments of $ 1.7 million begin starting in year 3 of the loan.

There are no prepayment penalties.

The Company expects that the Terphane Brazil Loan will be repaid (and collateral released) upon the closing of the Contingent Terphane Sale.

On October 26, 2023, the Company borrowed $ 20 million from Terphane Brazil (the “Intercompany Loan”) at the same interest rate as the Terphane Brazil Loan, thereby transferring the funds to the U.S.

The Company will repay the Intercompany Loan in conjunction with the closing of the Contingent Terphane Sale.

RETIREMENT PLANS AND OTHER POSTRETIREMENT BENEFITS

Tredegar sponsors a noncontributory defined benefit (pension) plan covering certain current and former U.S.

The plan for salaried and hourly employees currently in effect is based on a formula using the participant’s years of service and compensation or using the participant’s years of service and a dollar amount.

Tredegar sponsored a noncontributory defined benefit (pension) plan covering certain current and former U.S.

The plan for salaried and hourly employees was based on a formula using the participant’s years of service and compensation or using the participant’s years of service and a dollar amount.

The plan is closed to new participants and pay for active plan participants for benefit calculations was frozen as of December 31, 2007.

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.

On February 10, 2022, Tredegar announced the initiation of a process to terminate and settle its frozen defined benefit pension plan through lump sum distributions and the purchase of annuity contracts.

In connection therewith, on February 9, 2022, the Company contributed $ 50 million to the pension plan.

During the third quarter of 2023, the Company remeasured the pension plan, which resulted in a pre-tax pension settlement loss in the consolidated results of operation of $ 25.6 million.

The remeasurement of the pension benefit obligation and plan assets was triggered by $ 64.5 million of lump sum distributions from the pension plan assets which exceeded the pension plan's service and interest cost.

On September 27, 2023, the Company borrowed $ 30 million under the Prior Credit Agreement in anticipation of the final funding expected for terminating its defined benefit pension plan obligation.

On October 31, 2023, the Company used this cash to contribute $ 27.7 million to fully fund the pension plan with the amount necessary to purchase from Massachusetts Mutual Life Insurance Company a nonparticipating single premium group annuity contract for $ 157.5 million.

On November 3, 2023, the pension plan termination and settlement process was completed, and the Company’s relevant pension plan obligation was transferred to Massachusetts Mutual Life Insurance Company.

This completed the pension plan termination process that began in February 2022.

As a result of the routine administrative process to transition the pension plan, the Company recognized a $ 2.0 million charge to adjust the initial purchase price of the nonparticipating single premium group annuity contract.

During the fourth quarter of 2023, the Company recognized a pre-tax pension settlement loss of $ 66.7 million.

Tredegar also has a non-qualified supplemental pension plan covering certain employees.

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Consequently, Tredegar is not eligible for any federal subsidies.

Pension and other postretirement benefit liabilities related to Personal Care Films have been retained by the Company.

Pension expense recognized for participation by these former employees in the Company’s plans is not material for the years ended December 31, 2022, 2021, and 2020.

The following tables reconcile the changes in benefit obligations and plan assets in 2023 and 2022, and reconcile the funded status to prepaid or accrued cost at December 31, 2023 and 2022:

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Discount rate change ( 10,751 ) ( 61,519 ) 99 ( 1,483 )

Retirement rate assumptions and mortality table adjustments — 1,028 — ( 1 )

Other ( 6,459 ) 1,513 12 90

1 unchanged sentence

Benefits paid ( 16,957 ) ( 16,994 ) ( 913 ) ( 1,030 )

Settlement payments and annuity purchase ( 221,970 ) — — —

Benefit obligation, end of year $ 1,600 $ 248,114 $ 5,712 $ 5,726

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Benefits paid ( 16,957 ) ( 16,994 ) ( 913 ) ( 1,030 )

Settlement payments and annuity purchase ( 221,970 ) — — —

Plan assets at fair value, end of year $ — $ 218,119 $ — $ —

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Discount rate 4.89 % 5.07 % 2.90 % 4.98 % 5.17 % 2.86 %

Expected long-term return on plan assets 4.99 % 3.05 % 5.00 % n/a n/a n/a

Expected long-term return on plan assets n/a 4.99 % 3.05 % n/a n/a n/a

Weighted-average assumptions used to determine net periodic benefit cost:

Discount rate 2.90 % 2.57 % 3.27 % 2.86 % 2.54 % 3.25 %

Expected long-term return on plan assets 3.05 % 5.00 % 5.00 % n/a n/a n/a

Discount rate (a)

5.07 %/ 5.37 %

2.90 % 2.57 % 5.17 % 2.86 % 2.54 %

Expected long-term return on plan assets n/a 3.05 % 5.00 % n/a n/a n/a

Components of net periodic benefit cost:

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Net periodic benefit cost $ 10,759 $ 14,517 $ 14,085 $ 85 $ 85 $ 75

Pension settlement loss 92,291 — — — — —

Total benefit cost $ 103,050 $ 14,517 $ 14,085 $ 85 $ 85 $ 75

(a) Prior to the pension lump sum distributions in August 2023, a discount rate of 5.07% was used to determine the net periodic benefit cost.

Subsequent to August 2023, a discount rate of 5.37% was used to determine the net periodic benefit cost until the Company purchased a nonparticipating single premium group annuity contract in October 2023.

Net periodic benefit cost is determined using assumptions at the beginning of each year.

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Expected benefit payments over the next five years and in the aggregate for 2028—2032 are as follows:

(In thousands) Pension

Benefits Other Post-

2023 $ 18,701 $ 489

2024 18,971 480

2025 19,047 469

2026 18,666 458

(In thousands) Pension Benefits Other Post-

2024 $ 180 $ 481

2028—2032 620 1,998

The average remaining duration of benefit payments for the pension plan is about 9.6 years.

The pre-tax a mounts recorded in 2022, 2021 and 2020 in accumulated other comprehensive income consist of:

The pre-tax amounts recorded in 2023, 2022 and 2021 in accumulated other comprehensive income (loss) consist of:

Pension Benefits Other Post-Retirement Benefits

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Net actuarial (gain) loss $ 415 $ 103,998 $ 109,893 $ ( 1,250 ) $ ( 1,574 ) $ ( 320 )

Pension expense is expected to be approximately $ 14 million in 2023.

The amounts in accumulated other comprehensive income, before related deferred income taxes, that are expected to be recognized as components of net periodic cost during 2023 are approximately $ 12 million of cost for the pension plan and approximately $ 0.2 million of benefit for other post-retirement plans.

The percentage composition of assets held by pension plans at December 31, 2022, 2021 and 2020 are as follows:

The amounts in accumulated other comprehensive income, before related deferred income taxes, which are expected to be recognized as components of net periodic cost during 2024 are approximately $ 0.1 million of benefit for other post-retirement plans.

There were no plan assets as of December 31, 2023.

The percentage composition of assets held by the pension plan at December 31, 2022 was as follows:

% Composition of Plan Assets

at December 31,

2022 2021 2020

Pension plans:

Pension plan:

Fixed income mutual fund 13.9 %

Fixed income securities — 25.3 % 7.7 %

Large/mid-capitalization equity securities — 28.1 27.1

Small-capitalization equity securities — 6.8 8.6

International and emerging market equity securities — 19.9 20.6

Total equity securities — 54.8 56.3

Private equity and hedge funds 4.8

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Cash and cash equivalents 11.4

Other assets — 6.7 6.4

Total 100.0 %

Following the announcement to terminate and settle the pension plan, the Company contributed $ 50 million to the pension plan and implemented (through consultation with its investment advisors) a liability-matching bond portfolio investment strategy (including a derivative overlay) that hedged the estimated settlement funding gap, which was approximately $ 24 million (before plan administration costs) at that time.

The overall objective of this hedging program is to minimize the volatility of the estimated settlement funding gap such that, as applicable interest rates move up or down causing a decrease or increase in the estimated value of the settlement liability, the value of the matching bond portfolio and derivative overlay decreases or increases by a similar amount.

A lower expected return on plan assets increases the amount of expense and vice versa.

Decreases in the level of actual plan assets will also serve to increase the amount of pension expense.

The total return on plan assets (net of fees and plan expenses), which is primarily affected by the change in fair value of plan assets, current year contributions and current year payments to participants, was approximately negative 15.1 % in 2022, positive 10.4 % in 2021 and positive 10.9 % in 2020.

The expected long-term rate return of 5.00 % used in both 2021 and 2020 were determined at the end of 2020 and 2019 and therefore did not contemplate the liability-driven investment strategy discussed above, however, the expected long-term rate return of 3.05 % used in 2022 and 4.99 % for 2023 does contemplate the liability-driven investment strategy discussed above.

Estimates of the fair value of assets held by the Company’s pension plan are provided by unaffiliated third parties.

Investments in collective investment trusts, private equity, hedge funds and certain international equity securities are measured at net asset value, which is a practical expedient for measuring fair value.

These assets are therefore excluded from the fair value hierarchy for each of the years presented.

At December 31, 2022 and 2021, the pension plan assets are categorized by level within the fair value measurement hierarchy as follows:

Following the announcement to terminate and settle the pension plan in 2022, the Company contributed $ 50 million to the pension plan and implemented (through consultation with its investment advisors) a liability-matching bond portfolio investment strategy (including a derivative overlay) that hedged the estimated settlement funding gap, which was approximately $ 24 million (before plan administration costs) at that time.

The overall objective of this hedging program was to minimize the volatility of the estimated settlement funding gap such that, as applicable interest rates moved up or down causing a decrease or increase in the estimated value of the settlement liability, the value of the matching bond portfolio and derivative overlay decreased or increased by a similar amount.

Accordingly, the expected long-term rate return of 3.05% used in 2022 and 4.99% used in 2023 contemplated the liability-driven investment strategy.

A lower expected return on plan assets increased the amount of expense and vice versa.

Decreases in the level of actual plan assets would also serve to increase the amount of pension expense.

The total return on plan assets (net of fees and plan expenses), which was primarily affected by the change in fair value of plan assets, current year contributions and current year payments to participants, was approximately negative 15.1 % in 2022 and positive 10.4 % in 2021.

Estimates of the fair value of assets held by the Company’s pension plan were provided by unaffiliated third parties.

Investments in collective investment trusts, private equity, hedge funds and certain international equity securities were measured at net asset value, which was a practical expedient for measuring fair value.

These assets were therefore excluded from the fair value hierarchy for each of the year presented.

At December 31, 2022, the pension plan assets are categorized by level within the fair value measurement hierarchy as follows:

(In thousands) Total Quoted Prices

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Total plan assets, December 31, 2022 $ 218,119

Balances at December 31, 2021

Cash and cash equivalents $ 6,943 $ 6,943 $ — $ —

Large/mid-capitalization equity securities 68,739 68,739 — —

Small-capitalization equity securities 16,588 16,588 — —

International and emerging market equity securities 25,174 25,174 — —

Fixed income securities 61,845 9,306 52,539 —

Contracts with insurance companies 9,438 — — 9,438

Other assets (d)

6,868 6,868 — —

Total plan assets at fair value $ 195,595 $ 133,618 $ 52,539 $ 9,438

Investments measured at net asset value 49,017

Total plan assets, December 31, 2021 $ 244,612

(a) This category represents investments in cash and cash equivalents, which includes:

1.) cash held in the plan used for investments in U.S.

Treasury futures which are entered into to minimize the volatility of the estimated settlement funding gap;

Treasury futures which were entered into to minimize the volatility of the estimated settlement funding gap;

and 2.) short term money market fund in which the amortized cost approximates fair value.

These investments are highly liquid and therefore are classified as level 1 securities.

(b) Represents the estimated fair market value of the Company’s ownership in private equity and hedge funds which are probable of being sold for an amount different from the net asset value per share in connection with the expected termination of the pension plan.

(c) The collective investment trust contains liability hedging fixed income investments and are valued at the net asset value of the collective investment trust.

The net asset value is used as a practical expedient to estimate fair value.

The net asset value is based on the fair value of the underlying investments held by the fund less its liabilities.

These investments were highly liquid and therefore were classified as Level 1 securities.

(b) Represents the estimated fair market value of the Company’s ownership in private equity and hedge funds which were probable of being sold for an amount different from the net asset value per share in connection with the expected termination of the pension plan.

(c) The collective investment trust contains liability hedging fixed income investments and were valued at the net asset value of the collective investment trust.

The net asset value was used as a practical expedient to estimate fair value.

The net asset value was based on the fair value of the underlying investments held by the fund less its liabilities.

(d) Represents investments in certain commodity funds measured using quoted market prices.

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(In thousands) 2023 2022 2021

Gain (loss) on investment in kaléo (a)

Gain on investment in kaléo (a)

$ 262 $ 1,406 $ 12,780

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( 9 ) ( 350 ) ( 624 )

Loss on sale of Bright View Technologies — — ( 2,299 )

Group annuity contract premium expense (c)

( 2,000 ) — —

Other ( 400 ) ( 47 ) ( 377 )

Total $ ( 2,147 ) $ 1,009 $ 20,265

(a) In May 2022, additional cash consideration of $ 1.4 million was received related to customary post-closing adjustments.

(a) In January 2023 and May 2022, additional cash consideration of $ 0.3 million and $ 1.4 million, respectively was received related to customary post-closing adjustments.

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

See Note 16 for additional information.

(b) Costs associated with operating under COVID-19 conditions include employee overtime expenses associated with absenteeism, personal protective equipment supplies and facility maintenance.

On December 27, 2021, the Company completed the sale of its investment interests in kaleo, Inc.

(“kaléo”) (Series A-3 Preferred Stock, Series B Preferred Stock and common stock) that, taken together, represented on a fully diluted basis an approximate 18% interest in kaléo.

Tredegar received closing cash proceeds of $ 47.1 million.

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 unemployment/social security insurance non-income taxes (“PIS/COFINS”).

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The pre-tax gain was recorded in “Other income (expense), net” in the consolidated statements of income.

In December 2020, the Company entered into a definitive agreement and completed the sale of Bright View Technologies, which resulted in the recognition of a pre-tax loss of $ 2.3 million ($ 1.8 million after-tax).

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 exist as part of ongoing business operations (primarily in Flexible Packaging Films).

These derivative financial instruments are designated as and qualify as cash flow hedges and are recognized in the consolidated balance sheet at fair value.

The fair value of derivative instruments recorded on the consolidated balance sheets are based upon Level 2 inputs.

The fair value of derivative instruments recorded on the consolidated balance sheets is based upon Level 2 inputs.

If individual derivative instruments with the same counterparty can be settled on a net basis, the Company records the corresponding derivative fair values as a net asset or net liability.

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The Company's earnings are exposed to foreign currency exchange risk primarily through the translation of the financial statements of subsidiaries that have a functional currency other than the U.S.

The Company estimates that the net mismatch translation exposure for the Flexible Packaging Film's business unit in Brazil (“Terphane Ltda.”) of its sales and raw materials quoted or priced in U.S.

The Company estimates that the net mismatch translation exposure for the Terphane Ltda.

of its sales and raw materials quoted or priced in U.S.

Dollars and its variable conversion, fixed conversion and sales, general and administrative costs (before depreciation and amortization) quoted or priced in Brazilian Real is annual net costs of R$ 139 million Brazilian Real ("R$").

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$ 1,801 5.4580 R$ 9,830 Dec-24 85 %

$ 659 5.7360 R$ 3,780 Jan-24 23 %

$ 659 5.7562 R$ 3,793 Feb-24 23 %

$ 659 5.7774 R$ 3,807 Mar-24 23 %

$ 659 5.8000 R$ 3,822 Apr-24 23 %

$ 659 5.8207 R$ 3,836 May-24 24 %

$ 659 5.8419 R$ 3,850 Jun-24 24 %

$ 659 5.8636 R$ 3,864 Jul-24 24 %

$ 659 5.8872 R$ 3,880 Aug-24 24 %

$ 659 5.9118 R$ 3,896 Sep-24 24 %

$ 659 5.9350 R$ 3,911 Oct-24 24 %

$ 659 5.9581 R$ 3,926 Nov-24 24 %

$ 659 5.9813 R$ 3,942 Dec-24 24 %

$ 21,724 5.3786 R$ 116,844 84 %

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Liability derivatives:

Foreign currency forward contracts Accrued expenses — Accrued expenses ( 1,255 )

Foreign currency forward contracts Other non-current liabilities — Other non-current liabilities ( 3 )

2 unchanged sentences

The counterparties to any forward purchase commitments are major aluminum brokers and suppliers, and the counterparties to any aluminum futures contracts are major financial institutions.

Fixed-price forward sales contracts are only made available to the best and most credit-worthy customers.

Fixed-price forward sales contracts are only made available to the best and most creditworthy customers.

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

The pre-tax effect on net income (loss) from continuing operations and other comprehensive income (loss) of derivative instruments classified as cash flow hedges and described in the previous paragraphs for years ended December 31, 2022, 2021, and 2020 is summarized in the tables below:

The pre-tax 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 years ended December 31, 2023, 2022, and 2021 is summarized in the tables below:

(In thousands) Cash Flow Derivative Hedges

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Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income to net income (effective portion) $ 61 $ 3,011 $ 61 $ 1,378 $ 63 $ ( 337 )

As of December 31, 2022, the Company expects $ 2.0 million of unrealized after-tax net losses on aluminum and foreign currency derivative contracts reported in accumulated other comprehensive income (loss) to be reclassified to earnings within the next 12 months.

As of December 31, 2023, the Company expects $ 0.8 million of unrealized after-tax net gains on aluminum and foreign currency derivative contracts reported in accumulated other comprehensive income (loss) to be reclassified to earnings within the next 12 months.

For the years ended December 31, 2023, 2022 and 2021, net gains or losses realized, from previously unrealized net gains or losses on hedges that had been discontinued, were not material.

3 unchanged sentences

Stock options may be granted to purchase a specified number of shares of common stock at a price no lower than the fair market value on the date of grant and for a term not to exceed 10 years.

Stock options granted by

the Company in 2022, 2021 and 2020 vest after 2 years and have a 7-year life or vest after 3 years and have a 5-year life.

Stock options granted by the Company in 2021 vest after 2 years and have a 7-year life or vest after 3 years and have a 5-year life.

Stock options exercisable totaled 3,019,333 and 2,719,919 shares at December 31, 2023 and 2022, respectively.

On December 1, 2020, Tredegar’s Board of Directors declared a special cash dividend of $ 200 million, or $ 5.97 per share, on the Company’s common stock (the “Special Dividend”).

The Special Dividend was payable on December 18, 2020 and had an ex-dividend date of December 21, 2020.

All stock option awards that were outstanding at the time of the Special Dividend were modified pursuant to the nondiscretionary anti-dilution provisions in the related stock-based compensation plan.

SARs that were outstanding at the time of the Special Dividend were also modified pursuant to the nondiscretionary anti-dilution provisions in the related SARs grant agreements.

The modifications included increasing the number of outstanding stock options and SARs as well as reducing the exercise prices of all outstanding stock options and SARS.

The modification did not result in additional stock-based compensation expense.

No other terms or conditions of outstanding awards were modified.

A summary of stock options outstanding at December 31, 2023, 2022 and 2021, and changes during those years, is presented below:

3 unchanged sentences

Granted 388,822 16.37 to 16.37 16.37

Modification for special cash dividend (a)

701,535 10.75 to 14.62 11.90

Forfeited and expired (a)

( 141,074 ) 10.75 to 24.84 11.87

Outstanding at December 31, 2020 (a)

2,827,438 10.75 to 22.49 13.55

Granted 388,822 16.37 to 16.37 16.37

Forfeited and expired ( 22,611 ) 14.47 to 19.64 18.14

3 unchanged sentences

Forfeited and expired ( 17,203 ) 14.47 to 19.64 15.33

Outstanding at December 31, 2022

3,108,741 10.75 to 22.49 13.81

Forfeited and expired ( 89,408 ) 13.78 to 19.64 19.60

Outstanding at December 31, 2023 3,019,333 $ 10.75 to $ 22.49 $ 13.64

(a) The option exercise price per share reflects the reduction to the exercise prices of outstanding stock options impacted by the modification due to the anti-dilution provisions in the stock-based compensation plan.

The assumptions used in the Black-Scholes options-pricing model for valuing Tredegar stock options originally granted in 2021 and 2020, and the related estimated fair values at the date of grant, were as follows, no options were granted in 2022:

No options were granted in 2023 nor 2022.

The assumptions used in the Black-Scholes options-pricing model for valuing Tredegar stock options originally granted in 2021, and the related estimated fair values at the date of grant, were as follows:

Dividend yield 2.6 %

2 unchanged sentences

Holding period (years) 5

Weighted average exercise price at date of grant (also weighted average market price at date of grant) (a)

$ 16.37 $ 14.41

Weighted average exercise price at date of grant (also weighted average market price at date of grant) $ 16.37

Estimated weighted average fair value of options per share at date of grant

$ 5.57 $ 4.44

Total estimated fair value of stock options granted (in thousands) $ 2,165

(a) In December 2020, the weighted average exercise price for outstanding stock option awards granted in 2020 were modified to $ 10.75 .

As the anti-dilution provisions in the stock-based compensation plan were structured to equitably adjust the award’s fair value before and after the modification, there is no resulting incremental fair value.

The dividend yield is the actual dividend yield on Tredegar’s common stock at the date of grant, which the Company believes is a reasonable estimate of the expected yield during the holding period.

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The grant-date fair value of stock option-based awards vested in 2023, 2022 and 2021 was $ 2.2 million, $ 5.4 million, and $ 3.5 million, respectively.

As of December 31, 2022, the unrecognized compensation cost for continuing operations related to stock option-based awards was $ 0.2 million.

This cost is expected to be recognized over the remaining weighted average period of 0.2 years.

As of December 31, 2023, there was no unrecognized compensation cost related to stock option-based awards.

Restricted stock grants ordinarily vest three years from the date of grant based upon continued employment.

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Outstanding at December 31, 2023 736,079 $ 10.68 $ 7,861 — $ — $ —

As of December 31, 2022, the unrecognized compensation cost for continuing operations related to non-vested restricted stock awards was $ 3.2 million.

As of December 31, 2023, the unrecognized compensation cost related to non-vested restricted stock awards was $ 3.6 million.

This cost is expected to be recognized over the remaining weighted average period of 1.9 years.

SARs granted by the Company in 2021 and 2020 vest after 2 years and have a 7-year life.

There were no SARs granted in 2022.

SARs granted by the Company in 2021 vest after 2 years and have a 7-year life.

There were no SARs granted in 2023 or 2022.

SARs may be settled in cash upon exercise and therefore are classified as liabilities and included in accrued expenses in the consolidated balance sheet.

The fair value of these liability awards is remeasured at each reporting period until the date of settlement.

Increases and decreases in stock-based compensation expense is recognized over the vesting period, or immediately, for vested awards.

Increases and decreases in stock-based compensation expense are recognized over the vesting period, or immediately, for vested awards.

A summary of SARs outstanding at December 31, 2023, 2022 and 2021, and changes during those years, is presented below:

2 unchanged sentences

Outstanding at January 1, 2021 376,440 $ 10.75 to $ 19.64 $ 11.64

387,252 10.75 to 19.64 11.60

Modification for special cash dividend 71,402 10.75 to 19.64 11.60

Forfeited and expired ( 82,214 ) 10.75 to 19.64 11.39

Outstanding at December 31, 2020 376,440 10.75 to 19.64 11.64

Granted 164,464 16.37 to 16.37 16.37

4 unchanged sentences

Outstanding at December 31, 2022 498,687 10.75 to 16.37 13.49

(a) The SARs exercise price per share reflects the reduction to the exercise prices of outstanding SARs as a results of the modification to the awards pursuant to the nondiscretionary anti-dilution provisions in the related SAR s grant agreements.

The grant-date fair value of SARs awards vested in 2022, 2021 and 2020 was $ 0.5 million, $ 0.1 million and $ 0.6 million, respectively.

As of December 31, 2022, the unrecognized compensation cost for continuing operations was immaterial.

This cost is expected to be recognized over the remaining weighted average period of 0.2 years.

Income (loss) from continuing operations before income taxes and income tax expense (benefit) for continuing operations are as follows:

Forfeited and expired ( 53,969 ) 10.75 to 16.37 12.78

Outstanding at December 31, 2023 444,718 $ 10.75 to $ 16.37 $ 13.57

The grant-date fair value of SARs awards vested in 2022 and 2021 was $ 0.5 million and $ 0.1 million, respectively.

The grant-date fair value of SARs awards vested in 2023 was immaterial.

As of December 31, 2023, there was no unrecognized compensation cost related to SARs .

Income (loss) before income taxes and income tax expense (benefit) are as follows:

(In thousands) 2023 2022 2021

Income (loss) from continuing operations before income taxes:

Income (loss) before income taxes:

Domestic $ ( 175,510 ) $ 3,259 $ 22,774

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The significant differences between the U.S.

federal statutory rate and the effective income tax rate related to continuing operations are as follows:

federal statutory rate and the effective income tax rate are as follows:

2023 2022 2021

1 unchanged sentence

Income tax expense (benefit) at federal statutory rate $ ( 33,622 ) 21.0 $ 6,882 21.0 $ 14,116 21.0

Foreign rate differences 2,924 8.9 8,269 12.3 4,554 ( 18.2 )

tax on foreign branch income 1,390 4.1 ( 5,667 ) ( 8.4 ) 1,409 ( 5.6 )

Non-deductible other 381 1.2 1,053 1.6 208 ( 0.8 )

Tax contingency accruals and tax settlements 88 0.3 202 0.3 ( 58 ) 0.2

Stranded taxes released with termination of pension ( 21,912 ) 13.7 — — — —

Changes in estimates related to prior year tax provision ( 1,322 ) 0.8 ( 175 ) ( 0.5 ) ( 383 ) ( 0.6 )

Brazilian tax incentive ( 876 ) 0.5 ( 3,873 ) ( 11.8 ) ( 7,019 ) ( 10.4 )

Research and development tax credit ( 766 ) 0.5 ( 1,489 ) ( 4.5 ) ( 928 ) ( 1.4 )

Tax on Prodepe tax incentive ( 488 ) 0.3 ( 1,024 ) ( 3.1 ) 2,858 4.3

State taxes, net of federal income tax benefit ( 437 ) 0.3 48 0.1 933 1.4

Valuation allowance for capital loss carryforwards — — ( 5,415 ) ( 8.1 ) 52 ( 0.2 )

Foreign currency translation variation on intercompany loans — — — — 1,374 2.0

Dividend received deduction net of foreign withholding tax — — — — ( 109 ) ( 0.2 )

Changes in estimates related to prior year tax provision ( 175 ) ( 0.5 ) ( 383 ) ( 0.6 ) ( 2,472 ) 9.9

Foreign derived intangible income deduction — — ( 763 ) ( 2.3 ) — —

Tax on Prodepe tax incentive ( 1,024 ) ( 3.1 ) 2,858 4.3 ( 801 ) 3.2

Research and development tax credit ( 1,489 ) ( 4.5 ) ( 928 ) ( 1.4 ) ( 633 ) 2.5

Brazilian tax incentive ( 3,873 ) ( 11.8 ) ( 7,019 ) ( 10.4 ) ( 4,787 ) 19.1

Tax contingency accruals and tax settlements 1 — 88 0.3 202 0.3

Changes in federal valuation allowance 237 ( 0.1 ) — — ( 5,415 ) ( 8.1 )

Non-deductible other 594 ( 0.4 ) 381 1.2 1,053 1.6

Foreign rate differences 1,746 ( 1.1 ) 2,924 8.9 8,269 12.3

tax on foreign branch income 2,720 ( 1.7 ) 1,390 4.1 ( 5,667 ) ( 8.4 )

Income tax expense (benefit) at effective income tax rate $ ( 54,125 ) 33.8 $ 4,389 13.4 $ 9,284 13.8

Provision for income taxes for the year ended December 31, 2022 was $ 4.4 million compared to $ 9.3 million for the year ended December 31, 2021.

Provision (benefit) for income taxes for the year ended December 31, 2023 was $( 54.1 ) million compared to $ 4.4 million for the year ended December 31, 2022.

The effective tax rates for the years ended December 31, 2023 and 2022 were 33.8 % and 13.4 %, respectively.

The change in effective tax rate is primarily attributed to a discrete tax benefit recorded in the first quarter of 2022 resulting from the implementation of new U.S.

The change in effective tax rate is primarily attributed to tax benefits previously recorded in other comprehensive income (loss) that were released as a result of the pension plan termination, partially offset by a reduction in Brazilian tax incentives as a percentage of income.

The stranded taxes released with the termination of the pension plan represent the effect of the change in federal and state tax rates on pension-related deferred tax items initially recorded in other comprehensive income.

The related stranded taxes were released in full in 2023.

The effective tax rate in 2022 was impacted by a large discrete benefit recorded in the first quarter of 2022, resulting from the implementation of new U.S.

tax regulations associated with foreign tax credits published by the U.S.

Treasury and Internal Revenue Service (“IRS”) on January 4, 2022.

These regulations overhaul various components of the foreign tax credit regime including the determination of creditable foreign taxes and limit the amount of foreign taxes that are creditable against U.S.

These regulations overhauled various components of the foreign tax credit regime including the determination of creditable foreign taxes and limit the amount of foreign taxes that are creditable against U.S.

income taxes.

This discrete benefit was partially offset by an increase to the effective tax rate as the result of the Brazilian income tax no longer being creditable in the U.S.

for the foreseeable future.

Lastly, the effective tax rate changed due to foreign rate differences pertaining to the Company’s foreign operations and the benefit from tax incentives in Brazil.

Income taxes in 2021 are primarily due to the strong earnings of Terphane Ltda, which are included in Tredegar’s U.S.

As the result of these regulations, future Brazilian income tax under Brazil tax law in place at that time

would have been deductible, but not creditable, in the U.S.

The accounting rules require a reduction of the U.S.

deferred tax liability previously established related to anticipated future income from Brazil.

The IRS released guidance in 2023 that provides temporary relief for tax years after 2021 from the regulations published by the U.S.

Treasury and Internal Revenue Service on January 4, 2022.

As a result of the IRS guidance released in 2023, the reduction in the first quarter of 2022 of the U.S.

deferred tax liability previously established related to anticipated future income from Brazil was reversed in 2023.

The effective tax rate in 2021 was impacted by the strong earnings of Terphane Ltda, which are included in Tredegar’s U.S.

consolidated tax return and, the tax impact of the local statutory tax rates of Tredegar’s foreign subsidiaries being higher than the current U.S.

tax rate of 21%, the benefit of tax incentives in Brazil and the release of the valuation allowance for capital loss carryforwards.

Income taxes in 2020 were primarily impacted by the tax impact of Terphane Ltda.

being included in Tredegar’s U.S.

consolidated tax return as a foreign branch, the tax impact of the local statutory tax rates of Tredegar’s foreign subsidiaries being higher than the current US tax rate of 21%, the benefit of tax incentives in Brazil, and by claims for prior years’ U.S.

research and development tax credits.

Tredegar accrues U.S.

federal income taxes on unremitted earnings of all foreign subsidiaries where required.

However, due to changes in the taxation of dividends under TCJA, Tredegar will only record U.S.

Tredegar will only record U.S.

federal income taxes on unremitted earnings of its foreign subsidiaries where Tredegar cannot take steps to eliminate any potential tax on future distributions from its foreign subsidiaries.

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federal income taxes and foreign withholding taxes on Terphane Ltda.’s undistributed earnings as of December 31, 2023 and 2022.

Beginning January 1, 2022, the TCJA eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to capitalize such expenses as a result of amendments to Internal Revenue Code (“IRC”) Section 174.

As a result of this provision of the TCJA, deferred tax assets related to capitalized research expenses pursuant to the amended IRC Section 174 increased by a net $ 4.8 million.

The Brazilian federal statutory income tax rate is a composite of 34.0 % ( 25.0 % of income tax and 9.0 % of social contribution on income).

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The benefit from the tax incentives was $ 0.9 million, $ 3.9 million and $ 7.0 million in 2023, 2022 and 2021, respectively.

Deferred income tax liabilities and deferred income tax assets at December 31, 2022 and 2021, are as follows:

Deferred income tax assets and deferred income tax liabilities at December 31, 2023 and 2022, are as follows:

(In thousands) 2023 2022

Deferred income tax liabilities:

Amortization of goodwill and identifiable intangibles $ 10,533 $ 10,215

Depreciation 14,950 12,902

Foregone tax credits on foreign branch income 719 4,796

Right-of-use leased assets 3,147 2,767

Other 722 520

Total deferred income tax liabilities 30,071 31,200

Deferred income tax assets:

Pensions 7,535 5,632

Pension and other postretirement obligations $ — $ 7,535

Employee benefits 5,821 7,558

Excess capital losses 1,099 1,097

Basis difference in capital assets 2,131 2,098

Inventory 2,643 3,952

Asset write-offs, divestitures and environmental accruals 1,025 1,075

Tax benefit on U.S.

federal, state and foreign NOL and credit carryforwards 24,914 33,922

Section 174 Capitalized R&D expenditures 4,874 —

federal and state NOL and credit carryforwards 33,247 24,914

Capitalized R&D expenditures 6,543 4,874

Other 2,364 1,220

Lease liabilities 2,711 3,328

Tax basis remaining for installment sale - kaléo 999 1,092

Interest expense limitation 2,592 —

Foreign currency translation gain adjustment 591 1,224

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Total deferred income tax assets 44,590 43,971

Deferred income tax liabilities:

Goodwill and identifiable intangibles $ 3,392 $ 10,533

Property, plant and equipment 10,330 14,950

Foregone tax credits on foreign branch income 1,880 719

Right-of-use leased assets 2,409 3,147

Other 1,545 722

Total deferred income tax liabilities 19,556 30,071

Net deferred income tax assets (liabilities) $ 25,034 $ 13,900

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Net deferred income tax assets (liabilities) $ 25,034 $ 13,900

Except as noted below, the Company believes that it is more likely than not that future taxable income will exceed future tax-deductible amounts thereby resulting in the realization of deferred income tax assets.

The Company has estimated gross federal, state and foreign tax credits and net operating loss carryforwards of $ 24.9 million and $ 33.9 million at December 31, 2022 and 2021, respectively.

federal and state tax credits of $ 16.7 million, net operating loss carryforwards of $ 16.5 million and a deferred interest limitation of $ 2.6 million at December 31, 2023.

The Company had U.S.

federal and state tax credits of $ 15.3 million and net operating loss carryforwards of $ 9.6 million at December 31, 2022.

federal net operating loss and deferred interest limitation can be carried forward indefinitely.

federal foreign tax credits will expire between 2027-2033 and the U.S.

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Valuation allowances of $ 12.9 million, $ 10.3 million and $ 9.4 million at December 31, 2023, 2022 and 2021, respectively, are recorded against the tax benefit on U.S.

federal, state and foreign tax credits and net operating loss carryforwards generated by domestic subsidiaries that may not be recoverable in the carryforward period.

The valuation allowance for excess capital losses from investments and other related items was $ 0.7 million, $ 0.7 million and $ 7.1 million at December 31, 2022, 2021 and 2020, respectively.

The amount of the deferred income tax asset considered realizable, however, could be adjusted in the near term if estimates of the fair value of certain investments during the carryforward period change.

federal and state tax credits and net operating loss carryforwards generated by domestic subsidiaries that may not be recoverable in the carryforward period.

The valuation allowance for unrealized capital losses from investments and other related items was $ 0.7 million at December 31, 2022 and 2021.

As circumstances and events warrant, allowances will be reversed when it is more likely than not that future taxable income will exceed deductible amounts, thereby resulting in the realization of deferred income tax assets.

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income tax examinations by tax authorities for years before 2020.

The Company anticipates that it is reasonably possible that Federal and state income tax audits or statutes may settle or close within the next 12 months and are not expected to result in a material changes in unrecognized tax positions, including any payments that may be made.

The Company anticipates that it is reasonably possible that Federal and state income tax audits or statutes may settle or close within the next 12 months and are not expected to result in a material change in unrecognized tax positions, including any payments that may be made.

BUSINESS SEGMENTS

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EBITDA from ongoing operations is the key profitability measure used by the CODM (Tredegar’s President and Chief Executive Officer) for purposes of assessing financial performance.

The Company uses sales less freight (“net sales”) from continuing operations as its measure of revenues from external customers at the segment level.

The Company uses sales less freight (“net sales”) as its measure of revenues from external customers at the segment level.

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

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Add back freight 26,933 34,982 28,232

Sales as shown in consolidated statements of income $ 938,564 $ 826,455 $ 755,290

Sales as shown in consolidated statements of income (loss) $ 704,825 $ 938,564 $ 826,455

Refer to Notes to Financial Tables that follow these tables.

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Plant shutdowns, asset impairments, restructurings and other (a) ( 3,557 ) ( 310 ) 3,237

Goodwill impairment charge — — ( 13,696 )

Ongoing operations:

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Plant shutdowns, asset impairments, restructurings and other (a) ( 4,972 ) ( 646 ) ( 371 )

Goodwill impairment (34,891) — —

Flexible Packaging Films:

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Interest expense 11,607 4,990 3,386

Gain (loss) on investment in kaléo (a) 1,406 12,780 ( 60,900 )

Loss on sale of Bright View (a) — — ( 2,299 )

Gain on investment in kaléo (a) 262 1,406 12,780

Stock option-based compensation expense 231 1,424 2,495

Pension settlement loss 92,291 — —

Corporate expenses, net (a) 39,414 41,221 41,970

Income (loss) from continuing operations before income taxes 32,770 67,221 ( 25,046 )

Income (loss) before income taxes ( 160,030 ) 32,844 67,110

Income tax expense (benefit) (a) ( 54,125 ) 4,389 9,284

Income (loss) from continuing operations 28,381 57,937 ( 16,833 )

Income (loss) from discontinued operations, net of tax (a) 74 ( 111 ) ( 58,611 )

Net income (loss) $ ( 105,905 ) $ 28,455 $ 57,826

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General corporate 36,652 23,674

Cash and cash equivalents (b) 19,232 30,521

Discontinued operations — 178

Cash, cash equivalents and restricted cash (b) 13,455 19,232

Total $ 446,461 $ 542,093

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General corporate (d) 369 264 207 12 1,771 ( 153 )

Discontinued operations — — 5,511 — — 1,912

Total $ 27,683 $ 26,402 $ 23,784 $ 26,446 $ 36,875 $ 27,361

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Brazil 89,077 117,896 96,792

Asia 552 626 —

Total $ 677,892 $ 903,582 $ 798,223

8 unchanged sentences

General corporate 36,652 23,674 2,244 2,686

Cash and cash equivalents (b) 19,232 30,521 n/a n/a

Discontinued operations — 178 — —

Cash, cash equivalents and restricted cash (b) 13,455 19,232 n/a n/a

Total $ 446,461 $ 542,093 $ 183,455 $ 186,411

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Packaging 29,300 29,431 30,484

LED-based products — — 7,491

Subtotal 76,763 97,571 118,920

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(a) See Notes 1, 5, 9 and 12 for more information on losses associated with plant shutdowns, asset impairments and restructurings, unusual items, gains or losses from sale of assets, gains or losses on an investment accounted for under the fair value method and other items.

(b) Cash and cash equivalents includes funds held in locations outside the U.S.

(b) Cash, cash equivalents and restricted cash includes funds held in locations outside the U.S.

of $ 9.8 million and $ 10.3 million at December 31, 2023 and 2022, respectively.

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Tredegar has a savings plan that allows eligible employees to voluntarily contribute a percentage of their compensation, up to IRS limitations.

Charges recognized for the savings plan were $ 4.0 million in 2023, $ 3.9 million in 2022 and $ 3.3 million in 2021.

The provisions of the savings plan provided the following benefits for salaried and certain hourly employees:

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The Company also has a non-qualified plan that restores matching benefits for employees suspended from the savings plan due to certain limitations imposed by income tax regulations (“restoration plan”).

Charges recognized for these plans were $ 3.9 million in 2022, $ 3.3 million in 2021 and $ 4.0 million in 2020.

The Company’s liability under the restoration plan was $ 0.4 million at December 31, 2023 (consisting of 79,124 phantom shares of common stock) and $ 0.7 million at December 31, 2022 (consisting of 70,266 phantom shares of common stock) and valued at the closing market price on those dates.

Charges recognized for the restoration plan were immaterial for the years 2023, 2022 and 2021.

The Tredegar Corporation Benefits Plan Trust (the “Trust”) purchased 7,200 shares of the Company’s common stock in 1998 for $ 0.2 million and 46,671 shares of its common stock in 1997 for $ 1.0 million.

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The cost of the shares held by the Trust is shown as a reduction to shareholders’ equity in the consolidated balance sheets.

DIVESTITURES AND ASSETS HELD FOR SALE

Personal Care Films

In 2020, the Company completed the sale of Personal Care Films for an aggregate purchase price of $ 60.5 million, subject to customary adjustments.

The Company agreed to provide certain transition services related to finance, human resources and information technology (“IT”) that ended during the second quarter of 2021, resulting in final cash proceeds of $ 64.1 million.

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 year ended December 31 2020.

Net income (loss) from discontinued operations for the years ended December 31, 2022 and 2021 were immaterial.

Year Ended December 31,

(In thousands) 2020

Revenues and other items:

Sales $ 110,246

Other income (expense), net ( 333 )

Costs and expenses:

Cost of goods sold 92,079

Freight 5,229

Selling, general and administrative 16,824

Research and development 8,863

Asset impairments and costs associated with exit and disposal activities, net of adjustments 1,529

Loss on sale of business 50,027

Total 174,551

Income (loss) from discontinued operations before income taxes ( 64,638 )

Income tax expense (benefit) ( 6,027 )

Income (loss) from discontinued operations, net of tax $ ( 58,611 )

The following table provides significant operating and investing cash flow information for discontinued operations for the year ended December 31, 2020.

There was no significant operating and investing cash flow information for the years ended December 31, 2022 and 2021.

Year Ended December 31,

(In thousands) 2020

Operating activities:

Depreciation and amortization $ 5,511

Loss on sale of Personal Care Films 50,027

Investing activities:

Net proceeds on sale of Personal Care Films $ 55,115

Capital expenditures ( 1,912 )

Total $ 53,203

Assets Held For Sale

In July 2019, the Company committed to a plan to close its manufacturing facility in Lake Zurich, Illinois, which historically was reported within the personal care component of its PE Films segment.

As of December 31, 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.

In August 2007 and December 2008, the Company made an aggregate investment of $ 7.5 million in kaleo, Inc.

(“kaléo”), a privately held specialty pharmaceutical company dedicated to building innovative solutions for serious and life-threatening medical conditions.

Tredegar historically accounted for its investment in kaléo under the fair value option.

At the time of the initial investment, the Company elected the fair value option of accounting since its investment objectives were similar to those of venture capitalists, which typically do not have controlling financial interests.

kaléo’s stock is not publicly traded.

On December 27, 2021, the Company completed the sale of its investment interests in kaléo (Series A-3 Preferred Stock, Series B Preferred Stock and common stock) that, taken together, represented on a fully-diluted basis an approximate 18% interest in kaléo.

Tredegar received closing cash proceeds of $ 47.1 million.

Subsequently, in May 2022, additional cash consideration of $ 1.4 million was received related to customary post-closing adjustments, which is reported in “Other income (expense), net” in the consolidated statements of income.

SUPPLY CHAIN FINANCING

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As of December 31, 2023 and 2022, $ 15.8 million and $ 25.9 million, respectively, of the Company’s accounts payable were financed by participating suppliers through third-party financial institutions.

A reconciliation of the beginning and ending balances of the supply chain financing for the year ended December 31, 2023 is as follows:

(In thousands) 2023

Balance, beginning of year $ 25,927

New obligations entered 79,630

Less payments made ( 90,365 )

Foreign exchange 588

Balance, end of year $ 15,780

CONTINGENCIES

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EXHIBIT INDEX

2.1 Purchase and Sale Agreement, dated as of September 1, 2023, by and among Packfilm US LLC, Film Trading Importacao e Representacao Ltda., Terphane LLC, Terphane Limitada, Tredegar Film Products (Latin America), Inc., Terphane Acquisition Corporation II, TAC Holdings, LLC, Tredegar Investments LLC, Tredegar Corporation and Oben Holding Group S.A.C.

(filed as Exhibit 2.1 of Tredegar’s Current Report on Form 8-K (File No.

1-10258), filed on September 5, 2023, and incorporated herein by reference).

3.1 Amended and Restated Articles of Incorporation of Tredegar (filed as Exhibit 3.1 to Tredegar’s Annual Report on Form 10-K (File No.

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3.2 Amended and Restated Bylaws of Tredegar (filed as Exhibit 3.1 to Tredegar’s Current Report on Form 8-K (File No.

1-10258), filed on March 30, 2020, and incorporated herein by reference)

1-10258), filed on August 7, 2023 , and incorporated herein by reference)

3.3 Amended and Restated Bylaws of Tredegar Corporation, as of August 4, 2023 (filed as Exhibit 3.1 of Tredegar's Current Report on Form 8-K (File No.

1-10258), filed on August 7, 2023, and incorporated herein by reference).

4.1 Description of Registered Securities (filed as Exhibit 4.1 to Tredegar’s Annual Report on Form 10-K (File No 1-10258) for the year ended December 31, 2019, and incorporated herein by reference)

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1-10258), filed on June 30, 2022, and incorporated herein by reference)

10.1.1 Second Amended and Restated Guaranty, dated as of June 29, 2022, by and among the subsidiaries of Tredegar listed on the signature pages thereto in favor of JPMorgan C h ase Bank, N.A., as administrative agent, for the ratable benefit of the Holders of Guaranteed Obligations (as defined therein) (filed as Exhibit 4.2 to Tredegar's Current Report on Form 8-K (File No.

10.1.1 Second Amended and Restated Guaranty, dated as of June 29, 2022, by and among the subsidiaries of Tredegar listed on the signature pages thereto in favor of JPMorgan Chase Bank, N.A., as administrative agent, for the ratable benefit of the Holders of Guaranteed Obligations (as defined therein) (filed as Exhibit 4.2 to Tredegar's Current Report on Form 8-K (File No.

1-10258), filed on June 30, 2022, and incorporated herein by reference)

10.1.2 Second Amended and Restated Pledge Agreement, dated as of June 29, 2022, by and among Tredegar and the subsidiaries of Tredegar listed on the signature pages thereto and JPMorgan C h ase Bank, N.A., as administrative agent, for the ratable benefit of the Secured Parties (as defined therein) (filed as Exhibit 4.3 to Tredegar's Current Report on Form 8-K (File No.

10.1.2 Second Amended and Restated Pledge Agreement, dated as of June 29, 2022, by and among Tredegar and the subsidiaries of Tredegar listed on the signature pages thereto and JPMorgan Chase Bank, N.A., as administrative agent, for the ratable benefit of the Secured Parties (as defined therein) (filed as Exhibit 4.3 to Tredegar's Current Report on Form 8-K (File No.

1-10258), filed on June 30, 2022, and incorporated herein by reference)

10.1.3 Amendment No.

1 to Second Amended and Restated Credit Agreement, dated as of November 29, 2022, among Tredegar Corporation, as borrower, the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, Citizens Bank, N.A.

and PNC Bank, National Association, as co-syndication agents, and Bank of America, N.A., U.S.

Bank National Association and Wells Fargo Bank, National Association, as co-documentation agents, and the other lenders party thereto (filed as Exhibit 10.1 of Tredegar's Second Quarter 2023 Form 10-Q (File No.

1-10258), filed on August 9, 2023, and incorporated herein by reference).

10.1.4 Amendment No.

2 to Second Amended and Restated Credit Agreement, dated as of August 3, 2023, among Tredegar Corporation, as borrower, the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, Citizens Bank, N.A.

and PNC Bank, National Association, as co-syndication agents, and Bank of America, N.A., U.S.

Bank National Association and Wells Fargo Bank, National Association, as co-documentation agents, and the other lenders party thereto (filed as Exhibit 10.2 of Tredegar's Second Quarter 2023 Form 10-Q (File No.

1-10258), filed on August 9, 2023, and incorporated herein by reference).

10.1.5 Amendment No.

3, dated December 27, 2023, to the Second Amended and Restated Credit Agreement, dated June 29, 2022, by and among Tredegar Corporation, as borrower, certain of Tredegar Corporation’s material domestic subsidiaries, as guarantors, the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, Citizens Bank, N.A.

and PNC Bank, National Association, as co-syndication agents, and Bank of America, N.A., U.S.

Bank National Association and Wells Fargo Bank, National Association, as co-documentation agents (filed as Exhibit 4.1 to Tredegar’s Current Report on Form 8-K (File No.

1-10258), filed on December 28, 2023, and incorporated herein by reference).

10.1.6 Third Amended and Restated Pledge and Security Agreement, dated as of December 27, 2023, by and among Tredegar Corporation and the subsidiaries of Tredegar Corporation listed on the signature pages thereto and JPMorgan Chase Bank, N.A., as administrative agent, for the ratable benefit of the Secured Parties (as defined therein) (filed as Exhibit 4.1 to Tredegar’s Current Report on Form 8-K (File No.

1-10258), filed on December 28, 2023, and incorporated herein by reference).

10.2 Reorganization and Distribution Agreement, dated as of June 1, 1989, between Tredegar and Ethyl Corporation (filed as Exhibit 10.1 to Tredegar’s Annual Report on Form 10-K (File No.

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333-230386), filed on March 19, 2019, and incorporated herein by reference)

*10.18 Form of Executive Change-in-Control Severance Agreement (filed as Exhibit 10.1 of Tredegar’s Current Report on Form 8-K (File No.

1-10258), filed on October 4, 2023, and incorporated herein by reference).

10.19 Standard Buyout Commitment Agreement, dated October 31, 2023, by and between Tredegar Corporation and Massachusetts Mutual Life Insurance Company (filed as Exhibit 10.1 of Tredegar's Current Report on Form 8-K (File No.

1-10258), filed on November 6, 2023, and incorporated herein by reference).

+21 Subsidiaries of Tredegar

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

+97 Executive Incentive-based Compensation Recoupment Policy

+101 XBRL Instance Document and Related Items

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Tack, III Director

Waleski Director

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-K

Item 9A. Controls and Procedures