Tredegar (TG) 8-K Completion of Acquisition or Disposition of Assets

EXHIBIT 99.1

Tredegar Corporation

Introduction to Pro Forma Financial Statements (Unaudited)

The accompanying unaudited pro forma financial statements of Tredegar Corporation (“Tredegar”) give effect to the sale of the aluminum extrusions business in Canada (the “Business Sold”) to 6919464 Canada, Inc., as assignee of WXP Holdings, Inc. (the “Purchaser”), an affiliate of H.I.G. Capital (the “Transaction”). A description of the Transaction is provided under Item 2.01 of this Current Report on Form 8-K.

The unaudited pro forma consolidated balance sheet assumes the Transaction occurred on September 30, 2007. Pro forma information is based upon the historical balance sheet data of Tredegar and the Business Sold as of that date. The unaudited pro forma consolidated statements of income give effect to the Transaction for the nine months ended September 30, 2007 and each of the three years in the period ended December 31, 2006, as if the Transaction occurred at the beginning of each period presented. The unaudited pro forma financial statements should be read in conjunction with the consolidated historical financial statements and related notes included in Tredegar’s Annual Report on Form 10-K for the year ended December 31, 2006, and its Quarterly Report on Form 10-Q for the nine months ended September 30, 2007.

Historical results for the Business Sold will be reflected as discontinued operations beginning with Tredegar’s consolidated financial statements for the year ended December 31, 2007.

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Tredegar Corporation
Pro Forma Consolidated Balance Sheet
September 30, 2007
(In Thousands)
(Unaudited)

	Tredegar Historical			Pro Forma Adjustments			Tredegar Pro Forma
Assets
Current assets:
Cash and cash equivalents	$	38,946		$	—		$	38,946
Accounts and notes receivable, net of allowance for          doubtful accounts and sales returns		143,689			(23,126	)(a)		120,563
Income taxes recoverable		4,003			11,140	(b)		15,143
Inventories		64,890			(21,426	)(c)		43,464
Deferred income taxes		7,693			—			7,693
Prepaid expenses and other		3,801			(336	)(c)		3,465
Total current assets		263,022			(33,748	)		229,274
Property, plant and equipment, at cost		684,085			(53,346	)(c)		630,739
Less accumulated depreciation		395,405			(38,669	)(c)		356,736
Net property, plant and equipment		288,680			(14,677	)		274,003
Other assets and deferred charges		87,556			—			87,556
Goodwill and other intangibles		141,848			(6,459	)(c)		135,389
Total assets	$	781,106		$	(54,884	)	$	726,222
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	94,120		$	(19,119	)(c)	$	75,001
Accrued expenses		39,431			(3,803	)(c)		35,628
Income taxes payable		—			—			—
Current portion of long-term debt		638			—			638
Total current liabilities		134,189			(22,922	)		111,267
Long-term debt		43,515			(20,863	)(d)		22,652
Deferred income taxes		78,784			(7,035	)(c)		71,749
Other noncurrent liabilities		17,237			27	(e)		17,264
Total liabilities		273,725			(50,793	)		222,932
Shareholders’ equity:
Common stock, no par value		99,021			—			99,021
Common stock held in trust for savings          restoration plan		(1,301	)		—			(1,301	)
Foreign currency translation adjustment		36,736			(15,048	)(c)		21,688
Gain (loss) on derivative financial instruments		(401	)		(160	)(c)		(561	)
Pension and other postretirement benefit adjustments		(20,289	)		2,829	(c)		(17,460	)
Retained earnings		393,615			8,288	(f)		401,903
Total shareholders’ equity		507,381			(4,091	)		503,290
Total liabilities and shareholders’ equity	$	781,106		$	(54,884	)	$	726,222

See accompanying notes to pro forma financial statements.

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Tredegar Corporation
Pro Forma Consolidated Statement of Income
For the Nine Months Ended September 30, 2007
(In Thousands, Except Per Share Data)
(Unaudited)

	Tredegar Historical			Pro Forma Adjustments			Tredegar Pro Forma
Revenues and other items:
Sales	$	836,902		$	(122,781	)(g)	$	714,121
Other income (expense), net		(1,533	)		—			(1,533	)
		835,369			(122,781	)		712,588
Costs and expenses:
Cost of goods sold		712,236			(122,122	)(g)		590,114
Freight		19,100			(3,644	)(g)		15,456
Selling, general and administrative		52,277			(2,987	)(g)		49,290
Research and development		6,447			—			6,447
Amortization of intangibles		112			—			112
Interest expense		2,009			(954	)(h)		1,055
Asset impairments and costs associated with exit and                    disposal activities		30,182			(27,611	)(g)		2,571
Total		822,363			(157,318	)		665,045
Income (loss) before income taxes		13,006			34,537			47,543
Income taxes		11,114			7,936	(i)		19,050
Net income (loss)	$	1,892		$	26,601		$	28,493
Earnings (loss) per share:
Basic	$	.05		$	.68		$	.73
Diluted		.05			.68			.72
Shares used to compute earnings (loss) per share:
Basic		39,219						39,219
Diluted		39,396						39,396
Dividends per share	$	.12					$	.12

See accompanying notes to pro forma financial statements.

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Tredegar Corporation Pro Forma Consolidated Statement of Income
For the Year Ended December 31, 2006
(In Thousands, Except Per Share Data)
(Unaudited)

	Tredegar Historical		Pro Forma Adjustments			Tredegar Pro Forma
Revenues and other items:
Sales	$	1,116,525	$	(178,965	)(g)	$	937,560
Other income (expense), net		1,444		—			1,444
		1,117,969		(178,965	)		939,004
Costs and expenses:
Cost of goods sold		944,839		(165,465	)(g)		779,374
Freight		28,096		(5,494	)(g)		22,602
Selling, general and administrative		68,360		(4,253	)(g)		64,107
Research and development		8,088		—			8,088
Amortization of intangibles		149		—			149
Interest expense		5,520		(1,231	)(h)		4,289
Asset impairments and costs associated with exit and                    disposal activities		4,080		—	(g)		4,080
Total		1,059,132		(176,443	)		882,689
Income before income taxes		58,837		(2,522	)		56,315
Income taxes		20,636		(411	)(i)		20,225
Net income	$	38,201	$	(2,111	)	$	36,090
Earnings per share:
Basic	$	.99	$	(.05	)	$	.93
Diluted		.98		(.05	)		.93
Shares used to compute earnings per share:
Basic		38,671					38,671
Diluted		38,931					38,931
Dividends per share	$	.16				$	.16

See accompanying notes to pro forma financial statements.

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Tredegar Corporation
Pro Forma Consolidated Statement of Income
For the Year Ended December 31, 2005
(In Thousands, Except Per Share Data)
(Unaudited)

	Tredegar Historical			Pro Forma Adjustments			Tredegar Pro Forma
Revenues and other items:
Sales	$	956,969		$	(148,505	)(g)	$	808,464
Other income (expense), net		(544	)		(1,667	)		(2,211	)
		956,425			(150,172	)		806,253
Costs and expenses:
Cost of goods sold		810,621			(138,156	)(g)		672,465
Freight		24,691			(4,415	)(g)		20,276
Selling, general and administrative		64,723			(3,692	)(g)		61,031
Research and development		8,982			—			8,982
Amortization of intangibles		299			—			299
Interest expense		4,573			(939	)(h)		3,634
Asset impairments and costs associated with exit and                   disposal activities		16,334			(552	)(g)		15,782
Total		930,223			(147,754	)		782,469
Income before income taxes		26,202			(2,418	)		23,784
Income taxes		9,973			(147	)(i)		9,826
Net income	$	16,229		$	(2,271	)	$	13,958
Earnings per share:
Basic	$	.42		$	(.06	)	$	.36
Diluted		.42			(.06	)		.36
Shares used to compute earnings per share:
Basic		38,471						38,471
Diluted		38,597						38,597
Dividends per share	$	.16					$	.16

See accompanying notes to pro forma financial statements.

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Tredegar Corporation Pro Forma Consolidated Statement of Income
For the Year Ended December 31, 2004
(In Thousands, Except Per Share Data)
(Unaudited)

	Tredegar Historical		Pro Forma Adjustments			Tredegar Pro Forma
Revenues and other items:
Sales	$	861,165	$	(151,516	)(g)	$	709,649
Other income (expense), net		15,604		—			15,604
		876,769		(151,516	)		725,253
Costs and expenses:
Cost of goods sold		717,120		(136,227	)(g)		580,893
Freight		22,398		(4,371	)(g)		18,027
Selling, general and administrative		60,030		(2,785	)(g)		57,245
Research and development		15,265		—			15,265
Amortization of intangibles		330		—			330
Interest expense		3,171		(563	)(h)		2,608
Asset impairments and costs associated with exit and                   disposal activities		22,973		(10,407	)(g)		12,566
Total		841,287		(154,353	)		686,934
Income from continuing operations before income taxes		35,482		2,837			38,319
Income taxes		9,222		1,173	(i)		10,395
Income from continuing operations	$	26,260	$	1,664		$	27,924
Earnings per share from continuing operations:
Basic	$	.69	$	.04		$	.73
Diluted		.68		.04			.73
Shares used to compute earnings per share:
Basic		38,295					38,295
Diluted		38,507					38,507
Dividends per share	$	.16				$	.16

See accompanying notes to pro forma financial statements.

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Tredegar Corporation

Notes to Pro Forma Financial Statements (Unaudited)

(a) Reflects the removal of accounts receivable for the Business Sold of $23.6 million and the addition of accounts receivable of $489,000 due from an affiliate of the Purchaser for the assumption of gains and losses relating to certain hedging arrangements.

(b) Reflects the removal of income taxes recoverable for the Business Sold of $288,000 and the addition of income taxes recoverable of $11.4 million relating to a worthless stock deduction for the Business Sold that will be recognized in Tredegar’s 2008 consolidated income tax return, but which is expected to be realized by a reduction of Tredegar’s quarterly estimated income tax payments by the end of the third quarter of 2008.

(c) Reflects the removal of assets, liabilities and items reflected directly in shareholders’ equity for the Business Sold. See also Notes (a), (b) and (e). Goodwill of $6.5 million relating to the Aluminum Extrusions reporting unit was allocated to the Business Sold on a relative basis using the estimated fair value of the Business Sold (the after-tax cash flow expected from the Transaction) when it was classified as held for sale at the end of December 2007, and the estimated fair value of the U.S. aluminum extrusions business, which was retained. The fair value of the U.S. aluminum extrusions business was estimated using comparable enterprise value-to-EBITDA multiples as of December 31, 2007. The total goodwill for the Aluminum Extrusions reporting unit was $17.9 million at December 31, 2007, before allocation to the Business Sold.

(d) Reflects the proceeds received after working capital and other adjustments and transaction costs as if the Transaction had occurred on September 30, 2007. Proceeds are assumed to paydown borrowings outstanding under Tredegar’s revolving credit facility.

(e) Reflects the removal of pension and postretirement benefit obligations for the Business Sold and the addition of a fixed obligation retained by Bon L Holdings Corporation, a subsidiary of Tredegar (the “Seller”) for pension plans of $726,000 (approximately $655,000 at present value) and the Seller’s expected cost of $500,000 for insurance associated with the Transaction.

(f) Represents the pro forma after-tax gain from the Transaction considering the pro forma proceeds, the carrying value of assets, liabilities and direct equity items of the Business Sold and the cash income tax benefits expected to be realized as noted in (a)-(e) above. The Transaction is expected to generate capital loss carry-forwards for which realization is not likely, the possible tax benefits of which are estimated at approximately $5.4 million. Accordingly, a valuation allowance for approximately $5.4 million has been included in the pro forma financial statements so that no net deferred income tax assets associated with capital loss carry-forwards are recognized.

(g) Reflects the removal of the revenues and expenses of the Business Sold.

(h) Reflects the reduction of interest expense for the pro forma proceeds used to paydown long-term debt (see Note (d)). The interest rate assumed was 6.1% for the nine months ended September 30, 2007 and 5.9% in 2006, 4.5% in 2005 and 2.7% in 2004, which were the weighted average rates experienced in those periods. No interest expense reduction was assumed on the $11.4 million current income tax benefits expected (see Note (b)).

(i) Includes income taxes accrued from operations of the Business Sold and a marginal income tax rate of 36% on pro forma interest expense adjustments.

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