Norman A. Scher, Tredegar's president and chief executive officer, said: "Fourth-quarter and full-year earnings from manufacturing operations increased over 2001. Profits in our films business were greatly helped by payments related to volume shortfalls under take-or-pay agreements that are unlikely to recur in 2003. In addition, results include domestic diaper backsheet sales to P&G that are expected to be discontinued by the end of the first quarter. Aluminum profits were up, but demand remains weak and prospects for a near-term recovery are not promising. We expect that 2003 manufacturing earnings will trail 2002 levels."

Scher added: "We should see signs of improvement in Film Products during the second half of 2003. The bulk of the backsheet sales decline will soon be behind us, and we're excited about several product introductions including a new feminine pad topsheet for P&G for European markets. Finally, if the economy strengthens, we should see some pick-up in our aluminum business. In the meantime, we'll continue to pursue opportunities to streamline operations and reduce overall costs."

Regarding the aluminum extrusion business, Scher said: "Despite slightly lower volume, our focus on customer service and cost reduction enabled us to increase profits. While fourth-quarter profits should exceed last year's depressed levels, we're not optimistic as we enter the seasonally weak winter months. Hopefully, business conditions will improve as we move through the first half of 2003."

Tredegar also reported that net pension income is expected to decline in 2003 by approximately $4.4 million (7 cents per share after taxes).

MANUFACTURING OPERATIONS
Film Products

Fourth-quarter sales in Film Products were flat at $96.2 million while operating profit excluding unusual items was $18.9 million, up 7% from $17.7 million in 2001. Fourth-quarter 2001 results include approximately $900,000 in goodwill amortization expense. Volume for the quarter was 72 million pounds, down 11% from 81 million pounds in 2001.

Fourth-quarter sales and operating profit include $6.8 million and $1.9 million in 2002 and 2001, respectively, related to volume shortfall payments. Fourth-quarter and full-year operating profit also include a net gain from unusual items of $5.6 million in connection with terminations and revisions of supply contracts with P&G (NYSE:PG) and related asset write-downs. These items are summarized in the following table:

Excluding the impact of volume shortfall payments and unusual items, fourth-quarter sales were $89.4 million and operating profit was $12.1 million. On a similar basis, fourth-quarter 2001 sales were $94.3 million and operating profit was $15.8 million.

Scher said: "Given our rapidly changing product mix, near-term forecasting is very difficult. However, we expect operating profit in each of the next two quarters to be around $12 million. We're optimistic that continued growth from new products and cost reductions will have an increasingly positive impact as the year progresses. By year-end, we should be well positioned to resume growth in both sales and profits during 2004."

Tredegar's domestic backsheet business has been declining since 2000, when domestic backsheet sales to P&G and other customers were $136.1 million. Domestic backsheet sales in 2002 were $98.2 million. During 2001 and 2002, the company was successful in offsetting the negative profit impact of this decline by commercializing new diaper and feminine hygiene components for a growing global customer base.

Last October, Tredegar disclosed that it expected the domestic backsheet sales decline to accelerate in the near term. At that time, the company was anticipating the loss of additional domestic backsheet business from P&G, which did occur. Sales related to discontinued P&G domestic backsheet business totaled approximately $60 million in 2002. These sales should be fully eliminated by the end of the first quarter of 2003. Film Products' total 2002 sales were $376.9 million. Sales to P&G were approximately $240 million in 2002.

While Tredegar will continue to sell backsheet products on a global basis to P&G and other customers, the company's growth strategy is based on the ongoing development of new products, primarily apertured and elastic materials for global personal care markets. Tredegar has established sales and product development relationships with all of the major global producers of diapers and sanitary napkins as well as most regional and private label manufacturers. The company is developing several new personal care products for P&G and other customers that are expected to generate significant revenue beginning in 2003. As an example, Tredegar cited a new and improved apertured topsheet product for P&G's sanitary napkin business that is being introduced in Europe.

Capital expenditures were $24 million in 2002 versus $25 million in 2001. In 2003, Film Products expects to spend approximately $45 million to support continued global expansion and product development efforts.

Aluminum Extrusions

Fourth-quarter sales in Aluminum Extrusions were $80.7 million, down 3% from $83.2 million in 2001. Operating profit excluding unusual items more than doubled to $3.6 million from $1.7 million in 2001. Volume for the quarter was 53 million pounds, down 5% from 56 million pounds in 2001.

Full-year sales were $360.3 million, down 5% from $380.4 million in 2001. Excluding unusual items, operating profit was $27.3 million, up 7% from $25.4 million in 2001. Annual volume declined 4% to 234 million pounds from 244 million pounds in 2001.

Capital expenditures were $5 million in 2002 and are expected to be approximately $15 million in 2003.

Scher said: "Our aluminum business continues to be affected by poor economic conditions. While the winter months are historically weak, we see no signs of a significant upturn. We'll continue to focus on reducing costs and providing superior customer service. Until the economy strengthens, we do not expect to see meaningful improvement in this business."

THERICS

The fourth-quarter operating loss at Therics was $3.0 million (5 cents per share after taxes) compared to a loss of $3.7 million (7 cents per share after taxes) in 2001. The loss for the year was $13.1 million (22 cents per share after taxes) versus $12.9 million (21 cents per share after taxes) in 2001. Efforts to sell Therics are continuing.

TREDEGAR INVESTMENTS

Tredegar Investments had a net after-tax loss of $10.4 million (27 cents per share) for the quarter compared to a net after-tax loss of $7.8 million (21 cents per share) in 2001. The loss includes write-downs of direct and indirect investments caused by recent events indicating lower valuations. During the quarter, the depreciation in the net asset value of Tredegar's venture portfolio related to investment performance was $12.5 million. On December 31, the estimated fair value of venture capital investments was $99.4 million. Tredegar's Web site, www.tredegar.com, contains a detailed summary of the company's venture capital investments.

On October 15, 2002, Tredegar announced that it was exploring alternatives to maximize the after-tax value of its venture capital investments, including the sale of substantially all portfolio investments in a secondary market transaction. The company hopes to make an announcement regarding the status of the portfolio by the end of the first quarter.

UNUSUAL ITEMS AND DISCONTINUED OPERATIONS

Fourth-quarter results include a nonrecurring net after-tax gain of $2.4 million (6 cents per share) related primarily to contract terminations and revisions and asset impairments in Film Products. Fourth-quarter 2001 results include net after-tax charges totaling $3.5 million (9 cents per share) related to previously announced plant closings. Fourth-quarter 2001 results also include a net loss from discontinued operations of $1.7 million (4 cents per share) related to Molecumetics, Tredegar's former drug discovery subsidiary, which was closed in July of 2002.

Full-year results for 2002 include a net after-tax gain for unusual items of $1.4 million (4 cents per share). Year-end results for 2001 include net after-tax charges of $8.3 million (22 cents per share) related primarily to restructuring activities and the reversal of income tax contingency accruals upon favorable conclusion of IRS examinations.

The net loss in 2002 from discontinued operations was $8.7 million (23 cents per share) versus a net loss of $4.3 million (11 cents per share) in 2001.

Further details regarding unusual items and discontinued operations are provided in the financial tables included with this press release.

QUARTERLY CONFERENCE CALL

Tredegar management will host a conference call on January 21 at 3:00 p.m. EST to discuss its earnings results. Individuals can access the call by dialing 888-662-7338. Individuals calling from outside of the United States should dial 706-679-4074. A replay of the call will be available, beginning at 6:00 p.m. on January 21 through January 28, by dialing 800-642-1687 (domestic) or 706-645-9291 (international), conference ID 7395304.

Alternatively, individuals may listen to the live webcast of the presentation by visiting the Tredegar Web site at www.tredegar.com. The webcast of the call may be accessed by selecting the "Webcast of fourth-quarter results" link under "What's New" on the home page. An archived version of the call will be available for replay on the Web site for approximately two weeks.

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

The words "hope," "expect," "are likely," and similar expressions identify "forward-looking" statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements, including without limitation the following:

Film Products is highly dependent on sales to one customer, which comprised approximately 30% of Tredegar's net sales in 2002. Film Products' success in this regard depends on its ability to develop products that meet this customer's requirements as well as market acceptance of this customer's products. Our ability to grow Film Products and attract new customers depends on developing and delivering new products, especially in the personal care market. Personal care products are now being made with a variety of new materials, replacing traditional backsheet and other components. While we have substantial technical resources, there can be no assurance that our new products can be brought to market successfully, or at the same level of profitability and market share of replaced films. A shift in customer preferences away from our technologies, our inability to develop and deliver new profitable products, or delayed acceptance of our new products in domestic and foreign markets, could have a material adverse effect on our business.

Aluminum Extrusions is a cyclical business that is highly dependent on the economic conditions of its end-use markets in the U.S. and Canada, particularly in the construction, distribution and transportation industries. This business is also subject to seasonal slowdowns during the winter months. Aluminum Extrusions is under increasing domestic and foreign competitive pressures, including a growing presence of Chinese imports in a number of Aluminum Extrusions' markets.

Future performance is also influenced by the costs incurred by Film Products and Aluminum Extrusions. There is no assurance, however, that cost control efforts will positively impact results or that such efforts could be increased to a level that offsets any additional declines in revenues.

With the shutdown of Molecumetics, the current operations of Tredegar Biotech consist of Therics. Tredegar is attempting to sell Therics, but given the market conditions in the biotech sector, there is no assurance that we will be successful in those efforts. We will continue to incur losses as we support Therics' operations during the sale process. There is no assurance we will realize any return on our continuing investment in Therics.

Tredegar Investments holds illiquid investments in early-stage technology companies, the continued existence and value of which generally depend on the equity markets and these companies' ability to raise additional capital through subsequent rounds of private financing or initial public offerings. In addition, these companies are subject to the risk that they will not be able to commercialize their technology, products or business concepts.

Tredegar's efforts to maximize the after-tax value of its venture capital investments could result in the sale of substantially all of the portfolio in the secondary market. Recent transactions in the secondary market have been completed with significant discounts to reported fair value. The ultimate after-tax value of the portfolio under a hold strategy is uncertain. If Tredegar does not dispose of a substantial portion of its venture capital portfolio by the end of 2003, it will forego significant tax benefits that would be available on the carry-back of possible capital losses.

Tredegar does not undertake to update any forward-looking statement made in this press release to reflect any change in management's expectations or any change in conditions, assumptions or circumstances on which such statements are based.

Based in Richmond, Va., Tredegar Corporation is a global manufacturer of plastic films and aluminum extrusions.

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