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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
July 16, 1997
TUSCARORA INCORPORATED
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(Exact name of registrant as specified in its charter)
PENNSYLVANIA 0-17051 25-1119372
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
800 FIFTH AVENUE, NEW BRIGHTON, PENNSYLVANIA 15066
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (412) 843-8200
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Item 5. Other Events.
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On July 16, 1997, the State Court of Rockdale County, Georgia
entered an Order dismissing the civil action entitled L. MARIE ROBERTS v.
TUSCARORA INCORPORATED, JOE ALCOTT and LARRY MOONEYHAN, Civil Action File
No. 95-SV-1345. The Order was entered following receipt by the Court of a
letter from the plaintiff Roberts requesting that the proceeding be dismissed.
The proceeding was last reported in the Company's annual report on Form 10-K
for the fiscal year ended August 31, 1996.
On July 22, 1997, the Company mailed its quarterly report for the
fiscal quarter ended May 31, 1997 to the Company's shareholders. A copy of
the report is filed as Exhibit 99.1 to this current report.
On July 25, 1997, the Company issued a press release with respect to
the acquisition by the Company of the business and operations of Arrowtip Group,
a manufacturer of custom molded and fabricated foam packaging products in the
United Kingdom. A copy of the press release is filed as Exhibit 99.2 to this
current report. The acquisition does not constitute the acquisition of a
significant amount of assets for purposes of Item 2 of Form 8-K.
Reference is made to the quarterly report to shareholders and the press
release for information with respect to fiscal fourth quarter performance.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(c) Exhibits
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The following exhibits are filed as part of this current report:
Exhibit No. Document
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99.1 Quarterly report to shareholders for the fiscal quarter ended
May 31, 1997.
99.2 Press release with respect to the acquisition by the Company
of the Arrowtip Group in the United Kingdom.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TUSCARORA INCORPORATED
(Registrant)
By /s/ JOHN P. O'LEARY, JR.
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John P. O'Leary, Jr.,
President and Chief
Executive Officer
Date: July 25, 1997
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TUSCARORA INCORPORATED
FORM 8-K
Date of Report: July 16, 1997
Exhibit Index
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The following exhibits are filed as part of this current report on
Form 8-K.
Exhibit No. Document
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99.1 Quarterly report to shareholders for the fiscal quarter ended
May 31, 1997.
99.2 Press release with respect to the acquisition by the Company
of the Arrowtip Group in the United Kingdom.
<PAGE> 1
Exhibit 99.1
[LOGO]
THIRD QUARTER 3
ENDED MAY 31, 1997
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TO OUR SHAREHOLDERS:
Results for the third fiscal quarter of FY97 were mixed. We were pleased to
have achieved record net sales for a third quarter of $52.6 million, an
increase of 17% over net sales of $45.1 for the same quarter last year.
However, we were disappointed to report net income of $1.9 million, compared
with net income of $2.4 million for the third quarter of the last fiscal year.
This resulted in earnings of $.20 per share, a 20% decrease from earnings of
$.25 per share in the same quarter last year.
For the nine months ended May 31, 1997, net sales totaled a record $155.0
million, an increase of 14% over net sales of $135.6 million for the year
earlier period. Net income was $7.7 million, compared to net income of $7.5
million, while earnings per share were $.81, compared to $.80 for the first
nine months of FY96.
The decline in net income for the quarter was largely due to the combined
impact of significantly substandard gross profit margins at two facilities
acquired in the first quarter of the current fiscal year and at two of the
company's existing U.S. manufacturing facilities, and decreased shipping levels
to two large customers who were adjusting their inventory levels and reducing
packaging requirements.
Recent shipping rates have shown some improvement over the early weeks of
the third quarter, and the operating problems at the two existing manufacturing
facilities have been fully identified and substantially corrected. However, we
continue to experience lower than expected gross profit margins at certain of
our manufacturing facilities, principally in the businesses recently acquired
and at plants newly opened in the current fiscal year. Also, sales to one of
our large customers continue to be substantially below prior years' levels.
These difficulties, combined with the additional selling, administrative and
interest expenses resulting from the acquisition on May 30, 1997 of an
integrated materials business in Hayward, California, are likely to negatively
impact net income for the fourth quarter of FY97.
Clearly, the rapid expansion of our business in the past year has not been
without a cost to current profits. The businesses we acquire are often not
strong performers. While this allows us to purchase these operations at
attractive prices, it does take time and management skill to bring their
profitability up to our objectives. Similarly, opening new manufacturing
facilities always has a cost in terms of training, to achieve desired
efficiency levels. Also, margins may be diminished as production is moved from
profitable plants and added to the base of business in the new facility.
In most years, when we have not been as aggressive and focused on sales
growth, the impact of acquisitions and the opening of new facilities has
usually been absorbed with minimal effect on the company's earnings. While we
may have been overly ambitious in growing the business this year, you can be
assured that we are focusing the best of our management abilities on bringing
the profit margins at all of our new businesses and manufacturing facilities up
to the high standards that we expect, and generally achieve, from our mature
operations. In the long run, I believe that the actions for growth that we have
taken, and will continue to take this year, will pay off handsomely.
On a related note, in May we announced the acquisitions of a thermoforming
business in Southern California and an integrated materials business in the
city of Hayward, on San Francisco Bay. We also announced the planned opening
next year of a foam molding plant in Tijuana, Mexico. Collectively, this
expansion will give us a significant presence on the West Coast, the one major
market in the U.S. in which we had not been actively participating.
While earnings for this quarter are certainly disappointing and the
earnings for the fourth quarter are likely to be adversely affected as well, we
believe that we have a sound, long-term strategy in place to grow a larger and
more profitable business. That has been the company's track record over many
years and we are confident we can continue on that path. Your support through
these less than ideal periods is most appreciated.
Very truly yours,
/s/ JOHN P. O'LEARY, JR.
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John P. O'Leary, Jr.
President & CEO
July 17, 1997
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
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Three Months Ended Nine Months Ended
May 31, May 31,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Net Sales $52,592,726 $45,113,282 $155,009,971 $135,597,020
Cost of Sales 41,194,724 34,563,391 118,384,373 103,176,672
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Gross profit 11,398,002 10,549,891 36,625,598 32,420,348
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Selling and Administrative Expenses 7,276,063 5,903,900 21,199,529 18,003,941
Interest Expense 943,397 693,752 2,666,076 2,087,718
Other (Income) Expense 57,592 78,323 163,320 46,208
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8,277,052 6,675,975 24,028,925 20,137,867
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Income before income taxes 3,120,950 3,873,916 12,596,673 12,282,481
Provision for Income Taxes 1,235,572 1,502,649 4,945,935 4,770,074
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Net income $ 1,885,378 $ 2,371,267 $ 7,650,738 $ 7,512,407
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Net income per share $0.20 $0.25 $ 0.81 $ 0.80
Dividends per share - - $ 0.093 $ 0.087
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Weighted average number of shares of
Common Stock outstanding 9,464,026 9,399,204 9,445,777 9,344,844
===========================================================================================================
</TABLE>
Net income per share, dividends per share and weighted average number of shares
of Common Stock outstanding for the three and nine months ended May 31, 1996
have been adjusted to reflect a 50% share distribution declared on December 18,
1996 for distribution on January 13, 1997 to shareholders of record on December
27, 1996.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
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May 31, May 31,
1997 1996
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<S> <C> <C>
ASSETS
Current Assets $ 52,495,845 $ 44,258,328
Property, Plant and Equipment--Net 89,207,366 76,050,677
Other Assets--Net 9,731,984 5,069,555
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Total assets $151,435,195 $125,378,560
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $ 22,820,520 $ 20,605,952
Long-Term Debt--less current maturities 52,150,579 38,363,084
Other Long-Term Liabilities 4,431,044 3,058,395
Shareholders' Equity 72,033,052 63,351,129
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Total liabilities and shareholders' equity $151,435,195 $125,378,560
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</TABLE>
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[LOGO]
Packaging and Protective Products
SENSIBLE SOLUTIONS...SUPERIOR SERVICE
TUSCARORA INCORPORATED
IS INCORPORATED UNDER THE
LAWS OF THE COMMONWEALTH
OF PENNSYLVANIA.
STOCK TRANSFER AGENT
AND REGISTRAR:
CHASE MELLON
SHAREHOLDER SERVICES L.L.C.
FOUR STATION SQUARE
PITTSBURGH, PA 15219
TUSCARORA INCORPORATED
800 FIFTH AVENUE
RECYCLED NEW BRIGHTON, PA 15066
LOGO 412.843.8200
<PAGE> 1
Exhibit 99.2
FOR IMMEDIATE RELEASE
CONTACT: Brian C. Mullins INVESTOR RELATIONS CONTACT:
412/843-8200 John Nesbett/Jason Thompson
Lippert Heilshorn & Associates
212/838-3777
TUSCARORA ANNOUNCES ACQUISITION
OF UK PACKAGING MANUFACTURER
NEW BRIGHTON, PA - July 25, 1997 -- Tuscarora Incorporated (NASDAQ NM:TUSC)
today announced is has acquired the business and operations of Arrowtip Group, a
manufacturer of custom molded and fabricated foam packaging products. Arrowtip
Group has annual sales of approximately $8,000,000 (L5,000,000), and serves more
than 500 customers throughout the United Kingdom. Arrowtip has a foam molding
facility in Norwich and molding and fabricating operations in London. Arrowtip
is a major supplier of packaging to the consumer products and automotive
industries.
This acquisition, completed today, will bring Tuscarora's annual United
Kingdom sales to approximately $30,000,000 (L19,000,000), further strengthening
the company's position as the largest custom molder of foam plastics products in
the UK. Tuscarora first entered the UK market in February 1995 with the
acquisition of M.Y. Trondex Limited, with a plant in Northampton, England. The
company subsequently opened a facility in Spennymoor, England in June 1996, and
acquired EPS Moulders Limited, a foam molder in Livingston, Scotland in October
1996.
John P. O'Leary, Jr., president and chief executive officer, said, "We are
extremely pleased to have this opportunity to combine the strengths of the
Arrowtip organization with our current Tuscarora operations in the UK. This
acquisition will provide added service and capabilities to the Arrowtip customer
base, and should result in enhanced profitability for Tuscarora's shareholders."
The company plans to consolidate the operation in Norwich into the London
molding facility and its Northampton plant. Certain key manufacturing personnel
from Norwich will
--more--
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be relocating among the company's four manufacturing facilities in the UK. The
Northampton site will continue to serve as administrative headquarters for all
Tuscarora activities in the UK.
FISCAL FOURTH QUARTER PERFORMANCE
Tuscarora also announced that it continues to experience lower than
expected gross profit margins at certain manufacturing facilities, principally
at sites recently acquired and at plants newly opened this fiscal year.
Shipments to one of the company's large customers also continue to be
substantially below prior years' levels. These factors, combined with additional
selling, administrative and interest expenses resulting from the May 30, 1997
acquisition of an integrated materials business in Hayward, California, will
negatively impact net income for the fourth quarter of fiscal 1997.
O'Leary commented concerning fourth quarter performance, "Clearly, the
rapid expansion of our business in the past year has not been without a cost to
current profits. Time and management skill are required to raise the
profitability levels of the businesses we have acquired. Similarly, new
manufacturing facilities amass many start-up costs before achieving desired
efficiency levels. As production is moved from profitable plants and added to
the base of business in a new facility, margins generally diminish in the short
term. In response, we are concentrating out best management abilities to raise
profit margins at all facilities to the high standards that we expect, and
generally achieve, in our mature operations. In the long run, I believe the
actions for growth that we have taken this year, as well as this current
transaction involving the Arrowtip business, will pay off handsomely."
Tuscarora Incorporated custom designs and manufactures interior
protective packaging, material handling solutions and componentry from a broad
range of materials. One of the world's largest manufacturers of custom molded
products made from expanded foam plastic materials, Tuscarora also integrates
multiple materials, such as corrugated paperboard, molded and/or diecut foam
plastics, thermoformed plastics and wood, to meet each customer's specific
end-use requirements. Tuscarora serves over 3,000 customers located in the
United States, Canada, Mexico and the United Kingdom from 34 manufacturing
locations. Among the company's customers are major manufacturers in the high
technology, consumer electronics, major appliance and automotive industries.
