<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________________to ________________________
Commission file number 000-17051
Tuscarora Incorporated
(Exact name of registrant as specified in the charter.)
Pennsylvania 25-1119372
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
800 Fifth Avenue
New Brighton, Pennsylvania 15066
(Address of principal executive offices)
(Zip Code)
724-843-8200
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for at least the past 90 days.
Yes X No
--- ---
As of July 1, 1998, 9,499,252 shares of Common Stock, without par
value, of the registrant were outstanding.
<PAGE> 2
TUSCARORA INCORPORATED
INDEX
Page
----
Part I. Financial Information
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets at
May 31, 1998 and August 31, 1997 3
Condensed Consolidated Statements of
Income - Three and nine month periods
ended May 31, 1998 and May 31, 1997 4
Condensed Consolidated Statements of
Cash Flows - Nine months ended May 31,
1998 and May 31, 1997 5
Notes to Condensed Consolidated Financial
Statements 6 - 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations. 8 - 10
Part II. Other Information
Item 1. Legal Proceedings 11
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TUSCARORA INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MAY 31, AUGUST 31,
1998 1997
-------------- -------------
(UNAUDITED)
ASSETS
------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 659,634 $ 5,095,149
Trade accounts receivable, net of provision for losses 32,990,537 31,667,668
Inventories 20,481,531 18,238,886
Prepaid expenses and other current assets 2,843,111 1,592,284
------------- -------------
56,974,813 56,593,987
PROPERTY, PLANT AND EQUIPMENT, net 98,853,066 93,114,834
OTHER ASSETS
Goodwill 8,308,092 8,540,479
Other non-current assets 3,771,032 4,138,260
------------- -------------
Total Assets $ 167,907,003 $ 162,387,560
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Current maturities of long-term debt $ 5,133,332 $ 5,133,332
Accounts payable 14,315,630 16,714,670
Accrued income taxes 627,092 390,008
Accrued payroll and related taxes 1,065,213 910,090
Other current liabilities 3,446,807 3,661,408
------------- -------------
24,588,074 26,809,508
LONG-TERM DEBT - less current maturities 61,390,064 57,166,326
DEFERRED INCOME TAXES 1,263,573 2,417,725
OTHER LONG-TERM LIABILITIES 3,214,884 3,176,653
------------- -------------
Total Liabilities 90,456,595 89,570,212
SHAREHOLDERS' EQUITY
Preferred Stock - par value $.01 per share;
authorized shares, 1,000,000; none issued -- --
Common Stock - without par value; authorized shares,
20,000,000; issued shares, 9,495,710 at May 31,
1998 and 9,479,241 at August 31, 1997 9,495,710 9,479,241
Capital surplus 1,233,814 1,071,878
Retained earnings 66,702,487 62,291,940
Foreign currency translation adjustment 95,344 49,999
------------- -------------
77,527,355 72,893,058
Less cost of reacquired shares of Common Stock;
4,620 shares at May 31, 1998 and
August 31, 1997 (76,947) (75,710)
------------- -------------
Total Shareholders' Equity 77,450,408 72,817,348
------------- -------------
Total Liabilities and Shareholders' Equity $ 167,907,003 $ 162,387,560
============= =============
</TABLE>
Note: The consolidated balance sheet at August 31, 1997 has been taken from the
audited financial statements and condensed.
See notes to condensed consolidated financial statements.
3
<PAGE> 4
TUSCARORA INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MAY 31, MAY 31,
1998 1997 1998 1997
------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net Sales $59,607,631 $52,592,726 $176,819,100 $155,009,971
Cost of Sales 46,429,276 41,194,724 137,138,285 118,384,373
----------- ----------- ------------ ------------
Gross profit 13,178,355 11,398,002 39,680,815 36,625,598
Selling and Administrative Expenses 7,551,497 7,276,063 23,582,215 21,199,529
Restructuring Costs -- -- 3,495,336 --
Interest Expense 1,288,094 943,397 3,622,034 2,666,076
Other Expense 117,743 57,592 62,237 163,320
----------- ----------- ------------ ------------
Total expenses 8,957,334 8,277,052 30,761,822 24,028,925
----------- ----------- ------------ ------------
Income before income taxes 4,221,021 3,120,950 8,918,993 12,596,673
Provision for Income Taxes 1,650,773 1,235,572 3,465,559 4,945,935
----------- ----------- ------------ ------------
Net income $ 2,570,248 $ 1,885,378 $ 5,453,434 $ 7,650,738
=========== =========== ============ ============
Basic net income per share $ 0.27 $ 0.20 $ 0.58 $ 0.81
=========== =========== ============ ============
Diluted net income per share $ 0.27 $ 0.20 $ 0.56 $ 0.80
=========== =========== ============ ============
Weighted average number of shares
of Common Stock outstanding
Basic 9,488,238 9,464,026 9,482,156 9,445,777
=========== =========== ============ ============
Diluted 9,638,096 9,620,241 9,662,072 9,613,481
=========== =========== ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
TUSCARORA INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED MAY 31,
1998 1997
------------ ------------
<S> <C> <C>
Operating Activities
Net Income $ 5,453,434 $ 7,650,738
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 12,067,400 11,214,791
Amortization 858,930 572,113
Write down of assets due to restructuring 2,085,774 --
Provision for losses on receivables 356,387 477,302
Decrease in deferred income taxes (1,160,104) (35,126)
Loss on sale of property, plant and equipment, net 269,928 63,448
Stock compensation expense 10,357 10,126
Changes in operating assets and liabilities, net
of effects of business acquisitions:
Decrease (increase):
Trade accounts receivable (1,623,654) 302,388
Inventories (2,237,954) (1,993,181)
Prepaid expenses and other current assets (1,440,766) (264,221)
Other non-current assets (164,082) --
Increase (decrease):
Accounts payable (2,426,705) (3,564,557)
Accrued income taxes 234,330 (742,686)
Accrued payroll and related taxes 154,095 (136,469)
Other current liabilities (94,217) (1,539,586)
Other long-term liabilities (22,873) --
------------ ------------
Net cash provided by operating activities 12,320,280 12,114,779
------------ ------------
Investing Activities
Purchase of property, plant and equipment (20,849,776) (15,332,867)
Business acquisitions, net of cash acquired (135,145) (10,121,789)
Proceeds from sale of property, plant and equipment 1,060,164 856,502
------------ ------------
Net cash used for investing activities (19,924,757) (24,598,154)
------------ ------------
Financing Activities
Proceeds from long-term debt 8,000,000 15,700,000
Payments on long-term debt (3,989,189) (4,559,646)
Dividends paid (1,042,887) (881,558)
Proceeds from sale of Common Stock 166,811 327,827
------------ ------------
Net cash provided by financing activities 3,134,735 10,586,623
------------ ------------
Effect of Foreign Currency Exchange Rate Changes
on Cash and Cash Equivalents 34,227 (71,629)
------------ ------------
Net decrease in cash and cash equivalents (4,435,515) (1,968,381)
Cash and Cash Equivalents at Beginning of Period 5,095,149 3,379,776
------------ ------------
Cash and Cash Equivalents at End of Period $ 659,634 $ 1,411,385
============ ============
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE> 6
TUSCARORA INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Condensed Consolidated Financial Statements
The condensed consolidated balance sheet at May 31, 1998 and the
consolidated statements of income and consolidated statements of cash flows
for the periods ended May 31, 1998 and May 31, 1997 have been prepared by
the Company, without audit. In the opinion of Management, all adjustments
necessary to present fairly the financial position, results of operations
and changes in cash flows at May 31, 1998 and for the periods presented
have been made.
The accompanying condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions for Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required for complete financial statements
prepared in accordance with generally accepted accounting principles. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's 1997 Annual Report to Shareholders and incorporated by reference
in the Company's annual report on Form 10-K for the fiscal year ended
August 31, 1997.
The results of operations for the period ended May 31, 1998 are
not necessarily indicative of the operating results to be expected for the
full year.
2. Inventories
Inventories are summarized as follows:
May 31, August 31,
1998 1997
------------ ------------
Finished goods $ 10,246,597 $ 10,511,267
Work in process 149,573 154,962
Raw materials 8,032,144 5,820,100
Supplies 2,053,217 1,752,557
------------ ------------
$ 20,481,531 $ 18,238,886
============ ============
3. Claims and Contingencies
A lawsuit seeking substantial compensatory and punitive damages
as a result of the alleged wrongful death of an employee was filed against
the Company in December 1996. See Item 1 under Part II of this quarterly
report for information regarding this lawsuit. In addition, several legal
and administrative proceedings against the Company involving claims of
employment discrimination are pending. In the opinion of Management, the
disposition of the proceedings should not have a material adverse effect on
the Company's financial position or results of operations.
6
<PAGE> 7
4. Restructuring Costs
On February 2, 1998, the Company initiated a restructuring plan
to reduce costs and increase future financial performance through a
workforce reduction, consolidation of certain product design centers and
the write-down of certain buildings and equipment that will no longer be
employed in the Company's operations. The total restructuring costs
amounted to approximately $3.5 million. The principal component of the
restructuring plan was a charge of approximately $2.1 million to cover the
write-down of the carrying values of the property and equipment.
In addition, the restructuring costs included estimated employee
termination costs of $1.0 million, of which approximately $614,000 was paid
as of May 31, 1998. In connection with the restructuring plan,
approximately 30 employees were terminated or accepted an early retirement
package. These employees were associated with the Company's field sales,
design, manufacturing and marketing activities and general corporate
overhead. The balance of the charge, approximately $400,000, relates to
other restructuring costs associated with the plan.
5. Other Information
During the quarter ended February 28, 1998, the Company adopted
the provisions of Statement of Financial Accounting Standards (SFAS) No.
128 "Earnings Per Share". SFAS No. 128 replaced the calculation of primary
and fully diluted net income per share previously used with a calculation
of basic and diluted net income per share. Basic net income per share
computations are based on the weighted average number of shares of common
stock outstanding. Diluted net income per share computations reflect the
assumed exercise of outstanding stock options based on the treasury stock
method as prescribed by SFAS No. 128. Net income per share amounts for all
prior periods have been restated to conform to SFAS No. 128 requirements.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting of
Comprehensive Income" and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". These statements, which must be
adopted by the Company by the end of its 1999 fiscal year, are not expected
to have a material effect on the consolidated financial statements.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - THIRD QUARTER FISCAL 1998
COMPARED TO THIRD QUARTER FISCAL 1997
Net sales for the three months ended May 31, 1998 were $59.6 million,
an increase of $7.0 million, or 13.3%, over the same period of fiscal 1997.
Approximately 52.2% of the increase in net sales was due to the acquisitions of
Thermoformers Plus, Allgood Industries and Arrowtip Group Ltd. in April, May and
August 1997, respectively. The balance of the increase was due primarily to
higher sales in the Company's core custom molding operations.
Gross profit for the three months ended May 31, 1998 was $13.2
million, a 15.6% increase from $11.4 million in the same period of fiscal 1997.
The gross profit margin increased to 22.1% from 21.7% in the previous fiscal
year. The increase in gross profit margin was attributable to higher margins at
the US custom molding facilities as well as in the integrated materials and
custom thermoforming operations. The increase in gross profit margin would have
been greater but for decreases in the margins at the Company's United Kingdom
operations.
Selling and administrative expenses for the three months ended May 31,
1998 were $7.6 million, a 3.8% increase over $7.3 million in the same period of
fiscal 1997. Selling and administrative expenses as a percent of net sales
decreased significantly to 12.7% in the current period compared to 13.8% of net
sales in fiscal 1997. The dollar increase is due primarily to increased employee
costs, including those added as a result of the acquisitions in May and August
1997, and increased professional fees. The year over year increase in selling
and administrative costs was significantly lower in the current quarter than the
increases in the previous quarters of the current fiscal year due to the
restructuring initiative implemented in February 1998.
Net sales and operating income (loss) for the U.K. operations for the
three months ended May 31, 1998 were $6.2 million and ($485,000), respectively,
compared to $5.6 million and $(10,000), respectively, in the same period of
fiscal 1997.
Interest expense for the three months ended May 31, 1998 amounted to
$1.3 million compared to $943,000 in the same period of fiscal 1997. The
increase of $345,000 or 36.5%, is due to increases in long-term debt incurred in
connection with the acquisitions in May and August 1997 as well as increases in
borrowing during fiscal 1998.
Income before income taxes for the three-month period ended May 31,
1998 amounted to $4.2 million compared to $3.1 million in the same period of
fiscal 1997. The effective tax rate decreased to 39.1% in the current period
from 39.6% in the prior year primarily due to lower effective state tax rates.
Net income for the three months ended May 31, 1998 was $2.6 million
compared to $1.9 million earned in the same period of fiscal 1997. The increase
was due primarily to the increase in net sales and gross profit margin and lower
increases in selling and administrative expenses in the current quarter.
8
<PAGE> 9
RESULTS OF OPERATIONS - NINE MONTHS ENDED MAY 31, 1998
COMPARED TO NINE MONTHS ENDED MAY 31, 1997
Net sales for the nine months ended May 31, 1998 were $176.8 million,
an increase of $21.8 million, or 14.1%, over the same period of fiscal 1997.
Approximately 57.8% of the increase in net sales was due to the acquisitions of
EPS (Moulders) Ltd. in October 1996 and Thermoformers Plus, Allgood Industries
and Arrowtip Group Ltd. in April, May and August 1997, respectively. The balance
of the increase was due primarily to higher sales in the Company's core custom
molding operations. The sales increase was achieved despite reductions in some
selling prices, primarily in the first fiscal quarter.
Gross profit for the nine months ended May 31, 1998 was $39.7 million,
an 8.3% increase from $36.6 million in the same period of fiscal 1997. The gross
profit margin decreased to 22.4% from 23.6% in the previous year. The decrease
in gross profit margin was attributable primarily to lower margins at the
Company's United Kingdom operations. The gross profit margin was also negatively
impacted by the reduction in selling prices although these were partially offset
by lower EPS resin costs.
Selling and administrative expenses for the nine months ended May 31,
1998 were $23.6 million, an 11.2% increase over $21.2 million in the same period
of fiscal 1997. Selling and administrative expenses decreased slightly to 13.3%
of net sales compared to 13.7% of net sales in fiscal 1997. The dollar increase
is due primarily to increased employee costs, including those added as a result
of the acquisitions in October 1996 and May and August 1997.
Net sales and operating income (loss) for the U.K. operations for the
nine months ended May 31, 1998 were $20.1 million and ($1.1 million),
respectively, compared to $16.2 million and ($585,000), respectively, in the
same period of fiscal 1997.
Interest expense for the nine months ended May 31, 1998 amounted to
$3.6 million compared to $2.7 million in the same period of fiscal 1997. The
increase of $1.0 million or 35.9%, is due to increases in long-term debt
incurred in connection with the acquisitions in October 1996 and May and August
1997, as well as additional borrowings in the current fiscal year.
On February 2, 1998, the Company took a $3.5 million restructuring
charge in the quarter ended February 28, 1998. Approximately $1.0 million of
the restructuring charge related to the cost of employee terminations and early
retirements; approximately $2.1 million related to the write-down of obsolete
or impaired assets and the balance of $400,000 related to other restructuring
costs associated with the plan. In addition to the employee terminations and
early retirements, the Company consolidated certain product design centers in
the United States. Approximately $411,000 of the restructuring charge related
to the U.K. operations.
Income before income taxes for the nine months ended May 31, 1998
decreased to $8.9 million from $12.6 million in the same period of fiscal 1997,
a decrease of $3.7 million, or 29.2%. The decrease is attributable primarily to
the restructuring charge. The effective tax rate decreased to 38.9% compared to
39.3% in the same period of fiscal 1997 due primarily to lower effective state
income tax rates.
Net income for the nine months ended May 31, 1998 was $5.4 million, a
decrease of 28.7% from the $7.7 million earned in the same period of fiscal
1997. The decrease is due primarily to the restructuring charges.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the nine months ended
May 31, 1998 amounted to $12.3 million compared to $12.1 million for the same
period in fiscal 1997. Depreciation and amortization for the same nine-month
periods amounted to $12.9 million and $11.8 million, respectively. Because a
substantial portion of the Company's operating expenses are attributable to
depreciation and amortization, the Company believes that its liquidity would not
be adversely affected should a period of reduced earnings occur.
9
<PAGE> 10
During the nine months ended May 31, 1998, the Company's accounts
receivable and inventories increased as a result of the increased sales level.
Cash and cash equivalents as of May 31, 1998 amounted to $660,000 as compared
with $5.1 million at August 31, 1997.
Capital expenditures for property, plant and equipment during the nine
months ended May 31, 1998 amounted to $20.8 million, including approximately
$1.3 million for environmental control equipment. The largest portion of the
capital expenditures was for molding presses and related equipment.
Approximately $6.5 million was spent in connection with new manufacturing
facilities in Brenham, Texas and Tijuana, Mexico and approximately $4.8 million
in connection with the UK operations. Expenses in connection with business
acquisitions during the nine-month period were minimal. The Company will,
however, continue to look for acquisitions which will mesh well with the
Company's business.
Total long-term debt amounted to $61.4 million at May 31, 1998, of
which $58.5 million was borrowed under a credit agreement with the Company's
principal bank, including $34.2 million out of an available $40.0 million under
a revolving credit agreement. During the nine months ended May 31, 1998, $8.0
million was borrowed under the revolving credit agreement with its principal
bank, primarily to fund capital expenditures. Total long-term debt amounted to
$57.2 million at August 31, 1997.
On December 18, 1997, the Company declared a regular semiannual cash
dividend of $0.11 per share payable on January 6, 1998 to shareholders of record
on December 27, 1997. On June 15, 1998, the Company declared a regular
semiannual cash dividend of $0.11 per share payable on July 6, 1998 to
shareholders of record on June 26, 1998. Cash dividends of $0.09 and $0.10 per
share were paid in January and July 1997, respectively.
Cash provided by operating activities as supplemented by the amount
available under the bank credit agreement should be sufficient to enable the
Company to continue to fund its operating requirements, capital expenditures and
cash dividends.
OTHER
The Company has completed an internal assessment as to whether its
existing computer systems will properly utilize dates beyond December 31, 1999.
Accordingly, where necessary it has completed the installation of new computer
software that is Year 2000 capable. The total cost of acquiring and installing
the new software was not material.
The Company has also begun communications with its significant
suppliers, customers and equipment manufacturers to determine the extent to
which the Company is vulnerable to those third parties' failure to remediate
their own Year 2000 issue. The review of the capabilities of the Company's
significant suppliers and customers to meet the Year 2000 requirements has not
been completed, however, the Company believes, based on the information it has
obtained, that any significant problems that might arise should be able to be
resolved without a material adverse effect on the Company's financial position
or results of operations.
The impact of inflation on the Company's financial position and
results of operations has not been significant during the periods discussed.
10
<PAGE> 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
1. John C. Bartram, Administrator of the Estate of Dwayne Scott Mount,
Deceased v. Tuscarora Incorporated, et al., Case No. 96CV-0511 in the Court of
Common Please of Marion County, Ohio. This civil lawsuit was filed in December
1996, first reported in the quarterly report on Form 10-Q for the fiscal quarter
ended February 28, 1997 and described in the annual report on Form 10-K for the
fiscal year ended August 31, 1997. The information contained in such Form 10-Q
and Form 10-K is incorporated herein by reference. The lawsuit is a Wrongful
Death action filed following the death of Mr. Mount, an employee of the Company
(the "Decedent"), who was killed in May 1996 while working on a molding machine
at the Company's custom molding facility in Marion, Ohio. The Company and Toyo
Machine and Metal Co., Inc., the manufacturer of the molding machine ("Toyo"),
were named as defendants. Count I of the Complaint states an intentional
employer tort claim against the Company alleging that the Decedent was
wrongfully killed as a result of certain alleged intentional conduct of the
Company. Count II of the Complaint stated a products liability claim against
Toyo.
Having learned during discovery that the Company did not own the
molding machine but used it under an agreement with Kaneka America Corporation
("Kaneka America"), the plaintiff, upon Motion made to the Court on or about
April 30, 1998, was permitted by the Court to file an Amended Complaint which
names Kaneka America and Kaneka Texas Corporation ("Kaneka Texas") as defendants
as well as the Company and Toyo. Kaneka America, the owner of the molding
machine at the time it was acquired by the Company, unbeknownst to the Company
leased it to Kaneka Texas in April 1992 and then sold it to Kaneka Texas in
March 1995. The Amended Complaint amends Court II to assert joint and several
liability against Toyo, Kaneka America and Kaneka Texas and adds a Count III
which states a breach of contract claim against Kaneka America and/or Kaneka
Texas alleging that the Decedent was wrongfully killed as a result of the
failure of Kaneka America and/or Kaneka Texas to assist the Company in
maintaining the safety of the molding machine as required by the agreement
between the Company and Kaneka America. As in the case of Counts I and II, under
Count III the plaintiff seeks both compensatory and punitive damages of not less
than $5,000,000.
The Company is vigorously defending this litigation and has filed
Answers to the Complaints denying the allegations against the Company and
asserting various defenses including that the plaintiff's claim against the
Company is barred by recovery from the Ohio Bureau of Workers' Compensation.
2. Smith's Farm Superfund Site. It was reported in the quarterly
report on Form 10-Q for the fiscal quarter ended February 28, 1998 that the
Company's involvement in the cost recovery litigation with respect to this site
had been terminated.
11
<PAGE> 12
Item 5. Other Information
In Release No. 34-40018, dated May 21, 1998, the Commission amended
Rule 14a-4, effective June 29, 1998, to establish the date after which notice of
a shareholder proposal submitted outside the processes of Rule 14a-8 is
considered untimely. In the case of the Company, a proposal submitted by a
shareholder for action at the regular annual meeting of shareholders to be held
in 1998, but not for inclusion in the Company's Proxy Statement for the annual
meeting in accordance with Rule 14a-8, must be received by the Secretary,
Tuscarora Incorporated, 800 Fifth Avenue, New Brighton, Pennsylvania 15066 on or
prior to October 4, 1998.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits listed below are filed as a part of this quarterly report.
<TABLE>
<CAPTION>
Exhibit No. Document
- ----------- ------------------------------------------------------
<S> <C>
11 Computation of Diluted Net Income Per Share.
27.1 Financial Data Schedule for the nine months ended
May 31, 1998.
27.2 Restated Financial Data Schedule for the three months
ended November 30, 1997.
27.3 Restated Financial Data Schedule for the nine months
ended May 31, 1997.
27.4 Restated Financial Data Schedule for the six months
ended February 28, 1997.
27.5 Restated Financial Data Schedule for the three months
ended November 30, 1996.
</TABLE>
(b) Reports on Form 8-K
No events which resulted in the filing of a current report on Form 8-K
occurred during the fiscal quarter ended May 31, 1998.
12
<PAGE> 13
SIGNATURES
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)
Date: July 15, 1998 By /s/ JOHN P. O'LEARY, JR.
-------------------------------------
John P. O'Leary, Jr.,
President and
Chief Executive Officer
Date: July 15, 1998 By /s/ BRIAN C. MULLINS
-------------------------------------
Brian C. Mullins,
Vice President and
Treasurer (Principal
Financial Officer and
Principal Accounting
Officer)
<PAGE> 14
TUSCARORA INCORPORATED
FORM 10-Q FOR QUARTER ENDED MAY 31, 1998
EXHIBIT INDEX
The following exhibits are filed as a part of this quarterly
report on Form 10-Q.
<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<S> <C>
11 Computation of Diluted Net Income Per Share.
27.1 Financial Data Schedule for the nine months ended
May 31, 1998.
27.2 Restated Financial Data Schedule for the three months
ended November 30, 1997.
27.3 Restated Financial Data Schedule for the nine months
ended May 31, 1997.
27.4 Restated Financial Data Schedule for the six months
ended February 28, 1997.
27.5 Restated Financial Data Schedule for the three months
ended November 30, 1996.
</TABLE>
<PAGE> 1
TUSCARORA INCORPORATED
EXHIBIT 11 - COMPUTATION OF DILUTED NET INCOME PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MAY 31, MAY 31,
1998 1997 1998 1997
---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Weighted average number of shares
of Common Stock outstanding 9,488 9,464 9,482 9,446
Net effect of dilutive stock options -
based on the treasury stock method
using the average market price for
the period 150 156 180 167
------ ------ ------ ------
TOTAL 9,638 9,620 9,662 9,613
====== ====== ====== ======
Net income $2,570 $1,885 $5,453 $7,651
====== ====== ====== ======
Per share amount $ 0.27 $ 0.20 $ 0.56 $ 0.80
====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> MAY-31-1998
<CASH> $659,634
<SECURITIES> 0
<RECEIVABLES> 33,752,950
<ALLOWANCES> 762,413
<INVENTORY> 20,481,531
<CURRENT-ASSETS> 56,974,813
<PP&E> 198,742,081
<DEPRECIATION> 99,889,015
<TOTAL-ASSETS> 167,907,003
<CURRENT-LIABILITIES> 24,588,074
<BONDS> 61,390,064
0
0
<COMMON> 9,495,710
<OTHER-SE> 67,954,698
<TOTAL-LIABILITY-AND-EQUITY> 167,907,003
<SALES> 176,819,100
<TOTAL-REVENUES> 176,819,100
<CGS> 137,138,285
<TOTAL-COSTS> 137,138,285
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 356,387
<INTEREST-EXPENSE> 3,622,034
<INCOME-PRETAX> 8,918,993
<INCOME-TAX> 3,465,559
<INCOME-CONTINUING> 5,453,434
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,453,434
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.56
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Restated Financial Data Schedule for the three months ended November 30, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> NOV-30-1997
<CASH> $333,106
<SECURITIES> 0
<RECEIVABLES> 38,202,236
<ALLOWANCES> 649,731
<INVENTORY> 20,098,856
<CURRENT-ASSETS> 60,572,790
<PP&E> 191,358,199
<DEPRECIATION> 96,325,254
<TOTAL-ASSETS> 168,332,072
<CURRENT-LIABILITIES> 29,994,727
<BONDS> 55,993,298
0
0
<COMMON> 9,481,360
<OTHER-SE> 67,341,560
<TOTAL-LIABILITY-AND-EQUITY> 168,332,072
<SALES> 61,292,306
<TOTAL-REVENUES> 61,292,306
<CGS> 46,193,365
<TOTAL-COSTS> 46,193,365
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (13,246)
<INTEREST-EXPENSE> 1,157,167
<INCOME-PRETAX> 6,094,461
<INCOME-TAX> 2,321,990
<INCOME-CONTINUING> 3,772,471
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,772,471
<EPS-PRIMARY> 0.40<F1>
<EPS-DILUTED> 0.39<F1>
<FN>
<F1>Restated to conform to SFAS No. 128.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Restated Financial Data Schedule for the nine months ended May 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> MAY-31-1997
<CASH> $1,411,395
<SECURITIES> 0
<RECEIVABLES> 29,922,407
<ALLOWANCES> 1,030,698
<INVENTORY> 19,352,632
<CURRENT-ASSETS> 52,495,845
<PP&E> 180,332,183
<DEPRECIATION> 91,124,817
<TOTAL-ASSETS> 151,435,195
<CURRENT-LIABILITIES> 22,820,520
<BONDS> 52,150,579
0
0
<COMMON> 9,471,887
<OTHER-SE> 62,561,165
<TOTAL-LIABILITY-AND-EQUITY> 151,435,195
<SALES> 155,009,971
<TOTAL-REVENUES> 155,009,971
<CGS> 118,384,373
<TOTAL-COSTS> 118,384,373
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 477,302
<INTEREST-EXPENSE> 2,666,076
<INCOME-PRETAX> 12,596,673
<INCOME-TAX> 4,945,935
<INCOME-CONTINUING> 7,650,738
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,650,738
<EPS-PRIMARY> 0.81<F1>
<EPS-DILUTED> 0.80<F1>
<FN>
<F1>Restated to conform to SFAS No. 128.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Restated Financial Data Schedule for the six months ended February 28, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> FEB-28-1997
<CASH> $507,448
<SECURITIES> 0
<RECEIVABLES> 30,415,226
<ALLOWANCES> 1,085,812
<INVENTORY> 19,551,098
<CURRENT-ASSETS> 52,661,753
<PP&E> 171,395,861
<DEPRECIATION> 87,521,611
<TOTAL-ASSETS> 145,101,083
<CURRENT-LIABILITIES> 23,190,273
<BONDS> 47,237,409
0
0
<COMMON> 9,458,947
<OTHER-SE> 60,526,917
<TOTAL-LIABILITY-AND-EQUITY> 145,101,093
<SALES> 102,417,245
<TOTAL-REVENUES> 102,417,245
<CGS> 77,189,649
<TOTAL-COSTS> 77,189,649
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 322,352
<INTEREST-EXPENSE> 1,722,679
<INCOME-PRETAX> 9,475,723
<INCOME-TAX> 3,710,363
<INCOME-CONTINUING> 5,765,360
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,765,360
<EPS-PRIMARY> 0.61<F1><F2>
<EPS-DILUTED> 0.60<F1><F2>
<FN>
<F1>Restated to conform to SFAS No. 128.
<F2>As adjusted to reflect the 50% share distribution declared on December 18,
1996 payable on January 13, 1997 to shareholders of record on December 27, 1996.
Prior Financial Data Schedules have not been restated for the distribution.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Restated Financial Data Schedule for the three months ended November 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> NOV-30-1996
<CASH> $316,218
<SECURITIES> 0
<RECEIVABLES> 31,908,446
<ALLOWANCES> 927,232
<INVENTORY> 17,629,474
<CURRENT-ASSETS> 52,114,431
<PP&E> 168,649,500
<DEPRECIATION> 85,616,278
<TOTAL-ASSETS> 142,083,440
<CURRENT-LIABILITIES> 24,296,909
<BONDS> 44,717,092
0
0
<COMMON> 6,299,878
<OTHER-SE> 62,462,652
<TOTAL-LIABILITY-AND-EQUITY> 142,083,440
<SALES> 53,440,704
<TOTAL-REVENUES> 53,440,704
<CGS> 39,735,103
<TOTAL-COSTS> 39,735,103
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 166,547
<INTEREST-EXPENSE> 837,362
<INCOME-PRETAX> 6,047,481
<INCOME-TAX> 2,355,807
<INCOME-CONTINUING> 3,691,674
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,691,674
<EPS-PRIMARY> 0.39<F1>
<EPS-DILUTED> 0.39<F1>
<FN>
<F1>Restated to conform to SFAS No. 128.
</FN>
</TABLE>
