<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ X ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as
[ ] Definitive Proxy Statement permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec.240.14a-11(c) or Sec.240.14a-12
</TABLE>
TUSCARORA INCORPORATED
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (check the appropriate box):
[ X ] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount previously paid: --------------------------------------------
2. Form, Schedule or Registration No.:
---------------------------------
3. Filing Party:
-------------------------------------------------------
4. Date Filed:
---------------------------------------------------------
<PAGE> 2
Tuscarora Logo
800 FIFTH AVENUE
NEW BRIGHTON, PENNSYLVANIA 15066
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 17, 1998
To The Shareholders:
The Annual Meeting of Shareholders of Tuscarora Incorporated (the
"Company") will be held at the Pittsburgh Airport Marriott, Parkway West,
Coraopolis, Allegheny County, Pennsylvania on Thursday, December 17, 1998 at
10:30 A.M., Pittsburgh time, for the purpose of considering and acting upon the
following:
(1) The election of three persons to serve as directors for a three-year
term expiring at the annual meeting of shareholders in 2001;
(2) The adoption of an amendment of the Company's Restated Articles of
Incorporation to increase the authorized number of shares of the
Company's Common Stock, without par value, from 20,000,000 shares to
50,000,000 shares and to increase the authorized number of shares of
the Company's Preferred Stock, par value $.01 per share, from 1,000,000
shares to 2,000,000 shares, as described in the accompanying Proxy
Statement;
(3) The ratification of the appointment of Ernst & Young LLP as independent
public accountants to audit the financial statements of the Company and
its subsidiaries for the 1999 fiscal year; and
(4) Such other business as may properly come before the Annual Meeting or
any adjournment thereof.
By Order of the Board of Directors,
Harold F. Reed, Jr.,
Secretary
New Brighton, Pennsylvania
November 17, 1998
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY SO THAT
YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED AT THE ANNUAL MEETING. THE GIVING OF YOUR
PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE
MEETING. PLEASE INDICATE ON THE PROXY YOU RETURN WHETHER OR NOT YOU WILL ATTEND
THE MEETING.
<PAGE> 3
NOVEMBER 17, 1998
TUSCARORA INCORPORATED
800 FIFTH AVENUE
NEW BRIGHTON, PENNSYLVANIA 15066
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 17, 1998
This Proxy Statement is furnished to shareholders in connection with the
solicitation by the Board of Directors of Tuscarora Incorporated (the "Company")
of proxies in the accompanying form for use at the Annual Meeting of
Shareholders of the Company to be held on December 17, 1998 and at any
adjournment thereof. If a proxy in the accompanying form is duly executed and
returned to the Company, the shares represented will be voted at the Meeting
and, where a choice is specified, will be voted in accordance with the
specification made. Any shareholder who gives a proxy has the power to revoke it
at any time before it is exercised by notice to the Secretary. A later-dated
proxy will revoke an earlier proxy, and shareholders who attend the Meeting may,
if they wish, vote in person even though they have submitted a proxy, in which
event the proxy will be deemed to have been revoked.
The Company's Restated Articles of Incorporation (the "Articles") provide
that the Company has the authority to issue 20,000,000 shares of Common Stock,
without par value (the "Common Stock"), and 1,000,000 shares of Preferred Stock,
par value $.01 per share. Only shares of Common Stock have been issued. As of
the close of business on October 23, 1998, 9,528,136 shares of Common Stock were
issued and outstanding.
Holders of record of the Common Stock as of the close of business on
October 23, 1998 have the right to receive notice of and to vote at the Annual
Meeting. These shareholders are entitled to one vote for each share held on all
matters to be considered and acted upon at the Meeting. Under the Company's
Articles, the shareholders do not have cumulative voting rights in the election
of directors.
The Annual Report to Shareholders for the fiscal year ended August 31,
1998, which includes consolidated financial statements, is enclosed with this
Proxy Statement.
BENEFICIAL OWNERSHIP OF COMMON STOCK
Under the proxy rules of the Securities and Exchange Commission (the
"SEC"), a person who directly or indirectly has or shares voting power and/or
investment power with respect to a security is considered as a beneficial owner
of the security. Voting power includes the power to vote or direct the voting of
shares, and investment power includes the power to dispose of or direct the
disposition of shares. Shares as to which voting power and/or investment power
may be acquired within 60 days are also considered as beneficially owned under
these proxy rules.
MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of shares of the Company's Common Stock by (i) each director, (ii)
each person named in the Summary Compensation Table included in this Proxy
Statement and (iii) all directors and executive officers of the Company as a
group. Unless otherwise indicated in the footnotes to the table, the information
is as of the close of business on
<PAGE> 4
October 23, 1998 and each person named has sole voting power and sole investment
power with respect to the shares included in the table.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
--------------------------
NUMBER OF PERCENT
NAME SHARES OF CLASS
- ---------------------------------------------------- ------ --------
<S> <C> <C>
Thomas S. Blair 204,357 2.14%
James H. Brakebill (1)(2) 72,335 .76%
David I. Cohen (3) 3,058 .03%
Abe Farkas (3)(4)(5) 432,600 4.54%
Karen L. Farkas (3) 19,500 .20%
Robert W. Kampmeinert (4)(6)(7) 19,500 .20%
Jeffery L. Leininger none .00%
Brian C. Mullins (1)(2)(4) 81,238 .85%
David C. O'Leary (1)(2)(3)(4)(6) 179,797 1.88%
John P. O'Leary, Jr. (1)(2)(3)(4)(6)(8) 301,817 3.14%
Harold F. Reed, Jr. (3)(4) 76,950 .81%
Thomas P. Woolaway (3)(4) 268,941 2.82%
All directors and executive officers of the Company
as a group (12 persons)(1) 1,660,093 17.05%
</TABLE>
- ---------
(1) Includes shares covered by stock options exercisable within 60 days as
follows: James H. Brakebill, 50,850 shares; Brian C. Mullins, 51,810 shares;
David C. O'Leary, 35,250 shares; and John P. O'Leary, Jr., 70,500 shares. In
computing the percentage ownership for each executive officer and all
directors and executive officers as a group, the shares covered by the stock
options held by each executive officer and the group are deemed outstanding.
(2) Includes shares credited to their accounts under the Company's Common Stock
Purchase Plan for Salaried Employees as of the close of business on August
31, 1998 as follows: James H. Brakebill, 2,092 shares; Brian C. Mullins,
1,395 shares; David C. O'Leary, 1,364 shares; and John P. O'Leary, Jr., 997
shares.
(3) Includes shares held jointly with their spouses, as to which voting power
and investment power are shared, as follows: David I. Cohen, 3,058 shares;
Abe Farkas, 143,000 shares; Karen L. Farkas, 750 shares; David C. O'Leary,
30,684 shares; John P. O'Leary, Jr., 16,368 shares; Harold F. Reed, Jr.,
13,500 shares; and Thomas P. Woolaway, 69,994 shares.
(4) Includes shares held by their wives as follows: Abe Farkas, 90,000 shares;
Robert W. Kampmeinert, 1,500 shares; Brian C. Mullins, 8,000 shares; David
C. O'Leary, 2,617 shares; John P. O'Leary, Jr., 592 shares; Harold F. Reed,
Jr., 1,500 shares and Thomas P. Woolaway, 77,139 shares. Beneficial
ownership of these shares is disclaimed.
(5) Includes 168,100 shares held by the wife of Abe Farkas as trustee under
trusts for children and grandchildren. Beneficial ownership of these shares
is disclaimed.
(6) Includes shares held in custodian accounts for children as follows: Robert
W. Kampmeinert, 3,000 shares; David C. O'Leary, 11,475 shares; and John P.
O'Leary, Jr., 13,622 shares. Beneficial ownership of these shares is
disclaimed.
(7) Includes 15,000 shares held by Parker/Hunter Incorporated. Beneficial
ownership of these shares is disclaimed.
(8) Includes 105,285 shares held by the trust for the individual account defined
contribution pension plans of the Company and its subsidiaries. John P.
O'Leary, Jr. is a named fiduciary with respect to this trust and has sole
power to direct the trustee as to the acquisition, disposition and voting of
the Company's Common Stock held by the trust.
2
<PAGE> 5
The information in the table does not include 316,761 shares of the
Company's Common Stock held by trusts created under the Will of John P. O'Leary,
Sr., co-founder and former Chief Executive Officer of the Company. Mrs. John P.
O'Leary, Sr., John P. O'Leary, Jr., David C. O'Leary and Kerry O'Leary Zombeck
are co-trustees of these trusts and share voting power and investment power.
John P. O'Leary, Jr., David C. O'Leary and Kerry O'Leary Zombeck are the
children of Mrs. John P. O'Leary, Sr.
OTHER BENEFICIAL OWNERS
Information with respect to the only persons known by the Company to be the
beneficial owners of more than 5% of the Company's Common Stock is as follows:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
------------------------
NUMBER OF PERCENT
NAME AND ADDRESS SHARES OF CLASS
- ------------------------------------------------------- --------- --------
<S> <C> <C>
Jack Farkas 6315 Forbes Avenue Pittsburgh, Pennsylvania 486,000 5.10%
15212
T. Rowe Price Associates, Inc. 100 East Pratt Street 759,400 7.97%
Baltimore, Maryland 21202
</TABLE>
The above information with respect to Jack Farkas is as of October 23,
1998. Jack Farkas is the brother and uncle, respectively, of Abe Farkas and
Karen L. Farkas, both of whom are directors of the Company. Jack Farkas has sole
voting power and sole investment power with respect to the shares included in
the table. Of the shares, 198,000 are held by an irrevocable trust of which Jack
Farkas is the sole Trustee.
The above information with respect to T. Rowe Price Associates, Inc.
("Price Associates") is as of October 30, 1998 and was obtained from a letter
dated November 2, 1998 from Price Associates to the Company. The letter reported
that the shares were owned by various individual and institutional investors,
including the T. Rowe Price Small Cap Value Fund which held 700,000 shares
(7.35% of the shares outstanding) for which Price Associates serves as
investment advisor with power to direct investments and/or to vote the
securities. The letter reported that Price Associates had sole investment power
with respect to the 759,400 shares and no sole voting power. While Price
Associates is deemed to be a beneficial owner for purposes of the SEC reporting
requirements, Price Associates expressly disclaimed that it is, in fact, the
beneficial owner of the shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file with the SEC reports of beneficial
ownership and changes in beneficial ownership of the Company's Common Stock.
These persons are required to furnish the Company with copies of all Section
16(a) reports they file. In March 1998, Abe Farkas made a late filing of an
amended Form 5 report which disclosed a gift of 100 shares of the Company's
Common Stock in December 1996; and on November 4, 1998 David I. Cohen made a
late filing of an amended Form 5 report which disclosed purchases of an
aggregate of 58 shares of the Company's Common Stock in July 1997, January 1998
and July 1998. Based on written representations of its directors and executive
officers and copies of the reports that they filed, the Company believes that
all other reports required to be filed under Section 16(a) by the Company's
directors and executive officers since the beginning of the 1998 fiscal year
were timely filed.
3
<PAGE> 6
ELECTION OF DIRECTORS
Three directors will be elected at the Annual Meeting to serve until the
annual meeting of shareholders in 2001 and until their successors are elected.
The Board of Directors has nominated David I. Cohen, Abe Farkas and John P.
O'Leary, Jr. and recommends a vote for their election. Each nominee has
consented to be named as a nominee. All the nominees are presently directors.
Unless authority to so vote is withheld, it is intended that the proxies
solicited by the Board of Directors will be voted "FOR" the election of the
three nominees. In the event that at the date of the Annual Meeting any of the
nominees should for any reason not be available for election, the proxies
solicited by the Board will be voted for the election of the other nominees and
such substitute nominees as shall be designated by the Board.
The Board of Directors does not have a nominating committee. The Company's
Articles provide that nominations for the election of directors at a meeting of
shareholders may be made only by the Board, a committee of the Board or a
shareholder of record entitled to vote in the election of the directors to be
elected; provided, however, that a nomination may only be made by a shareholder
of record at a meeting of shareholders if written notice that the nomination is
to be made is received by the Secretary of the Company prior to the meeting. In
the case of an annual meeting, the written notice must be received 90 days prior
to the anniversary date of the immediately preceding annual meeting and must
contain certain information with respect to the nominee as set forth in the
Articles. Information with respect to the nominating procedure may be obtained
by a shareholder from the Secretary of the Company. No written notice that a
nomination would be made by a shareholder at the Annual Meeting was received by
the Company.
Information with respect to the nominees and the other directors whose
terms of office will continue after the Annual Meeting is set forth in the table
below. The nominees and other directors have held the positions shown for more
than five years unless otherwise indicated.
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION OR
NAME SINCE EMPLOYMENT; DIRECTORSHIPS; AGE
---- ----- ------------------------------
<S> <C> <C>
Nominees for a term expiring in 2001:
David I. Cohen 1993 Partner of Titus & McConomy LLP (law firm),
Pittsburgh, Pennsylvania since July 1995; Partner
of Reed Smith Shaw & McClay LLP (law firm),
Pittsburgh, Pennsylvania prior to July 1995; Age
47
Abe Farkas 1962 Retired; formerly owner of Beaver Super Market,
Beaver, Pennsylvania; Age 82
John P. O'Leary, Jr. 1974 President and Chief Executive Officer of the
Company (also Chairman of the Board of Directors
of the Company); Director of Matthews
International Corporation; Age 51
Continuing directors with a term expiring in 1999:
Thomas S. Blair 1962 Chairman of the Board of Blair Strip Steel
Company (manufacturer of cold-rolled strip
steel), New Castle, Pennsylvania; Age 76
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION OR
NAME SINCE EMPLOYMENT; DIRECTORSHIPS; AGE
---- ----- ------------------------------
<S> <C> <C>
Jeffery L. Leininger 1996 Vice Chairman-Specialized Commercial Banking,
Mellon Bank, N.A. (national bank), Pittsburgh,
Pennsylvania since February 1996; Executive Vice
President and Department Head, Mellon Bank, N.A.,
from February 1994 to February 1996; Senior Vice
President and Region Manager, Mellon Bank, N.A.,
prior to February 1994; Age 52
Thomas P. Woolaway 1962 Retired Chief Operating Officer of the Company;
Vice Chairman of the Board of Directors of the
Company; Age 67
Continuing directors with a term expiring in 2000:
Karen L. Farkas 1994 President and Treasurer of Heart Smart Foods Ltd.
(wholesaler of specialty foods), Alberta, Canada;
Tutor and seminar instructor in corporate
finance, investments and individual finance at
Athabasca University, Alberta, Canada; Age 50
Robert W. Kampmeinert 1994 Chairman, President and Chief Executive Officer
of Parker/Hunter Incorporated (investment banking
firm); Pittsburgh, Pennsylvania; Director of
Tollgrade Communications, Inc.; Age 55
David C. O'Leary 1985 Vice President and Chief Operating Officer of the
Company since May 1997; Vice President, Sales and
Marketing of the Company from April 1994 to May
1997; Vice President, Southern Division of the
Company prior to April 1994; Age 49
Harold F. Reed, Jr. 1969 Senior Partner of Reed, Luce, Tosh, Wolford and
Douglass (law firm), Beaver, Pennsylvania;
Secretary of the Company; Director of First
Western Bancorp;
Age 71
</TABLE>
During the 1998 fiscal year, there were seven meetings of the Board of
Directors. Average attendance at those meetings was 98.6%.
VOTE REQUIRED
Only affirmative votes are counted in the election of directors. The three
nominees for election as directors at the Annual Meeting who receive the highest
number of votes cast for the election of directors by the holders of the
Company's Common Stock present in person or voting by proxy, a quorum being
present, will be elected as directors.
COMMITTEES OF BOARD OF DIRECTORS
The Board of Directors has an Executive Committee, a Compensation Committee
and an Audit Committee.
The members of the Executive Committee are John P. O'Leary, Jr. (Chairman),
Thomas S. Blair, David C. O'Leary, Harold F. Reed, Jr. and Thomas P. Woolaway.
The Committee may exercise all the power and authority of the Board in the
management of the affairs of the Company except for matters expressly reserved
5
<PAGE> 8
by law for Board action. It is intended that the Committee will meet only
infrequently as necessary between regular meetings of the Board. The Executive
Committee did not meet during the 1998 fiscal year.
The members of the Compensation Committee are Robert W. Kampmeinert
(Chairman), Thomas S. Blair, Harold F. Reed, Jr. and Thomas P. Woolaway. The
Committee recommends to the Board the base salary of the Company's executive
officers and the grant of stock options under the Company's stock option plans.
For many years, the Committee has also recommended to the Board the bonuses of
the Company's executive officers. In addition, the Committee administers the
Company's Common Stock Purchase Plan for Salaried Employees and designates the
participants and levels of participation under the Company's Supplemental
Executive Retirement Plan. The Committee also makes recommendations to the Board
with respect to director compensation and administers the Company's Deferred
Compensation Plan for Non-Employee Directors. During the 1998 fiscal year, there
were four meetings of the Compensation Committee.
The members of the Audit Committee are David I. Cohen (Chairman), Abe
Farkas, Karen L. Farkas and Jeffery L. Leininger. The responsibilities of the
Committee include assuring direct and open lines of communication between the
Board of Directors and the Company's accounting personnel and independent public
accountants and reviewing the annual financial statements of the Company and its
subsidiaries with the management of the Company and the independent public
accountants. The Committee verifies the independence of the independent public
accountants, recommends to the Board the retention or selection of the
independent public accountants, reviews the quality and depth of staffing in the
Company's financial and accounting departments and reviews proposed changes in
accounting principles as they may materially affect the Company. During the 1998
fiscal year, there were two meetings of the Audit Committee.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives an annual
retainer of $5,000. Non-employee directors who serve on the Executive Committee
also receive an annual fee of $1,500 and non-employee directors who serve as
Chairmen of Board Committees also receive an annual fee of $1,000. In addition,
non-employee directors receive $1,500 for each Board meeting and $750 for each
meeting of the Compensation Committee and Audit Committee they attend.
Non-employee directors receive reimbursement for travel expenses to attend Board
and Committee meetings. Directors who are employees of the Company do not
receive compensation for serving as a director.
The Company maintains a Deferred Compensation Plan for Non-Employee
Directors which permits Directors who are not employees of the Company to defer
compensation earned for services as a director until after termination of
service. Participants may defer compensation into a bookkeeping account which
credits the participant with phantom share units of the Company's Common Stock
or into a bookkeeping account to which interest is credited. The number of
phantom share units credited is the amount of compensation deferred divided by
the fair market value of the Company's Common Stock on the date of deferral.
Three non-employee directors have elected to defer all or part of their
compensation into a phantom share account. As cash dividends are paid,
additional phantom share units are credited to the account. Payments of the
value of an account are made by the Company in cash after the participant ceases
to be a director at the election of the participant in a lump sum or in up to
ten annual installments.
The Company's 1997 Stock Incentive Plan provides for the grant of stock
options to non-employee directors but no such options had been granted as of the
end of the 1998 fiscal year.
The Company also has a retirement plan for directors who are not current or
former employees of the Company. Under the plan, retirement benefits are paid to
any director whose service as a director has terminated and who is 60 and has
completed at least five years of service on the Board at the time of termination
of service. The retirement benefit is an amount equal to 50% of the amount paid
each year to active non-employee directors. The benefits commence immediately
upon termination of service and terminate upon the earliest to occur of (i)
expiration of a period of time equal to the period of time the retired director
served, (ii) the death of the retired director or (iii) the tenth anniversary of
the date on which service as a director terminated. There are no survivor
benefits payable under the plan.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation paid
for services rendered in all capacities to the Company and its subsidiaries for
the last three fiscal years to those persons who were at August 31, 1998 the
Chief Executive Officer of the Company and the Company's other executive
officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION(1) YEAR ($)(2) ($)(3) ($)(4) (#)(5) ($)(6)
- ------------------------------- ------ -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John P. O'Leary, Jr. 1998 $272,000 $ 75,000 $-- 15,000 $22,640
President and 1997 262,000 105,000 -- 15,000 21,251
Chief Executive Officer 1996 250,000 120,000 -- 15,000 10,047
David C. O'Leary 1998 185,000 45,000 -- 7,500 19,505
Vice President and Chief 1997 170,000 54,000 -- 7,500 18,332
Operating Officer since May 1996 155,000 60,000 -- 7,500 10,128
1997; Vice President, Sales
and Operations prior to May
1997
Brian C. Mullins 1998 176,000 40,000 -- 7,500 22,475
Vice President, Chief 1997 170,000 54,000 -- 7,500 21,246
Financial Officer and 1996 162,500 60,000 -- 7,500 10,032
Treasurer
James H. Brakebill 1998 176,500 40,000 -- 7,500 22,615
Vice President, 1997 170,000 54,000 -- 7,500 21,454
Manufacturing Services since 1996 155,000 60,000 -- 7,500 10,128
May 1997; Vice President,
Manufacturing prior to May
1997
</TABLE>
- ---------
(1) At its regular Board meeting held on October 16, 1998, the titles of David
C. O'Leary, Brian C. Mullins and James H. Brakebill were changed to Senior
Vice President.
(2) Represents base salary and includes the tax deferred contributions made by
the Company on behalf of the executive officers under the Company's Section
401(k) Plan for Salaried Employees.
(3) Represents cash bonuses awarded to the executive officers following the end
of each fiscal year.
(4) The dollar value of perquisites and other personal benefits is required to
be disclosed under this column if the amount for any executive officer
equals or exceeds $50,000 or 10% of the total of annual salary and bonus.
The dollar value of the perquisites and other personal benefits did not
exceed the threshold amount for any of the executive officers named for any
of the fiscal years covered in the table.
(5) Represents the number of shares of the Company's Common Stock for which
stock options were granted during the fiscal year. The stock options were
granted under the Company's 1989 Stock Incentive Plan. No further stock
options may be granted under this plan. In December 1997, the shareholders
approved the Company's 1997 Stock Incentive Plan under which stock options
may be granted to the Company's employees, including the executive officers,
as well as to the Company's non-employee directors. No stock options or
other awards had been granted under the 1997 Stock Incentive Plan as of the
end of the 1998 fiscal year.
(6) This column includes employer contributions for the accounts of the named
executive officers under (i) the Company's individual account defined
contribution pension plan for salaried employees, (ii) the Company's Section
401(k) Plan for Salaried Employees and (iii) the Company's Common Stock
7
<PAGE> 10
Purchase Plan for Salaried Employees. For the 1998 fiscal year, the
breakdown of the employer contributions among the plans is as set forth
below.
<TABLE>
<CAPTION>
COMMON
STOCK
PENSION SECTION PURCHASE
NAME PLAN 401(K) PLAN PLAN
---- ------- ----------- --------
<S> <C> <C> <C>
John P. O'Leary, Jr............................. $20,800 $1,480 $360
David C. O'Leary................................ 17,600 1,545 360
Brian C. Mullins................................ 20,800 1,455 240
James H. Brakebill.............................. 20,800 1,455 360
</TABLE>
Option Grants. The following table sets forth as to the persons named in
the Summary Compensation Table additional information with respect to the stock
options granted during the 1998 fiscal year, including the potential realizable
value from the stock options assuming they are exercised at the end of the
ten-year option term and assuming 5% and 10% annual rates of stock price
appreciation during the option term.
OPTION GRANTS IN 1998 FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
INDIVIDUAL GRANTS(1) AT ASSUMED ANNUAL RATES
-------------------------------------------------------- OF STOCK PRICE
NUMBER OF % OF TOTAL EXERCISE APPRECIATION FOR
SECURITIES OPTIONS GRANTED PRICE OPTION TERM(2)
UNDERLYING TO EMPLOYEES IN PER SHARE EXPIRATION ---------------------------
NAME OPTIONS(#) 1998 FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------- ---------- ---------------- ------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John P. O'Leary, Jr...... 15,000 7.40% $19.16 10/22/07 $ 180,744 $ 458,042
David C. O'Leary......... 7,500 3.70% 19.16 10/22/07 90,372 229,021
Brian C. Mullins......... 7,500 3.70% 19.16 10/22/07 90,372 229,021
James H. Brakebill....... 7,500 3.70% 19.16 10/22/07 90,372 229,021
</TABLE>
- ---------
(1) The stock options for the number of shares shown were granted on October 23,
1997 and became exercisable on April 23, 1998. The exercise price per share
was 100% of the fair market value of the Company's Common Stock on the date
of grant. Fair market value is the average of the high and low sales prices
of the Company's Common Stock on the date of grant on the NASDAQ National
Market System as reported in The Wall Street Journal. The exercise price may
be paid in cash, in shares of the Common Stock which have been held for at
least one year or in any combination of cash and such shares.
(2) The 5% and 10% assumed annual rates of stock price appreciation do not
reflect actual changes in the fair market value of the Company's Common
Stock since the date of grant. The information in the table is provided in
accordance with the rules of the SEC regarding the disclosure of
compensation of executive officers. The information is not intended to
forecast possible future stock price appreciation, if any.
Option Exercises and Values. The following table sets forth as to the
persons named in the Summary Compensation Table information with respect to the
number of shares of the Company's Common Stock acquired upon the exercise of
stock options during the 1998 fiscal year, the value realized from such
exercises, the number of shares covered by unexercised stock options held at
August 31, 1998 and the value of such unexercised stock options at August 31,
1998.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN 1998 FISCAL YEAR AND
1998 FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
VALUE 1998 FISCAL 1998 FISCAL
SHARES ACQUIRED REALIZED YEAR END YEAR END
NAME ON EXERCISE (#) ($)(1) (#)(2) ($)(3)
- ---------------------------------- --------------- ------ ------ --------------------
<S> <C> <C> <C> <C>
John P. O'Leary, Jr............... None -- 70,500 $ 91,763
David C. O'Leary.................. None -- 35,520 45,881
Brian C. Mullins.................. 5,250 $61,483 51,810 163,329
James H. Brakebill................ 4,275 49,940 50,850 156,335
</TABLE>
- ---------
(1) The value realized is the difference between the aggregate fair market value
of the shares acquired on exercise and the aggregate exercise price.
(2) The outstanding stock options at 1998 fiscal year end include stock options
granted under the Company's 1985 Incentive Stock Option Plan and 1989 Stock
Incentive Plan. All the outstanding stock options at 1998 fiscal year end
were exercisable.
(3) The value of unexercised in-the-money stock options is the difference
between the aggregate fair market value of shares covered by stock options
with an exercise price less than fair market value at 1998 fiscal year end
and the aggregate exercise price of such stock options. Certain outstanding
stock options at 1998 fiscal year end were not in-the-money.
Supplemental Retirement Benefits. The Company has a supplemental executive
retirement plan under which supplemental retirement benefits may be paid by the
Company directly to key executives designated by the Compensation Committee.
John P. O'Leary, Jr., Brian C. Mullins and James H. Brakebill have been
designated as participants. Under the plan, designated percentages of
compensation are credited each fiscal quarter to an unfunded bookkeeping account
for each participant. Interest is also credited to the account for each fiscal
quarter at the then prime rate as announced by the Company's principal bank.
Payments from the account commence after the later of the participant's
termination of employment or age 55 and are paid in the form of a single life
annuity unless another form of annuitized payment is elected. A participant does
not have the option to elect to receive a lump sum payment from the Company.
Under an agreement entered into with each participant, the supplemental
retirement benefits may be forfeited in the event of certain activity by the
participant not in the best interests of the Company during the three-year
period following termination of employment. During the 1998 fiscal year, the
amounts accrued by the Company under the plan to the bookkeeping accounts for
the benefit of John P. O'Leary, Jr., Brian C. Mullins and James H. Brakebill,
including the accrued interest, amounted to $26,560, $15,640 and $21,636,
respectively.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's principal bank is Mellon Bank, N.A., of which Jeffery L.
Leininger, a director of the Company, is Vice Chairman-Specialized Commercial
Banking. The Company has a credit agreement with Mellon Bank, N.A. which
provides for a $40,000,000 revolving credit facility and under which, as of
August 31, 1998, $27,750,000 was borrowed under a term note repayable in
quarterly installments with final maturity on August 31, 2004. As of August 31,
1998, $34,215,000 was borrowed under the revolving credit facility. The Company
may choose between various interest rate options for specified interest periods
with respect to amounts borrowed under both the revolving credit facility and
the term note. The Company has also entered into interest rate swap, cap and
floor agreements with Mellon Bank, N.A. having a combined notional value of
$37,750,000 as of August 31, 1998. The purpose of these agreements is to reduce
the impact of increases in the interest rates on the Company's variable rate
long-term debt, principally under the credit agreement with Mellon Bank, N.A.
9
<PAGE> 12
For information regarding transactions involving Robert W. Kampmeinert and
Harold F. Reed, Jr., directors of the Company, see "Compensation Committee
Interlocks and Insider Participation" below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the 1998 fiscal year, the members of the Compensation Committee were
Robert W. Kampmeinert, Thomas S. Blair, Harold F. Reed, Jr. and Thomas P.
Woolaway.
Robert W. Kampmeinert is the Chairman, President and Chief Executive
Officer of Parker/Hunter Incorporated, an investment banking firm which rendered
professional services to the Company during the 1998 fiscal year and will render
professional services to the Company during the 1999 fiscal year.
Harold F. Reed, Jr. is a partner in the law firm of Reed, Luce, Tosh,
Wolford and Douglass which rendered professional services to the Company during
the 1998 fiscal year and will render professional services to the Company during
the 1999 fiscal year. Mr. Reed is also Secretary of the Company.
Thomas P. Woolaway, a co-founder of the Company, was an officer of the
Company from its formation until his retirement in 1994. Mr. Woolaway was the
Chief Operating Officer of the Company at the time of his retirement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation program for its executive officers is
administered by the Compensation Committee of the Board of Directors, all the
members of which are non-employee directors. The program is composed primarily
of cash compensation, consisting of base salary and a bonus, but also includes
non-cash compensation in the form of stock options and accrued supplemental
retirement benefits. The Company has four executive officers, each of whom is
named in the Summary Compensation Table included in this Proxy Statement.
Base Salary and Bonus. The base salary and bonus of each executive officer
for each fiscal year is established by the Board of Directors following
recommendations by the Committee. Base salary for a fiscal year is determined at
the end of the preceding fiscal year. Bonuses for a fiscal year have been
determined after the financial results for each fiscal year have become
available.
The base salary of each executive officer depends primarily on the office
and responsibilities of the executive officer. Increases are affected by the
Company's growth and financial performance. For the 1998 fiscal year, the
Committee recommended and the Board approved an increase in the base salary of
John P. O'Leary, Jr., the Company's Chief Executive Officer, of 3.6% compared to
an increase of 5% for the 1997 fiscal year. The increases in base salary for the
other executive officers were 3.5% which were also lower increases than for the
preceding fiscal year. It was intended that the increases in base salary
approximate the rate of inflation. The rationale for the lower salary increases
for the 1998 fiscal year than in the prior fiscal year was that the Company's
profit performance during the 1997 fiscal year was not satisfactory. Net income
for the 1997 fiscal year was approximately $9.3 million compared to
approximately $9.7 million in fiscal 1996. During the 1998 fiscal year, the base
salary of David C. O'Leary was increased from $176,000 per annum to $200,000 per
annum simultaneously with his election as the Company's Chief Operating Officer.
As to bonuses, the Committee strongly believes that the executive officers
should have a meaningful portion of their total compensation tied to the
profitability of the Company. Accordingly, financial results for a fiscal year
have been a primary consideration in the awarding of bonuses; but other factors,
especially individual performance, have had significance as well. There has been
no plan requiring that bonuses be paid if certain criteria are met, there has
been no established relationship between a bonus and base salary and there has
been no formula under which established weights have been given to the various
factors considered. In general, the Committee has compared the factors for the
fiscal year for which a bonus is paid against recent prior fiscal years and has
acted accordingly. The bonuses for the executive officers for the 1998 fiscal
year were determined as in the prior fiscal years and because the financial
results for the 1998 fiscal year were very disappointing, the bonuses for the
executive officers, including the Chief Executive Officer, were substantially
less than in the prior two fiscal years.
10
<PAGE> 13
The Committee has not recommended base salaries or bonuses based on
compensation paid by other companies although from time to time the Committee
reviews ranges of compensation for executive officers of manufacturing companies
with comparable sales.
New Incentive Bonus Plan. Commencing in August 1997, the Committee began
considering revision of the bonus system to provide a more incentive based bonus
computation. Thereafter, in November 1997 the Company retained William M.
Mercer, Incorporated ("Mercer") to commence a review of the Company's
compensation arrangements for senior management. The review was commenced in
conjunction with a Company reorganization from centralized management to five
divisions determined on a geographical basis, each with a division Vice
President responsible for a group of five to nine manufacturing facilities.
During the remainder of the 1997 fiscal year, Mercer prepared a competitive pay
levels study and recommended an incentive bonus plan which was reviewed in depth
by the Committee. While no formal plan has yet been adopted, financial targets
have been established for the executive officers, the division Vice Presidents
and other key employees. It is expected that bonuses for the executive officers
for the 1999 fiscal year and future years will be based primarily on achievement
of the financial targets established under the new plan.
Stock Options. The Committee recommends stock option grants to the Board of
Directors. Stock options have been the principal form of long-term compensation
received by the Company's executive officers. The Committee has favored stock
options as a long-term incentive because they match the interests of the
employee-optionholder with those of the shareholders. Any value to the employee
is tied directly to stock price increases. For a number of years, stock options
have been granted each October following release of the Company's financial
results for the preceding fiscal year. The number of shares covered by each
stock option grant depends on the optionee's responsibilities with the Company,
as reflected by the optionee's job classification, as well as the Company's
financial performance. John P. O'Leary, Jr., by virtue of his position as Chief
Executive Officer, receives a stock option for a greater number of shares than
the other executive officers. In October 1997, Mr. O'Leary was granted a stock
option to purchase 15,000 shares of the Company's Common Stock while the other
executive officers were granted stock options for 7,500 shares. The exercise
price of the stock options, which expire after ten years, is 100% of the fair
market value of the Company's Common Stock on the effective date of grant. Stock
options for the same number of shares were granted to the executive officers in
October 1995 and October 1996.
In October 1997, the Committee recommended that the Board of Directors
adopt, and the Board adopted, the Company's 1997 Stock Incentive Plan (the "1997
Plan"). In December 1997, the Company's shareholders approved the 1997 Plan
under which the Board may grant a total of 750,000 shares of the Company's
Common Stock to key employees of the Company and its subsidiaries and to the
Company's non-employee directors. The stock options granted in October 1997 were
granted under the Company's 1989 Stock Incentive Plan. No further stock options
may be granted under this plan.
Retirement Benefits. The Company's executive officers will receive
retirement benefits under the Company's individual account defined contribution
pension plan for salaried employees and the Company's Section 401(k) Plan, both
of which are qualified plans under the Internal Revenue Code. In addition,
benefits payable directly by the Company to the Chief Executive Officer and two
of the other executive officers upon retirement are being accrued by the Company
for these individuals in unfunded bookkeeping accounts established under the
Company's supplemental executive retirement plan.
Other. The executive officers may also participate in the Company's Common
Stock Purchase Plan for Salaried Employees which is administered by the
Committee. Certain perquisites and other personal benefits are also provided to
certain of the Company's employees, including its executive officers. These
personal benefits in the aggregate are not significant.
The Committee is aware that the deduction for compensation paid to the
Chief Executive Officer and the other executive officers is limited to $1
million under Section 162(m) of the Internal Revenue Code and that certain
performance based compensation may be excluded from this limitation. The
Committee has not recommended that any steps be taken to qualify any
compensation for the exclusion because it has not been necessary to do so. Cash
compensation paid to the executive officers has not reached the level where
being entitled to the deduction might be a concern for the Company. Also, the
vast majority of the stock options
11
<PAGE> 14
granted to the executive officers each year has been incentive stock options as
to which the Company is not generally entitled to a deduction for Federal income
tax purposes.
Respectfully submitted,
Robert W. Kampmeinert, Chairman
Thomas S. Blair
Harold F. Reed, Jr.
Thomas P. Woolaway
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following line graph compares the cumulative total shareholder return
on the Company's Common Stock over the 1994-1998 fiscal years with the
cumulative total return of the Russell 2000 Index and the Dow Jones Containers
and Packaging Industry Group over the same period. The graph assumes a $100
investment on August 31, 1993 in the Company's Common Stock and in each of the
indices and assumes the reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG THE COMPANY, THE RUSSELL
2000 INDEX
AND THE DOW JONES CONTAINERS AND PACKAGING INDUSTRY GROUP
<TABLE>
<CAPTION>
DOW JONES
CONTAINERS
MEASUREMENT PERIOD TUSCARORA AND
(FISCAL YEAR COVERED) INCORPORATED RUSSELL 2000 PACKAGING
<S> <C> <C> <C>
1993 100 100 100
1994 106 106 119
1995 169 128 136
1996 166 142 134
1997 198 183 179
1998 170 150 136
</TABLE>
PROPOSED INCREASE IN AUTHORIZED
COMMON STOCK AND PREFERRED STOCK
GENERAL
The Board of Directors unanimously recommends that the shareholders adopt
an amendment to Article 5th of the Company's Articles to increase the authorized
number of shares of the Company's Common Stock, without par value, from
20,000,000 shares to 50,000,000 shares and to increase the authorized number of
shares of the Company's Preferred Stock, par value $.01 per share, from
1,000,000 shares to 2,000,000 shares. Unless otherwise directed therein, the
proxies solicited by the Board will be voted "FOR" the proposed amendment.
12
<PAGE> 15
As of October 23, 1998, 9,528,136 shares of the Company's Common Stock were
issued and outstanding and only 4,620 shares of Common Stock were held as
treasury shares. An additional 1,895,953 shares of Common Stock are reserved for
issuance under the Company's stock incentive plans and Common Stock Purchase
Plan. Thus, of the 20,000,000 presently authorized shares of Common Stock as of
October 23, 1998, after reflecting the reserved shares, only 8,575,911 shares
remained available for issuance for other purposes. As to the Preferred Stock,
while none of the 1,000,000 authorized shares have been issued, 781,805 of the
authorized shares were potentially issuable under the Company's Shareholder
Rights Plan as of October 23, 1998, leaving only 218,195 shares available for
issuance for other purposes.
REASONS FOR THE PROPOSED AMENDMENT
The Board of Directors believes that it is desirable to have the additional
authorized shares of Common Stock, as well as the additional shares of Preferred
Stock, available for general corporate purposes, including possible acquisition,
capital raising and financing transactions, Common Stock distributions or stock
splits (such as occurred in October 1987, April 1992 and January 1997), and
future employee and director incentive and benefit plans. While the Company has
no present plans or commitments with respect to the issuance of any of the
additional authorized shares, the Company believes it advisable to have the
authorization to issue the additional shares in order to permit the Company, as
the need may arise, to move promptly to take advantage of market conditions or
the availability of other favorable opportunities without the delay and expense
of calling a special shareholders' meeting.
The additional shares of the Common Stock and Preferred Stock will be
available for issuance by the Board of Directors for any proper corporate
purpose, to such persons and for such consideration as the Board may determine,
without any further action by the shareholders except in the case of certain
types of transactions requiring a shareholder vote under Pennsylvania law, the
Articles or the rules of the NASDAQ National Market System. The NASDAQ rules
currently require shareholder approval in several instances, including certain
acquisition transactions and the adoption of certain employee and director
plans.
The holders of any of the additional shares of the Common Stock issued in
the future will have the same rights and privileges as the holders of the shares
of the Common Stock currently issued and outstanding. The holders of any
undesignated Preferred Stock issued in the future will have such rights,
preferences and privileges as may be determined by the Board of Directors at the
time of designation, including conversion, redemption, voting and liquidation
rights and preferences. Neither the holders of the Common Stock nor the
Preferred Stock have preemptive rights with respect to the future issuance of
any additional shares.
POSSIBLE ANTI-TAKEOVER EFFECT
Although the proposed amendment is not intended to be an antitakeover
measure, shareholders should note that, under certain circumstances, the
issuance of the additional authorized shares of Common Stock or Preferred Stock
could be used to create impediments to persons seeking to effect a merger or
otherwise gain control of the Company. Any of the additional shares of Common
Stock or Preferred Stock could be privately placed with purchasers who might
side with the Board of Directors in opposing a hostile takeover bid. In
particular, the Board could authorize holders of the Preferred Stock to vote as
a class, either separately or with the holders of Common Stock, on any merger,
sale or exchange of assets by the Company or any other extraordinary corporate
transaction.
Under the Articles, unless approved by the Board of Directors, a merger or
similar transaction with a person or group which beneficially owns more than 20%
of the outstanding voting power of the Company's capital stock entitled to vote
generally in an annual election of directors of the Company (the "Voting Stock")
or an amendment to the Articles or the Company's By-Laws must be approved by the
affirmative vote of 75% of the outstanding shares of the Voting Stock and by a
majority of the outstanding shares of Voting Stock not beneficially owned by
such person or group. The issuance of the additional authorized shares of the
Common Stock or Preferred Stock could prevent a merger or similar transaction or
Articles or By-Law amendment from receiving the necessary shareholder approval.
13
<PAGE> 16
Finally, the proposed amendment might simply also be considered as having
the effect of discouraging an attempt by a person to acquire control of the
Company through the acquisition of a substantial number of shares of the Voting
Stock. The issuance of the additional authorized shares of Common Stock or
Preferred Stock could dilute the stock ownership for such person and increase
the cost to such person of acquiring control.
Under the Articles, the Company has a classified Board of Directors and the
Company's shareholders do not have cumulative voting rights in the election of
directors.
There has been no attempt to takeover the Company at any time in the past,
and the Board of Directors is not aware that any person or group is seeking to
obtain control of the Company.
EFFECTIVE DATE
If the proposed amendment is adopted, the amendment will become effective
upon the filing of Articles of Amendment to the Company's Articles with the
Pennsylvania Department of State.
VOTE REQUIRED
Under Pennsylvania law, the affirmative vote of a majority of the votes
cast at the Annual Meeting by the holders of the Company's Common Stock voting
in person or represented by proxy and entitled to vote, a quorum being present,
is necessary for the adoption of the amendment. Abstentions from voting by
shareholders present in person or represented by proxy and entitled to vote are
not votes cast "for" or "against" the amendment and are therefore not counted in
determining whether the required vote has been obtained.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Ernst & Young LLP as independent
public accountants to audit the financial statements of the Company and its
subsidiaries for the 1999 fiscal year. Ernst & Young LLP has audited the
financial statements of the Company and its subsidiaries for the 1997 and 1998
fiscal years. Although the appointment of independent public accountants is not
required to be submitted to a vote of the shareholders, the Board believes that
shareholders should participate in the selection of the independent public
accountants through the ratification process.
The Board of Directors recommends a vote for the ratification of the
appointment of Ernst & Young LLP and unless otherwise directed therein, the
proxies solicited by the Board will be voted "FOR" the ratification of the
appointment of Ernst & Young LLP. In the event the shareholders fail to ratify
the appointment, the Board will consider such vote as a direction to appoint
other independent public accountants for the 2000 fiscal year.
The Board of Directors expects that representatives of Ernst & Young LLP
will be present at the Annual Meeting. The Board understands that while such
representatives do not presently plan to make a statement at the Meeting, they
will be available to respond to appropriate questions.
S.R. Snodgrass, A.C., the Company's former independent public accountants,
audited the financial statements of the Company and its subsidiaries for the
1996 fiscal year and prior fiscal years. The decision to change independent
public accountants effective with the 1997 fiscal year was recommended by the
Company's management and approved by the Audit Committee of the Board of
Directors on February 9, 1996. Ernst & Young LLP was appointed by the Board for
the 1997 fiscal year on the same date. The change to Ernst & Young LLP resulted
from the expansion of the Company's operations into foreign countries. Ernst &
Young LLP had already been performing the required statutory audits of the
Company's operations in the United Kingdom and Mexico.
The reports of S.R. Snodgrass, A.C. on the financial statements of the
Company and its subsidiaries for the 1995 and 1996 fiscal years did not contain
an adverse opinion or a disclaimer of opinion, nor were they qualified or
modified as to uncertainty, audit scope or accounting principles. During the
1995 and 1996 fiscal years, there were no disagreements between the Company and
S.R. Snodgrass, A.C. on any matter of
14
<PAGE> 17
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreement(s), if not resolved to the satisfaction
of S.R. Snodgrass, A.C., would have caused it to make a reference to the subject
matter of the disagreement(s) in connection with its reports. During such fiscal
years, there were also no reportable events as defined in Item 304(a)(1)(v) of
the SEC's Registration S-K.
During the Company's 1995 and 1996 fiscal years, neither the Company nor
anyone on its behalf consulted Ernst & Young LLP regarding either the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements. However, as indicated above, the Company did
engage Ernst & Young LLP to perform statutory audits of the Company's operations
in the U.K. and Mexico for its 1995 and 1996 fiscal years.
VOTE REQUIRED
Under Pennsylvania law, the affirmative vote of a majority of the votes
cast at the Annual Meeting by the holders of the Company's Common Stock voting
in person or represented by proxy and entitled to vote, a quorum being present,
is necessary for the ratification of the appointment of Ernst & Young LLP.
Abstentions from voting by shareholders present in person or represented by
proxy and entitled to vote are not votes cast "for" or "against" ratification of
the appointment of Ernst & Young LLP and are therefore not counted in
determining whether the required vote has been obtained.
OTHER MATTERS
No business other than that set forth above is expected to come before the
Annual Meeting or any adjournment thereof. Should other business properly come
before the Meeting or any adjournment thereof, the proxy holders will vote upon
the same according to their discretion and best judgment.
EXPENSES OF SOLICITATION
The cost of solicitation of proxies for the Annual Meeting will be paid by
the Company. In addition to the solicitation of proxies by mail, the officers
and regular employees of the Company may solicit proxies in person or by
telephone or telegraph. Brokers, banks and other holders of record, either
directly or through an agent, will forward proxy soliciting material and the
Company's Annual Report to Shareholders for the fiscal year ended August 31,
1998 to the beneficial owners of the shares of the Company's Common Stock held
of record by them, and the Company will reimburse these record holders for their
reasonable out-of-pocket expenses incurred in so doing.
The Company has also engaged Corporate Investor Communications, Inc.
("CIC") to aid in the solicitation of proxies. CIC has advised the Company that
its services will include contacting brokers, banks, non-objecting beneficial
owners and individual holders of record of the Company's Common Stock. It is
anticipated that the Company will pay $5,000 to CIC for its services, plus
expenses.
15
<PAGE> 18
1999 SHAREHOLDER PROPOSALS
A proposal submitted by a shareholder for inclusion in the Company's Proxy
Statement for the regular annual meeting of shareholders to be held in 1999 must
be received by the Secretary, Tuscarora Incorporated, 800 Fifth Avenue, New
Brighton, Pennsylvania 10566 on or prior to July 20, 1999. A proposal submitted
by a shareholder for action at such regular annual meeting, but not for
inclusion in the Company's Proxy Statement, must be so received on or prior to
October 3, 1999.
Information with respect to the written notice and information required to
be provided by a shareholder of record in order to nominate a candidate for
election at an annual meeting of shareholders is contained under the heading
"Election of Directors" in this Proxy Statement.
By Order of the Board of Directors,
Harold F. Reed, Jr.,
Secretary
16
<PAGE> 19
PROXY
TUSCARORA INCORPORATED
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
PITTSBURGH AIRPORT MARRIOTT, PARKWAY WEST, CORAOPOLIS,
ALLEGHENY COUNTY, PENNSYLVANIA
THURSDAY, DECEMBER 17, 1998, 10:30 A.M., PITTSBURGH TIME
The undersigned shareholder of Tuscarora Incorporated (the "Company")
hereby appoints John P. O'Leary, Jr., Harold F. Reed, Jr. and Brian C. Mullins,
and each of them acting individually, as proxies of the undersigned to vote at
the Annual Meeting of Shareholders of the Company to be held December 17, 1998,
and at all adjournments thereof, all the shares of Common Stock of the Company
which the undersigned may be entitled to vote, on the matters set forth on the
reverse side of this proxy and, in their discretion, upon any other business
which may properly come before the Meeting.
The undersigned shareholder hereby revokes all previous proxies for the
Annual Meeting, acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement, both dated November 17, 1998, and of the Annual Report to
Shareholders for the 1998 fiscal year, and hereby ratifies all that said proxies
may do by virtue hereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER. IF NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED "FOR" ITEMS 1, 2
AND 3.
(Continued, and to be signed, on the other side)
FOLD AND DETACH HERE
<PAGE> 20
THE BOARD OF DIRECTORS RECOMMENDS A VOTE Please mark
FOR ITEMS 1, 2 AND 3. your votes as [ X ]
indicated in
this example
Item 1--The election of Directors for a three year term expiring at the annual
meeting of shareholders in 2001.
FOR WITHHOLD
ALL NOMINEES AUTHORITY
(EXCEPT AS TO VOTE FOR
INDICATED) ALL NOMINEES
[ ] [ ]
Nominees: David I. Cohen, Abe Farkas and John P. O'Leary, Jr. A vote FOR
includes discretionary authority to vote for a substituted nominee if any of the
nominees listed becomes unable to serve or for good cause will not serve.
(To withhold authority to vote for any individual nominee, print that nominee's
name on the line below.
- -------------------------------------------------------------------------------
Item 2--The adoption of an amendment of the Company's Restated Articles of
Incorporation to increase the authorized Common Stock and Preferred Stock as
described in the accompanying Proxy Statement.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Item 3--The ratification of the appointment of Ernst & Young LLP as independent
public accountants to audit the financial statements of the Company and its
subsidiaries for the 1999 fiscal year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PLEASE DATE AND SIGN BELOW EXACTLY AS YOUR NAME APPEARS ON THIS CARD. IF YOU ARE
ACTING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, GUARDIAN OR TRUSTEE, PLEASE SO
INDICATE WITH YOUR FULL TITLE WHEN SIGNING. CORPORATE HOLDERS SHOULD SIGN IN
FULL CORPORATE NAME BY DULY AUTHORIZED OFFICER. IF SHARES ARE HELD JOINTLY, EACH
SHAREHOLDER NAMED SHOULD SIGN.
DATED________________________________ , 1998
____________________________________________
____________________________________________
WITH RESPECT TO THE ANNUAL MEETING
I/WE WILL ATTEND___ I/WE WILL NOT ATTEND___
FOLD AND DETACH HERE
PLEASE INDICATE IN THE SPACE PROVIDED ABOVE
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
YOU ARE URGED TO PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON SO THAT YOUR SHARES MAY
BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A
QUORUM MAY BE ASSURED AT THE MEETING.
