-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K/8ypZxNLVP7cS7m3TgSzFcm+NpC+PWV90htDPA7c+msdrc/120UbGWR7nY0rNv4 wPp5bX7z96Ufgax5qd1WLQ== 0000950128-98-000023.txt : 19980115 0000950128-98-000023.hdr.sgml : 19980115 ACCESSION NUMBER: 0000950128-98-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971130 FILED AS OF DATE: 19980114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TUSCARORA INC CENTRAL INDEX KEY: 0000821538 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS FOAM PRODUCTS [3086] IRS NUMBER: 251119372 STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17051 FILM NUMBER: 98506681 BUSINESS ADDRESS: STREET 1: 800 FIFTH AVE CITY: NEW BRIGHTON STATE: PA ZIP: 15066 BUSINESS PHONE: 4128438200 MAIL ADDRESS: STREET 1: 800 FIFTH AVENUE CITY: NEW BRIGHTON STATE: PA ZIP: 15066 FORMER COMPANY: FORMER CONFORMED NAME: TUSCARORA PLASTICS INC DATE OF NAME CHANGE: 19920703 10-Q 1 TUSCARORA INCORPORATED 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 November 30, 1997 [ ] 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 0-17051 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) 412-843-8200 (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 January 2, 1998, 9,481,509 shares of Common Stock, without par value, of the registrant were outstanding. 2 TUSCARORA INCORPORATED INDEX
Page ---- Part I. Financial Information Item 1. Financial Statements. Condensed Consolidated Balance Sheets at November 30, 1997 and August 31, 1997 3 Condensed Consolidated Statements of Income - Three months ended November 30, 1997 and November 30, 1996 4 Condensed Consolidated Statements of Cash Flows - Three months ended November 30, 1997 and November 30, 1996 5 Notes to Condensed Consolidated Financial Statements 6 - 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 8 - 9 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K. 10
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS TUSCARORA INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, AUGUST 31, 1997 1997 ------------ ------------ (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents $ 333,106 $ 5,095,149 Trade accounts receivable, net of provision for losses 37,552,505 31,667,668 Inventories 20,098,856 18,238,886 Prepaid expenses and other current assets 2,588,323 1,592,284 ------------ ------------ 60,572,790 56,593,987 PROPERTY, PLANT AND EQUIPMENT, net 95,032,945 93,114,834 OTHER ASSETS Goodwill 8,712,925 8,540,479 Other non-current assets 4,013,412 4,138,260 ------------ ------------ Total Assets $168,332,072 $162,387,560 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 5,133,332 $ 5,133,332 Accounts payable 17,175,775 16,714,670 Accrued income taxes 2,016,882 390,008 Accrued payroll and related taxes 978,210 910,090 Other current liabilities 4,690,528 3,661,408 ------------ ------------ 29,994,727 26,809,508 LONG-TERM DEBT - less current maturities 55,993,298 57,166,326 DEFERRED INCOME TAXES 2,272,697 2,417,725 OTHER LONG-TERM LIABILITIES 3,248,430 3,176,653 ------------ ------------ Total Liabilities 91,509,152 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, 9,481,360 at November 30, 1997 and 9,479,241 at August 31, 1997 9,481,360 9,479,241 Capital surplus 1,108,013 1,071,878 Retained earnings 66,064,411 62,291,940 Foreign currency translation adjustment 244,846 49,999 ------------ ------------ 76,898,630 72,893,058 Less cost of reacquired shares of Common Stock; 4,620 shares at November 30, 1997 and August 31, 1997 (75,710) (75,710) ------------ ------------ Total Shareholders' Equity 76,822,920 72,817,348 ------------ ------------ Total Liabilities and Shareholders' Equity $168,332,072 $162,387,560 ============ ============
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 4 TUSCARORA INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED NOVEMBER 30, 1997 1996 ----------- ----------- Net Sales $61,292,306 $53,440,704 Cost of Sales 46,193,365 39,735,103 ----------- ----------- Gross profit 15,098,941 13,705,601 Selling and Administrative Expenses 7,865,953 6,862,268 Interest Expense 1,157,167 837,362 Other (Income) (18,640) (41,510) ----------- ----------- Total expenses 9,004,480 7,658,120 ----------- ----------- Income before income taxes 6,094,461 6,047,481 Provision for Income Taxes 2,321,990 2,355,807 ----------- ----------- Net income $ 3,772,471 $ 3,691,674 =========== =========== Net income per share $ .40 $ .39 =========== =========== Weighted average number of shares of Common Stock outstanding 9,475,833 9,424,139 =========== ===========
See notes to condensed consolidated financial statements. 4 5 TUSCARORA INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED NOVEMBER 30, 1997 1996 ----------- ----------- Operating Activities Net Income $ 3,772,471 $ 3,691,674 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 3,903,109 3,679,605 Amortization 277,946 176,110 Provision for losses on receivables (13,246) 166,547 Decrease in deferred income taxes (148,936) (106,867) Loss (gain) on sale of property, plant and equipment, net 16,059 (3,457) Stock compensation expense 3,475 3,183 Changes in operating assets and liabilities, net of effects of business acquisitions: Decrease (increase): Trade accounts receivable (5,627,547) (922,691) Inventories (1,798,016) (1,049,103) Prepaid expenses and other current assets (980,167) (1,299,833) Other non-current assets (3,206) -- Increase (decrease): Accounts payable 365,723 (4,084,417) Accrued income taxes 1,631,597 2,053,001 Accrued payroll and related taxes 52,348 (303,719) Other current liabilities 411,009 (275,934) Other long-term liabilities 43,670 26,168 ----------- ----------- Net cash provided by operating activities 1,906,289 1,750,267 ----------- ----------- Investing Activities Purchase of property, plant and equipment (5,830,907) (4,659,002) Business acquisitions, net of cash acquired (116,775) (5,278,480) Proceeds from sale of property, plant and equipment 464,784 6,750 ----------- ----------- Net cash (used for) investing activities (5,482,898) (9,930,732) ----------- ----------- Financing Activities Proceeds from long-term debt -- 6,700,000 Payments on long-term debt (1,177,082) (1,625,783) Proceeds from sale of Common Stock 34,779 72,330 ----------- ----------- Net cash provided by (used for) financing activities (1,142,303) 5,146,547 ----------- ----------- Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents (43,131) (29,640) Net decrease in cash and cash equivalents (4,762,043) (3,063,558) Cash and Cash Equivalents at Beginning of Period 5,095,149 3,379,776 ----------- ----------- Cash and Cash Equivalents at End of Period $ 333,106 $ 316,218 =========== ===========
See notes to condensed consolidated financial statements. 5 6 TUSCARORA INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Condensed Consolidated Financial Statements The condensed consolidated balance sheet at November 30, 1997 and the consolidated statements of income and consolidated statements of cash flows for the periods ended November 30, 1997 and November 30, 1996 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 November 30, 1997 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 November 30, 1997 are not necessarily indicative of the operating results to be expected for the full year. 2. Inventories Inventories are summarized as follows:
November 30, August 31, 1997 1997 ------------ ----------- Finished goods $11,295,961 $10,511,267 Work in process 226,261 154,962 Raw materials 6,560,190 5,820,100 Supplies 2,016,444 1,752,557 ----------- ----------- $20,098,856 $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. In addition, several legal and administrative proceedings against the Company involving claims of employment discrimination are pending and the Company is involved in legal and administrative proceedings, including one with respect to a Superfund site, which may result in the Company becoming liable for a portion of certain environmental cleanup costs. 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 7 4. Other Information In February 1997, the Financial Accounting Standards Board (FASB) issued Statement of Accounting Standard ("SFAS") No. 128, "Earnings Per Share" which must be adopted by the Company in its fiscal quarter ended February 28, 1998. This Statement generally requires the presentation of basic and diluted earnings per share on the face of the Consolidated Statements of Income. In the opinion of Management, the amount of basic earnings per share which will be reported will not be materially different from the income per share currently reported on the Consolidated Statements of Income nor will the amount of diluted earnings per share be materially different from the basic earnings per share. SFAS No. 130, "Reporting of Comprehensive Income"; and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" were also issued in 1997. These statements must be adopted by the Company by the end of its 1999 fiscal year, and are not expected to have a material effect on the consolidated financial statements. 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - FIRST QUARTER FISCAL 1998 COMPARED TO FIRST QUARTER FISCAL 1997 Net sales for the three months ended November 30, 1997 were $61.3 million, an increase of $7.9 million, or 14.7%, over the same period of fiscal 1997. Approximately 65.0% of the increase in net sales was due to the acquisitions of EPS (Moulders) Ltd. in October 1996 and Thermoformers Plus, Allgood Industries, Inc. and Arrowtip Group Ltd. in April, May and August 1997, respectively. The balance of the increase was due primarily to higher sales at the Company's core custom molding operations. The sales increase was achieved despite reductions in some selling prices. Gross profit for the three months ended November 30, 1997 was $15.1 million, a 10.2% increase from $13.7 million in the first three months of fiscal 1997. The gross profit margin decreased to 24.6% from 25.6% in the previous fiscal year. The decrease in gross profit margin was attributable primarily to well below-objective margins at the Company's United Kingdom operations as well as its expanding custom thermoforming operations. The gross profit margin was also negatively impacted by the reductions in some selling prices although these were partially offset by lower EPS resin prices. Selling and administrative expenses for the current three-month period were $7.9 million, a 14.6% increase over $6.9 million in the previous period. Selling and administrative expenses remained steady as a percent of sales at 12.8%. 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. Interest expense for the three months ended November 1997 amounted to $1.2 million compared to $837,000 in the same period of fiscal 1997. The increase of $320,000, or 38.2%, is due primarily to increases in long-term debt incurred in connection with the acquisitions in October 1996 and May and August 1997. Income before income taxes for the three months ended November 30, 1997 increased to $6.1 million from $6.0 million in the same period of fiscal 1997, an increase of $47,000 or 0.8%. The effective tax rate decreased to 38.1% compared to 39.0% in the same period of fiscal 1997 due primarily to lower effective state income tax rates. Net income for the three months ended November 30, 1997 was $3.8 million, an increase of 2.2% from the $3.7 million earned in the same period of fiscal 1997. The increase was due primarily to the increase in net sales. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities for the three months ended November 30, 1997 amounted to $1.9 million compared to $1.8 million for the same period in fiscal 1997. Depreciation and amortization for the same three-month periods amounted to $4.2 and $3.9 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. 8 9 During the three months ended November 30, 1997, the Company's accounts receivable and inventories increased as a result of the increased sales level. Capital expenditures for property, plant and equipment during the three months ended November 30, 1997 amounted to $5.8 million, including approximately $290,000 for environmental control equipment. The largest portion of the capital expenditures was for molding presses and related equipment, including equipment at the new manufacturing facilities in Brenham, Texas and Tijuana, Mexico. The Company made no acquisitions during the quarter, however, it will continue to look for acquisitions which will mesh well with the Company's business. Total long-term debt of the Company amounted to $56.0 million at November 30, 1997, of which $52.8 million was borrowed under a credit agreement with the Company's principal bank, including $26.2 million out of an available $40.0 million under a revolving credit agreement. There were no additional borrowings under the revolving credit agreement during the three months ended November 30, 1997. 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. 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. INFLATION The impact of inflation on the Company's financial position and results of operations has not been significant during the periods discussed. 9 10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits The exhibits listed below are filed as a part of this quarterly report. Exhibit No. Document ----------- -------- 11 Computation of Net Income Per Share. 27 Financial Data Schedule. (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 November 30, 1997. 10 11 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: January 14, 1998 By /s/ John P. O'Leary, Jr. -- ------------------------------ John P. O'Leary, Jr., President and Chief Executive Officer Date: January 14, 1998 By /s/ Brian C. Mullins -- -------------------------------- Brian C. Mullins, Vice President and Treasurer (Principal Financial Officer and Principal Accounting Officer) 11 12 TUSCARORA INCORPORATED FORM 10-Q FOR QUARTER ENDED NOVEMBER 30, 1997 EXHIBIT INDEX The following exhibits are filed as a part of this quarterly report on Form 10-Q. Exhibit No. Document ------- ------------------------------------ 11 Computation of Net Income Per Share. 27 Financial Data Schedule. 12 EX-11 2 TUSCARORA INCORPORATED 1 TUSCARORA INCORPORATED EXHIBIT 11 - COMPUTATION OF NET INCOME PER SHARE
Three Months Ended November 30, ------------------------------- 1997 1996 ------ ------ (In thousands, except per share data) PRIMARY Weighted average number of shares of Common Stock outstanding 9,476 9,424 Net effect of dilutive stock options - based on the treasury stock method using average market price 225 159 ------ ------ TOTAL 9,701 9,583 ====== ====== Net income $3,772 $3,692 ====== ====== Per share amount $ .39 $ .39 ====== ====== FULLY DILUTED Weighted average number of shares of Common Stock outstanding 9,476 9,424 Net effect of dilutive stock options - based on the treasury stock method using greater of average market price or closing market price 225 160 ------ ------ TOTAL 9,701 9,584 ====== ====== Net income $3,772 $3,692 ====== ====== Per share amount $ .39 $ .39 ====== ======
13 EX-27 3 TUSCARORA INCORPORATED
5 3-MOS AUG-31-1998 NOV-30-1997 333,106 0 38,202,236 649,731 20,098,856 60,572,790 191,358,199 96,325,254 168,332,072 29,994,727 55,993,298 0 0 9,481,360 67,341,560 168,332,072 61,292,306 61,292,306 46,193,365 46,193,365 0 (13,246) 1,157,167 6,094,461 2,321,990 3,772,471 0 0 0 3,772,471 0.39 0.39
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