10-K

TUSCARORA INCORPORATED
FOR THE FISCAL YEAR ENDED AUGUST 31, 2000

TABLE OF CONTENTS

PART I
	Item 1. Business.
	Item 2. Properties.
	Item 3. Legal Proceedings.
	Item 4. Submission of Matters to a Vote of Security Holders.
PART II
	Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters.
	Item 6. Selected Financial Data.
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
	Item 8. Financial Statements and Supplementary Data.
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
PART III
	Items 10 through 13.
PART IV
	Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
	(a)(1) Financial Statements:
	(a)(2) Financial Statement Schedules:
	(a)(3) Exhibits:
	(b) Reports on Form 8-K:
SIGNATURES
EXHIBIT INDEX
SECOND AMENDMENT TO LOAN AGREEMENT
FINANCIAL STATEMENTS
LIST OF SUBSIDIARIES
CONSENT OF ERNST & YOUNG LLP
POWERS OF ATTORNEY
FINANCIAL DATA SCHEDULE

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

(Mark One)

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended August 31, 2000
[   ]	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 its charter)

Pennsylvania
(State or other jurisdiction of
incorporation or organization) 25-1119372
(IRS employer
Identification No.)

800 Fifth Avenue
New Brighton, Pennsylvania
(Address of principal executive offices) 15066
(Zip Code)

Registrant’s telephone number, including area code: 724-843-8200

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, without par value
Preferred Share Purchase Rights

      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 [  ].

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

      The registrant estimates that as of October 24, 2000, the aggregate market value of the shares of its Common Stock held by non-affiliates of the registrant was approximately $107,469,000.

      As of October 24, 2000, 9,305,326 shares of Common Stock of the registrant were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

      Portions of the registrant’s Annual Report to Shareholders for its fiscal year ended August 31, 2000 are incorporated by reference into Parts I, II and IV of this annual report.

      Portions of the Proxy Statement for the registrant’s Annual Meeting of Shareholders to be held on December 19, 2000 are incorporated by reference into Part III of this annual report.

PART I

Item 1. Business.

General

      Tuscarora Incorporated (the “Company”) was incorporated in 1962 as Tuscarora Plastics, Inc. The corporate name was changed in 1992 to reflect changes in the Company’s business.

      The Company custom designs and manufactures protective packaging and material handling products and supplies custom designed components for industrial and consumer product applications. The Company uses a variety of materials to produce its products. In each of its markets, the Company’s focus is to engineer a practical, cost effective solution to meet each customer’s specific end-use requirements.

      Protective packaging and material handling products and components are manufactured using custom molded foam plastic materials and thermoplastics. Protective packaging and material handling products are also manufactured by using other materials, including corrugated paperboard, molded and/or diecut foam plastics, thermoformed plastics and wood either alone or in various combinations. The range of material options offered enables the Company to be competitive vis-à-vis companies that only offer products made from a single material.

      In the 2000, 1999 and 1998 fiscal years, the protective packaging and material handling products contributed approximately 88%, 86% and 86%, respectively, of the Company’s net sales. The remainder was accounted for by the component products.

      The Company has six principal target markets.  Those markets are, and the approximate percentages of the Company’s net sales accounted for by each during fiscal year 2000 were, as follows: high technology and telecommunications –28%, automotive and recreational vehicles –17%, consumer electronics –16%, large and small appliances –14%, building products and office furniture –10% and pharmaceuticals and specialty chemicals –6%. The Company competes in other market sectors as well.

      The Company serves more than 3,600 customers, located in North America and Europe. For the 2000 fiscal year, no customer accounted for more than 3%, and the Company’s ten largest customers accounted for approximately 21%, of the Company’s net sales.

      Protective packaging products made from foam plastic and other materials are used to protect a wide range of finished goods during shipment. The products are designed to reduce or eliminate damage that may occur during shipment and handling as a result of shock, vibration or wide temperature fluctuations. Goods packaged in the Company’s protective packaging include such items as:

Computers and computer peripherals	Water heaters and air conditioners
Televisions and VCRs	Refrigerators
Satellite dishes	Microwave ovens
Office equipment	Coffee makers and other kitchen appliances
Vaccine containers	Telecommunications equipment
Liquid chemicals	Toys
Pharmaceuticals	Outboard motors
Military equipment
Office furniture

      Until recently, the Company’s focus has been limited to providing interior protective packaging, i.e., packaging where the customer’s goods, together with the Company’s protective packaging, are placed inside exterior shipping containers prior to shipment. Presently, the Company more and more is providing protective packaging that includes outer containers made of corrugated paperboard, wood or thermoplastics. The Company also supplies customers with value added features such as molded or diecut partitions that position accessories such as electronic cables and operating manuals that are shipped with the customer’s goods. Similar value added features are also being provided in regard to the Company’s material handling products and components.

      Material handling products generally serve the same purposes and functions as the protective packaging products but are used primarily in intra-plant and inter-plant movement of parts and components rather than shipment of finished goods. For example, automobile manufacturers and their suppliers transport parts to assembly plants using foam dunnage trays made by the Company. Material handling products also frequently serve as carriers to position parts for automated assembly. The Company also manufactures insulated shippers which transport temperature-sensitive materials for the pharmaceutical and chemical industries. The material handling products are generally more durable than the protective packaging products and are usually reusable, providing a cost-effective means of transporting materials that are sensitive or difficult to handle. Most of the material handling products are foam plastic shapes; however, certain material handling products, such as durable returnable material handling pallets, trays and fixtures, are made from thermoformed as well as integrated materials.

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      The protective packaging and material handling products made from expanded foam plastic materials possess an unusual combination of useful properties such as exceptional lightness, impact resistance and shock absorbency, toughness and strength, thermal insulating efficiency, temperature tolerance, buoyancy and chemical and biological neutrality. The cost of the products to the customer is often less than alternative types of materials because, pound for pound, less material is required to provide equal or better protection. These products can also be easily and quickly handled thus reducing the customer’s labor costs. Because foam plastic packaging shapes frequently require less space and are lighter than most other packaging materials, the customer is often able to reduce its product shipping costs. Similarly, properly designed foam plastic material handling products often increase total yield per transportation container, thus reducing intra-plant or inter-plant freight cost.

      The protective packaging and material handling products made from a variety of materials are made by integrating foam plastic shapes with other materials such as corrugated paperboard and wood to produce products with superior properties and/or lower costs compared to products made from a single material. In addition, the Company’s product offerings include specialty corrugated containers and custom wood crating products.

      Thermoformed products are used to hold goods and parts in place during shipment or handling. Thermoformed products are sometimes used where the shock absorbency or thermal insulating properties of foam plastic are not required. Because transparent plastic materials can be thermoformed, these materials are often used to create a package that allows the consumer to view the enclosed product. The Company supplies thermoformed products to most of the Company’s target markets.

      The Company also manufactures molded foam plastic shapes which are used as components in automobiles, watercraft and recreational vehicles. Due to their light weight and high energy-absorbing properties, molded foam shapes are used, for example, in door panels, steering wheels and dashboards to provide added passenger protection. Flotation and/or seating assemblies are made for watercraft and recreational vehicles.

      The Company manufactures thermal insulation components which are foam plastic shapes used by appliance manufacturers to provide insulation in products such as home and commercial refrigerators, freezers, air conditioners and water coolers. The construction industry also uses these shapes as insulation in poured concrete or block walls, in prefabricated metal buildings and as core material for factory-manufactured steel exterior doors.

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      The Company also makes components from thermoformed materials. Components made from thermoformed materials are used in applications such as garage door panels and motor vehicle trim.

Custom Design

      Virtually all of the Company’s products are custom designed. The Company has nine design and testing centers which support the Company’s sales efforts and manufacturing operations. The centers are staffed by design and engineering personnel who study and evaluate the requirements of the Company’s customers. Five of the centers are certified International Safe Transit Association (ISTA) testing laboratories. The Company’s customers make extensive use of the design and testing centers.

      With respect to the custom molding operations, prototype foam shapes are developed at the design and testing centers. After a shape is approved by the customer, one or more aluminum production molds are made and then shipped to a custom molding facility, generally the one nearest the customer, for production. The Company makes most of the production molds for its manufacturing operations in the United States and Mexico at a single mold making facility in the United States. In the United Kingdom, the making of the production molds is outsourced to a third party.

      The design and testing centers and mold making facility are equipped with and extensively use computer-aided design (CAD) and computer-aided manufacturing (CAM) systems. The locations of the design and testing centers and the mold making facility are set forth under Item 2 of this annual report.

Manufacturing

      The Company has five operating divisions and 36 manufacturing facilities, including the mold making facility. All but seven of the facilities are located in the United States: three are in the United Kingdom, three are in Mexico and one is in Ireland. The divisions are the Eastern Division, Midwestern Division, Southern Division and Western Division (which includes the Mexican operations) in the United States and the U.K. Division.

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The divisions in the United States, each of which consists of from five to ten manufacturing facilities, were formed in recognition of the Company’s expansion nationwide and the corresponding need for management decentralization.

      The Company’s manufacturing facilities are generally strategically situated near manufacturing facilities of major customers and/or major markets. The locations of the manufacturing facilities are set forth under Item 2 of this annual report.

      Custom molded foam plastic products are produced by causing plastic beads to be blown into an aluminum production mold inserted in an automatic molding machine. Time and pressure controlled heat (in the form of steam) is applied to the beads in the mold, causing the beads to expand and/or soften and fuse together to form the shape of the product which is then stabilized before removal from the molding machine. Significant capital expenditures for molding machines and auxiliary equipment are required to manufacture custom molded products. Auxiliary equipment includes air compressors, steam boilers, cooling towers, conveyors, drying equipment and a wide variety of other standard industrial machinery and equipment. The major items of expense in the manufacture of the custom molded products are the plastic resins from which the products are made, labor and the utilities needed to operate the molding machines and other equipment.

      The manufacture of the products made from integrated materials and the thermoformed products is less capital intensive. In the integrated materials operations, the machinery and equipment consists primarily of machining and fabricating equipment for forming foam plastic, corrugated paperboard and wood products. Fabrication of foam plastic involves the cutting of shapes from billets or planks of foam plastic using specialized cutting tools and hot wire equipment. Fabrication of corrugated paperboard involves slitting, die-cutting, folding and gluing the paperboard. The fabrication of wood products employs conventional power saws and other wood-working machinery. The fabricated parts are then assembled to produce products to meet each customer’s specific end-use requirements.

      Thermoforming is the process by which rigid sheets of hard thermoplastic, such as ABS or high density polyethylene, are heated and then vacuum and/or pressure formed over molds to create specific shapes. The Company also has the ability to produce thermoformed products from thin gauge material in a roll-fed in-line manufacturing process as well as from heavy gauge material through a sheet-fed process.

      The major items of expense in the manufacture of the products made from integrated materials and the thermoformed products are the materials from which the products are made, labor and electricity costs.

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      In general, the Company receives purchase orders from its customers which do not specify quantity production and delivery dates. Production against orders is determined by the customers’ production schedules with the result that products are generally required to be produced and delivered on short notice. Production levels are generally determined by customer release patterns rather than the backlog of purchase orders.

      The proximity of the Company’s manufacturing facilities to the Company’s customers ensures timely delivery of products and enables the Company to provide products without a significant shipping cost. Production flexibility also exists among the Company’s facilities since molds and/or molding machines and other manufacturing equipment can be moved quickly from one facility to another.

      All of the Company’s manufacturing facilities have warehousing capacity for inventories of finished goods. Warehouses are located at other locations as well. Distribution of products from the manufacturing facilities and warehouses to customers is made by Company operated tractor-trailers and by common carrier. Most of the Company operated tractor-trailers are leased.

      In the area of quality improvement, ISO and QS registration, and customer satisfaction, the Company has made excellent progress. Six manufacturing facilities achieved ISO registration during the 2000 fiscal year, bringing the total number of plants that have achieved or have been recommended for ISO or QS registration to 25. The Company expects that substantially all of the manufacturing facilities will be registered by the end of the 2001 fiscal year.

Sales

      Sales are made primarily by the Company’s own sales force which, including supporting technical personnel at the Company’s design and testing centers, consists of 120 salaried employees. Sales offices are located at all the design and testing centers. In addition, sales in certain geographic areas and to certain accounts are handled by sales representatives paid on a commission basis who are assisted and supported by Company personnel.

Foreign Operations

      The Company commenced doing business in the United Kingdom as a result of a business acquisition during the 1995 fiscal year. The business there has since been expanded through other business acquisitions and site development.

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      The Company has had a manufacturing facility in Juarez, Mexico since 1994. This facility has enabled the Company primarily to provide protective packaging for domestic customers that have established “Maquiladora” operations in Mexico. Maquiladora programs permit domestic companies to ship component parts in bond into Mexico, assemble them and then ship the assembled product in bond back into the United States for sale to their domestic customers. During the 1998 fiscal year, the Company established a second similar facility in Tijuana, Mexico. The Company established a third facility in Mexico in March 2000 in Guadalajara, Mexico (see “New Site Development” below). The Guadalajara facility is intended to serve primarily high technology customers.

      The United Kingdom operations have shown an operating loss during each of the last three fiscal years; however, there was a continued reduction in the operating loss in the 2000 fiscal year due principally to improved operating efficiencies. The operating income of the Mexican operations showed significant improvement in the 2000 fiscal year. For further information with respect to the foreign operations, see Notes 11 and 17 of the Notes to Consolidated Financial Statements and Management’s Discussion and Analysis of Results of Operations and Financial Condition contained in the Company’s Annual Report to Shareholders for the 2000 fiscal year and incorporated herein by reference.

      The Company’s operations in the United Kingdom and Mexico are conducted through subsidiaries. The Company has no other subsidiaries which play an important role in the Company’s business.

      In October 2000, the Company acquired a 50% interest in a company with a custom foam molding facility in Cork, Ireland (see “Business Acquisitions” below).

Raw Materials

      The materials from which the Company’s custom molded products are made are expandable polystyrene (“EPS”), expanded polypropylene (“EPP”), expanded polyethylene (“EPE”), ARCEL™ and high heat-resistant styrene-based resins. All the raw material resins are petroleum based. EPP and EPE are polyolefin resins and ARCEL™ is a co-polymer of polyethylene and polystyrene.

      EPS is received by the Company in an unexpanded state and in its raw form has an appearance much like table salt. ARCEL™ and the high heat-resistant resins are also received by the Company in an unexpanded state. Under conditions of time and pressure controlled heat, the raw material beads can be expanded to many times their original size with no increase in weight.

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The Company expands the beads to various densities depending upon the properties desired and stores the expanded beads until the final products are molded. In contrast, the EPP and EPE beads are already expanded when received by the Company and do not require further expansion before molding.

      Most of the Company’s custom molded products are made from EPS. The other resins are particularly suitable for certain applications and are significantly more expensive. Accordingly, the products made from the other resins sell at higher prices than the products made from EPS. During the 2000, 1999 and 1998 fiscal years, approximately 25%, 24% and 26%, respectively, of the Company’s net sales of custom molded products have been attributable to products made from the premium resins.

      The Company has never experienced a shortage of the resins used in the manufacture of the custom molded products and does not foresee that any shortage will occur. EPS, EPP and EPE are generally available from a number of suppliers who sell to any prospective purchaser. The high heat-resistant resins and ARCEL™ are each sold by a single supplier but are also generally available. The materials (including corrugated paperboard, wood and foam billets and planks) used in the manufacture of products made from integrated materials and the materials used in the thermoforming operations are also readily available.

      An increase in the price of EPS which began in the fourth quarter of the 1999 fiscal year continued during the 2000 fiscal year and resulted in higher selling prices for many of the Company’s products made from EPS. The Company experienced increased costs during the 2000 fiscal year for other raw materials, particularly corrugated paperboard, and such increased costs also resulted in higher selling prices for some of the Company’s products.

Competition

      The Company’s protective packaging and material handling products compete with similar products made by others as well as with other types of protective products. A majority of the similar products is produced by independent manufacturers who generally market their products in a particular geographic area from a single or limited number of facilities. While the Company is considerably larger than most of the manufacturers of similar products, the Company’s penetration in the total protective packaging market is still relatively small. A number of the companies which produce competing products, particularly paper and corrugated packaging products, are well established and have substantially greater financial resources than the Company.

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      The components manufactured for use in automobiles, watercraft and recreational vehicles, as well as those manufactured for thermal insulation, represent a small portion of the overall market for these types of products. Because of the specialized nature of these products, the Company competes primarily with other manufacturers of similar foam plastic products, rather than with manufacturers of products made from alternative materials. The components manufactured by the Company, however, can be provided by other vendors using alternative materials.

      Competition between the Company and manufacturers of similar products is based primarily on product engineering, price and customer service.

Capital Expenditures

      Capital expenditures for property, plant and equipment during the 2000, 1999 and 1998 fiscal years (not including expenditures in connection with business acquisitions) amounted to $20,344,000, $19,491,000 and $24,153,000, respectively. The 2000 fiscal year expenditures included expenditures for the purchase and refurbishment of an integrated materials facility in Darlington, Pennsylvania, to which the Company transferred its integrated materials manufacturing operations from a leased facility in Beaver, Pennsylvania; expenditures for a new warehouse at the custom foam molding facility in Marion, Ohio; expenditures to increase the manufacturing capacity at the custom foam molding facility in Colorado Springs, Colorado; expenditures for the completion of plant modernization and machinery and equipment upgrades at the custom foam molding facility in Sallisaw, Oklahoma acquired in February 1999; and expenditures to complete the installation of custom foam molding capabilities in Hayward, California.

      Capital expenditures included above for land, buildings and improvements during the 2000, 1999 and 1998 fiscal years amounted to $8,067,000, $7,064,000 and $5,702,000, respectively. Capital expenditures included above for machinery and equipment during the 2000, 1999 and 1998 fiscal years amounted to $12,277,000, $12,427,000 and $18,451,000, respectively. During the 2000 fiscal year, $4,269,000 of these expenditures was for automatic molding machines used in the custom molding operations, $1,161,000 for manufacturing equipment used in the integrated materials and thermoforming operations and $5,928,000 for auxiliary equipment primarily for the custom molding operations. In addition, $919,000 was expended during the 2000 fiscal year for environmental control equipment (see “Environmental Considerations” below).

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      The capital expenditures for the 2001 fiscal year are expected to be substantially the same as the capital expenditures for the 2000 fiscal year.

Business Acquisitions

      In September 2000, the Company purchased the operating assets of the Mt. Pleasant, Tennessee facility of Polyfoam Packers Corporation. In addition to a state-of-the-art custom foam molding facility, the Company acquired new customer accounts that are expected to add approximately $3,000,000 of new revenues in the 2001 fiscal year. The total consideration consisted of cash paid at the closing and additional cash consideration which may be paid to the seller based on certain sales made by the business in the future. The amount paid and to be paid in connection with the acquisition is not material. Portions of the purchase price were allocated to goodwill and to a covenant not to compete.

      In October 2000, the Company acquired a 50% interest in Hytherm Packaging Limited, a custom foam molding company in Cork, Ireland. The 50/50 joint venture with Hytherm (Ireland) Limited will conduct business under the name Tuscarora Ireland Limited. The purchase price was not material.

      During the fiscal year ended August 31, 2000, the Company completed three acquisitions. In September 1999, the Company purchased the specialty corrugated container, heavy wall corrugated fabrication and custom wood crating business of Lane Container Company of Dallas, Texas. The Company is continuing the business acquired at its current location under a lease with a third party. In February 2000, the Company purchased the custom wood pallet and container business of Erickson Wood Products of Belmont, California. The business acquired was relocated to the Company’s existing manufacturing facility in Hayward, California. In March 2000, the Company purchased the interior foam cushion fabricating business of Cushion Packaging Company of Dallas, Texas. The Company is in the process of combining this business with the business acquired from Lane Container Company. In each acquisition, the Company paid cash and agreed to pay additional consideration contingent on the operating performance or certain sales made by the business in the future. Any additional consideration paid will be accounted for as additional purchase price. The aggregate purchase price, part of which has been allocated to goodwill and to covenants not to compete, is not material.

      Expenditures in connection with business acquisitions during the 1999 and 1998 fiscal years were also not significant. In February 1999, the Company acquired the custom molding business, including the associated real estate, of Berry Packaging, Inc. in Sallisaw, Oklahoma. In June 1998, the Company acquired a small EPS custom molding business in Meriden, Connecticut and moved the business acquired to the Company’s existing custom molding facility in Putnam, Connecticut.

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      For further information with respect to the business acquisitions during the last three fiscal years, see Notes 13 and 18 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report to Shareholders for the 2000 fiscal year and incorporated herein by reference.

      For information with respect to the effect of acquisitions on the increases in the Company’s net sales for the 2000 and 1999 fiscal years, see Management’s Discussion and Analysis of Results of Operations and Financial Condition contained in the Company’s Annual Report to Shareholders for the 2000 fiscal year and incorporated herein by reference.

      The Company will continue to look for acquisitions which mesh well with the Company’s business.

New Site Development

      The Company also establishes manufacturing facilities through new site development.

      During the 2000 fiscal year, the Company established a new integrated materials facility in Guadalajara, Mexico, primarily to serve high technology customers (see “Foreign Operations” above).

      The Company will continue to develop new production sites as they are needed to meet the needs of its customers.

Seasonality

      The Company’s net sales and net income are subject to some seasonal variation. The Company’s business generally declines in the second fiscal quarter (primarily in December) due to a reduction in manufacturing activity by the Company’s customers. See Note 19 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report to Shareholders for the 2000 fiscal year and incorporated herein by reference.

Employees

      As of August 31, 2000, the Company had 2,188 employees, of which 526 were employed in the United Kingdom and Mexico. Of the total, 516 were salaried employees and 1,672 were paid on an hourly basis. Of the hourly employees, 397 at eight manufacturing facilities, including one in the United Kingdom, are covered by collective bargaining agreements with seven different unions.

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The agreements expire at various dates from November 30, 2001 through May 31, 2004. The Company considers its labor relations to be good and has never suffered a work stoppage as a result of a labor conflict.

Environmental Considerations

      The Company has obtained air and other applicable environmental permits for all the custom molding facilities in the United States and Mexico. Air permits are not required in the United Kingdom or Ireland. Certain of the permits restrict the amount of pentane (a blowing agent contained in the Company’s foam plastic resins) which may be released during the manufacturing process. Pentane is a volatile organic compound (VOC). VOCs have been linked to smog in the atmosphere, particularly in densely populated areas. The need to reduce the emission of this gas has resulted in capital expenditures for batch pre-expanders which allow the Company to use low pentane content EPS. Pentane abatement systems have also been installed at certain custom molding facilities. Air permits have not been required for the Company’s integrated materials and thermoforming facilities.

      The Company employs recycling equipment at its custom molding and integrated materials facilities. The equipment includes (i) regrinders which enable the Company to reuse in-house scrap and molded foam received from original equipment manufacturers, customers and consumers, (ii) EPS densifiers which enable the Company to compact scrap and molded foam collected for reprocessing in the polystyrene recycling market and (iii) balers which enable the Company to compact in-house corrugated paperboard scrap for reprocessing. In-house scrap resulting from the manufacture of thermoformed products is returned to the raw material suppliers of these materials for recycling.

      If necessary, the Company’s products may also be safely landfilled or incinerated.

      During the 2000, 1999 and 1998 fiscal years, the Company’s capital expenditures for environmental matters, including environmental control equipment, amounted to $1,366,000, $1,168,000 and $1,341,000, respectively. Capital expenditures for environmental matters during the 2001 fiscal year are expected to amount to approximately $1,000,000.

      In 1996, the Company commenced a voluntary program under which environmental compliance audits are being conducted over a period of time for all the Company’s manufacturing facilities in the United States. At the end of the 2000 fiscal year, 26 audits had been completed. The audits have been conducted by an independent environmental consulting firm and have not resulted in plans for any significant expenditures for environmental matters.

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      There has been public concern that using chloro-fluoro-carbons (CFCs) in the manufacture of plastic products may deplete the Earth’s upper atmospheric ozone layer. The Company does not use, nor has it ever used, CFCs in the manufacture of any of its products.

Business Segments

      During the fourth quarter of the 1999 fiscal year, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 131, “Disclosures about Segments of an Enterprise and Related Information.” Management believes that the Company currently operates in a single business segment as a custom designer and manufacturer of protective packaging and material handling products and components.

      The geographic distribution of net sales and operating income (loss) for the 2000, 1999 and 1998 fiscal years and of long-lived assets at August 31, 2000, 1999 and 1998 among the United States, the United Kingdom and Mexico, as required by SFAS No. 131, is set forth in Note 17 of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report to Shareholders for the 2000 fiscal year and incorporated herein by reference.

Item 2. Properties.

      The Company’s headquarters are located at 800 Fifth Avenue, New Brighton, Pennsylvania 15066.

      Manufacturing and Design and Testing Facilities.  The Company’s manufacturing and design and testing facilities are located as follows:

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	Custom	Integrated			Design and
Location	Molding	Materials	Thermoforming		Testing
Hayward, California	X	X			X
Colorado Springs, Colorado (two sites)	X	X			X
Putnam, Connecticut	X
Conyers, Georgia (two sites)	X	X		X	X
Streator, Illinois	X
Storm Lake, Iowa	X
Holden, Massachusetts		X			X
Chesaning, Michigan	X
Grand Blanc, Michigan					X
Saginaw, Michigan		X
Tupelo, Mississippi	X
Las Cruces, New Mexico	X
Cortland, New York	X
Butner, North Carolina	X
Marion, Ohio	X
Sandusky, Ohio				X
Sallisaw, Oklahoma	X
Darlington, Pennsylvania		X
New Brighton, Pennsylvania	X				X
Greeneville, Tennessee	X	X
Lewisburg, Tennessee	X

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	Custom	Integrated			Design and
Location	Molding	Materials	Thermoforming		Testing
Mt. Pleasant, Tennessee	X
Brenham, Texas	X
Dallas, Texas		X			X
Sterling, Virginia	X
Burlington, Wisconsin		X		X
Pardeeville, Wisconsin	X
Tijuana, B.C., Mexico	X	X		X	X
Juarez, Chih., Mexico	X	X
Guadalajara, Jal., Mexico		X
Northampton, England	X				X
Spennymoor, England	X
Livingston, Scotland	X	X
Cork, Ireland	X

      During the 2000 fiscal year, the Company closed a custom molding facility in London, England and redistributed its business among other U.K. facilities. During the 2000 fiscal year, the Company, acquired the integrated materials facility in Dallas, Texas (see “Business Acquisitions” under Item 1), established a new integrated materials facility in Guadalajara, Mexico (see “New Site Development” under Item 1), transferred its integrated materials operations in Beaver, Pennsylvania to the facility in Darlington, Pennsylvania and discontinued an integrated materials facility in Lindon, Utah.

       In September 2000, the Company acquired the custom molding facility in Mt.  Pleasant, Tennessee (see “Business Acquisitions” under Item 1) and in October 2000, the Company acquired a 50% interest in the custom molding facility in Cork, Ireland (see “Business Acquisitions” under Item 1).

      Other Facilities. The Company’s mold making facility is in Sun Prairie, Wisconsin. This facility is considered a manufacturing facility because most of the aluminum production molds that are made by the Company at this facility are sold to and are owned by the Company’s customers.

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      Miscellaneous. Most of the custom molding facilities are owned while a majority of the other facilities are leased. The Company has options to purchase most of the leased facilities and generally makes substantial leasehold improvements to, and exercises its options to purchase, the leased facilities. The leases expire at various dates through March 2010. In many cases, the leases may be extended at the Company’s option.

      The Company has warehouse facilities at each manufacturing location. Additional warehouse facilities are located near certain of the Company’s manufacturing facilities and near the manufacturing facilities of certain major customers. All the outside warehouse facilities are leased.

      The Company believes that its facilities are generally well suited for their respective uses and that they are generally adequately sized and designed to provide the operating efficiencies necessary for the Company to be competitive. The Company continually expands and modernizes its existing facilities and establishes new facilities as necessary to meet the demand for its products.

      Information with respect to the machinery and equipment used in the Company’s manufacturing operations and the Company’s transportation equipment is included in Item 1 of this annual report. The information is incorporated in this Item 2 by reference.

Item 3. Legal Proceedings.

      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 Pleas for Marion County, Ohio. In December 1996, the Administrator of the Estate of Dwayne Scott Mount (the “Decedent”) filed a Complaint for Wrongful Death in the captioned civil action against the Company and Toyo Machine and Metal Co., Ltd. (“Toyo”). Decedent, an employee of the Company, was killed in May 1996 while working on a molding machine at the Company’s custom molding plant in Marion, Ohio. The molding machine was manufactured by Toyo. Count I of the Complaint states an intentional employer tort claim and alleges that the Decedent was wrongfully killed as a result of certain alleged intentional conduct of the Company. Under Count I, plaintiff seeks both compensatory and punitive damages from the Company of not less than $5,000,000. Count II of the Complaint stated a products liability claim and alleged that the Decedent was wrongfully killed as a result of the defective design and/or manufacture of the molding machine by Toyo. Under Count II, plaintiff sought both compensatory and punitive damages from Toyo. In March 1999, plaintiff voluntarily dismissed, without prejudice, its claims against Toyo.

-16-

      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 in April 1998, was permitted by the Court to file an Amended Complaint which named Kaneka America and Kaneka Texas Corporation (“Kaneka Texas”) as additional defendants. Kaneka America, the owner of the molding machine at the time it was acquired by the Company, leased the machine to Kaneka Texas in April 1992 and then sold it to Kaneka Texas in March 1995. The Amended Complaint added a Count III which stated 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 pursuant to the agreement between the Company and Kaneka America. Under Count III, plaintiff sought both compensatory and punitive damages from Kaneka America and/or Kaneka Texas of not less than $5,000,000. In June 1999, plaintiff settled its claims against Kaneka America and Kaneka Texas for $75,000.

      On May 22, 2000, the trial judge granted the Company’s Motion for Summary Judgment, thus adjudicating the lawsuit in favor of the Company. On May 23, 2000, the plaintiff filed an appeal with the Third District Court of Appeals, Marion County, Ohio. The Company is vigorously contesting the appeal. In the opinion of management, the final disposition of the lawsuit should not have a material adverse effect on the Company’s financial position or results of operations.

-17-

Item 4. Submission of Matters to a Vote of Security Holders.

      No matters were submitted to a vote of security holders of the Company during the fiscal quarter ended August 31, 2000.

Executive Officers of the Company

      In accordance with Instruction 3 to Item 401(b) of Regulation S-K, information with respect to the executive officers of the Company is set forth below.

Name	Age		Office with the Company
John P. O’Leary, Jr.		53	President and Chief Executive Officer
David C. O’Leary		51	Senior Vice President and Chief Operating Officer
Brian C. Mullins		59	Senior Vice President, Chief Financial Officer and Treasurer

      John P. O’Leary, Jr. has been President and Chief Executive Officer of the Company since prior to September 1995. He has been a director of the Company since 1974 and became Chairman of the Board of Directors in August 1994.

      David C. O’Leary has been a Vice President and the chief operating officer of the Company since May 1997. His title was changed to Senior Vice President and Chief Operating Officer in October 1998. He was Vice President-Sales and Marketing from prior to September 1995 to May 1997. The Vice Presidents in charge of the Company’s operating divisions report directly to David C. O’Leary.

      Brian C. Mullins has been Vice President and Treasurer of the Company as well as its chief financial and accounting officer since prior to September 1995. His title was changed to Senior Vice President, Chief Financial Officer and Treasurer in October 1998.

      John P. O’Leary, Jr. and David C. O’Leary are brothers.

      The executive officers are elected annually by the Board of Directors at an organizational meeting which is held immediately after each Annual Meeting of Shareholders.

-18-

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters.

      The Company’s Common Stock is traded in the over-the-counter market on the National Market System of the National Association of Securities Dealers (“NASDAQ”). The Common Stock trades under the NASDAQ symbol TUSC. As of August 31, 2000, there were 597 holders of record of the Company’s Common Stock.

      Information with respect to the market prices of, and the cash dividends paid with respect to, the Company’s Common Stock during the fiscal years ended August 31, 2000 and 1999 appears in Note 19 —Quarterly Financial Data (unaudited) of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report to Shareholders for the fiscal year ended August 31, 2000 and is incorporated herein by reference.

Item 6. Selected Financial Data.

      The selected financial data required by this Item 6 is furnished by the “Eleven Year Consolidated Financial Summary” which appears on the bottom half of the inside front cover of the Company’s Annual Report to Shareholders for the fiscal year ended August 31, 2000 and is incorporated herein by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

      The information required by this Item 7 appears under the caption “Management’s Discussion and Analysis of Results of Operations and Financial Condition” on pages 27 through 31 of the Company’s Annual Report to Shareholders for the fiscal year ended August 31, 2000 and is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

      The quantitative and qualitative disclosure about market risk required by this Item 7A appears in the Management’s Discussion and Analysis of Results of Operations and Financial Condition under the caption “Market Risks” on page 30 of the Company’s Annual Report to Shareholders for the fiscal year ended August 31, 2000 and is incorporated herein by reference.

-19-

Item 8. Financial Statements and Supplementary Data.

      The following financial statements and related notes and report appear on the pages indicated in the Company’s Annual Report to Shareholders for the fiscal year ended August 31, 2000 and are incorporated herein by reference:

	Page(s) in
	Annual Report
Financial Statements and Related Report	to Shareholders
Consolidated Statements of Income for the fiscal years ended       August 31, 2000, 1999 and 1998		13
Consolidated Balance Sheets at August 31, 2000 and 1999		14
Consolidated Statements of Cash Flows for the fiscal years ended      August 31, 2000, 1999 and 1998		15
Consolidated Statements of Shareholders’ Equity for the fiscal years ended       August 31, 2000, 1999 and 1998		16
Notes to Consolidated Financial Statements		17-26
Report, dated October 6, 2000, of Ernst & Young LLP		27

      The supplementary financial information required by this Item 8 appears in Note 19 —Quarterly Financial Data (unaudited) of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report to Shareholders for the fiscal year ended August 31, 2000 and is also incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

      There were no such events and therefore this Item 9 is not applicable.

PART III

Items 10 through 13.

      In accordance with the provisions of General Instruction G to Form 10-K, the information required by Item 10 (Directors and Executive Officers of the Registrant), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management) and Item 13 (Certain Relationships and Related Transactions) is not set forth herein (except for the information concerning “Executive Officers of the Company” which appears at the end of Part I of this annual report) because the Company has already filed its definitive Proxy Statement for its Annual Meeting of Shareholders to be held on December 19, 2000, which includes such information, with the Commission. Such information is incorporated herein by reference.

-20-

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

      The financial statements, financial statement schedule and exhibits listed below are filed as part of this annual report:

(a)(1) Financial Statements:

      The consolidated financial statements of the Company and its subsidiaries, together with the report of Ernst & Young LLP, dated October 6, 2000, appearing on pages 13 through 27 of the Company’s Annual Report to Shareholders for the fiscal year ended August 31, 2000, are incorporated herein by reference (see Item 8 above).

(a)(2) Financial Statement Schedules:

		Page in this
Schedules		Annual Report
Schedule II -	Valuation Account for the fiscal years ended August 31, 2000, 1999 and 1998	S-1

      The report of Ernst & Young LLP with respect to Schedule II is included in the consent of Ernst & Young LLP filed with this annual report as Exhibit 23.

      All other financial statement schedules are omitted either because they are not applicable or are not material, or the information required therein is contained in the consolidated financial statements or notes thereto set forth in the Company’s Annual Report to Shareholders for the fiscal year ended August 31, 2000.

(a)(3) Exhibits:

Exhibit
No.	Document
3(i)	Restated Articles of Incorporation, as amended by the Company’s shareholders at the Annual Meeting of Shareholders held on December 17, 1998, and Statement with Respect to Shares of Series A Junior Participating Preferred Stock, filed as Exhibit 3(i) to the Company’s quarterly report on Form 10-Q for the fiscal quarter

-21-

Exhibit
No.	Document
	ended November 30, 1998 and incorporated herein by reference.
3(ii)	By-Laws, as amended and restated by the Company’s Board of Directors effective April 16, 1998, filed as Exhibit 3(ii) to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1998 and incorporated herein by reference.
4	Loan Agreement, dated September 23, 1999, by and among the Company, Mellon Bank, N.A., KeyBank National Association and Mellon Bank, N.A., as Agent, with copies of the Notes executed and delivered by the Company in connection with the Loan Agreement attached, filed as Exhibit 4 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1999 and incorporated herein by reference.
4.1	First Amendment, dated as of May 1, 2000, to the Loan Agreement, dated September 23, 1999, by and among the Company, Mellon Bank, N.A., KeyBank National Association and Mellon Bank, as Agent, filed as Exhibit 4 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended May 31, 2000 and incorporated herein by reference.
4.2	Second Amendment, effective August 31, 2000, to the Loan Agreement, dated September 23, 1999, by and among the Company, Mellon Bank, N.A., KeyBank National Association and Mellon Bank, N.A., as Agent, with copies of the Notes executed and delivered by the Company in connection with the Second Amendment attached, filed herewith.
4.3	Shareholder Rights Agreement, dated August 17, 1998, between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, filed as Exhibit 4 to the Company’s current report on Form 8-K filed on August 21, 1998 and incorporated herein by reference.
10.1	1989 Stock Incentive Plan, as amended by the Company’s Board of Directors and shareholders effective December 15, 1994, filed as Exhibit 10.3 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1995 and incorporated herein by reference.*
10.2	1989 Stock Incentive Plan, as amended by the Company’s Board of Directors effective August 31, 1996, filed as Exhibit 10.4 to the Company’s annual report on Form 10-K

-22-

Exhibit
No.	Document
	for the fiscal year ended August 31, 1996 and incorporated herein by reference.*
10.3	1997 Stock Incentive Plan, as adopted by the Company’s Board of Directors on October 17, 1997 and approved by the Company’s shareholders on December 18, 1997, filed as Exhibit 10.4 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1998 and incorporated herein by reference.*
10.4	Common Stock Purchase Plan for Salaried Employees, as amended by the Company’s Board of Directors on October 11, 1996, filed as Exhibit 10.5 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1996 and incorporated herein by reference.*
10.5	Deferred Compensation Plan for Non-Employee Directors, as adopted by the Company’s Board of Directors on December 14, 1994, filed as Exhibit 10.6 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended February 28, 1995 and incorporated herein by reference.*
10.6	Retirement Policy and Plan for Non-Employee Directors, as amended by the Company’s Board of Directors on December 14, 1994, filed as Exhibit 10.7 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended February 28, 1995 and incorporated herein by reference.*
10.7	Written description of supplemental retirement benefit for Thomas P. Woolaway, filed as Exhibit 10.7 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1995 and incorporated herein by reference.*
10.8	First Amendment to the Tuscarora Incorporated and Subsidiary Companies Salaried Employees’ Money Purchase Pension Plan, as adopted by the Company’s Board of Directors on October 11, 1996, providing for additional employer contributions for certain of the Company’s executive officers, filed as Exhibit 10.9 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1996 and incorporated herein by reference.*
10.9	Tuscarora Incorporated Supplemental Executive Retirement Plan, as adopted by the Company’s Board of Directors on February 9, 1996, and related Consent of the Company’s Compensation Committee, dated October 11, 1996,

-23-

Exhibit
No.	Document
	designating certain of the Company’s executive officers as Plan participants, and form of Participation Agreement, filed as Exhibit 10.10 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1996 and incorporated herein by reference.*
10.10	Indemnification and Insurance Agreement, dated December 15, 1994, between the Company and Robert W. Kampmeinert (substantially identical agreements have been entered into with all the Company’s present directors), filed as Exhibit 10.11 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1998 and incorporated herein by reference.
13	Those portions of the Annual Report to Shareholders for the fiscal year ended August 31, 2000 which are expressly incorporated in this annual report by reference, filed herewith.
21	List of subsidiaries of the Company, filed herewith.
23	Consent of Ernst & Young LLP, filed herewith.
24	Powers of Attorney, filed herewith.
27	Financial Data Schedule for the fiscal year ended August 31, 2000, filed herewith.

* Management contract or compensatory plan, contract or arrangement required to be filed by Item 601(b)(10)(iii) of Regulation S-K.

      The Company agrees to furnish to the Commission upon request copies of all instruments defining the rights of holders of long-term debt of the Company and its subsidiaries which are not filed as a part of this annual report.

      Copies of the exhibits filed as a part of this annual report are available at a cost of $.20 per page to any shareholder upon written request to Brian C. Mullins, Senior Vice President, Chief Financial Officer and Treasurer, Tuscarora Incorporated, 800 Fifth Avenue, New Brighton, Pennsylvania 15066.

(b) Reports on Form 8-K:

      The Company filed one current report on Form 8-K on June 12, 2000 reporting under Item 5 developments related to the John C. Bartram litigation in the Court of Common Pleas for Marion County, Ohio (see Item 3 of this annual report).

-24-

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Tuscarora Incorporated
By	/s/ John P. O’Leary, Jr.
	John P. O’Leary, Jr., President
	and Chief Executive Officer

Date: November 29, 2000

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company in the capacities indicated on November 29, 2000:

/s/ John P. O’Leary, Jr.	/s/ Brian C. Mullins
John P. O’Leary, Jr.	Brian C. Mullins
(Director and Chief	(Principal Financial
Executive Officer)	Officer and Principal
	Accounting Officer)
David I. Cohen
Abe Farkas
Karen L. Farkas
Robert W. Kampmeinert
Jeffery L. Leininger
David C. O’Leary
Harold F. Reed, Jr. and
Thomas P. Woolaway,
Directors
By      /s/    Brian C. Mullins
Brian C. Mullins,
Attorney-in-Fact

-25-

TUSCARORA INCORPORATED
Schedule II —Valuation Account
Years Ended August 31, 2000, 1999 and 1998

	Balance at		Charged to				Balance at
	Beginning		Costs and				End
Description	of Period		Expenses		Deductions(1)		of Period
Allowance for doubtful accounts
Year Ended August 31, 2000		$670,033	$	121,485	$	157,013	$	634,505
Year Ended August 31, 1999		$651,720	$	145,319	$	127,006	$	670,033
Year Ended August 31, 1998		$674,689	$	311,711	$	334,680	$	651,720

(1) Uncollected receivables written off, net of recoveries.

S-1

TUSCARORA INCORPORATED
FORM 10-K FOR FISCAL YEAR AUGUST 31, 2000
EXHIBIT INDEX

Exhibit
No.	Document
3(i)	Restated Articles of Incorporation, as amended by the Company’s shareholders at the Annual Meeting of Shareholders held on December 17, 1998, and Statement with Respect to Shares of Series A Junior Participating Preferred Stock, filed as Exhibit 3(i) to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended November 30, 1998 and incorporated herein by reference.
3(ii)	By-Laws, as amended and restated by the Company’s Board of Directors effective April 16, 1998, filed as Exhibit 3(ii) to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1998 and incorporated herein by reference.
4	Loan Agreement, dated September 23, 1999, by and among the Company, Mellon Bank, N.A., KeyBank National Association and Mellon Bank, N.A., as Agent, with copies of the Notes executed and delivered by the Company in connection with the Loan Agreement attached, filed as Exhibit 4 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1999 and incorporated herein by reference.
4.1	First Amendment, dated as of May 1, 2000, to the Loan Agreement, dated September 23, 1999, by and among the Company, Mellon Bank, N.A., KeyBank National Association and Mellon Bank, as Agent, filed as Exhibit 4 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended May 31, 2000 and incorporated herein by reference.
4.2	Second Amendment, effective August 31, 2000, to the Loan Agreement, dated September 23, 1999, by and among the Company, Mellon Bank, N.A., KeyBank National Association and Mellon Bank, N.A., as Agent, with copies of the Notes executed and delivered by the Company in connection with the Second Amendment attached, filed herewith.
4.3	Shareholder Rights Agreement, dated August 17, 1998, between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, filed as Exhibit 4 to the Company’s current report on Form 8-K filed on August 21, 1998 and incorporated herein by reference.
10.1	1989 Stock Incentive Plan, as amended by the Company’s Board of Directors and shareholders effective December 15, 1994, filed as Exhibit 10.3 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1995 and incorporated herein by reference.*
10.2	1989 Stock Incentive Plan, as amended by the Company’s Board of Directors effective August 31, 1996, filed as Exhibit 10.4 to the Company’s annual report on Form 10-K
	for the fiscal year ended August 31, 1996 and incorporated herein by reference.*
10.3	1997 Stock Incentive Plan, as adopted by the Company’s Board of Directors on October 17, 1997 and approved by the Company’s shareholders on December 18, 1997, filed as Exhibit 10.4 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1998 and incorporated herein by reference.*
10.4	Common Stock Purchase Plan for Salaried Employees, as amended by the Company’s Board of Directors on October 11, 1996, filed as Exhibit 10.5 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1996 and incorporated herein by reference.*
10.5	Deferred Compensation Plan for Non-Employee Directors, as adopted by the Company’s Board of Directors on December 14, 1994, filed as Exhibit 10.6 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended February 28, 1995 and incorporated herein by reference.*
10.6	Retirement Policy and Plan for Non-Employee Directors, as amended by the Company’s Board of Directors on December 14, 1994, filed as Exhibit 10.7 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended February 28, 1995 and incorporated herein by reference.*
10.7	Written description of supplemental retirement benefit for Thomas P. Woolaway, filed as Exhibit 10.7 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1995 and incorporated herein by reference.*
10.8	First Amendment to the Tuscarora Incorporated and Subsidiary Companies Salaried Employees’ Money Purchase Pension Plan, as adopted by the Company’s Board of Directors on October 11, 1996, providing for additional employer contributions for certain of the Company’s executive officers, filed as Exhibit 10.9 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1996 and incorporated herein by reference.*
10.9	Tuscarora Incorporated Supplemental Executive Retirement Plan, as adopted by the Company’s Board of Directors on February 9, 1996, and related Consent of the Company’s Compensation Committee, dated October 11, 1996, designating certain of the Company’s executive officers as Plan participants, and form of Participation Agreement, filed as Exhibit 10.10 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1996 and incorporated herein by reference.*
10.10	Indemnification and Insurance Agreement, dated December 15, 1994, between the Company and Robert W. Kampmeinert (substantially identical agreements have been entered into with all the Company’s present directors), filed as Exhibit 10.11 to the Company’s annual report on Form 10-K for the fiscal year ended August 31, 1998 and incorporated herein by reference.
13	Those portions of the Annual Report to Shareholders for the fiscal year ended August 31, 2000 which are expressly incorporated in this annual report by reference, filed herewith.
21	List of subsidiaries of the Company, filed herewith.
23	Consent of Ernst & Young LLP, filed herewith.
24	Powers of Attorney, filed herewith.
27	Financial Data Schedule for the fiscal year ended August 31, 2000, filed herewith.
*	Management contract or compensatory plan, contract or arrangement required to be filed by Item 601(b)(10)(iii) of Regulation S-K.

EX-4.2

   1
                                                                     Exhibit 4.2



                       SECOND AMENDMENT TO LOAN AGREEMENT


         Amendment, effective the 31st day of August, 2000, by and among
Tuscarora Incorporated, a Pennsylvania corporation (the "Borrower"), Mellon
Bank, N.A., a national banking association ("Mellon"), KeyBank National
Association, a national banking association ("Key") (Mellon, Key and any other
financial institution that becomes a party to the Loan Agreement (as
hereinafter defined), are individually, a "Bank" and collectively, the
"Banks"), and Mellon Bank, N.A., as Agent for the Banks ("Agent") ("Second
Amendment").

                              W I T N E S S E T H:

         WHEREAS, the Borrower, the Banks and the Agent have entered into that
certain Loan Agreement, dated September 23, 1999, as amended by the First
Amendment to Loan Agreement, dated as of May 1, 2000, pursuant to which, among
other things, the Banks extended to the Borrower a credit facility in the
original principal amount not to exceed Ninety Million and 00/100 Dollars
($90,000,000.00) (as further amended from time to time, the "Loan Agreement");
and

         WHEREAS, the Borrower desires to amend certain provisions of the Loan
Agreement and the Banks and the Agent desire to permit such amendments pursuant
to the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the premises contained herein and
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
agree as follows:

         1. All capitalized terms used herein which are defined in the Loan
Agreement shall have the same meaning herein as in the Loan Agreement unless
the context clearly indicates otherwise.

         2. The definition of "Total Commitment Amount" contained in Section
1.01 of the Loan Agreement is hereby deleted in its entirety and in its stead
is inserted the following:

                  "Total Commitment Amount" shall mean the obligation hereunder
         of the Banks to make Loans and issue Letters of Credit up to the
         maximum aggregate principal amount of One Hundred Million and 00/100
         Dollars ($100,000,000.00) (subject to the terms and conditions of this
         Agreement).

         3. Section 2.01(a) of the Loan Agreement is hereby deleted in its
entirety and in its stead is inserted the following:

                  (a) Revolving Credit Loans. Subject to the terms and
         conditions and relying upon the representations and warranties set
         forth in this Agreement and the other Loan Documents, the Banks
         severally (but not jointly) agree to make, continue or convert loans
         (the "Revolving Credit Loans") to the Borrower at any time or

   2
         from time to time (i) on or after August 31, 2000 through August 30,
         2001 in an aggregate principal amount (including the aggregate
         principal amount of all Swing Line Loans outstanding and the Letter of
         Credit Undrawn Availability) not exceeding at any one time outstanding
         Fifty-Five Million and 00/100 Dollars ($55,000,000.00) and (ii) on or
         after August 31, 2001 through and including the day immediately
         preceding the Revolving Credit Expiry Date, in an aggregate principal
         amount (including the aggregate principal amount of all Swing Line
         Loans outstanding and the Letter of Credit Undrawn Availability) not
         exceeding at any one time outstanding Forty-Five Million and 00/100
         Dollars ($45,000,000.00) (the "Revolving Credit Facility Commitment");
         provided, however, that each Bank shall not be required to make
         Revolving Credit Loans (and participate in the issuance of Letters of
         Credit) in an aggregate principal amount outstanding at any one time
         exceeding such Bank's Commitment Percentage. The Revolving Credit Loans
         shall be made pro rata in accordance with each Banks' Commitment
         Percentage. Within the limits of time and amount set forth in this
         Section 2.01, and subject to the provisions of this Agreement
         including, without limitation, the Banks' right to demand repayment of
         the Revolving Credit Loans upon the occurrence of an Event of Default,
         Borrower may borrow, repay and reborrow under this Section 2.01;
         provided however, that if Borrower prepays any Libor Rate Loan on any
         day other than the last day of the applicable Interest Period for such
         Libor Rate Loan, then Borrower shall comply with the terms and
         conditions of Section 2.15(c) with respect to such prepayment.

         4. Schedule 1 to the Loan Agreement is hereby deleted in its entirety
and in its stead is inserted Schedule 1 as set forth on Exhibit A attached
hereto and made a part hereof.

         5. The Borrower hereby reconfirms and reaffirms all representations
and warranties, agreements and covenants made by it pursuant to the terms and
conditions of the Loan Agreement, except as such representations and
warranties, agreements and covenants may have heretofore been amended, modified
or waived in writing in accordance with the Loan Agreement; provided, however,
that any such representations, warranties, agreements and covenants that
expressly relate to a specific date continue to relate only to such date.

         6. The Borrower hereby represents and warrants to the Banks and the
Agent that (i) the Borrower has the legal power and authority to execute and
deliver this Second Amendment; (ii) the officers of the Borrower executing this
Second Amendment have been duly authorized to execute and deliver the same and
bind the Borrower with respect to the provisions hereof; (iii) the execution
and delivery hereof by the Borrower and the performance and observance by the
Borrower of the provisions hereof and of the Loan Agreement and all documents
executed or to be executed therewith, do not violate or conflict with the
organizational agreements of Borrower or any Law applicable to Borrower or
result in a breach of any provision of or constitute a default under any other
agreement, instrument or document

                                      -2-
   3

binding upon or enforceable against the Borrower and (iv) this Second
Amendment, the Loan Agreement and the documents executed or to be executed by
the Borrower in connection herewith or therewith constitute valid and binding
obligations of the Borrower in every respect, enforceable in accordance with
their respective terms.

         7. The Borrower represents and warrants that (i) no Event of Default
exists under the Loan Agreement, nor will any occur as a result of the
execution and delivery of this Second Amendment or the performance or
observance of any provision hereof and (ii) it presently has no claims or
actions of any kind at Law or in equity against the Banks or the Agent arising
out of or in any way relating to the Loan Documents.

         8. Each reference to the Loan Agreement that is made in the Loan
Agreement or any other document executed or to be executed in connection
therewith shall hereafter be construed as a reference to the Loan Agreement as
amended hereby.

         9. Except as amended hereby, all of the terms and conditions of the
Loan Agreement shall remain in full force and effect. This Second Amendment
amends the Loan Agreement and is not a novation thereof.

         10. This Second Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts each
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.


                           [INTENTIONALLY LEFT BLANK]



                                      -3-
   4


     IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto,
have caused this Second Amendment to be duly executed by their duly authorized
officers to be effective on the date first written above.


Attest:                                      Tuscarora Incorporated

By: /s/ EDWARD R. WOLFORD                    By: /s/ BRIAN C. MULLINS
    ------------------------                     ----------------------------
    Edward R. Wolford                            Brian C. Mullins

Title: Assistant Secretary                   Title: Senior Vice President
       ---------------------                        -------------------------


                                             Mellon Bank, N.A., as Agent
                                             and for itself as a Bank

                                             By: /s/ DWAYNE R. FINNEY
                                                 ----------------------------

                                             Title: Vice President
                                                    -------------------------


                                             KeyBank National Association

                                             By: /s/ FRANCIS W. LUTZ, JR.
                                                 ----------------------------
                                                 Francis W. Lutz, Jr.

                                             Title: Portfolio Officer
                                                    -------------------------


                                      -4-
   5

                                   EXHIBIT A
                                   ---------

                                   Schedule 1

                       Schedule of Banks and Commitments
                       ---------------------------------


                                                        Revolving
                                       Revolving         Credit                           Term Loan
                                        Credit          Commitment       Term Loan        Commitment
Banks                                  Commitment       Percentage       Commitment       Percentage
- -----                                  ----------       ----------       ----------       ----------
                                                                              
Mellon Bank, N.A.                      $35,000,000        63.64%         $30,000,000        66.67%
Two Mellon Bank Center
Room 152-0270
Pittsburgh, Pennsylvania 15259

KeyBank National Association           $20,000,000        36.36%         $15,000,000        33.33%
Corporate Banking Division             ------------       -----          -----------        -----
127 Public Square
Cleveland, Ohio 44144

Total Commitment Amount                $55,000,000          100%         $45,000,000         100%
                                       ===========          ===          ===========         ===

   6

                FIRST AMENDED AND RESTATED REVOLVING CREDIT NOTE
                ------------------------------------------------

$35,000,000                                            Pittsburgh, Pennsylvania
                                                       August 31, 2000


     FOR VALUE RECEIVED, the undersigned, Tuscarora Incorporated, a Pennsylvania
corporation (the "Borrower"), hereby promises to pay to the order of Mellon
Bank, N.A., a national banking association ("Mellon"), as provided for in the
Loan Agreement (as defined below), the lesser of (i) the principal sum of
Thirty-Five Million and 00/100 Dollars ($35,000,000.00) or (ii) Mellon's ratable
portion of the aggregate unpaid principal amount of all Revolving Credit Loans
made by Mellon to the Borrower pursuant to that certain Loan Agreement, dated
September 23, 1999, by and among the Borrower, Mellon, KeyBank National
Association ("Key") (Mellon and Key are individually a "Bank" and collectively,
the "Banks") and Mellon, as agent for the Banks (in such capacity, the "Agent"),
as amended by the First Amendment to Loan Agreement, dated as of May 1, 2000, as
such agreement may be further amended, modified or supplemented from time to
time (the "Loan Agreement"). The Borrower hereby further promises to pay to the
order of Mellon interest on the unpaid principal amount of this First Amended
and Restated Revolving Credit Note from time to time outstanding at the rate or
rates per annum determined pursuant to Article II of, or as otherwise provided
in, the Loan Agreement, and with such amounts being payable on the dates set
forth in Article II of, or as otherwise provided in, the Loan Agreement.

     All payments and prepayments to be made in respect of principal, interest,
or other amounts due from the Borrower under this First Amended and Restated
Revolving Credit Note shall be payable at 12:00 noon, Pittsburgh, Pennsylvania
time, on the day when due, without presentment, demand, protest or notice of
any kind, all of which are expressly waived, and an action therefor shall
immediately accrue. All such payments shall be made to the Agent for the
ratable benefit of Mellon at the designated office of the Agent located at Two
Mellon Bank Center, Pittsburgh, Pennsylvania 15259, in lawful money of the
United States of America in immediately available funds without setoff,
counterclaim or other deduction of any nature.

     Except as otherwise provided in the Loan Agreement, if any payment of
principal or interest under the First Amended and Restated Revolving Credit
Note shall become due on a day which is not a Business Day, such payment shall
be made on the next following Business Day and such extension of time shall be
included in computing interest in connection with such payment.

     This First Amended and Restated Revolving Credit Note is one of the Notes
referred to in, and is entitled to the benefits of, the Loan Agreement, as the
same may be amended, modified or supplemented from time to time. Capitalized
terms used in this First Amended and Restated Revolving Credit Note which are
defined in the Loan Agreement shall have the meanings assigned to them therein
unless otherwise defined in this First Amended and Restated Revolving Credit
Note.

     WARRANT OF ATTORNEY TO CONFESS JUDGMENT. THE BORROWER HEREBY IRREVOCABLY
AUTHORIZES AND EMPOWERS THE PROTHONOTARY, ANY ATTORNEY OR ANY CLERK OF ANY COURT
OF RECORD, AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT, TO APPEAR FOR AND
   7
CONFESS JUDGMENT AGAINST THE BORROWER FOR SUCH SUMS AS ARE DUE AND/OR MAY BECOME
DUE UNDER THIS FIRST AMENDED AND RESTATED REVOLVING CREDIT NOTE, WITH OR WITHOUT
DECLARATION, WITH COSTS OF SUIT, WITHOUT STAY OF EXECUTION AND WITH AN AMOUNT
EQUAL TO FIVE PERCENT (5%) OF THE AMOUNT OF SUCH JUDGMENT, BUT NOT LESS THAN TEN
THOUSAND AND 00/100 DOLLARS ($10,000.00) ADDED FOR ATTORNEYS' COLLECTION FEES.
TO THE EXTENT PERMITTED BY LAW, THE BORROWER RELEASES ALL ERRORS IN SUCH
PROCEEDINGS. IF A COPY OF THIS FIRST AMENDED AND RESTATED REVOLVING CREDIT NOTE,
VERIFIED BY AFFIDAVIT BY OR ON BEHALF OF THE HOLDER OF THIS FIRST AMENDED AND
RESTATED REVOLVING CREDIT NOTE SHALL HAVE BEEN FILED IN SUCH ACTION, IT SHALL
NOT BE NECESSARY TO FILE THE ORIGINAL FIRST AMENDED AND RESTATED REVOLVING
CREDIT NOTE AS A WARRANT OF ATTORNEY. THE AUTHORITY AND POWER TO APPEAR FOR
AND CONFESS JUDGMENT AGAINST THE BORROWER SHALL NOT BE EXHAUSTED BY THE INITIAL
EXERCISE THEREOF AND MAY BE EXERCISED AS OFTEN AS THE HOLDER SHALL FIND IT
NECESSARY AND DESIRABLE AND THIS FIRST AMENDED AND RESTATED REVOLVING CREDIT
NOTE OR A COPY THEREOF SHALL BE A SUFFICIENT WARRANT THEREFOR. THE HOLDER HEREOF
MAY CONFESS ONE OR MORE JUDGMENTS IN THE SAME OR DIFFERENT JURISDICTIONS FOR ALL
OR ANY PART OF THE AMOUNT OWING HEREUNDER, WITHOUT REGARD TO WHETHER JUDGMENT
HAS THERETOFORE BEEN CONFESSED ON MORE THAN ONE OCCASION FOR THE SAME AMOUNT. IN
THE EVENT ANY JUDGMENT CONFESSED AGAINST THE BORROWER HEREUNDER IS STRICKEN OR
OPENED UPON APPLICATION BY OR ON THE BORROWER'S BEHALF FOR ANY REASON, HOLDER IS
HEREBY AUTHORIZED AND EMPOWERED TO AGAIN APPEAR FOR AND CONFESS JUDGMENT AGAINST
THE BORROWER FOR ANY PART OR ALL OF THE AMOUNTS OWING HEREUNDER, AS PROVIDED FOR
HEREIN, IF DOING SO WILL CURE ANY ERRORS OR DEFECTS IN SUCH PRIOR PROCEEDINGS.

     This First Amended and Restated Revolving Credit Note shall be governed
by, and shall be construed and enforced in accordance with, the laws of the
Commonwealth of Pennsylvania without regard to the principles of the conflicts
of laws thereof. The Borrower hereby consents to the jurisdiction and venue of
the Court of Common Pleas of Allegheny County, Pennsylvania and the United
States District Court for the Western District of Pennsylvania with respect to
any suit arising out of or mentioning this First Amended and Restated Revolving
Credit Note.

     This First Amended and Restated Revolving Credit Note amends and restates
the Revolving Credit Note, dated September 23, 1999, made by the Borrower to
Mellon (the "Prior Note"). This First Amended and Restated Revolving Credit
Note is issued in substitution for (and not in discharge of the indebtedness
evidenced by) the Prior Note.


                                      -2-
   8

     IN WITNESS WHEREOF, and intending to be legally bound hereby, the Borrower
has executed, issued and delivered this First Amended and Restated Revolving
Credit Note in Pittsburgh, Pennsylvania on the day and year written above.


Witness:                                     Tuscarora Incorporated


    /s/ EDWARD HOOPES                        By: /s/ BRIAN C. MULLINS
- ----------------------------                     ----------------------------
       Edward Hoopes                             Brian C. Mullins

                                             Title: Senior Vice President
                                                    -------------------------
   9

                FIRST AMENDED AND RESTATED REVOLVING CREDIT NOTE
                ------------------------------------------------

$20,000,000                                            Pittsburgh, Pennsylvania
                                                       August 31, 2000


     FOR VALUE RECEIVED, the undersigned, Tuscarora Incorporated, a
Pennsylvania corporation (the "Borrower"), hereby promises to pay to the order
of KeyBank, National Association, a national banking association ("Key"), as
provided for in the Loan Agreement (as defined below), the lesser of (i) the
principal sum of Twenty Million and 00/100 Dollars ($20,000,000.00) or (ii)
Key's ratable portion of the aggregate unpaid principal amount of all Revolving
Credit Loans made by Key to the Borrower pursuant to that certain Loan
Agreement, dated September 23, 1999, by and among the Borrower, Mellon Bank,
N.A. ("Mellon") (Key and Mellon are individually, a "Bank" and collectively, the
"Banks") and Mellon, as agent for the Banks (in such capacity, the "Agent"), as
amended by the First Amendment to Loan Agreement, dated as of May 1, 2000, as
such agreement may be further amended, modified or supplemented from time to
time (the "Loan Agreement"). The Borrower hereby further promises to pay to the
order of Key interest on the unpaid principal amount of this First Amended and
Restated Revolving Credit Note from time to time outstanding at the rate or
rates per annum determined pursuant to Article II of, or as otherwise provided
in, the Loan Agreement, and with such amounts being payable on the dates set
forth in Article II of, or as otherwise provided in, the Loan Agreement.

     All payments and prepayments to be made in respect of principal, interest,
or other amounts due from the Borrower under this First Amended and Restated
Revolving Credit Note shall be payable at 12:00 noon, Pittsburgh, Pennsylvania
time, on the day when due, without presentment, demand, protest or notice of any
kind, all of which are expressly waived, and an action therefor shall
immediately accrue. All such payments shall be made to the Agent for the ratable
benefit of Key at the designated office of the Agent located at Two Mellon Bank
Center, Pittsburgh, Pennsylvania 15259, in lawful money of the United States of
America in immediately available funds without setoff, counterclaim or other
deduction of any nature.

     Except as otherwise provided in the Loan Agreement, if any payment of
principal or interest under the First Amended and Restated Revolving Credit
Note shall become due on a day which is not a Business Day, such payment shall
be made on the next following Business Day and such extension of time shall be
included in computing interest in connection with such payment.

     This First Amended and Restated Revolving Credit Note is one of the Notes
referred to in, and is entitled to the benefits of, the Loan Agreement, as the
same may be amended, modified or supplemented from time to time. Capitalized
terms used in this First Amended and Restated Revolving Credit Note which are
defined in the Loan Agreement shall have the meanings assigned to them therein
unless otherwise defined in this First Amended and Restated Revolving Credit
Note.

     WARRANT OF ATTORNEY TO CONFESS JUDGMENT. THE BORROWER HEREBY IRREVOCABLY
AUTHORIZES AND EMPOWERS THE PROTHONOTARY, ANY ATTORNEY OR ANY CLERK OF ANY COURT
OF RECORD, AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT, TO APPEAR FOR AND
CONFESS JUDGMENT AGAINST THE BORROWER FOR SUCH SUMS AS ARE DUE

   10
AND/OR MAY BECOME DUE UNDER THIS FIRST AMENDED AND RESTATED REVOLVING CREDIT
NOTE, WITH OR WITHOUT DECLARATION, WITH COSTS OF SUIT, WITHOUT STAY OF EXECUTION
AND WITH AN AMOUNT EQUAL TO FIVE PERCENT (5%) OF THE AMOUNT OF SUCH JUDGMENT,
BUT NOT LESS THAN TEN THOUSAND AND 00/100 DOLLARS ($10,000.00) ADDED FOR
ATTORNEYS' COLLECTION FEES. TO THE EXTENT PERMITTED BY LAW, THE BORROWER
RELEASES ALL ERRORS IN SUCH PROCEEDINGS. IF A COPY OF THIS FIRST AMENDED AND
RESTATED REVOLVING CREDIT NOTE, VERIFIED BY AFFIDAVIT BY OR ON BEHALF OF THE
HOLDER OF THIS FIRST AMENDED AND RESTATED REVOLVING CREDIT NOTE SHALL HAVE BEEN
FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL FIRST
AMENDED AND RESTATED REVOLVING CREDIT NOTE AS A WARRANT OF ATTORNEY. THE
AUTHORITY AND POWER TO APPEAR FOR AND CONFESS JUDGMENT AGAINST THE BORROWER
SHALL NOT BE EXHAUSTED BY THE INITIAL EXERCISE THEREOF AND MAY BE EXERCISED AS
OFTEN AS THE HOLDER SHALL FIND IT NECESSARY AND DESIRABLE AND THIS FIRST AMENDED
AND RESTATED REVOLVING CREDIT NOTE OR A COPY THEREOF SHALL BE A SUFFICIENT
WARRANT THEREFOR. THE HOLDER HEREOF MAY CONFESS ONE OR MORE JUDGMENTS IN THE
SAME OR DIFFERENT JURISDICTIONS FOR ALL OR ANY PART OF THE AMOUNT OWING
HEREUNDER, WITHOUT REGARD TO WHETHER JUDGMENT HAS THERETOFORE BEEN CONFESSED ON
MORE THAN ONE OCCASION FOR THE SAME AMOUNT. IN THE EVENT ANY JUDGMENT CONFESSED
AGAINST THE BORROWER HEREUNDER IS STRICKEN OR OPENED UPON APPLICATION BY OR ON
THE BORROWER'S BEHALF FOR ANY REASON, HOLDER IS HEREBY AUTHORIZED AND EMPOWERED
TO AGAIN APPEAR FOR AND CONFESS JUDGMENT AGAINST THE BORROWER FOR ANY PART OR
ALL OF THE AMOUNTS OWING HEREUNDER, AS PROVIDED FOR HEREIN, IF DOING SO WILL
CURE ANY ERRORS OR DEFECTS IN SUCH PRIOR PROCEEDINGS.

     This First Amended and Restated Revolving Credit Note shall be governed
by, and shall be construed and enforced in accordance with, the laws of the
Commonwealth of Pennsylvania without regard to the principles of the conflicts
of laws thereof. The Borrower hereby consents to the jurisdiction and venue of
the Court of Common Pleas of Allegheny County, Pennsylvania and the United
States District Court for the Western District of Pennsylvania with respect to
any suit arising out of or mentioning this First Amended and Restated Revolving
Credit Note.

     This First Amended and Restated Revolving Credit Note amends and restates
the Revolving Credit Note, dated September 23, 1999, made by the Borrower to Key
(the "Prior Note"). This First Amended and Restated Revolving Credit Note is
issued in substitution for (and not in discharge of the indebtedness evidenced
by) the Prior Note.


                                      -2-
   11

     IN WITNESS WHEREOF, and intending to be legally bound hereby, the Borrower
has executed, issued and delivered this First Amended and Restated Revolving
Credit Note in Pittsburgh, Pennsylvania on the day and year written above.


Witness:                                     Tuscarora Incorporated


    /s/ EDWARD HOOPES                        By: /s/ BRIAN C. MULLINS
- ----------------------------                     ----------------------------
       Edward Hoopes                             Brian C. Mullins

                                             Title: Senior Vice President
                                                    -------------------------

EX-13

   1

                                                                      Exhibit 13


                                                       TABLE OF CONTENTS
                                                     TO THE CONSOLIDATED
                                                    FINANCIAL STATEMENTS


                                                            Consolidated      13
                                                              Statements
                                                               of Income

                                                            Consolidated      14
                                                          Balance Sheets

                                                            Consolidated      15
                                                              Statements
                                                           of Cash Flows

                                                            Consolidated      16
                                                              Statements
                                                        of Shareholders'
                                                                  Equity

                                                   Notes to Consolidated      17
                                                    Financial Statements

                                                               Report of      27
                                                    Independent Auditors

                                                            Management's      27
                                                          Discussion and
                                                     Analysis of Results
                                                       of Operations and
                                                     Financial Condition


   2




CONSOLIDATED STATEMENTS OF INCOME

- ----------------------------------------------------------------------------------------------
Year Ended
August 31,                                  2000                 1999                1998
- ----------------------------------------------------------------------------------------------
                                                                       
Net Sales                               $273,687,494        $233,841,000        $232,902,210
Cost of Sales                            208,591,121         178,635,682         180,144,500
- ----------------------------------------------------------------------------------------------
  Gross profit                            65,096,373          55,205,318          52,757,710
- ----------------------------------------------------------------------------------------------
Selling and Administrative Expenses       37,394,750          31,959,155          31,195,448
Restructuring Costs (Note 15)                     --                  --           3,495,336
Interest Expense                           5,448,817           4,619,190           4,944,271
Other (Income) Expense--Net                 (563,271)           (232,602)            (58,756)
- ----------------------------------------------------------------------------------------------
                                          42,280,296          36,345,743          39,576,299
- ----------------------------------------------------------------------------------------------
  Income before income taxes              22,816,077          18,859,575          13,181,411
Provision for Income Taxes (Note 11)       8,618,122           7,130,451           5,149,463
- ----------------------------------------------------------------------------------------------
  Net income                            $ 14,197,955        $ 11,729,124        $  8,031,948
==============================================================================================
  Basic net income per share
    of Common Stock (Note 6)                   $1.52               $1.24               $0.85
  Diluted net income per share
    of Common Stock (Note 6)                   $1.51               $1.23               $0.83
  Cash dividends paid
    per share of Common Stock                  $0.27               $0.24               $0.22
==============================================================================================



The accompanying notes are an integral part of the consolidated financial
statements.


                                                                  AR 2000  |  13

   3

CONSOLIDATED BALANCE SHEETS



- ----------------------------------------------------------------------------------------------------
Assets (August 31)                                                      2000                    1999
- ----------------------------------------------------------------------------------------------------
                                                                                 
CURRENT ASSETS
  Cash and cash equivalents                                    $   7,377,860           $   6,090,066
  Trade accounts receivable, less allowance of
    $634,505 in 2000; $670,033 in 1999                            48,457,015              33,427,529
  Inventories (Note 2)                                            33,962,576              22,490,918
  Prepaid expenses and other current assets                        3,801,453               2,425,187
- ----------------------------------------------------------------------------------------------------
    Total current assets                                          93,598,904              64,433,700
- ----------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
  Land                                                             4,039,090               3,950,046
  Buildings and improvements                                      70,367,481              63,141,812
  Machinery and equipment                                        137,079,923             131,943,609
- ----------------------------------------------------------------------------------------------------
    Total                                                        211,486,494             199,035,467
- ----------------------------------------------------------------------------------------------------
  Less accumulated depreciation                                 (108,990,502)            (97,980,580)
- ----------------------------------------------------------------------------------------------------
    Net property, plant and equipment                            102,495,992             101,054,887
- ----------------------------------------------------------------------------------------------------
OTHER ASSETS
  Goodwill, net                                                    8,371,686               8,667,816
  Other non-current assets, net                                    5,053,772               3,229,120
- ----------------------------------------------------------------------------------------------------
    Total other assets                                            13,425,458              11,896,936
- ----------------------------------------------------------------------------------------------------
    Total assets                                               $ 209,520,354           $ 177,385,523
====================================================================================================
Liabilities and Shareholders' Equity (August 31)
- ----------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
  Current maturities of long-term debt (Note 3)                $   5,195,494           $   5,113,972
  Accounts payable                                                19,994,070              15,133,063
  Accrued income taxes                                                    --                 276,112
  Accrued payroll and related taxes                                1,608,630               1,518,769
  Other current liabilities                                        6,332,526               5,017,092
- ----------------------------------------------------------------------------------------------------
    Total current liabilities                                     33,130,720              27,059,008
- ----------------------------------------------------------------------------------------------------
LONG-TERM DEBT (Note 3)                                           78,763,774              60,064,673
DEFERRED INCOME TAXES (Note 11)                                      579,076               1,123,373
OTHER LONG-TERM LIABILITIES                                        2,322,821               2,454,547
- ----------------------------------------------------------------------------------------------------
    Total liabilities                                            114,796,391              90,701,601
- ----------------------------------------------------------------------------------------------------
COMMITMENTS (Note 16)                                                     --                      --
SHAREHOLDERS' EQUITY
  Preferred Stock--par value $.01 per share;
    authorized shares, 2,000,000; none issued                             --                      --
  Common Stock--without par value; authorized shares,
    50,000,000; issued shares, 9,602,418 in 2000,
    9,568,343 in 1999 (Note 4)                                     9,602,418               9,568,343
  Capital surplus (Note 4)                                         1,964,514               1,696,670
  Retained earnings                                               89,370,918              77,680,902
  Accumulated other comprehensive loss (Note 5)                   (2,314,459)               (481,262)
- ----------------------------------------------------------------------------------------------------
    Total                                                         98,623,391              88,464,653
- ----------------------------------------------------------------------------------------------------
  Less Common Stock in treasury--309,268 shares
    in 2000; 138,468 shares in 1999; at cost                      (3,899,428)             (1,780,731)
- ----------------------------------------------------------------------------------------------------
    Total shareholders' equity                                    94,723,963              86,683,922
- ----------------------------------------------------------------------------------------------------
    Total liabilities and shareholders' equity                 $ 209,520,354           $ 177,385,523
====================================================================================================


The accompanying notes are an integral part of the consolidated financial
statements.


14  |

   4

CONSOLIDATED STATEMENTS OF CASH FLOWS



- ------------------------------------------------------------------------------------------------------------------------------
Year Ended
August 31,                                                            2000                   1999                   1998
- ------------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
                                                                                                       
Net income                                                        $ 14,197,955           $ 11,729,124           $  8,031,948
Adjustments to reconcile net income to
  cash provided by operating activities:
    Depreciation                                                    16,762,875             16,363,522             16,080,389
    Amortization                                                     1,334,356              1,226,042              1,150,138
    Provision for losses on receivables                                121,485                145,319                311,711
    Decrease in deferred income taxes                                 (596,976)              (494,962)              (748,329)
    Loss (gain) on sale, abandonment or write-down of
      property, plant and equipment, net (Note 15)                    (124,118)                67,442              2,470,209
    Loss (gain) on disposition of investments                          (79,459)               (78,390)                    --
    Stock compensation expense                                          12,189                 12,011                 13,513
Changes in operating assets and liabilities, net of
  effects of business acquisitions:
  Decrease (increase):
    Trade accounts receivable                                      (14,634,591)               980,761             (3,095,960)
    Inventories                                                    (11,089,354)            (1,875,503)            (1,816,520)
    Prepaid expenses and other current assets                       (1,280,700)              (829,221)              (357,209)
    Other non-current assets                                          (499,418)               (55,389)               271,362
  Increase (decrease):
    Accounts payable                                                 4,753,852                710,325             (2,490,497)
    Accrued income taxes                                              (301,382)               (34,061)               (55,307)
    Accrued payroll and related taxes                                  108,145                300,043                241,914
    Other current liabilities                                        1,586,217               (837,492)             2,112,943
    Other long-term liabilities                                       (108,996)               (40,819)              (357,788)
- ------------------------------------------------------------------------------------------------------------------------------
      Cash provided by operating activities                         10,162,080             27,288,752             21,762,517
- ------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Issuance of loan to customer                                          (767,970)                    --                     --
Purchase of property, plant and equipment                          (20,344,272)           (19,491,132)           (24,153,483)
Business acquisitions, net of cash acquired (Note 13)               (4,268,663)            (3,090,313)            (1,062,744)
Proceeds from sale of property, plant and equipment                  3,112,082                887,112              1,399,612
Other investing activities, net                                       (151,005)                18,196                (51,303)
- ------------------------------------------------------------------------------------------------------------------------------
      Cash used for investing activities                           (22,419,828)           (21,676,137)           (23,867,918)
- ------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt                                        23,690,000              4,000,000              9,221,670
Principal payments on long-term debt                                (5,387,522)            (5,318,515)            (5,156,164)
Dividends paid                                                      (2,507,939)            (2,288,360)            (2,083,750)
Proceeds from sale of Common Stock                                     269,338                156,281                402,746
Payments to reacquire Common Stock                                  (2,098,305)            (1,575,688)                    --
- ------------------------------------------------------------------------------------------------------------------------------
      Cash provided by (used for)
         financing activities                                       13,965,572             (5,026,282)             2,384,502
- ------------------------------------------------------------------------------------------------------------------------------
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS                                          (420,030)                51,452                 78,031
      Net increase in cash and cash equivalents                      1,287,794                637,785                357,132
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                     6,090,066              5,452,281              5,095,149
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                        $  7,377,860           $  6,090,066           $  5,452,281
- ------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA
Income taxes paid                                                 $  9,522,028           $  7,861,502           $  6,058,530
Interest paid                                                     $  4,765,360           $  5,018,886           $  5,080,415
==============================================================================================================================


The accompanying notes are an integral part of the consolidated financial
statements.

                                                                  AR 2000  |  15

   5

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY



                                 Common Stock                                                  Treasury Shares
                           ------------------------                                           ------------------
                                                                                Accumulated
                                                                                   Other
                                                                               Comprehensive
                              Shares                    Capital     Retained       Income
                              Issued      Amount        Surplus     Earnings       (Loss)        Shares       Amount         Total
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Balance at
August 31, 1997             9,479,241   $9,479,241     $1,071,878  $62,291,940    $  49,999        4,620     ($75,710)  $72,817,348
- ------------------------------------------------------------------------------------------------------------------------------------
Net income                                                           8,031,948                                            8,031,948
Foreign currency
  translation gain                                                                  342,151                                 342,151
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income                                                 8,031,948      342,151                               8,374,099
Sale of shares under
  Common Stock
  purchase plan                 9,516        9,516        147,461                                                           156,977
Sale of shares under
  stock option plans           42,099       42,099        216,243                                 (4,371)      71,877       330,219
Shares acquired in
  payment of
  option price                                                                                     4,371      (70,936)      (70,936)
Dividends paid
  ($0.22 per share)                                                 (2,083,750)                                          (2,083,750)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at
August 31, 1998             9,530,856   $9,530,856     $1,435,582  $68,240,138    $ 392,150        4,620     ($74,769)  $79,523,957
- ------------------------------------------------------------------------------------------------------------------------------------
Net income                                                          11,729,124                                           11,729,124
Foreign currency
  translation loss                                                                 (873,412)                               (873,412)
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income                                                11,729,124     (873,412)                             10,855,712
Sale of shares under
  Common Stock
  purchase plan                11,185       11,185        130,882                                                           142,067
Sale of shares under
  stock option plans           26,302       26,302        130,206                                (10,418)     134,835       291,343
Shares acquired in
  payment of
  option price                                                                                    20,416     (265,109)     (265,109)
Shares acquired under
  share repurchase
  program                                                                                        123,850   (1,575,688)   (1,575,688)
Dividends paid
  ($0.24 per share)                                                 (2,288,360)                                          (2,288,360)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at
August 31, 1999             9,568,343   $9,568,343     $1,696,670  $77,680,902    ($481,262)     138,468  ($1,780,731)  $86,683,922
- ------------------------------------------------------------------------------------------------------------------------------------
Net income                                                          14,197,955                                           14,197,955
Foreign currency
  translation loss                                                               (1,833,197)                             (1,833,197)
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income                                                14,197,955   (1,833,197)                             12,364,758
Sale of shares under
  Common Stock
  purchase plan                11,371       11,371        134,509                                                           145,880
Sale of shares under
  stock option plans           22,704       22,704        133,335                                 (7,046)      87,609       243,648
Shares acquired in
  payment of
  option price                                                                                     7,046     (108,001)     (108,001)
Shares acquired under
  share repurchase program                                                                       170,800   (2,098,305)   (2,098,305)
Dividends paid
  ($0.27 per share)                                                 (2,507,939)                                          (2,507,939)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT
AUGUST 31, 2000             9,602,418   $9,602,418     $1,964,514  $89,370,918  ($2,314,459)     309,268  ($3,899,428)  $94,723,963
- ------------------------------------------------------------------------------------------------------------------------------------


The accompanying notes are an integral part of the consolidated financial
statements.

16  |
   6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


NATURE OF OPERATIONS

Tuscarora Incorporated (the Company) custom designs and manufactures protective
packaging, material handling solutions and specialty components utilizing a
variety of materials to meet each customer's specific end-use requirements.
Material options, used singularly or in combination, include molded and diecut
foam plastics, corrugated paperboard, wood and thermoformed plastics. Among the
Company's customers are major manufacturers in the following industries: high
technology and telecommunications, automotive and recreational vehicles,
consumer electronics, large and small appliances, building products and office
furniture and pharmaceuticals and specialty chemicals.


PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Tuscarora
Incorporated and its subsidiaries. Significant inter-company accounts and
transactions have been eliminated.


REVENUE RECOGNITION

The Company recognizes revenue upon shipment of products to customers, at which
point title passes to the customer, or upon performance of services.


FOREIGN CURRENCY TRANSLATION

The assets and liabilities of the Company's foreign subsidiaries are translated
into U.S. dollars at the exchange rates prevailing at each balance sheet date
while revenues and expenses are translated into U.S. dollars at the average
exchange rates for each period presented. The translation adjustments are
included in accumulated other comprehensive income (loss). Foreign currency
transaction gains and losses are reflected in Other (Income) Expense.


CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of 90 days
or less to be cash equivalents.


CONCENTRATIONS OF CREDIT RISK

Financial instruments, which potentially subject the Company to credit risk,
consist primarily of trade accounts receivable. However, due to the large number
of the Company's customers and their dispersion across many geographic areas and
industries, concentrations of credit risk with respect to trade accounts
receivable are limited. This risk is further reduced by the Company's
maintenance of credit insurance on certain large accounts.


INVENTORIES

Inventories other than finished goods are stated at the lower of cost or market,
cost being determined on the first-in, first-out method. Finished goods are
stated at the lower of average cost or market and include the cost of material,
labor and manufacturing overhead.


PROPERTY, PLANT AND EQUIPMENT

Land, buildings and equipment are stated on the basis of cost. Major renewals
and betterments are capitalized while replacements and maintenance and repairs,
which do not improve or extend the life of the asset, are expensed in the year
incurred. When properties are disposed of, the related cost and accumulated
depreciation are removed from the respective accounts, and any gain or loss on
disposition is reflected in Other (Income) Expense.

Provisions for depreciation of plant and equipment are computed on the
straight-line method based on the following estimated useful lives:

  Buildings and improvements .......... 10-30 years

  Machinery and equipment ............. 3-10 years


                                                                  AR 2000  |  17

   7


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

OTHER ASSETS

Other assets consist primarily of goodwill and other intangible assets such as
covenants not to compete which have been acquired in connection with business
acquisitions and are amortized using the straight-line method. Goodwill is
amortized over 15 years and the covenants not to compete over the period covered
by each agreement.

The Company reviews the carrying value of its long-lived assets, including
goodwill, and impairments are recognized when the expected future operating cash
flows derived from the assets are less than their carrying values.


DERIVATIVE FINANCIAL INSTRUMENTS

The Company has entered into an interest rate swap and cap agreement with its
principal bank, the purpose of which is to reduce the impact of increases in
interest rates on the Company's variable rate long-term debt (see Note 3). The
Company accounts for the agreement under the accrual method, which requires
amounts paid or received under the agreement to be recognized as adjustments to
interest expense.


STOCK-BASED COMPENSATION

Stock options granted by the Company are accounted for in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB No. 25). In accordance with APB No. 25, no stock-based
compensation expense has been recognized in the accompanying financial
statements for the Company's employee stock options since the exercise price of
the outstanding stock options has equaled the market price of the underlying
stock on the date of grant of the stock options. Stock-based compensation
expense under APB No. 25 is recognized in the accompanying financial statements
for the Company contributions under the Company's Common Stock Purchase Plan.


NET INCOME PER SHARE

Net income per share (see Note 6) is calculated in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings 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.


USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from the estimates.


RECLASSIFICATION

Certain amounts in the Consolidated Statements of Cash Flows for the prior
fiscal years have been reclassified to be consistent with the presentation for
the fiscal year ended August 31, 2000.


ACCOUNTING PRONOUNCEMENTS

In 1998, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." Subsequently, the FASB issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities: Deferral of the
Effective Date of SFAS Statement No. 133," which deferred the effective date of
SFAS No. 133 for one year. SFAS No. 133 became applicable to the Company on
September 1, 2000 and will result in a charge to income or expense or an item of
accumulated other comprehensive income (loss) which will not be significant.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 (SAB 101) "Revenue Recognition in Financial Statements" to
clarify the revenue recognition rules for certain types of transactions. The
Company is currently evaluating the effect of implementing SAB 101, which is
required to be adopted by the Company by the fourth quarter of the fiscal year
ended August 31, 2001.


NOTE 2: INVENTORIES

Inventories at August 31, 2000 and 1999 are summarized as follows:

- ---------------------------------------------------------
August 31,                    2000               1999
- ---------------------------------------------------------
Finished goods            $12,099,704       $10,606,473
Work in process               118,190           198,093
Raw materials              19,938,692        10,326,444
Supplies                    1,805,990         1,359,908
- ---------------------------------------------------------
Total                     $33,962,576       $22,490,918
=========================================================


18  |


   8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

NOTE 3: LONG-TERM DEBT

In September 1999, the Company entered into a new $90,000,000 credit agreement
with its principal bank (Mellon Bank, N.A.) and a second bank providing for a
$45,000,000 revolving credit facility expiring on September 1, 2004 and
$45,000,000 in five-year term notes. The Company initially borrowed $19,030,000
under the revolving credit facility and $45,000,000 under the term notes. The
term notes are repayable in quarterly installments of $1,125,000 with a final
payment of $22,500,000 on September 1, 2004. The proceeds were used primarily to
repay in full the outstanding borrowings under the credit agreement with the
Company's principal bank in effect at August 31, 1999. In August 2000, the
credit agreement was amended to increase the amount available under the
revolving credit facility to $55,000,000 through August 30, 2001. At August 31,
2000, $14,970,000 remained available under the increased revolving credit
facility. Under the credit agreement, the Company may choose between interest
rate options for specified interest periods for both the revolving credit
facility and the term notes. The credit agreement also provides for a facility
fee of 0.25% per annum on each lender's commitment.

Long-term debt outstanding at August 31, 2000 and 1999 is summarized as set
forth below:




- ------------------------------------------------------------------------------------------------------------------------
                                                                Interest Rate at                 August 31,
                                                                 August 31, 2000           2000              1999
- ------------------------------------------------------------------------------------------------------------------------
                                                                                                 
Notes under bank credit agreement:
  Variable rate revolving credit note                                  7.87%           $40,030,000        $38,215,000
  Variable rate term notes with final
  payment on September 1, 2004                                         7.91%            40,500,000         23,125,000

Other long-term debt:
  Variable rate industrial development bonds
    subject to annual mandatory sinking fund
    redemption through December 1, 2000,
    with final payment on December 1, 2001                             4.42%             1,600,000          2,025,000
  Variable rate mortgage note payable in quarterly
    installments, through March 30, 2006                              10.00%               479,179            562,511
  Capitalized lease obligations payable in monthly
    installments through May 25, 2005                                  8.24%             1,227,525          1,079,078
Other                                                                  5.00%               122,564            172,056
- ------------------------------------------------------------------------------------------------------------------------
                                                                                        83,959,268         65,178,645
Less amounts due within one year, included in current liabilities                        5,195,494          5,113,972
- ------------------------------------------------------------------------------------------------------------------------
Total long-term debt                                                                   $78,763,774        $60,064,673
========================================================================================================================



The outstanding borrowings by the Company under the bank credit agreement are
unsecured. The bank credit agreement contains covenants that require the Company
to maintain a certain tangible net worth, as well as certain financial ratios.
These covenants also impose limitations on the amount that the Company may pay
during any fiscal year for property, plant and equipment and business
acquisitions. The agreement relative to the Company's industrial development
bonds also contains financial covenants. At August 31, 2000, approximately
$7,600,000 of retained earnings was available for the payment of cash dividends
by the Company without causing a violation of any of the financial covenants.


                                                                  AR 2000  |  19


   9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

Aggregate maturities of long-term debt for the next five fiscal years are as
follows:

- -----------------------------------
  August 31,
- -----------------------------------
  2001                $ 5,195,494
  2002                  5,961,921
  2003                  4,796,454
  2004                  4,726,880
  2005                 62,768,920
===================================

The amount becoming due in the fiscal year ended August 31, 2005 includes the
final payment of $22,500,000 due under the five-year term notes under the bank
credit agreement as well as the amount due under the revolving credit facility.

At August 31, 2000, $18,500,000 of the Company's long-term debt was subject to
an interest rate swap and cap agreement with the Company's principal bank. The
purpose of the agreement is to reduce the impact of increases in interest rates
on the Company's variable rate long-term debt. The fair value of the agreement
is not material.


NOTE 4: COMMON STOCK

In all transactions involving the authorized but unissued shares of the
Company's Common Stock, an amount equal to $1.00 times the number of shares
issued is credited to the Common Stock account and the balance of the purchase
price is credited to the Capital Surplus account.


NOTE 5: COMPREHENSIVE INCOME

Total comprehensive income, shown before the related income tax effect, for each
of the fiscal years ended August 31, 2000, 1999 and 1998 was as follows:



- ----------------------------------------------------------------------------------------
Year Ended August 31,                           2000            1999           1998
- ----------------------------------------------------------------------------------------
                                                                   
Net income                                   $14,197,955     $11,729,124    $8,031,948
Foreign currency translation (loss) gain      (1,833,197)       (873,412)      342,151
- ----------------------------------------------------------------------------------------
Comprehensive income                         $12,364,758     $10,855,712    $8,374,099
========================================================================================


The income tax benefit (expense) related to comprehensive income for the fiscal
years ended August 31, 2000, 1999 and 1998 was $692,948, $330,150 and
($133,781), respectively. At August 31, 2000 and 1999, accumulated other
comprehensive loss, which consisted entirely of foreign currency translation
adjustments, amounted to ($2,314,459) and ($481,262), respectively.

NOTE 6: NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income
per share of Common Stock in accordance with the provisions of SFAS No. 128,
"Earnings Per Share," for each of the fiscal years ended August 31, 2000, 1999
and 1998:



- ----------------------------------------------------------------------------------------------------
Year Ended August 31,                                 2000               1999            1998
- ----------------------------------------------------------------------------------------------------
                                                                             
Net income                                          $14,197,955       $11,729,124     $8,031,948
- ----------------------------------------------------------------------------------------------------
Weighted average shares of
  Common Stock outstanding--basic                     9,343,040         9,494,648      9,488,436

Effect of dilutive securities
  Stock options                                          63,787            75,554        168,147
- ----------------------------------------------------------------------------------------------------

Weighted average shares of
  Common Stock outstanding--dilutive                  9,406,827         9,570,202      9,656,583

Basic net income per share of Common Stock          $      1.52       $      1.24     $     0.85
- ----------------------------------------------------------------------------------------------------

Diluted net income per share of Common Stock        $      1.51       $      1.23     $     0.83
====================================================================================================


Securities not included in the computation of diluted net income per share for
the periods presented were as follows:



- ----------------------------------------------------------------------------------------------------
Year Ended August 31,                                 2000               1999            1998
- ----------------------------------------------------------------------------------------------------
                                                                            
Stock options                                        983,748            913,768         157,917
Option price range                                $12.82-$19.16      $12.82-$19.16       $19.16
====================================================================================================


The options to purchase shares of Common Stock not included in the computations
of diluted net income per share for the periods presented were excluded because
the exercise price of the stock options was greater than the average market
price of the Company's Common Stock during the periods.


20  |
   10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

NOTE 7: SHAREHOLDER RIGHTS PLAN

In August 1998, the Company adopted a Shareholder Rights Plan under which the
holder of each share of the Company's outstanding Common Stock has an associated
preferred stock purchase right. The rights become exercisable to purchase shares
of a series of the Company's authorized Preferred Stock designated as the Series
A Junior Participating Preferred Stock under certain circumstances, and in the
event a person or group would acquire 20% or more of the Company's Common Stock,
the rights, if not previously redeemed, would entitle the holders (other than
such person or a member of such group) to purchase shares of the Common Stock of
Series A Junior Participating Preferred Stock of the Company or common shares of
an acquiring company at 50% of the respective shares' current fair market value.
The rights expire on August 31, 2008.


NOTE 8: SHARE REPURCHASE PLAN

In October 1998, the Company's Board of Directors authorized the repurchase of
up to 250,000 shares of the Company's Common Stock at prices not to exceed $15
per share through August 31, 1999. This authorization has subsequently been
extended through August 31, 2001, with the maximum number of shares that may be
repurchased increased to 500,000. There was no increase in the maximum price per
share that may be paid. During the fiscal year ended August 31, 2000, the
Company repurchased 170,800 shares of Common Stock at prices ranging from $10.94
to $13.94 per share. During the fiscal year ended August 31, 1999, the Company
repurchased 123,850 shares of Common Stock at prices ranging from $9.94 to
$13.94 per share.


NOTE 9: STOCK OPTIONS

In December 1997, the Company's shareholders approved the 1997 Stock Incentive
Plan (the 1997 Plan) under which the Board of Directors may grant options to
purchase 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. At August 31, 2000, 74,700 shares remained available for the grant of
stock options under the 1997 Plan.

The Company also has a prior stock option plan under which options to purchase
shares of the Company's Common Stock granted to key employees of the Company and
its subsidiaries remain outstanding. No further stock options may be granted
under this plan.

All outstanding stock options have been granted at 100% of the fair market value
of the Company's Common Stock on the date of grant. The stock options have
ten-year option terms. The option price may be paid in cash, in already-owned
shares of the Company's Common Stock held for at least one year, or in a
combination of cash and shares, except in the case of U.K. employees who must
pay the option price in cash. Data concerning the outstanding stock options for
each of the fiscal years ended August 31, 2000, 1999 and 1998 is as follows:




                                                2000                        1999                         1998
                                        --------------------         ------------------           ------------------
                                                    WEIGHTED                   Weighted                     Weighted
                                                    AVERAGE                    Average                       Average
                                                    EXERCISE                   Exercise                     Exercise
                                          SHARES     PRICE            Shares     Price            Shares      Price
- ----------------------------------------------------------------------------------------------------------------------
                                                                                          
Balance at September 1                  1,266,775    $13.99           768,595   $13.99            640,590    $12.08
Options granted                           140,000     12.83           554,100    12.83            202,700     18.92
Options exercised                         (29,750)     7.93           (36,720)    7.93            (46,470)     7.11
Options expired                           (44,750)    14.93           (19,200)   14.93            (28,225)    17.43
- ----------------------------------------------------------------------------------------------------------------------
Balance at August 31                    1,332,275    $13.69         1,266,775   $13.69            768,595    $13.99
- ----------------------------------------------------------------------------------------------------------------------
Exercisable at August 31                  809,525    $14.33           722,675   $14.33            768,595    $13.99
======================================================================================================================


Stock options outstanding at August 31, 2000 are as follows:



        RANGE OF          OPTIONS AT       WEIGHTED AVERAGE       WEIGHTED AVERAGE
     EXERCISE PRICES    AUGUST 31, 2000     EXERCISE PRICE   REMAINING CONTRACTUAL LIFE
- ----------------------------------------------------------------------------------------
                                                    
    $  6.67-$9.99            58,200             $ 7.53              0.8 years
    $10.00-$14.99           988,825              12.67              7.1 years
    $15.00-$19.16           285,250              17.91              6.3 years
- ----------------------------------------------------------------------------------------
            Total         1,332,275
========================================================================================


                                                                  AR 2000  |  21


   11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

The following pro forma information regarding net income and basic and diluted
net income per share, required by SFAS No. 123 "Accounting and Disclosure of
Stock-Based Compensation," has been determined as if the Company had accounted
for its employee stock options under the fair value method of SFAS No. 123. The
fair value for the stock options is estimated at the date of grant using a
Black-Scholes option pricing model with the following assumptions: a risk-free
interest rate of 5.8%, 4.75% and 5.50% for the fiscal years ended August 31,
2000, 1999 and 1998, respectively; a volatility factor of the expected market
price of the Company's Common Stock of 0.37, 0.31 and 0.25 for the fiscal years
ended August 31, 2000, 1999 and 1998, respectively; a weighted average expected
option life of 10 years for the fiscal years ended August 31, 2000 and 1999 and
7 years for the fiscal year ended August 31, 1998; and a 1.00% dividend yield.
For purposes of the pro forma disclosure, the estimated fair value of the
options granted ($6.46, $5.67 and $6.72 per share for the fiscal years ended
August 31, 2000, 1999 and 1998, respectively) is charged to expense over the
period during which the stock options vest. For the fiscal years ended August
31, 2000, 1999 and 1998, the Company's reported and pro forma net income and
basic and diluted net income per share of Common Stock are shown below.


AS REPORTED:                           2000            1999            1998
- -------------------------------------------------------------------------------
                                                           
Net income                          $14,197,955     $11,729,124     $8,031,948
Basic net income per share
   of Common Stock                     $1.52           $1.24           $0.85
Diluted net income per share
   of Common Stock                     $1.51           $1.23           $0.83
- -------------------------------------------------------------------------------
PRO FORMA:
- -------------------------------------------------------------------------------
Net income                          $13,108,723     $10,898,604     $6,779,143
Basic net income per share
   of Common Stock                     $1.40           $1.15           $0.71
Diluted net income per share
   of Common Stock                     $1.39           $1.14           $0.70
===============================================================================


NOTE 10: COMMON STOCK PURCHASE PLAN

The Company has a Common Stock Purchase Plan under which most full-time salaried
employees in the U.S. may participate. Employees may authorize salary deductions
up to 8% of annual salary but not to exceed $300 per month, and the Company
contributes an amount equal to 10% of the contributions of the participating
employees. The contributions are used to purchase shares of the Company's Common
Stock from the Company at current market value.




22  |

   12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

NOTE 11: INCOME TAXES

For the fiscal years ended August 31, 2000, 1999
and 1998, income (loss) before income taxes consists of the following:


- --------------------------------------------------------------
Year Ended
August 31,         2000            1999            1998
- --------------------------------------------------------------
  U.S.
  operations    $21,284,818     $19,479,484     $15,506,129

  Foreign
  operations      1,531,259        (619,909)     (2,324,718)
- --------------------------------------------------------------
  Total         $22,816,077     $18,859,575     $13,181,411
==============================================================



The provision (benefit) for taxes on income consists of the following:


- --------------------------------------------------------
Year Ended
August 31,         2000            1999         1998
- --------------------------------------------------------
Current:
  Federal      $7,469,698      $6,880,338   $5,780,529
  State         1,196,307         582,510      115,913
  Foreign         549,093         213,494       21,232
- --------------------------------------------------------
                9,215,098       7,676,342    5,917,674
- --------------------------------------------------------
Deferred:
  Federal        (296,601)       (162,891)    (295,887)
  State          (141,787)       (187,841)     (86,740)
  Foreign        (158,588)       (195,159)    (385,584)
- --------------------------------------------------------
                 (596,976)       (545,891)    (768,211)
- --------------------------------------------------------
  Total        $8,618,122      $7,130,451   $5,149,463
========================================================


The following is a reconciliation of the statutory U.S. Corporate federal income
tax rate to the effective income tax rate:

- ---------------------------------------------------------
Year Ended
August 31,            2000            1999         1998
- ---------------------------------------------------------
U.S. statutory
  rate applied to
  pre-tax income      35.0%           35.0%        35.0%
State income taxes
  net of federal
  tax benefit          2.4%            1.4%         2.4%
Prior years' state
  income tax
  overaccruals          --              --         (2.2%)
Other                  0.4%            1.4%         3.9%
- ---------------------------------------------------------
                      37.8%           37.8%        39.1%
=========================================================


Deferred income tax assets and liabilities at August 31, 2000 and 1999 were
comprised of the following:

- -------------------------------------------------------
August 31,                           2000        1999
- -------------------------------------------------------
Deferred income tax assets:
   Allowance for
     bad debts                 $  266,295   $  263,127
   U.K. net operating
     loss carry forwards          707,001      399,512
   U.K. deferred interest
     expense                      265,943      670,234
   Supplemental
     pension benefits             615,229      503,072
   Other                          523,957      557,889
- -------------------------------------------------------
   Total                        2,378,425    2,393,834
- -------------------------------------------------------
Deferred income tax
 liabilities:
   Depreciation                 2,115,815    3,195,971
   Other                          191,726       43,548
- -------------------------------------------------------
   Total                        2,307,541    3,239,519
- -------------------------------------------------------
Valuation allowance              (649,960)    (277,688)
   Net deferred income tax
     liability                 $  579,076   $1,123,373
- -------------------------------------------------------

Undistributed net income of the Company's Mexican subsidiaries totaled
$1,930,585 and $593,722 at August 31, 2000 and 1999, respectively. These
earnings are considered to be indefinitely reinvested and, accordingly, no
provision for U.S. federal or state income taxes has been provided.

The valuation allowance is attributable to the Company's U.K. operations. The
U.K. net operating loss carry forwards, which will be applied against future
taxable income, can be carried forward indefinitely.


NOTE 12: RETIREMENT BENEFITS

The Company maintains non-contributory individual account defined contribution
pension plans covering most employees in the U.S. and a contributory individual
account defined contribution pension plan covering most salaried employees in
the U.K. Under these pension plans, the Company contribution is 5.5% of total
compensation for most employees. Benefits generally do not become vested until,
but become fully vested upon, five full years of employment in the U.S. and two
full years of employment in the U.K. Normal retirement age under all plans is
age 65. The Company contributions for the fiscal years ended August 31, 2000,
1999 and 1998 were $2,558,087, $2,321,219 and $2,237,627, respectively.

The Company also maintains Section 401 (k) plans covering most salaried and
hourly employees in the U.S. The Company makes matching contributions based upon
the savings of participants, subject to certain limitations. All contributions
are made to the plan trustee, are fully vested and are invested by the plan
trustee among various investment options in accordance with instructions from
the participants. The Company contributions for the fiscal years ended August
31, 2000, 1999 and 1998 were $246,161, $202,753 and $163,495, respectively.


                                                                  AR 2000  |  23
   13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================


The Company has an unfunded supplemental executive retirement plan under which
the Company will pay benefits directly to certain key employees following their
retirement. The Company's cost, which is based on a percentage of the
compensation of each participant plus interest, is accrued each fiscal quarter
and reflected as a long-term liability. For the fiscal years ended August 31,
2000, 1999 and 1998, the Company accrued $82,159, $65,992 and $63,837 in
connection with this plan. No benefit payments have been made under this plan
and the total accrued benefit at August 31, 2000 was $270,948.

In addition, certain former key employees of the Company or their beneficiaries
are receiving unfunded supplemental retirement benefits directly from the
Company, the future costs of which are also reflected as a liability. As of
August 31, 2000, the total liability for the supplemental retirement benefits
amounted to $1,063,481, of which $136,453 represents amounts payable within one
year. For the fiscal years ended August 31, 2000, 1999 and 1998, the Company
paid $143,235, $119,788 and $120,494 in connection with these arrangements.

The Company does not provide any other significant postretirement benefits.


NOTE 13: ACQUISITIONS

During the fiscal year ended August 31, 2000, the Company completed three
acquisitions. In September 1999, the Company purchased the specialty corrugated
container, heavy wall corrugated fabrication and custom wood crating business of
Lane Container Company of Dallas, Texas. The Company is continuing the business
acquired at its current location under a lease with a third party. In February
2000, the Company purchased the custom wood pallet and container business of
Erickson Wood Products of Belmont, California. The business acquired was
relocated to the Company's existing manufacturing facility in Hayward,
California. In March 2000, the Company purchased the interior foam cushion
fabricating business of Cushion Packaging Company of Dallas, Texas. The Company
intends to relocate the business acquired to its facility in Dallas, Texas upon
the expiration of the existing lease. In each acquisition, the Company paid cash
and agreed to pay additional consideration contingent on the operating
performance or certain sales of the business acquired. Any additional
consideration paid will be accounted for as additional purchase price. The
aggregate purchase price, part of which has been allocated to goodwill and
covenants not to compete, is not material.

During the fiscal year ended August 31, 1999, the Company purchased the custom
foam molding business, including the associated real estate, of Berry Packaging,
Inc. in Sallisaw, Oklahoma for cash and agreed to pay additional consideration
contingent on certain sales of the business acquired. Any contingent
consideration paid is accounted for as additional purchase price. The purchase
price, a portion of which was allocated to goodwill, was not material. There
were no business acquisitions of any significance during the fiscal year ended
August 31, 1998.

During the fiscal years ended August 31, 2000, 1999 and 1998, amounts paid as
additional consideration in connection with the Company's acquisitions have not
been material. All the acquisitions during the fiscal years ended August 31,
2000, 1999 and 1998 have been accounted for as purchases. The operating results
of the acquisitions are included in the Company's consolidated results of
operations from the date of acquisition. The combined operating results,
including the operating results of the acquired businesses had they been
included at the beginning of the fiscal year of acquisition, would not be
materially different from the consolidated results of operations as reported.


NOTE 14: LEASE COMMITMENTS

Rental expense charged to operations for the fiscal years ended August 31, 2000,
1999 and 1998 amounted to $6,409,917, $6,597,043 and $6,550,994, respectively.
The approximate net minimum rentals required to be paid under all non-cancelable
operating leases during each of the next five fiscal years is as follows:

- --------------------------------
August 31,
- --------------------------------
2001                $5,004,006
2002                 4,399,720
2003                 3,957,085
2004                 3,343,879
2005                 1,967,828
Thereafter           4,042,819
================================


Substantially all the rental payments represent commitments under leases for
manufacturing and warehouse facilities and under leases for trucking equipment.
The Company has the option to purchase certain of the leased manufacturing and
warehouse facilities. The Company also has capitalized lease obligations that
are not significant (see Note 3).


24  |
   14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

NOTE 15: RESTRUCTURING COSTS

In February 1998, the Company initiated a $3,500,000 restructuring plan to
reduce costs and increase future financial performance. The principal component
of the plan was a charge of $2,070,572 to cover the write-down of the carrying
values of certain property and equipment. The property and equipment write-downs
were a result of the Company's decisions to consolidate certain manufacturing
facilities and product design centers, to discontinue the manufacture of certain
products and to write off obsolete machinery and equipment. The restructuring
charge also included estimated employee termination costs of $988,864 as
approximately 30 employees were terminated or accepted an early retirement
package. The reduction included employees associated with the Company's field
sales, design, manufacturing, marketing and administrative activities. The
balance of approximately $400,000 related to other restructuring costs
associated with the plan. Approximately $411,000 of the restructuring costs
related to the U.K. operations.

The Company estimates that the cost savings resulting from the restructuring
charge during the fiscal years ended August 31, 2000, 1999 and 1998 amounted to
$2,046,702, $2,120,899 and $1,089,435, respectively. Of these amounts, the
Company estimates the restructuring resulted in a reduction in cost of sales of
$431,295, $468,857 and $263,414 during the fiscal years ended August 31, 2000,
1999 and 1998, respectively, and a reduction in selling and administrative
expenses of $1,615,407, $1,652,042 and $826,021 during the fiscal years ended
August 31, 2000, 1999 and 1998, respectively. Similar cost savings are expected
going forward except to the extent positions may be restored.

The restructuring was completed during the year ended August 31, 1998 without
any adjustment to the restructuring charge. The cost savings have been
substantially as expected. At August 31, 2000, only $100,157 of the payments
accrued in connection with the restructuring remained to be paid. Payments will
continue until August 2002.

NOTE 16: CLAIMS AND CONTINGENCIES

In May 2000, a Motion for Summary Judgement in favor of the Company was granted
in a lawsuit filed against the Company in December 1996 seeking substantial
compensatory and punitive damages as a result of the alleged wrongful death of
an employee. The plaintiff in this lawsuit has filed an appeal. In addition,
legal and administrative proceedings against the Company involving claims of
employment discrimination are pending. In the opinion of management, the
disposition of these proceedings should not have a material adverse effect on
the Company's financial position or results of operations.

NOTE 17: BUSINESS SEGMENTS

The Company currently operates in a single business segment as a custom designer
and manufacturer of protective packaging, material handling solutions and
specialty components. The Company has product design, sales and manufacturing
operations in the U.S. and the U.K., as well as in Maquiladora zones in Mexico.
The geographic distribution of net sales and operating income (loss) for the
fiscal years ended August 31, 2000, 1999 and 1998 and of long-lived assets at
August 31, 2000, 1999 and 1998 is set forth below. A portion of U.S. selling
expenses has been allocated to the Mexican operations for all periods presented
since most of the design and selling activity for the Mexican operations is
performed by U.S. personnel. Operating income (loss) is gross profit less
selling and administrative expenses.




- --------------------------------------------------------------------------------------------------
August 31,                             2000                   1999                    1998
- --------------------------------------------------------------------------------------------------
                                                                        
Net Sales
  United States                    $224,484,011            $191,732,957           $193,470,452
  United Kingdom                     24,609,991              23,909,889             25,696,670
  Mexico                             24,593,492              18,198,154             13,735,088
- --------------------------------------------------------------------------------------------------
    Total                          $273,687,494            $233,841,000           $232,902,210
- --------------------------------------------------------------------------------------------------
Operating Income (Loss)
  United States                    $ 26,264,244            $ 22,935,788           $ 23,452,719
  United Kingdom                       (176,738)               (407,436)            (2,043,964)
  Mexico                              1,614,117                 717,811                153,507
- --------------------------------------------------------------------------------------------------
    Total                          $ 27,701,623            $ 23,246,163           $ 21,562,262
- --------------------------------------------------------------------------------------------------
Long-lived Assets
  United States                    $ 96,105,956            $ 86,379,603           $ 83,781,953
  United Kingdom                     11,724,457              17,044,811             18,215,968
  Mexico                              8,091,037               9,527,409              8,361,718
- --------------------------------------------------------------------------------------------------
    Total                          $115,921,450            $112,951,823           $110,359,639
- --------------------------------------------------------------------------------------------------



                                                                  AR 2000  |  25
   15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

NOTE 18: SUBSEQUENT EVENT

In September 2000, the Company purchased the operating assets of the Mt.
Pleasant, Tennessee plant of Polyfoam Packers Corporation. In addition to a
state-of-the-art custom foam molding facility, the Company acquired new customer
accounts that are expected to add approximately $3,000,000 of new revenues in
the fiscal year ended August 31, 2001. The total consideration paid consisted of
cash paid at closing and additional cash consideration which may be paid to the
seller based on certain sales made by the business acquired. The acquisition was
accounted for as a purchase and portions of the purchase price were allocated to
goodwill and to a covenant not to compete.

In October 2000, the Company acquired a 50% interest in an existing Irish
company from Hytherm (Ireland) Ltd. The 50/50 joint venture under the name
Tuscarora Ireland Limited will manufacture custom protective packaging from an
existing foam molding facility in Cork, Ireland.

NOTE 19: QUARTERLY FINANCIAL DATA
(UNAUDITED)
Summarized quarterly financial information is as follows:



- -----------------------------------------------------------------------------------------------------------------------
                                                              Fiscal Quarter Ended
                                November 30              February 29                May 31               August 31
- -----------------------------------------------------------------------------------------------------------------------
                                                                                           
Fiscal 2000:
   Net Sales                    $64,717,803              $61,300,885             $72,465,046           $75,203,760
   Gross Profit                  16,325,043               13,960,362              17,051,972            17,758,996
   Net Income                     4,417,047                2,318,755               3,898,405             3,563,748
   Per Share of Common Stock:
     Basic Net Income                 $0.47                    $0.25                   $0.42                 $0.38
     Diluted Net Income               $0.47                    $0.25                   $0.42                 $0.38
     Dividends Paid                      --                   $0.135                      --                $0.135
     Stock Market Prices:
       High                          12 7/8                       12                      14                    16
       Low                                9                  10 9/16                  11 1/8               12 7/16

- -----------------------------------------------------------------------------------------------------------------------
                                November 30              February 28                May 31               August 31
- -----------------------------------------------------------------------------------------------------------------------
Fiscal 1999:
   Net Sales                    $60,465,735              $53,640,580             $59,703,336           $60,031,349
   Gross Profit                  15,087,311               12,013,627              13,694,768            14,409,612
   Net Income                     3,964,407                1,892,235               2,998,963             2,873,519
   Per Share of Common Stock:
     Basic Net Income                 $0.42                    $0.20                   $0.32                 $0.30
     Diluted Net Income               $0.41                    $0.20                   $0.31                 $0.30
     Dividends Paid                      --                    $0.12                      --                 $0.12
     Stock Market Prices:
       High                              14                       14                      13                    14
       Low                               10                       12                   8 1/2               10 7/16
======================================================================================================================



26  |

   16


REPORT OF INDEPENDENT AUDITORS

================================================================================

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF TUSCARORA INCORPORATED

We have audited the accompanying consolidated balance sheets of Tuscarora
Incorporated and subsidiaries as of August 31, 2000 and 1999, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended August 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Tuscarora Incorporated and subsidiaries as of August 31, 2000 and 1999, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended August 31, 2000, in conformity with accounting
principles generally accepted in the United States.


/s/ Ernst & Young LLP

    Pittsburgh, PA
    October 6, 2000





MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

RESULTS OF OPERATIONS--FISCAL 2000
COMPARED TO FISCAL 1999

Net sales for the fiscal year ended August 31, 2000 were $273.7 million, an
increase of 17.0% or $39.8 million over fiscal 1999. Approximately 67% of the
increase in net sales was attributable to increased demand for the Company's
products in virtually all end-use markets in North America, with especially
strong growth in sales to customers in the high technology and
telecommunications industry. The balance of the increase in net sales is due
primarily to the acquisition of Lane Container Company in Dallas, Texas in
September 1999, the acquisition of Berry Packaging, Inc. in Sallisaw, Oklahoma
in February 1999 and to higher selling prices for many of the Company's
products. The higher selling prices were necessitated by increased raw material
costs, particularly for expandable polystyrene resins and corrugated paper.

Net sales in the fourth quarter of fiscal 2000 were $75.2 million, an increase
of 25.3% compared to $60.0 million in the fourth quarter of fiscal 1999. The
fourth quarter of fiscal 2000 marked the fifth successive quarter in which sales
were significantly increased over the corresponding quarter of the prior fiscal
year.

Gross profit for the fiscal year ended August 31, 2000 was $65.1 million, or
23.8% of net sales, compared to $55.2 million, or 23.6% of net sales, in fiscal
1999. The increase in profitability, despite increasing raw material and energy
prices throughout the last three quarters of fiscal 2000, resulted from improved
manufacturing efficiencies, moderation of the impact of the rising raw material
costs through pre-buying materials at favorable prices and increased selling
prices for certain of the Company's products.

Net sales and gross profit for the U.K. operations for the fiscal year ended
August 31, 2000 were $24.6 million and $4.1 million, respectively, compared to
$23.9 million and $3.5 million, respectively, in fiscal 1999. Gross profit
increased 17.8% to 16.9% of net sales during fiscal 2000, up from 14.7% in
fiscal 1999. The increase in gross profit, despite the modest growth in sales,
demonstrates the efficiencies created by redistributing certain business among
the manufacturing facilities in the United Kingdom. The cost to redistribute
such business led partially to a 10.1% increase in selling and administrative
expenses for fiscal 2000. The operating loss in the U.K. for fiscal 2000
amounted to ($176,738), as compared to an operating loss of ($407,436) for
fiscal 1999.


                                                                  AR 2000  |  27
   17
================================================================================


Net sales for the Mexican operations for the fiscal year ended August 31, 2000
were $24.6 million, a 35.1% increase over net sales of $18.2 million in fiscal
1999. This significant increase in net sales resulted from growth in business
from existing customers as well as new business from customers relocating their
manufacturing facilities to Mexico. To accommodate the sales growth in Mexico,
particularly with high technology and telecommunications customers, the Company
opened a new facility in Guadalajara, Mexico during the third quarter of fiscal
2000. Gross profit for the Mexican operations for fiscal 2000 was $4.2 million,
a 43.1% increase over the fiscal 1999 gross profit of $3.0 million. Gross profit
increased to 17.2% of net sales during fiscal 2000, up from 16.3% in fiscal
1999. Operating income for the Mexican operations amounted to $1.6 million for
fiscal 2000, as compared to $718,000 for fiscal 1999. Operating income for
fiscal 1999 was adversely affected by start-up costs of the Company's Tijuana
facility. The significant improvement in operating income during fiscal 2000 was
due primarily to the Tijuana facility being fully operational during that
period.

Selling and administrative expenses for the fiscal year ended August 31, 2000
increased 17.0%, or $5.4 million, to $37.4 million. In fiscal 2000, selling and
administrative expenses were 13.7% of net sales, the same percentage of net
sales they were in fiscal 1999. The dollar increase was due primarily to higher
employee costs.

Interest expense for the fiscal year ended August 31, 2000 was $5.4 million
compared to $4.6 million in fiscal 1999. As a percent of net sales, interest
expense remained at 2.0% for fiscal 2000, as compared to fiscal 1999. The dollar
increase in interest during fiscal 2000 is attributable to higher interest rates
as well as higher levels of outstanding debt incurred primarily to fund capital
expenditures and build significantly higher raw material inventory levels.

Income before income taxes for fiscal 2000 increased to $22.8 million from $18.9
million in fiscal 1999, an increase of 21.0%. The Company's effective tax rate
remained at 37.8% for fiscal 2000, as compared to fiscal 1999.

Net income for the fiscal year ended August 31, 2000 was $14.2 million, an
increase of 21.0% from the $11.7 million earned in fiscal 1999. The increase was
due primarily to the increase in fiscal 2000 gross profit. Net sales and net
income for fiscal 2000 were Company records.


RESULTS OF OPERATIONS--FISCAL 1999
COMPARED TO FISCAL 1998

Net sales for the fiscal year ended August 31, 1999 were $233.8 million, an
increase of $939,000, or 0.4%, over fiscal 1998. The increase in net sales
was due to a small acquisition in July 1998 and to the acquisition of Berry
Packaging, Inc. in Sallisaw, Oklahoma in February 1999 and to higher sales
levels in the consumer electronics and high technology industries in the last
half of fiscal 1999. The overall increase in net sales was achieved despite
modestly lower selling prices to customers through the first three quarters
of the fiscal year as the Company passed on lower EPS resin costs to certain
customers, lower sales to certain customers in the major appliance and high
technology industries in the first and second quarters of the fiscal year and
lower sales in the United Kingdom.

Net sales in the fourth quarter of fiscal 1999 were $60.0 million compared to
$56.1 million in the same period of fiscal 1998, an increase of 7.0%. The fourth
quarter was the only quarter during fiscal 1999 when the net sales were not less
than or substantially the same as in the corresponding quarter of the prior
fiscal year. The increase in net sales for the quarter was due primarily to
significantly higher sales in the high technology industry and to higher selling
prices to customers due to an increase in the cost of EPS resin that became
effective during the quarter.

Gross profit for the fiscal year ended August 31, 1999 was $55.2 million, or
23.6% of net sales, compared to $52.8 million, or 22.7% of net sales, in fiscal
1998. The increase in gross profit margin for the fiscal year was due primarily
to improved operating efficiencies at several key manufacturing facilities,
including those in the U.K., and to the lower EPS raw material costs when
compared to fiscal 1998.

Selling and administrative expenses for the fiscal year ended August 31, 1999
increased 2.4%, or $764,000, to $32.0 million and increased slightly as a
percentage of net sales to 13.7% from 13.4% in the previous fiscal year. The
dollar increase was due primarily to higher employee costs added in the latter
half of the fiscal year. Through the first nine months of fiscal 1999 the
selling and administrative expenses were less than in the corresponding period
of fiscal 1998 due to the restructuring initiative taken in fiscal 1998 (see
Note 15 of the Notes to Consolidated Financial Statements).



28  |
   18
================================================================================


Net sales and operating loss for the U.K. operations for the twelve months ended
August 31, 1999 were $23.9 million and $407,000, respectively, compared to $25.7
million and $2.0 million, respectively, in fiscal 1998. The operating loss
during the 1999 fiscal year was substantially less than during fiscal 1998 due
to the improved operating efficiencies referred to above.

Interest expense for the fiscal year ended August 31, 1999 was $4.6 million
compared to $4.9 million in fiscal 1998. The decrease of $325,000 was due to a
slightly lower level of outstanding debt and to lower interest rates when
compared to fiscal 1998.

Income before income taxes for fiscal 1999 increased to $18.9 million from $13.2
million in fiscal 1998, an increase of 43.1%. The substantial increase was due
to the increased gross profit and the effect of the restructuring charge in
fiscal 1998.

The Company's effective tax rate decreased to 37.8% from 39.1% in fiscal 1998
due primarily to a lower effective state income tax rate.

Net income for the fiscal year ended August 31, 1999 was $11.7 million, an
increase of 46.0% from the $8.0 million earned in fiscal 1998. The increase was
due primarily to the increase in 1999 gross profit and the restructuring charge
taken in fiscal 1998.


LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities amounted to $10.2 million, $27.3
million and $21.8 million in fiscal 2000, 1999 and 1998, respectively.
Depreciation and amortization in fiscal 2000, 1999 and 1998 amounted to $18.1
million, $17.6 million and $17.2 million, respectively. Because a substantial
portion of the Company's operating expenses is attributable to depreciation and
amortization, the Company believes that its liquidity would not be adversely
affected should a period of reduced earnings occur.

Inventories and accounts payable at August 31, 2000 increased to $34.0 million
and $20.0 million, respectively, from $22.5 million and $15.1 million,
respectively, at August 31, 1999 primarily due to higher than normal purchases
of raw materials throughout the year in anticipation of price increases by the
Company's raw material suppliers. Accounts receivable increased to $49.1 million
at August 31, 2000 compared with $34.1 million at the end of the prior fiscal
year due primarily to the higher sales during the period and the acquisition of
Lane Container Company in September 1999.

Capital expenditures for property, plant and equipment during fiscal 2000, 1999
and 1998 amounted to $20.3 million, $19.5 million and $24.2 million,
respectively, including approximately $919,000, $900,000 and $1.3 million,
respectively, for environmental control equipment. The largest amount of the
capital expenditures during all three years has been for machinery and
equipment. For fiscal 2000, expenditures included the purchase and refurbishment
of an integrated materials facility in Darlington, Pennsylvania, to which the
Company transferred its integrated materials manufacturing operations from a
leased facility in Beaver, Pennsylvania; expenditures for a new warehouse at the
custom foam molding facility in Marion, Ohio; expenditures to increase the
manufacturing capacity at the custom foam molding facility in Colorado Springs,
Colorado; expenditures for the completion of plant modernization and machinery
and equipment upgrades at the custom foam molding facility in Sallisaw, Oklahoma
acquired in February 1999; and expenditures to complete the installation of
custom foam molding capabilities in Hayward, California.

In September 1999, the Company purchased Lane Container Company of Dallas,
Texas, a specialty corrugated container, heavy wall corrugated fabrication and
custom wood crating business; in February 2000, the Company purchased Erickson
Wood Products of Belmont, California, a custom wood pallet and container
business, and in March 2000, the Company purchased Cushion Packaging Company of
Dallas, Texas, an interior


                                                                  AR 2000  |  29


   19

================================================================================


foam cushion fabricating business. (see Note 13 of the Notes to Consolidated
Financial Statements). The aggregate amount of cash paid in connection with the
Company's business acquisitions, net of cash acquired, during fiscal 2000, 1999
and 1998 amounted to $4.3 million, $3.1 million and $1.1 million, respectively.

Long-term debt increased from $60.1 million at August 31, 1999 to $78.8 million
at August 31, 2000, of which $76.0 million was borrowed under a credit agreement
with the Company's principal bank and a second bank, including $40.0 million out
of an available $55.0 million under a revolving credit facility. During the
twelve months ended August 31, 2000, $23.7 million was borrowed under the credit
agreement primarily to fund the higher than normal raw material purchases and
capital expenditures during the fiscal year. See Note 3 of the Notes to
Consolidated Financial Statements for additional information with respect to
long-term debt.

Cash dividends amounted to $2.5 million ($0.27 per share), $2.3 million ($0.24
per share) and $2.1 million ($0.22 per share) in fiscal 2000, 1999 and 1998,
respectively.

Cash provided by operating activities as supplemented
by the amount available under the bank credit agreement should continue to be
sufficient to fund the Company's operating needs, capital requirements and
dividend payments.


MARKET RISKS

The Company is exposed to market risks from changes in interest rates and
foreign exchange rates.

The Company's primary interest rate risk relates to its long-term debt
obligations. At August 31, 2000, the Company had total long-term debt
obligations, including the current portion of these obligations, of $83,959,268.
Of this amount, only $1,350,089 was in fixed rate obligations. The average
interest rate on the Company's variable rate obligations increased during the
2000 fiscal year and further increases may occur during the 2001 fiscal year.
Assuming a hypothetical 10% increase in the weighted average interest rate on
the Company's variable rate obligations (i.e., an increase from the August 31,
2000 weighted average interest rate of 7.84% to a weighted average interest rate
of 8.52%), annual interest expense would be increased by approximately $570,326
based on the August 31, 2000 outstanding balance of variable rate obligations.

The Company has entered into an interest rate swap and cap agreement with its
principal bank to hedge against the market risk of interest rate increases. The
notional value under this agreement at August 31, 2000 amounted to $18,500,000.
The additional interest expense paid under this agreement during the 2000 fiscal
year was not material.

A substantial majority of the Company's sales and earnings are transacted in
U.S. dollars. This includes substantially all the sales resulting from the
Mexican operations. As to the operations in the U.K. for fiscal 2000, net sales
denominated in U.K. pounds sterling totaled $24.6 million or approximately 9% of
the Company's net sales. The average exchange rate during fiscal 1999 was 1.57
U.S. dollars per U.K. pound sterling. Assuming a hypothetical adverse change of
10% in such average exchange rate from 1.57 to 1.41, the net sales of the U.K.
operations would have decreased by $2.5 million and the operating loss of these
operations would have decreased by $18,000 for fiscal 2000.

The subsidiaries that operate in the U.K. and Mexico have amounts payable
denominated in U.S. dollars, in addition to amounts payable denominated in U.K.
pounds sterling and Mexican pesos, which can act to mitigate the impact of
foreign exchange rate changes. The Company has not entered into any foreign
currency exchange contracts to hedge against the exchange rate risk.

The market risks described above are substantially the same as at the end of
fiscal 1999.

30  |


   20

================================================================================


OUTLOOK

Fiscal 2000 saw the Company build on the considerable momentum in revenues and
profitability that developed during the latter half of fiscal 1999. Rising
sales, driven by continued growth in the high technology and telecommunications
and consumer electronics markets should continue to generate profit growth in
fiscal 2001. Significant progress has also been made in the Company's U.K.
operations. The Company is generally pleased with the operating efficiencies
that are currently in place there and expects that the higher revenues that were
generated in the fourth quarter of fiscal 2000 should continue and should drive
increases in profitability in fiscal 2001.

Capital expenditures for fiscal 2001 are expected to approximate the capital
expenditures during fiscal 2000, and the Company will continue to look for
acquisition opportunities.

While no new production sites are presently contemplated, the Company recently
established a 50/50 joint venture in Ireland to serve the rapidly growing high
technology industry in that country. The Company has also formed a strategic
alliance with a Singapore based company with facilities throughout Asia that can
supply customers who operate Asian production facilities that require products
similar to those the Company provides in North America, the U.K. and Ireland.
While there is presently no direct financial incentive for the Company to lead
Asian business toward its alliance partner, it believes that a unified system
can provide quality products and localized delivery in Asia. This will improve
the likelihood of the Company being considered a preferred supplier by customers
with global packaging requirements.


OTHER

The impact of inflation on both the Company's financial position and results of
operations has been minimal and is not expected to adversely affect fiscal 2001
results.

In 1998, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." Subsequently, the FASB issued SFAS No. 137
"Accounting for Derivative Instruments and Hedging Activities: Deferral of the
Effective Date of SFAS Statement No. 133," which deferred the effective date of
SFAS No. 133 for one year. SFAS No. 133 became applicable to the Company on
September 1, 2000 and will result in a charge to income or expense or an item of
accumulated other comprehensive income (loss) which will not be significant.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 (SAB 101) "Revenue Recognition in Financial Statements" to
clarify the revenue recognition rules for certain types of transactions. The
Company is currently evaluating the effect of implementing SAB 101, which is
required to be adopted by the Company by the fourth quarter of the fiscal year
ended August 31, 2001.


FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Results of Operations and Financial
Condition and the Notes to Consolidated Financial Statements contain, in
addition to historical information, certain forward-looking statements. Such
statements (which are typically identified by the words "believe," "should,"
"expect," "anticipate," and other expressions that look to the future) are based
on assumptions and expectations which, although believed to be reasonable based
on information available to the Company, are inherently subject to risks and
uncertainties and which, consequently, may or may not be realized. The Company
undertakes no obligation to update or revise any forward-looking statements. The
risks and uncertainties inherent in the assumptions and expectations could be
material, and include, but are not limited to, economic and market conditions,
the impact of competition, consumer buying trends, pricing trends, fluctuations
in the cost and availability of raw materials and the ability to maintain
favorable customer and supplier relationships and arrangements.

                                                                  AR 2000  |  31
   21

ELEVEN YEAR CONSOLIDATED FINANCIAL SUMMARY




 YEAR ENDED AUGUST 31,                           2000          1999           1998         1997         1996            1995
- -------------------------------------------------------------------------------------------------------------------------------
                                                                                                   
Net sales                                      $273,687      $233,841      $232,902      $209,207      $182,590      $163,300
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes                       22,816        18,860        13,181(a)     15,441        15,905        15,034
- -------------------------------------------------------------------------------------------------------------------------------
Net income                                       14,198        11,729         8,032(a)      9,295         9,653         8,980
- -------------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization                    18,097        17,590        17,231        15,286        12,977        10,890
- -------------------------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding--basic        9,343         9,495         9,488         9,452         9,362         9,231
- -------------------------------------------------------------------------------------------------------------------------------
Basic net income per share                         1.52          1.24          0.85(a)       0.98          1.03          0.97
- -------------------------------------------------------------------------------------------------------------------------------
Diluted net income per share                       1.51          1.23          0.83(a)       0.97          1.01          0.96
- -------------------------------------------------------------------------------------------------------------------------------
Return on sales                                     5.2%          5.0%          3.4%          4.4%          5.3%          5.5%
- -------------------------------------------------------------------------------------------------------------------------------
Return on beginning shareholders' equity           16.4%         14.7%         11.0%         14.3%         17.6%         19.0%
- -------------------------------------------------------------------------------------------------------------------------------
Working capital                                  60,468        37,375        34,859        29,784        23,224        22,390
- -------------------------------------------------------------------------------------------------------------------------------
Total assets                                    209,520       177,386       172,166       162,388       131,169       117,721
- -------------------------------------------------------------------------------------------------------------------------------
Long-term debt (excluding current portion)       78,764        60,065        61,184        57,166        39,249        36,510
- -------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity                             94,724        86,684        79,524        72,817        64,827        54,773
- -------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity per share                    10.14          9.13          8.38          7.70          6.92          5.93
- -------------------------------------------------------------------------------------------------------------------------------
Dividends per share                                0.27          0.24          0.22          0.19          0.17          0.15
- -------------------------------------------------------------------------------------------------------------------------------




 YEAR ENDED AUGUST 31,                            1994             1993            1992         1991         1990
- --------------------------------------------------------------------------------------------------------------------
                                                                                            
Net sales                                        $120,085        $101,075        $95,809      $84,420      $85,458
- --------------------------------------------------------------------------------------------------------------------
Income before income taxes                          9,017           6,285          8,289        6,856        7,912
- --------------------------------------------------------------------------------------------------------------------
Net income                                          5,703           4,270(b)       4,981        4,230        4,874
- --------------------------------------------------------------------------------------------------------------------
Depreciation and amortization                       9,721           9,206          7,879        7,235        6,591
- --------------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding--basic          9,194           9,164          9,146        9,086        9,033
- --------------------------------------------------------------------------------------------------------------------
Basic net income per share                           0.62            0.47(b)        0.54         0.47         0.54
- --------------------------------------------------------------------------------------------------------------------
Diluted net income per share                         0.61            0.46(b)        0.54         0.46         0.53
- --------------------------------------------------------------------------------------------------------------------
Return on sales                                       4.7%            4.2%           5.2%         5.0%         5.7%
- --------------------------------------------------------------------------------------------------------------------
Return on beginning shareholders' equity             13.4%           10.9%          14.2%        13.4%        17.8%
- --------------------------------------------------------------------------------------------------------------------
Working capital                                    16,548          15,893         13,463       13,728       11,385
- --------------------------------------------------------------------------------------------------------------------
Total assets                                       94,225          79,769         75,510       63,775       60,677
- --------------------------------------------------------------------------------------------------------------------
Long-term debt (excluding current portion)         25,284          23,930         22,121       14,870       16,264
- --------------------------------------------------------------------------------------------------------------------
Shareholders' equity                               47,180          42,546         39,280       35,152       31,451
- --------------------------------------------------------------------------------------------------------------------
Shareholders' equity per share                       5.13            4.64           4.29         3.87         3.48
- --------------------------------------------------------------------------------------------------------------------
Dividends per share                                  0.13            0.12           0.11         0.09         0.09
- --------------------------------------------------------------------------------------------------------------------



In the above table, all dollar amounts, except per share data, are in thousands.
The weighted average number of shares of Common Stock outstanding and the
dividends and other per share amounts have been adjusted to reflect the 100%
share distribution paid on April 14, 1992 and the 50% share distribution paid on
January 13, 1997.

(a) Income before income taxes, net income and net income per share amounts for
the 1998 fiscal year include the effect of a nonrecurring, pre-tax charge of
$3,495,336 for restructuring costs. (See Note 15 to the financial statements.)

(b) Net income and net income per share for the 1993 fiscal year include income
of $321,218 or $0.03 per share resulting from the cumulative effect of a change
in the method of accounting for income taxes.

EX-21

   1
                                                                    Exhibit 21

                             TUSCARORA INCORPORATED

                              List of Subsidiaries

     The following is a complete list of the subsidiaries of the Company.


         Name of                                                Jurisdiction of
       Subsidiary                                                Incorporation
       ----------                                                -------------
Alpine Packaging, Inc. (1)                                         Colorado
Tuscarora Investment Corporation (1)                               Delaware
Tuscarora International, Inc. (1)                                  Delaware
   Tuscarora, S.A. de C.V. (2)                                     Mexico
   Tuscarora de Mexico, S.A. de C.V. (2)                           Mexico
   Tuscarora de Tijuana, S.A. de C.V. (2)                          Mexico
   Servicios Tuscarora, S.A. de C.V. (2)                           Mexico
Tuscarora Limited (1)                                              England
   Tuscarora (Scotland) Limited (3)                                England
   Tuscarora (London) Limited (3)                                  England
      Arrowtip Limited (4)                                         England
      Anglican Expanded Products Limited (4)                       England

- ------------
(1)   100% owned by Tuscarora Incorporated.
(2)   All but one share is owned by Tuscarora International, Inc. and
      1 share is owned by Tuscarora Incorporated.
(3)   100% owned by Tuscarora Limited.
(4)   100% owned by Tuscarora (London) Limited.

EX-23

   1

                                                                      Exhibit 23


                          Consent of Ernst & Young LLP


We consent to the incorporation by reference in this Annual Report on Form 10-K
of Tuscarora Incorporated of our report dated October 6, 2000 included in the
Annual Report to Shareholders of Tuscarora Incorporated for the fiscal year
ended August 31, 2000.

Our audits also included the financial statement schedule of Tuscarora
Incorporated listed in Item 14(a)(2). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

We also consent to the incorporation by reference in Registration Statements on
Form S-8 (Nos. 33-35373 and 333-06111) pertaining to the 1989 Stock Incentive
Plan of Tuscarora incorporated; Form S-8 (No. 333-57833) pertaining to the 1997
Stock Incentive Plan of Tuscarora Incorporated; and Form S-8 (No. 333-35587)
pertaining to the Tuscarora Incorporated Common Stock Purchase Plan for Salaried
Employees of our report dated October 6, 2000 with respect to the financial
statements incorporated herein by reference, and our report included in the
preceding paragraph with respect to the financial statement schedule included in
this Annual Report (Form 10-K) of Tuscarora Incorporated.


/s/ ERNST & YOUNG LLP


Pittsburgh, Pennsylvania
November 29, 2000

EX-24

   1

                                                                    Exhibit 24


                                POWER OF ATTORNEY


         NOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins, and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 2000 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue hereof.



October 13, 2000                             /s/ David I. Cohen
                                             -----------------------------
                                                 David I. Cohen
   2

                                POWER OF ATTORNEY


         NOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins, and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 2000 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue hereof.



October 13, 2000                             /s/ Abe Farkas
                                             -----------------------------
                                                 Abe Farkas





   3

                                POWER OF ATTORNEY


         NOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins, and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 2000 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue hereof.



October 13, 2000                             /s/ Karen L. Farkas
                                             -----------------------------
                                                 Karen L. Farkas


   4

                                POWER OF ATTORNEY


         NOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins, and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 2000 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue hereof.



October 13, 2000                             /s/ Robert W. Kampmeinert
                                             -----------------------------
                                                 Robert W. Kampmeinert


   5


                                POWER OF ATTORNEY


         NOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins, and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 2000 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue hereof.



October 13, 2000                             /s/ Jeffrey L. Leininger
                                             -----------------------------
                                                 Jeffrey L. Leininger


   6

                                POWER OF ATTORNEY


         NOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins, and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 2000 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue hereof.



October 13, 2000                             /s/ David C. O'Leary
                                             -----------------------------
                                                 David C. O'Leary





   7



                                POWER OF ATTORNEY


         NOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins, and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 2000 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue hereof.



October 13, 2000                             /s/ Harold F. Reed, Jr.
                                             -----------------------------
                                                 Harold F. Reed, Jr.




   8


                                POWER OF ATTORNEY


         NOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins, and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 2000 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue hereof.



October 13, 2000                             /s/ Thomas P. Woolaway
                                             -----------------------------
                                                 Thomas P. Woolaway

EX-27

 

<ARTICLE> 5

                             
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          AUG-31-2000
<PERIOD-START>                             SEP-01-1999
<PERIOD-END>                               AUG-31-2000
<CASH>                                       7,377,860
<SECURITIES>                                         0
<RECEIVABLES>                               49,091,520
<ALLOWANCES>                                   634,505
<INVENTORY>                                 33,962,576
<CURRENT-ASSETS>                            93,598,904
<PP&E>                                     211,486,494
<DEPRECIATION>                             108,990,502
<TOTAL-ASSETS>                             209,520,354
<CURRENT-LIABILITIES>                       33,130,720
<BONDS>                                     78,763,774
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                     9,602,418
<OTHER-SE>                                  85,121,545
<TOTAL-LIABILITY-AND-EQUITY>               209,520,354
<SALES>                                    273,687,494
<TOTAL-REVENUES>                           273,687,494
<CGS>                                      208,591,121
<TOTAL-COSTS>                              208,591,121
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                               121,485
<INTEREST-EXPENSE>                           5,448,817
<INCOME-PRETAX>                             22,816,077
<INCOME-TAX>                                 8,618,122
<INCOME-CONTINUING>                         14,197,955
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                14,197,955
<EPS-BASIC>                                       1.52
<EPS-DILUTED>                                     1.51