1
Exhibit 13
Consolidated Statements of Income
- ----------------------------------------------------------------------------------------------
YEAR ENDED
AUGUST 31, 1997 1996 1995
- ----------------------------------------------------------------------------------------------
Net Sales $209,206,775 $182,589,621 $163,299,682
Cost of Sales 160,951,244 139,249,481 123,682,160
- ----------------------------------------------------------------------------------------------
Gross profit 48,255,531 43,340,140 39,617,522
- ----------------------------------------------------------------------------------------------
Selling and Administrative Expenses 28,636,840 24,524,593 21,831,518
Interest Expense 3,741,275 2,928,483 2,603,250
Other (Income) Expense--Net 436,154 (18,235) 148,636
- ----------------------------------------------------------------------------------------------
32,814,269 27,434,841 24,583,404
- ----------------------------------------------------------------------------------------------
Income before income taxes 15,441,262 15,905,299 15,034,118
Provision for Income Taxes (Note 6) 6,146,001 6,252,682 6,053,854
- ----------------------------------------------------------------------------------------------
Net income $ 9,295,261 $ 9,652,617 $ 8,980,264
==============================================================================================
Net income per share of
Common Stock (Note 1) $0.98 $1.03 $0.97
==============================================================================================
Weighted average number of shares
of Common Stock outstanding 9,452,082 9,362,409 9,230,618
==============================================================================================
Table of Contents to the Consolidated
Financial Statements
- -------------------------------------
Consolidated Statements
of Income 8
Consolidated Balance Sheets 9
Consolidated Statements
of Cash Flows 10
Consolidated Statements
of Shareholders' Equity 11
Notes to Consolidated
Financial Statements 12
Report of Independent
Accountants 20
Management's Discussion and
Analysis of Results of
Operations and
Financial Condition 20
Net income per share of Common Stock and the weighted average number of shares
of Common Stock have been adjusted to reflect the 50% share distribution paid on
January 13, 1997.
The accompanying notes are an integral part of the consolidated financial
statements.
TUSCARORA INCORPORATED Annual Report 1997 8
2
Consolidated Balance Sheets
- ---------------------------------------------------------------------------------------------------------------------------
Assets (August 31) 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and cash equivalents $ 5,095,149 $ 3,379,776
Trade accounts receivable, less allowance of
$674,689 in 1997; $787,175 in 1996 31,667,668 26,094,406
Inventories (Note 2) 18,238,886 15,666,880
Prepaid expenses and other current assets 1,592,284 1,771,694
- ---------------------------------------------------------------------------------------------------------------------------
Total current assets 56,593,987 46,912,756
- ---------------------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Land 3,867,700 2,658,573
Buildings and improvements 55,320,144 45,197,923
Machinery and equipment 128,809,150 111,383,112
- ---------------------------------------------------------------------------------------------------------------------------
Total 187,996,994 159,239,608
- ---------------------------------------------------------------------------------------------------------------------------
Less accumulated depreciation (94,882,160) (80,529,962)
- ---------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 93,114,834 78,709,646
- ---------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS
Goodwill 8,540,479 3,406,779
Other non-current assets 4,138,260 2,140,261
- ---------------------------------------------------------------------------------------------------------------------------
Total other assets 12,678,739 5,547,040
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $162,387,560 $131,169,442
===========================================================================================================================
Liabilities and Shareholders' Equity (August 31)
- ---------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Current maturities of long-term debt (Note 3) $ 5,133,332 $ 5,346,335
Accounts payable 16,714,670 16,416,387
Accrued income taxes 390,008 153,930
Accrued payroll and related taxes 910,090 595,282
Other current liabilities 3,661,408 1,176,918
- ---------------------------------------------------------------------------------------------------------------------------
Total current liabilities 26,809,508 23,688,852
- ---------------------------------------------------------------------------------------------------------------------------
Long-term Debt (Note 3) 57,166,326 39,249,136
Deferred Income Taxes (Note 6) 2,417,725 2,069,988
Other Long-term Liabilities 3,176,653 1,334,577
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 89,570,212 66,342,553
- ---------------------------------------------------------------------------------------------------------------------------
Commitments (Note 10)
Shareholders' Equity
Preferred Stock--par value $.01 per share;
authorized shares, 1,000,000; none issued -- --
Common Stock--without par value, authorized shares,
20,000,000; issued shares, 9,479,241 in 1997,
9,426,923 in 1996 (Note 4) 9,479,241 9,426,923
Capital surplus (Note 4) 1,071,878 740,818
Retained earnings 62,291,940 54,825,048
Foreign currency translation adjustment 49,999 (38,690)
- ---------------------------------------------------------------------------------------------------------------------------
Total 72,893,058 64,954,099
- ---------------------------------------------------------------------------------------------------------------------------
Less Common Stock in treasury--4,620 shares
in 1997; 12,351 shares in 1996; at cost (75,710) (127,210)
- ---------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 72,817,348 64,826,889
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $162,387,560 $131,169,442
===========================================================================================================================
The number of shares and amounts of Common Stock have been adjusted to reflect
the 50% share distribution paid on January 13, 1997.
The accompanying notes are an integral part of the consolidated financial
statements.
TUSCARORA INCORPORATED Annual Report 1997 9
3
Consolidated Statements of Cash Flows
- ---------------------------------------------------------------------------------------------------------------------------
YEAR ENDED
AUGUST 31, 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 9,295,261 $ 9,652,617 $ 8,980,264
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 14,429,068 12,364,207 10,247,768
Amortization 857,319 612,773 641,745
Provision for losses on receivables 504,862 378,366 287,782
Increase (decrease) in deferred income taxes (69,674) 200,468 168,189
Loss on sale or abandonment of
property, plant and equipment, net 524,449 80,883 64,425
Stock compensation expense 13,684 12,290 10,516
Changes in operating assets and liabilities, net of
effects of business acquisitions:
Decrease (increase):
Trade accounts receivable 852,227 (2,588,248) (5,059,511)
Inventories (521,990) 2,561,825 (2,468,166)
Prepaid expenses and other current assets (961,419) (309,401) (393,767)
Other non-current assets (179,702) (226,454) (289,188)
Increase (decrease):
Accounts payable (2,133,551) 726,863 1,100,205
Accrued income taxes 96,729 (281,410) 64,376
Accrued payroll and related taxes 249,493 100,695 (256,558)
Other current liabilities (2,256,586) (884,162) 593,290
Other long-term liabilities 311,645 (53,049) 402,820
- ---------------------------------------------------------------------------------------------------------------------------
Cash provided by operating activities 21,011,815 22,348,263 14,094,190
- ---------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of property, plant and equipment (21,318,432) (23,128,792) (20,689,178)
Business acquisitions, net of cash acquired (Note 8) (14,084,072) (513,239) (5,664,667)
Proceeds from sale of property, plant and equipment 1,050,319 152,129 184,764
- ---------------------------------------------------------------------------------------------------------------------------
Cash (used for) investing activities (34,352,185) (23,489,902) (26,169,081)
- ---------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 23,000,000 8,000,000 16,045,000
Payments on long-term debt (6,320,161) (4,854,866) (3,667,977)
Dividends paid (1,828,369) (1,626,948) (1,415,195)
Proceeds from sale of Common Stock 421,194 323,218 118,287
- ---------------------------------------------------------------------------------------------------------------------------
Cash provided by
financing activities 15,272,664 1,841,404 11,080,115
- ---------------------------------------------------------------------------------------------------------------------------
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS (216,921) 20,244 (16,947)
Net increase (decrease) in cash and
cash equivalents 1,715,373 720,009 (1,011,723)
- ---------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,379,776 2,659,767 3,671,490
- ---------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,095,149 $ 3,379,776 $ 2,659,767
- ---------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA
Income taxes paid $ 5,944,408 $ 6,243,828 $ 5,821,289
Interest paid $ 3,046,640 $ 3,302,840 $ 2,396,164
===========================================================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
TUSCARORA INCORPORATED Annual Report 1997 10
4
Consolidated Statements of Shareholders' Equity
COMMON STOCK TREASURY SHARES
------------------ --------------------
CURRENCY
SHARES CAPITAL RETAINED TRANSLATION
ISSUED AMOUNT SURPLUS EARNINGS SHARES AMOUNT ADJUSTMENT TOTAL
- ---------------------------------------------------------------------------------------------------------------------------
Balance at
August 31, 1994 9,290,571 $9,290,571 ($925,640) $39,234,310 69,938 ($419,292) $-- $47,179,949
- ---------------------------------------------------------------------------------------------------------------------------
Net income 8,980,264 8,980,264
Sale of shares under
employee stock
purchase plan 9,666 9,666 110,652 120,318
Sale of shares under
stock option plans (25,589) (50,550) 362,933 337,344
Shares acquired in
payment of
option price 21,910 (328,859) (328,859)
Dividends paid
($0.15 per share) (1,415,195) (1,415,195)
Foreign currency translation adjustment (100,460) (100,460)
- ---------------------------------------------------------------------------------------------------------------------------
Balance at
August 31, 1995 9,300,237 $9,300,237 ($840,577) $46,799,379 41,298 ($385,218)($100,460)$54,773,361
- ---------------------------------------------------------------------------------------------------------------------------
Net income 9,652,617 9,652,617
Sale of shares under
employee stock
purchase plan 9,020 9,020 131,374 140,394
Sale of unissued shares
under stock
option plans 16,620 16,620 124,214 140,834
Sale of shares under
stock option plans (203,729) (31,950) 307,660 103,931
Shares acquired in
payment of
option price 3,003 (49,652) (49,652)
Shares issued in
connection with
an acquisition 101,046 101,046 1,529,536 1,630,582
Dividends paid
($0.17 per share) (1,626,948) (1,626,948)
Foreign currency translation adjustment 61,770 61,770
- ---------------------------------------------------------------------------------------------------------------------------
Balance at
August 31, 1996 9,426,923 $9,426,923 $740,818 $54,825,048 12,351 ($127,210) ($38,690)$64,826,889
- ---------------------------------------------------------------------------------------------------------------------------
Net income 9,295,261 9,295,261
Sale of shares under
employee stock
purchase plan 9,873 9,873 147,384 157,257
Sale of unissued shares
under stock
option plans 42,445 42,445 244,929 287,374
Sale of shares under
stock option plans (61,253) (21,530) 258,873 197,620
Shares acquired in
payment of
option price 13,799 (207,373) (207,373)
Dividends paid
($0.19 per share) (1,828,369) (1,828,369)
Foreign currency translation adjustment 88,689 88,689
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE AT
AUGUST 31, 1997 9,479,241 $9,479,241 $1,071,878 $62,291,940 4,620 ($75,710) $49,999 $72,817,348
- ---------------------------------------------------------------------------------------------------------------------------
Share numbers, amounts, and cash dividends paid per share of Common Stock have
been adjusted to reflect the 50% share distribution paid on January 13,1997.
The accompanying notes are an integral part of the consolidated financial
statements.
TUSCARORA INCORPORATED Annual Report 1997 11
5
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
NOTE 1: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nature of Operations
Tuscarora Incorporated (the Company) is a multinational designer and
manufacturer of interior protective packaging and material handling solutions,
made from a variety of materials, for a broad range of manufactured products.
The Company also supplies customers with molded foam plastic and thermoformed
components for a number of industrial and consumer product applications. The
principal end-use markets that the Company serves are the high technology,
consumer electronics, automotive and major appliance industries.
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.
Foreign Currency Translation
The assets and liabilities of the Company's foreign subsidiaries are translated
into U. S. dollars at current exchange rates. The revenues and expenses of these
operations are translated at the average exchange rates prevailing during the
year. These translation adjustments are accumulated in a separate component of
shareholders' equity. Foreign currency transaction gains and losses are included
in determining net income for the year in which the exchange rate changes.
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. Due to the large number of the
Company's customers and their dispersion across many geographic areas,
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 FIFO (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 assets are charged against
earnings 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 earnings.
Provisions for depreciation of plant and equipment are computed on the
straight-line method based on the following estimated useful lives.
Building and improvements............ 10-30 years
Machinery and equipment............... 3-10 years
TUSCARORA INCORPORATED Annual Report 1997 12
6
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
Other Assets
Other assets consist primarily of intangible assets such as goodwill and
covenants not to compete which have been acquired in connection with business
acquisitions (see Note 8) and are amortized using the straight-line method.
Goodwill is amortized over 15 years and the covenants over the period covered by
each agreement.
The carrying value of intangible assets is periodically reviewed by the
Company and impairments are recognized when the expected future operating cash
flows derived from such intangible assets is less than their carrying value.
Interest Rate Agreements
The Company has entered into interest rate swap, cap and floor agreements with
its principal bank having a combined notional value of $42,375,000 at August 31,
1997. The purpose of these agreements is to reduce the impact of increases in
interest rates on the Company's variable rate long-term debt. While there was no
net out-of-pocket cost for these agreements, any amounts paid or received under
the agreements are recognized as an adjustment to interest expense. The interest
expense adjustments associated with, and the fair market value of, the
agreements are not material.
Income Taxes
The provision for income taxes includes deferred taxes resulting from temporary
differences in income for financial reporting and tax purposes using the
liability method. Such temporary differences result primarily from differences
in the carrying value of assets and liabilities.
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 25"). In accordance with APB 25, no stock-based compensation
expense has been recognized in the accompanying financial statements, since the
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of option grant.
Net Income Per Share
Net income per share is based upon the weighted average number of shares of
Common Stock outstanding and has been adjusted to reflect the 50% share
distribution paid on January 13,1997. The weighted average number of shares
outstanding at August 31, 1997, 1996 and 1995 was 9,452,082, 9,362,409 and
9,230,618, respectively. Common stock equivalents resulting from the assumed
exercise of stock options are not dilutive in the calculation of earnings per
share.
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 those estimates.
Accounting Pronouncements
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share", SFAS No. 129, "Disclosure of Information about Capital Structure", SFAS
No. 130, "Reporting Comprehensive Income", and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information" were issued in 1997. These
statements will be adopted by the Company when required, and are not expected to
have a material effect on the consolidated financial statements.
NOTE 2: INVENTORIES
Inventories at August 31, 1997 and 1996 are summarized as follows:
- ---------------------------------------------------------
AUGUST 31, 1997 1996
- ---------------------------------------------------------
Finished goods $10,511,267 $9,739,590
Work in process 154,962 215,475
Raw Materials 5,820,100 4,233,990
Supplies 1,752,557 1,477,825
- ---------------------------------------------------------
Total $ 18,238,886 $ 15,666,880
- ---------------------------------------------------------
TUSCARORA INCORPORATED Annual Report 1997 13
7
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
NOTE 3: LONG-TERM DEBT
The Company's credit agreement with its principal bank provides for a
$40,000,000 revolving credit facility expiring on August 31, 2000 and a
$37,000,000 eight-year term note repayable in quarterly installments, with final
maturity on August 31, 2004. Under the credit agreement, the Company may choose
as to both the revolving credit facility and the term note between various
interest rate options for specified interest periods. The agreement provides for
a commitment fee of 0.125% per annum on the average daily unborrowed funds under
the revolving credit facility.
Long-term debt outstanding at August 31, 1997 and 1996 is summarized as set
forth below:
The outstanding borrowings by the Company under the credit agreement with its
principal bank are unsecured. The credit agreement contains covenants which
require the Company to maintain a certain tangible net worth as well as certain
financial ratios. These covenants also impose limitations on the amount which
the Company may pay during any fiscal year for property, plant and equipment and
in transactions accounted for as business acquisitions. At August 31, 1997,
approximately $4,400,000 of retained earnings was available for the payment of
cash dividends by the Company without causing a violation of any of the
financial covenants. The agreement relating to the Company's industrial
development bonds also contains financial covenants.
- ----------------------------------------------------------------------------------------------------------------------
INTEREST RATE AT AUGUST 31,
AUGUST 31, 1997 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
Notes under credit agreement with principal bank:
Variable rate revolving credit note 6.75% $ 26,215,000 $ 3,215,000
Variable rate term note payable in quarterly
installments, through August 31, 2004. 7.10% 32,375,000 37,000,000
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 3.80% 2,875,000 3,300,000
Variable rate mortgage note payable in quarterly
installments, through March 30, 2006 9.00% 729,175 812,507
Other 5.75% 105,483 267,964
- ----------------------------------------------------------------------------------------------------------------------
62,299,658 44,595,471
Less amounts due within one year, included in current liabilities 5,133,332 5,346,335
======================================================================================================================
Total long-term debt $57,166,326 $39,249,136
======================================================================================================================
TUSCARORA INCORPORATED Annual Report 1997 14
8
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
Aggregate maturities of long-term debt for the next five fiscal years are as
follows:
- ---------------------------------------------------------
August 31,
- ---------------------------------------------------------
1998 $5,133,332
1999 5,133,332
2000 31,348,332
2001 5,133,332
2002 5,133,332
=========================================================
The amount becoming due in the fiscal year ended August 31, 2000 includes the
$26,215,000 borrowed under the revolving credit facility with the Company's
principal bank. The bank makes an annual determination as to whether to extend
the expiration date of the revolving credit facility for an additional year.
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
which is issued is credited to the Common Stock account and the balance of the
purchase price is credited to the Capital Surplus account.
NOTE 5: STOCK OPTIONS AND COMMON STOCK PURCHASE PLAN
The Company has a 1989 Stock Incentive Plan (the "1989 Plan") and a prior stock
option plan under which options to purchase shares of the Company's Common Stock
have been granted to eligible employees. At August 31, 1997, a total of 187,725
shares remained available for the grant of stock options under the 1989 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 or in a combination of cash and shares.
Data concerning the outstanding stock options for each of the fiscal years in
the three-year period ended August 31, 1997 follows:
1997 1996 1995
------------------ ----------------- ------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
- ---------------------------------------------------------------------------------------------------------------------
Balance at September 1 566,565 $10.87 478,035 $8.62 391,635 $7.48
Options granted 153,975 14.96 144,750 16.50 138,750 11.17
Options exercised (63,975) 7.58 (48,570) 5.04 (50,550) 6.68
Options expired (15,975) 14.89 (7,650) 14.15 (1,800) 10.56
- ---------------------------------------------------------------------------------------------------------------------
Balance at August 31 640,590 $12.08 566,565 $10.87 478,035 $8.62
- ---------------------------------------------------------------------------------------------------------------------
Exercisable at August 31 640,590 $12.08 566,565 $10.87 478,035 $8.62
- ---------------------------------------------------------------------------------------------------------------------
Stock options outstanding at August 31, 1997:
RANGE OF OPTIONS AT WEIGHTED AVERAGE WEIGHTED AVERAGE
EXERCISE PRICES AUGUST 31, 1997 EXERCISE PRICE REMAINING CONTRACTUAL LIFE
=====================================================================================================================
$5.17-$7.99 93,690 $6.39 2.2 years
$8.00-$12.00 267,300 10.30 6.0 years
$12.01-$16.50 279,600 15.69 8.7 years
=====================================================================================================================
Total 640,590
=====================================================================================================================
TUSCARORA INCORPORATED Annual Report 1997 15
9
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
Pro forma information regarding net income and net income per share, required
by SFAS No. 123, 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 options granted in fiscal 1997 and 1996 was estimated at the date
of grant using a Black-Scholes option pricing model with the following
assumptions: a risk-free interest rate of 6.50%; a volatility factor of the
expected market price of the Company's Common Stock of 0.28; a weighted average
expected option life of seven years; and a 1.00% dividend yield. For purposes of
the pro forma disclosure, the estimated fair value of the options granted
(fiscal 1997 - $5.94 per share; fiscal 1996 - $6.55 per share) is charged to
expense during the fiscal year of grant based on the vesting provisions of the
award. For the fiscal years ended August 31, 1997 and August 31, 1996, the
Company's reported and pro forma net income and net income per share are as
follows:
========================================================
AS REPORTED: 1997 1996
- --------------------------------------------------------
Net income $ 9,295,000 $9,653,000
Net income per share $ 0.98 $ 1.03
- --------------------------------------------------------
PRO FORMA:
- --------------------------------------------------------
Net income $ 8,380,000 $8,705,000
Net income per share $ 0.89 $ 0.93
========================================================
Because the SFAS No. 123 method of accounting has not been applied to options
granted prior to September 1, 1995, the resulting pro forma compensation cost
may not be representative of the cost to be expected in future years.
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.
NOTE 6: INCOME TAXES
For the fiscal years ended August 31, 1997, 1996 and 1995, income(loss) before
income taxes consist of the following:
- ---------------------------------------------------------
YEAR ENDED
AUGUST 31, 1997 1996 1995
- ---------------------------------------------------------
U.S.
operations $16,251,615 $15,639,009 $15,258,892
Foreign
operations (810,353) 266,290 (224,774)
- ---------------------------------------------------------
Total $15,441,262 $15,905,299 $15,034,118
- ---------------------------------------------------------
The provision (benefit) for taxes on income consists of the following:
- ---------------------------------------------------------
YEAR ENDED
AUGUST 31, 1997 1996 1995
- ---------------------------------------------------------
Current:
Federal $5,365,323 $4,894,867 $4,751,053
State 741,814 1,140,588 1,121,211
Foreign 47,450 16,759 13,401
- ---------------------------------------------------------
6,154,587 6,052,214 5,885,665
- ---------------------------------------------------------
Deferred:
Federal 197,229 110,844 130,290
State 76,002 34,094 37,899
Foreign (281,817) 55,530 --
- ---------------------------------------------------------
(8,586) 200,468 168,189
- ---------------------------------------------------------
Total provision$6,146,001 $6,252,682 $6,053,854
- ---------------------------------------------------------
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, 1997 1996 1995
- ---------------------------------------------------------
U.S. Statutory rate
applied to
pre-tax income 35.0% 35.0% 35.0%
State income taxes
net of Federal
tax benefit 5.3% 4.8% 5.0%
Other (0.5%) (0.5%) 0.3%
- ---------------------------------------------------------
39.8% 39.3% 40.3%
=========================================================
TUSCARORA INCORPORATED Annual Report 1997 16
10
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
Deferred tax assets and liabilities at August 31, 1997 and 1996 were
comprised of the following:
- -------------------------------------------------------
AUGUST 31, 1997 1996
- -------------------------------------------------------
Deferred tax assets:
Allowance for
bad debts $238,445 $ 310,901
Supplemental
pension benefits 502,317 432,865
Other 142,208 72,047
Deferred tax liabilities:
Depreciation 3,085,036 2,809,804
Other 215,659 75,997
- -------------------------------------------------------
Net deferred
tax liability $2,417,725 $2,069,988
- -------------------------------------------------------
NOTE 7: 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 5-1/2% 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 under all plans is age
65. All contributions are made to the plan trustees and invested for the
accounts of the participants. The Company contributions for the fiscal years
ended August 31, 1997, 1996 and 1995 were $2,143,754, $1,557,721 and $1,409,179,
respectively.
The Company also maintains a Section 401(k) plan covering most salaried
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,
1997, 1996 and 1995 were $108,510, $94,628 and $78,733, respectively.
Effective September 1, 1996, the Company adopted a supplemental retirement
plan under which benefits will be paid by the Company directly to certain key
employees following their retirement. Benefits under the plan accrue each fiscal
quarter and are reflected as a long-term liability. In addition, certain former
executive officers of the Company or their beneficiaries are receiving
supplemental retirement benefits directly from the Company, the future liability
for which is also reflected as a long-term liability. As of August 31, 1997, the
liability for the supplemental retirement benefits amounted to $1,194,743, of
which $136,452 represents amounts payable within one year.
The Company does not provide any other significant postretirement benefits.
NOTE 8: ACQUISITIONS
During the fiscal year ended August 31, 1997, the Company completed five
acquisitions. In September 1996, the Company acquired the custom thermoforming
business of FormPac Corporation in Sandusky, Ohio; in October 1996, the Company
acquired all the outstanding capital stock of EPS (Moulders) Ltd., a custom
molding business in Livingston, Scotland; in April 1997, the Company acquired
the custom thermoforming business of Thermoformers Plus in Chula Vista,
California; in May 1997, the Company acquired the integrated materials business
of Allgood Industries, Inc. in Hayward, California; and in July 1997, the
Company acquired all the outstanding capital stock of Arrowtip Group Ltd., a
custom molded and fabricated foam packaging business in the United Kingdom. The
aggregate purchase price recorded for these acquisitions totaled $16.7 million,
including contingent consideration payable in certain of the acquisitions. The
amount recorded as contingent consideration is based on readily attainable sales
or on a specified minimum payment amount, and in the aggregate is not material.
TUSCARORA INCORPORATED Annual Report 1997 17
11
During the fiscal year ended August 31, 1996, the Company acquired one
business. In December 1995,the Company acquired all the outstanding capital
stock of Alpine Packaging, Inc., a custom designer and manufacturer of specialty
corrugated and technical/military specification packaging and wood pallets in
Colorado Springs, Colorado. For this acquisition, the Company issued 101,046
shares of its Common Stock and paid cash having an aggregate value of $1.7
million during the 1996 fiscal year. The Consolidated Statement of Cash Flows
for the fiscal year ended August 31, 1996 excludes the non-cash consideration
issued in connection with the acquisition.
During the fiscal year ended August 31, 1995, the Company acquired two
businesses. In September 1994, the Company acquired the specialty corrugated and
foam packaging business of Astrofoam, Inc. in Holden, Massachusetts, and in
February 1995, the Company acquired the custom molding business of M.Y. Trondex
Ltd. in the United Kingdom. The aggregate purchase price recorded for these
acquisitions through the end of the 1997 fiscal year amounted to $6.2 million.
All the above acquisitions 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 results from the acquired businesses had they been included at the
beginning of the fiscal year, would not be materially different from the
consolidated results of operations as reported. In certain of these acquisitions
part of the purchase price was allocated to goodwill (1997-$5.1 million; 1996-
$1.4 million; 1995-$1.1 million) and/or covenants not to compete (see Note 1 of
the Notes to Consolidated Financial Statements).
NOTE 9: LEASE COMMITMENTS
Rental expense charged to operations for the fiscal years ended August 31, 1997,
1996 and 1995 amounted to $5,907,685, $4,223,461 and $3,889,162, 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,
- -------------------------------------------------------
1998 $4,542,830
1999 3,997,152
2000 3,623,135
2001 3,329,737
2002 2,650,066
Thereafter 6,555,903
=======================================================
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 manufacturing and
warehouse facilities.
NOTE 10: CLAIMS AND CONTINGENCIES
A lawsuit seeking substantial compensatory and punitive damages as a result of
the alleged wrongful death of an employee was filed against the Company in
December 1996. In addition, legal and administrative proceedings against the
Company involving claims of employment discrimination are pending and the
Company is involved in legal and administrative proceedings, including one with
respect to a Superfund site, which may result in the Company becoming liable for
a portion of certain environmental cleanup costs. In the opinion of management,
the disposition of these proceedings should not have a material adverse effect
on the Company's financial position or results of operations.
NOTE 11:BUSINESS SEGMENTS
The Company currently operates primarily in a single business segment as a
designer and manufacturer of interior protective packaging, material handling
solutions and componentry.
TUSCARORA INCORPORATED Annual Report 1997 18
12
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
The Company has operations in the United States, the United Kingdom and
Mexico. Transfers between geographic regions are not significant. The geographic
distribution of sales and operating profit for the fiscal years ended August 31,
1997, 1996 and 1995 and of identifiable assets as of August 31,1997, 1996, and
1995 is set forth below. Operating profit is gross profit less selling and
administrative expenses.
- --------------------------------------------------------------------------------------------------------------------
AUGUST 31, 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
Net Sales
United States $178,587,326 $ 165,156,448 $ 156,516,410
United Kingdom 21,078,007 12,398,404 5,120,418
Mexico 9,541,442 5,034,769 1,662,854
- --------------------------------------------------------------------------------------------------------------------
Total $209,206,775 $ 182,589,621 $ 163,299,682
- --------------------------------------------------------------------------------------------------------------------
Operating Income (Loss)
United States $17,383,589 $ 18,215,381 $ 18,774,060
United Kingdom (34,582) 357,303 (199,626)
Mexico 2,269,684 242,863 (788,430)
- --------------------------------------------------------------------------------------------------------------------
Total $19,618,691 $ 18,815,547 $ 17,786,004
- --------------------------------------------------------------------------------------------------------------------
Identifiable Assets
United States $132,026,240 $ 115,485,089 $108,823,073
United Kingdom 25,311,617 11,224,548 6,633,274
Mexico 5,049,703 4,459,805 2,264,912
- --------------------------------------------------------------------------------------------------------------------
Total $162,387,560 $131,169,442 $117,721,259
- --------------------------------------------------------------------------------------------------------------------
NOTE 12:QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial information is as follows:
(All per share amounts have been adjusted to reflect the 50% share distribution
paid on January 13,1997.)
- --------------------------------------------------------------------------------------------------------------------
FISCAL QUARTER ENDED
NOVEMBER 30 FEBRUARY 28 MAY 31 AUGUST 31
- --------------------------------------------------------------------------------------------------------------------
FISCAL 1997:
Net Sales $53,441,000 $48,977,000 $52,593,000 $54,196,000
Gross Profit 13,706,000 11,522,000 11,398,000 11,630,000
Net Income 3,692,000 2,074,000 1,885,000 1,644,000
Per Share of Common Stock:
Net Income $0.39 $0.22 $0.20 $0.17
Dividends Paid -- $0.09 -- $0.10
Stock Market Prices:
High 15-1/2 19 17-1/2 17-5/8
Low 14-7/16 14-15/16 14-1/8 14-7/8
- --------------------------------------------------------------------------------------------------------------------
NOVEMBER 30 FEBRUARY 29 MAY 31 AUGUST 31
- --------------------------------------------------------------------------------------------------------------------
FISCAL 1996:
Net Sales $47,296,000 $43,188,000 $45,113,000 $46,993,000
Gross Profit 11,957,000 9,913,000 10,550,000 10,920,000
Net Income 3,155,000 1,987,000 2,371,000 2,140,000
Per Share of Common Stock:
Net Income $0.34 $0.21 $0.25 $0.23
Dividends Paid -- $0.08 -- $0.09
Stock Market Prices:
High 17 17 16-9/16 16-1/2
Low 14-13/16 14-5/16 15-9/16 14
====================================================================================================================
TUSCARORA INCORPORATED Annual Report 1997 19
13
Report of Independent Accountants
- -------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF TUSCARORA INCORPORATED
We have audited the accompanying consolidated balance sheet of Tuscarora
Incorporated and subsidiaries as of August 31, 1997 and the related consolidated
statements of income, changes in shareholders' equity, and cash flows for the
year then ended. 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 audit. The financial statements of Tuscarora
Incorporated as of August 31, 1996 and for each of the two years in the period
then ended, were audited by other auditors whose report dated October 11, 1996,
expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. 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 financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1997 financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Tuscarora Incorporated at August 31, 1997 and the consolidated results of its
operations and its cash flow for the year then ended in conformity with
generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
---------------------
Pittsburgh, PA
October 16, 1997
Management's Discussion and Analysis of
Results of Operations and Financial Condition
- -------------------------------------------------------------------------------
RESULTS OF OPERATIONS--FISCAL 1997
COMPARED TO FISCAL 1996
Net sales for the fiscal year ended August 31,1997 were $209.2 million, an
increase of $26.6 million, or 14.6% over fiscal 1996. Approximately 65% of the
increase in net sales was attributable to acquisitions. The Company acquired two
custom molding businesses in the United Kingdom in October 1996 and July 1997,
two integrated materials businesses in the United States in December 1995 and
May 1997 and two thermoforming businesses in the United States in September 1996
and April 1997 (see Note 8 of the Notes to Consolidated Financial Statements).
The balance of the increase in net sales was attributable to higher sales in the
Company's core custom molding operations. The sales increase was achieved
despite lower sales at the Company's existing integrated materials operations
than in the prior fiscal year, two large customers adjusting inventory levels
and reducing their packaging requirements and reductions in some selling prices.
Net sales in the fourth quarter of fiscal 1997 were $54.2 million compared to
$47.0 million in the same period last year, an increase of 15.3%. The fiscal
year over prior fiscal year growth rate in net sales in the fourth quarter was
comparable to the growth rate in the three previous quarters of fiscal 1997.
Gross profit for the fiscal year ended August 31, 1997 was $48.3 million, or
23.1% of net sales, compared to $43.3 million, or 23.7% of net sales, in fiscal
1996. The decrease in the gross profit margin for the fiscal year is due
primarily to well below-objective gross profit margins at the Company's United
Kingdom facilities and at the expanding thermofoming operations. The gross
profit margin was also negatively impacted by the lower sales to the two major
customers and by operational difficulties at two of the Company's older
manufacturing facilities. The decrease in gross profit margin occurred despite
lower EPS raw materials costs than in the prior fiscal year.
Selling and administrative expenses for the fiscal year ended August 31,1997
increased 16.8%, or $4.1 million, to $28.6 million and increased as a
percentage of net sales to 13.7% from 13.4% in the previous fiscal year. The
significant dollar increase was due primarily to increased employee and other
costs added in connection with the acquisitions of the businesses in December
1995, September and October 1996, and May and July 1997.
TUSCARORA INCORPORATED Annual Report 1997 20
14
Interest expense for the fiscal year ended August 31, 1997 was $3.7 million
compared to $2.9 million in fiscal 1996. The increase of $800,000 was due to a
higher level of outstanding debt throughout the year, primarily as a result of
additional borrowings to finance the business acquisitions.
Income before income taxes for fiscal 1997 decreased to $15.4 million from
$15.9 million in fiscal 1996, a decrease of 2.9%.
The Company's effective tax rate increased slightly to 39.8% from 39.3% in
fiscal 1996.
Net income for the fiscal year ended August 31, 1997 was $9.3 million, a
decrease of 3.7% from the $9.7 million earned in fiscal 1996. The decrease was
due primarily to the decrease in the gross profit margin.
RESULTS OF OPERATIONS--
FISCAL 1996 COMPARED TO FISCAL 1995
Net sales for the fiscal year ended August 31, 1996 were $182.6 million, an
increase of $19.3 million, or 11.8%, over fiscal 1995. Approximately 38% of the
increase in net sales was attributable to the acquisition of a custom molding
business in the United Kingdom and of an integrated materials business in
Colorado Springs, Colorado in February and December 1995, respectively (see Note
8 of the Notes to Consolidated Financial Statements). The balance of the
increase was attributable to higher sales of both custom molded and integrated
materials products in most major markets which the Company serves, particularly
the major appliance and consumer electronics industries. The increase was
achieved despite a reduction in selling prices which occurred in December 1995
following decreases in EPS resin costs.
Net sales in the fourth quarter of fiscal 1996 were $47.0 million, an increase
of 3.2%, or $1.5 million, over net sales of $45.5 million in the same period of
fiscal 1995 despite the selling price reduction referred to above. The fiscal
year over prior year growth rate in net sales in the fourth quarter was smaller
than in the previous three fiscal quarters of fiscal 1996, as many of the
Company's large industrial customers reduced their production rates to adjust
their finished goods inventories. Although the sales level slowed in the early
part of the fourth quarter, sales activity increased significantly at the end of
the quarter.
Gross profit for the fiscal year ended August 31, 1996 was $43.3 million, or
23.7%, of net sales, compared to $39.6 million, or 24.3%, of net sales in fiscal
1995. The decrease in the gross profit margin was due primarily to lower than
anticipated sales levels, particularly in the fourth quarter, which resulted in
lower utilization of the Company's expanded manufacturing capacity and
associated fixed costs. The decrease in the gross profit margin was also
attributable to the lower selling prices.
Selling and administrative expenses for the fiscal year ended August 31, 1996
increased 12.3%, or $2.7 million, to $24.5 million but remained steady as a
percentage of net sales at 13.4%. The dollar increase was due primarily to
increased employee and other costs added in connection with the acquisitions of
the businesses in February and December 1995.
Interest expense for the fiscal year ended August 31, 1996 was $2.9 million
compared to $2.6 million in fiscal 1995. The increase of $300,000 was due to a
higher level of outstanding debt throughout the year, most of which was borrowed
in fiscal 1995.
Income before income taxes for the fiscal year ended August 31, 1996 increased
to $15.9 million from $15.0 million for fiscal 1995, an increase of 5.8%.
The provision for income taxes for the fiscal year ended August 31, 1996
increased due to the increase in income before income taxes. The Company's
effective tax rate decreased to 39.3% from 40.3%. The effective tax rate was
higher in fiscal 1995 due to the net operating loss of the U.K. operations for
which a tax benefit was not recorded.
Net income for the fiscal year ended August 31, 1996 was $9.7 million, an
increase of 7.5% from $9.0 million in fiscal 1995. The increase was due
primarily to the increase in net sales and gross profit.
Net sales and net income for fiscal year 1996 were Company records.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities amounted to $21.0 million, $22.3
million and $14.1 million in fiscal 1997, 1996 and 1995, respectively.
Depreciation and amortization in fiscal 1997, 1996 and 1995 amounted to $15.3
million, $13.0 million and $10.9 million, respectively. Because a substantial
portion of the Company's operating expenses are attributable to depreciation and
amortization, the Company believes that its liquidity would not be adversely
affected should a period of reduced earnings occur.
At August 31, 1997, the Company's accounts receivable and inventories were
higher than at the end of the previous fiscal year due to the acquisitions
during the fiscal year.
TUSCARORA INCORPORATED Annual Report 1997 21
15
Capital expenditures for property, plant and equipment during fiscal 1997,
1996 and 1995 amounted to $21.3 million, $23.1 million and $20.7 million,
respectively, including approximately $1.5 million, $900,000 and $1.7 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 1997, the expenditures included machinery and equipment
for new custom molding facilities in Storm Lake, Iowa, Brenham, Texas and
Tijuana, B.C., Mexico, and for major renovations of the existing custom molding
facility in Cortland, New York.
During fiscal 1997, the Company acquired the custom thermoforming business of
FormPac Corporation in Sandusky, Ohio and the custom molding business of EPS
(Moulders) Ltd. in Livingston, Scotland in September and October 1996,
respectively, and purchased the custom thermoforming business of Thermoformers
Plus in Chula Vista, California, the integrated materials business of Allgood
Industries, Inc. in Hayward, California and the custom molding and fabricating
business of Arrowtip Group Ltd. in London, England in April, May and July 1997
respectively, for an aggregate of approximately $13.4 million in cash (see Note
8 of the Notes to Consolidated Financial Statements).
Long-term debt increased from $39.2 at August 31, 1996 to $57.2 million at
August 31, 1997, of which $54.0 was borrowed under a credit agreement with the
Company's principal bank, including $26.2 out of an available $40.0 million
under a revolving credit facility. During the twelve months ended August 31,
1997, $23.0 million was borrowed under the revolving credit facility primarily
to fund the acquisitions during the fiscal year. At August 31, 1997, $13.8
million of the revolving credit facility remained available. See Note 3 of the
Notes to Consolidated Financial Statements for additional information with
respect to long-term debt.
Cash dividends, after adjustment for the 50% share distribution paid on
January 13, 1997, amounted to $1.8 million ($0.19 per share), $1.6 million
($0.17 per share) and $1.4 million ($0.15 per share) in fiscal 1997, fiscal 1996
and fiscal 1995, 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.
FINANCIAL RISK MANAGEMENT
The Company has interest rate, credit, market and foreign currency risks.
Information with respect to the interest rate and credit risks appears in Note 1
of the Notes to the Consolidated Financial Statements. The market risk stems
from the Company's ownership of certain readily marketable securities which are
held for investment and are included under other non-current assets on the
Consolidated Balance Sheets. The fair market value of the securities is not
material. The Company has not hedged against the foreign currency risk.
Transactions with customers in Mexico are primarily in the maquiladora zones
and are denominated in U.S. Dollars. Adjustments resulting from changes in the
rate of exchange between U.S. Dollars and U.K. Pounds Sterling have not been
significant.
OUTLOOK
While the Company's net sales continued to grow, the slight decline in net
income for the 1997 fiscal year and in particular the operating loss incurred by
the operations in the United Kingdom were significant disappointments.
Management's focus for the 1998 fiscal year will be on improved profit
performance from the Company's existing operations, particularly from those in
the U.K. and from the newly expanded thermoforming operations. Capital
expenditures are not expected to exceed the expenditures during the 1997 fiscal
year and while the Company will continue to look for acquisitions which will
mesh well with the Company's business, no significant acquisitions are presently
being negotiated. Should a major acquisition develop, it is likely that there
would be a refinancing of the Company's credit agreement with its principal
bank. The new custom molding facilities in Brenham, Texas and Tijuana, Mexico
are expected to commence production in the second quarter of fiscal 1998. While
no other new production facilities are presently contemplated, the Company will
continue to develop new production sites as they are needed to meet the needs of
its customers.
The impact of inflation on both the Company's financial position and results
of operations has been minimal and is not expected to adversely effect fiscal
1998 results.
ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share", SFAS No. 129, "Disclosure of Information about Capital Structure", SFAS
No. 130, "Reporting of Comprehensive Income", and SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information" were issued in 1997.
These statements will be adopted by the Company when required, and are not
expected to have a material effect on the consolidated financial statements.
TUSCARORA INCORPORATED Annual Report 1997 22
16
ELEVEN YEAR CONSOLIDATED FINANCIAL SUMMARY
Year Ended August 31 1997 1996 1995 1994 1993 1992
- -------------------- -------- -------- -------- -------- -------- --------
Net sales $209,207 $182,590 $163,300 $120,085 $101,075 $ 95,809
Income before income taxes 15,441 15,905 15,034 9,017 6,285 8,289
Net income 9,295 9,653 8,980 5,703 4,270(a) 4,981
Depreciation and amortization 15,286 12,977 10,890 9,721 9,206 7,879
Weighted average shares outstanding 9,452 9,362 9,231 9,194 9,164 9,146
Net income per share 0.98 1.03 0.97 0.62 0.47(a) 0.54
Margin on sales 4.4% 5.3% 5.5% 4.7% 4.2% 5.2%
Return on beginning shareholders' equity 14.3% 17.6% 19.0% 13.4% 10.9% 14.2%
Working capital 29,784 23,224 22,390 16,548 15,893 13,463
Total assets 162,388 131,169 117,721 94,225 79,769 75,510
Long-term debt (excluding current portion) 57,166 39,249 36,510 25,284 23,930 22,121
Shareholders' equity 72,817 64,827 54,773 47,180 42,546 39,280
Shareholders' equity per share 7.70 6.92 5.93 5.13 4.64 4.29
Dividends per share 0.19 0.17 0.15 0.13 0.12 0.11
Year Ended August 31 1991 1990 1989 1988 1987
- -------------------- -------- -------- -------- -------- --------
Net sales $ 84,420 $ 85,458 $ 77,642 $ 65,583 $ 55,279
Income before income taxes 6,856 7,912 7,479 5,644 5,192
Net income 4,230 4,874 4,478 3,469 2,834
Depreciation and amortization 7,235 6,591 5,463 4,269 3,347
Weighted average shares outstanding 9,086 9,033 9,030 8,034 7,935
Net income per share 0.47 0.54 0.50 0.43 0.36
Margin on sales 5.0% 5.7% 5.8% 5.3% 5.1%
Return on beginning shareholders' equity 13.4% 17.8% 19.0% 22.0% 21.1%
Working capital 13,728 11,385 11,418 10,146 5,792
Total assets 63,775 60,677 53,138 46,777 40,132
Long-term debt (excluding current portion) 14,870 16,264 13,165 13,248 12,858
Shareholders' equity 35,152 31,451 27,360 23,574 15,762
Shareholders' equity per share 3.87 3.48 3.03 2.93 1.99
Dividends per share 0.09 0.09 0.08 0.07 0.06
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 200%
share distribution paid on October 1, 1987, the 100% share distribution paid on
April 14, 1992 and the 50% share distribution paid on January 13, 1997. (a) 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.