FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the thirteen week period ended June 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 0-8514
LIQUI-BOX CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 31-0628033
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
6950 Worthington-Galena Road, Worthington, Ohio 43085
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 888-9280
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 9, 1996
__________________________ _____________________________
Common Stock, no par value 5,908,982 shares
Exhibit Index at Page 10
Page 1 of 13
<PAGE>
LIQUI-BOX CORPORATION
INDEX
Page No.
---------
Part I - Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
June 29, 1996 and December 30, 1995 ....................... 3-4
Condensed Consolidated Statements of Income
For the thirteen and twenty-six week periods ended
June 29, 1996 and July 1, 1995 ............................ 5
Condensed Consolidated Statements of Cash Flows
For the twenty-six week periods ended
June 29, 1996 and July 1, 1995 ............................ 6
Notes to Condensed Consolidated Financial Statements ........ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............. 8-9
Part II - Other Information - Items 1-6 ............................. 10
Exhibit 11 - Statement Re Computation of Earnings Per Share . 11
Exhibit 27 - Financial Data Schedule ........................ 12
Signatures .................................................. 13
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<PAGE>
<TABLE>
Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
UNAUDITED
---------------------------------
June 29, 1996 December 30, 1995
------------- -----------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents ......................... $ 6,789,000 $ 9,424,000
Accounts receivable:
Trade, net of allowance for doubtful accounts
of $817,000 and $679,000 at respective dates 20,082,000 16,788,000
Other ........................................ 906,000 1,511,000
------------ ------------
20,988,000 18,299,000
Inventories:
Raw materials and supplies ................... 10,053,000 9,003,000
Work in process .............................. 6,767,000 5,534,000
Finished goods ............................... 5,431,000 4,035,000
------------ ------------
22,251,000 18,572,000
Other current assets .............................. 2,200,000 2,404,000
------------ ------------
Total Current Assets .................... 52,228,000 48,699,000
Property, plant and equipment, at cost:
Buildings and leasehold improvements .............. 9,489,000 9,243,000
Equipment and vehicles ............................ 57,871,000 56,355,000
Equipment leased to customers ..................... 18,339,000 17,548,000
Less accumulated depreciation ................ (60,060,000) (57,140,000)
------------ ------------
25,639,000 26,006,000
Construction in process ...................... 4,562,000 1,965,000
Land ......................................... 468,000 468,000
------------ ------------
30,669,000 28,439,000
Other Assets:
Loans to officers and employees ................... 70,000 70,000
Goodwill, net of amortization ..................... 9,845,000 10,126,000
Deferred charges and other assets ................. 3,377,000 3,462,000
------------ ------------
13,292,000 13,658,000
------------ ------------
Total Assets ............................ $ 96,189,000 $ 90,796,000
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<PAGE>
<TABLE>
Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
UNAUDITED
---------------------------------
June 29, 1996 December 30, 1995
------------- -----------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable ...................................... 6,025,000 4,888,000
Dividends payable ..................................... 640,000 673,000
Salaries, wages and related liabilities ............... 5,487,000 1,295,000
Federal, state and local taxes ........................ 708,000 329,000
Other accrued liabilities ............................. 3,308,000 2,590,000
------------- ------------
Total Current Liabilities ................ 16,168,000 9,775,000
Other noncurrent liabilities:
Deferred income taxes ................................. 1,405,000 1,366,000
Stockholders' Equity:
Preferred stock without par value
2,000,000 shares authorized;
none issued
Common stock $.1667 stated value
20,000,000 shares authorized;
7,262,598 shares issued .......................... 1,210,000 1,210,000
Additional paid in capital ............................ 5,423,000 5,178,000
Cumulative translation adjustment ..................... 655,000 618,000
Unrealized Gains on Marketable Securities .................. 519,000 460,000
Retained earnings ..................................... 103,852,000 97,494,000
Less:
Treasury stock, at cost--1,400,836 and 1,144,992
shares at respective dates .................. (33,043,000) (25,305,000)
------------- ------------
Total Stockholders' Equity ............ 78,616,000 79,655,000
------------- ------------
Total Liabilities and Stockholders' Equity ...... $ 96,189,000 $ 90,796,000
============= ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<PAGE>
<TABLE>
Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Statements of Income
UNAUDITED UNAUDITED
----------------------------------------------------------------------------
Thirteen Weeks Ended Twenty-six Weeks Ended
----------------------------------------------------------------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
-------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Net Sales ...................................... $ 42,159,000 $ 42,984,000 $ 76,342,000 $ 76,630,000
Cost of Sales .................................. 27,838,000 31,515,000 50,721,000 56,121,000
------------ ------------ ------------ ------------
14,321,000 11,469,000 25,621,000 20,509,000
Selling, administrative and
development expenses ...................... 6,815,000 5,456,000 12,871,000 10,555,000
------------ ------------ ------------ ------------
7,506,000 6,013,000 12,750,000 9,954,000
Interest and dividend income ................... 156,000 30,000 245,000 57,000
Interest expense ............................... 0 (75,000) (1,000) (115,000)
Other income (expense) ......................... (11,000) (84,000) (42,000) (79,000)
------------ ------------ ------------ ------------
7,651,000 5,884,000 12,952,000 9,817,000
Taxes on income ................................ 3,122,000 2,359,000 5,282,000 3,936,000
------------ ------------ ------------ ------------
Net Income ................................ $ 4,529,000 $ 3,525,000 $ 7,670,000 $ 5,881,000
============ ============ ============ ============
Earnings per common and common
equivalent share
Primary ........................................ $ 0.74 $ 0.55 $ 1.24 $ 0.92
============ ============ ============ ============
Fully Diluted .................................. $ 0.74 $ 0.55 $ 1.24 $ 0.92
============ ============ ============ ============
Cash dividends per
common share .............................. $ 0.11 $ 0.10 $ 0.22 $ 0.20
============ ============ ============ ============
Weighted average number of
common and common
equivalent shares used in
computing earnings per share
Primary ........................................ 6,121,688 6,380,352 6,209,463 6,389,836
============ ============ ============ ============
Fully Diluted .................................. 6,121,688 6,380,352 6,209,463 6,392,015
============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<PAGE>
<TABLE>
Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
UNAUDITED
-------------------------
Twenty-six Weeks Ended
-------------------------
June 29, July 1,
1996 1995
---------- ---------
<S> <C> <C>
Operating Activities:
Net income ................................................................. $ 7,670,000 $ 5,881,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ....................................... 3,338,000 3,080,000
Provision for loss on accounts receivable ........................... 474,000 175,000
Amortization of other noncurrent assets ............................. 555,000 513,000
Loss (gain) on disposal of property, plant and equipment ............ (18,000) 97,000
Deferred Compensation ............................................... 228,000 152,000
Changes in deferred income tax accounts ............................. 39,000 --
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable ................... (3,147,000) (6,663,000)
(Increase) decrease in inventories ........................... (3,666,000) (2,168,000)
(Increase) decrease in other current assets .................. 205,000 (559,000)
Increase (decrease) in accounts payable ...................... 1,133,000 (2,068,000)
Increase (decrease) in salaries, wages and related liabilities 4,192,000 1,553,000
Increase (decrease) in other accrued liabilities ............. 1,065,000 242,000
------------ -----------
Net Cash Provided by Operating Activities .................................. 12,068,000 235,000
Investing Activities:
Purchases of property, plant and equipment ................................. (6,707,000) (5,150,000)
Proceeds from sale of property, plant and equipment ........................ 1,168,000 974,000
Other asset changes, net ................................................... (123,000) 24,000
------------ -----------
Net Cash Used in Investing Activities ................................. (5,662,000) (4,152,000)
Financing Activities:
Acquisition of treasury shares ............................................. (7,822,000) (852,000)
Sale of treasury shares .................................................... 101,000 247,000
Cash dividends ............................................................. (1,312,000) (1,250,000)
Changes in loans to officers and employees ................................. -- 6,000
Proceeds of short-term borrowings .......................................... -- 4,500,000
Principal payments on capital lease obligations ............................ -- (27,000)
------------ -----------
Net Cash Provided by (Used in) Financing Activities .................. (9,033,000) 2,624,000
Effect of exchange rate changes on Cash .................................... (8,000) 60,000
------------ -----------
Decrease in Cash and Cash Equivalents ................................. (2,635,000) (1,233,000)
Cash and cash equivalents at beginning of year ............................. 9,424,000 4,341,000
------------ -----------
Cash and Cash Equivalents at End of Second Quarter .................... $ 6,789,000 $ 3,108,000
============ ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<PAGE>
LIQUI-BOX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. The accompanying financial statements include the accounts of Liqui-Box
Corporation (the "Company") and its subsidiaries.
The information furnished reflects all adjustments (all of which
were of a normal recurring nature) which are, in the opinion of
management, necessary to fairly present the consolidated financial
position, results of operations, and changes in cash flows on a
consistent basis.
Certain amounts in the prior year's financial statements have been
reclassified to conform with the 1996 presentation.
2. In the First Quarter 1996, the Company adopted Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets To Be Disposed Of". This standard provides guidance on reviewing
long-lived assets and certain intangibles for impairment. In addition,
the standard requires that long-lived assets and certain intangibles to
be disposed of be reported at the lower of carrying amount or fair value
less cost of disposal. The adoption of this standard has not had a
significant impact on the Company's financial statements.
3. In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting
for Stock-Based Compensation" which became effective for the Company in
the First Quarter 1996. SFAS No. 123 requires expanded disclosures of
stock-based compensation agreements with employees and encourages (but
does not require) compensation cost to be measured based on the fair
value of the equity instrument awarded. Companies are permitted, however,
to continue to apply APB Opinion No. 25, which recognizes compensation
cost based on the intrinsic value of the equity instrument awarded. The
Company will continue to apply APB Opinion No. 25 to its stock-based
compensation awards to employees and will disclose the required pro forma
effect on net income and earnings per share in the Company's Annual
Report for the fiscal year ended December 28, 1996.
4. The accompanying unaudited consolidated financial statements are
presented in accordance with the requirements for Form 10-Q and
consequently do not include all the disclosures normally required by
generally accepted accounting principles or those which are normally made
in the Company's annual Form 10-K filing. Reference should be made to the
Company's 1995 Form 10-K for additional disclosures including a summary
of the Company's accounting policies, which have not significantly
changed.
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<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
During the Second Quarter 1996, Liqui-Box (the "Company") experienced a 7%
increase in unit sales and a 2% decrease in net sales dollars compared to
the Second Quarter 1995. This net sales decrease is primarily attributable
to lower sales prices on most of the Company's products reflecting a decline
in the cost of the Company's primary raw material, plastic resin. For the
first two quarters of 1996, net sales dollars are flat compared with 1995
while unit sales have increased 8%. The cost of most of the resins the
Company uses in the manufacture of its products rose dramatically in late
1994 and early 1995. The cost of many of these resins began to decline from
their peaks in Spring 1995; however, as of the end of the Second Quarter
1996, they had not returned to the beginning of 1994 levels.
Gross profit, as a percentage of net sales, was 34.0% in the Second Quarter
1996 and 26.7% in the Second Quarter 1995. For the first two quarters of
1996, gross profit, as a percentage of net sales, was 33.6% compared to
26.8% in 1995. The increases in gross profit as a percent of net sales are
primarily the result of reduced costs due to previous plant consolidations
and improved plant operating efficiencies. To a lesser extent, decreases in
raw material costs, partly offset by decreased selling prices, also
contributed to the increase in the gross profit as a percent of net sales.
For the Second Quarter of 1996, selling, administrative, and development
expenses were 16.2% of sales as compared to 12.7% in the Second Quarter of
1995. For the first six months of 1996, selling, administrative, and
development expenses were 16.9% of sales as compared to 13.8% for the first
six months of 1995. The increase is primarily the result of increased
compensation costs due to the Company's profit sharing plan which includes
virtually all United States employees. The increase also reflects an
increase in the Company's research and development costs, as well as
continued costs associated with the statistical quality improvement project
begun by the Company in 1995.
Income before taxes as a percentage of net sales was 18.1% in the Second
Quarter 1996 and 13.7% in the Second Quarter 1995. For the first six months
of 1996, income before taxes as a percentage of net sales was 17.0% of sales
as compared to 12.8% for the first six months of 1995. These increases are a
result of increased gross profits which have been partially offset by the
increase in selling, administrative, and development expenses for the first
six months of 1996.
The provision for income taxes was 40.8% of before tax income for the Second
Quarter of 1996 and 40.1% for the Second Quarter 1995. On a year-to-date
basis, the provision for income taxes was 40.8% in 1996 and 40.1% in 1995.
The effective tax rate for the first six months of 1996 is based on the
Company's anticipated tax rate for the 1996 fiscal year.
At the end of the Second Quarter of 1996 and 1995, the Company had no
significant backlog of orders, which is industry typical.
Liquidity and Capital Resources
Total working capital at June 29, 1996, was $36,060,000 compared to
$38,924,000 at December 30, 1995. The ratio of current assets to current
liabilities was 3.2 to 1 at the end of the Second Quarter 1996 and 5.0 to 1
at year end 1995. Net cash provided from operations was $12,068,000 for the
six months ended June 29, 1996 compared to $235,000 for the six months ended
July 1, 1995. The increase in cash provided from operations reflects the
improved profitability in the first six months of 1996. Net cash provided
from operations for the first six months of 1995 was relatively low
reflecting timing differences in the collection of accounts receivable and
the payment of accounts payable.
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<PAGE>
Net cash used in investing activities was $5,622,000 for the six months
ended June 29, 1996 compared to $4,152,000 for the six months ended July 1,
1995. The cash was used primarily for purchases of new plant equipment and
improvements to existing property and plant equipment. Cash used in
financing activities was $9,033,000 for the six months ended June 29, 1996,
compared to cash provided of $2,624,000 for the six months ended July 1,
1995. The cash used in financing activities was primarily for the
acquisition of treasury stock and payment of cash dividends.
The Company's major commitments for capital expenditures as of June 29, 1996
were, as they have been in the past, primarily for increased capacity at
existing locations, building filler machines for lease and tooling for new
projects. Funds required to fulfill these commitments will be provided
principally from operations with any additional funding needed coming from
an outstanding line of credit with The Huntington National Bank.
Longer-term cash requirements, other than normal operating expenses, are for
financing anticipated growth; increasing capacity at existing plants;
developing new products and enhancing existing products; dividend payments;
and possible continued repurchases of the Company's common shares. The
Company believes that its existing cash and cash equivalents, available
credit facilities, and anticipated cash generated from operations will be
sufficient to satisfy its currently anticipated cash requirements for the
fiscal year 1996.
There have been no significant changes in capitalization during the first
three months of 1996, except for the repurchase of treasury shares in the
aggregate amount of $7,822,000 which were acquired throughout the first six
months of 1996. The common shares were bought at a price considered fair by
management and there was cash available for these purchases. The Company
felt the purchases represented a good investment and would secure common
shares for issuance under the Company's employee benefit plans. The Company
has not entered into any significant financing arrangements not reflected in
the financial statements.
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<PAGE>
PART II. OTHER INFORMATION
Item 1-3. Inapplicable
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Liqui-Box Corporation was held on April
24, 1996 to elect three directors for terms expiring in 1998. No
other matters came before the meeting.
At the close of business on the record date for the Annual
Meeting, 6,117,606 common shares of Liqui-Box Corporation were
outstanding and entitled to vote. Common shares present at the
meeting by proxy or in person were 5,058,309 or 82.6859%.
Proposal 1, Election of Directors for term ending in 1998:
Abstain &
Broker
For Withheld Non-Votes
--------- -------- ---------
Samuel B. Davis 4,948,791 109,608 0
Robert S. Hamilton 4,948,465 109,934 0
Russell M. Gertmenian 4,950,659 107,740 0
Directors whose terms of office continue after the Annual
Meeting are Jeanette A. Davis, Carl J. Aschinger, Jr., Peter J.
Linn and C. William McBee.
Item 5. Inapplicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
Exhibit 11. Statement Re Computation of Earnings Per Share
(page 11)
Exhibit 27. Financial Data Schedule (page 12)
(b) No reports on Form 8-K were filed during the quarter ended
June 29, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIQUI-BOX CORPORATION
(Registrant)
Date August 12, 1996 By /s/ Juan Jose Perez
___________________________________
Juan Jose Perez
Vice President - Administration
(Duly Authorized Officer)
Date August 12, 1996 By /s/ James B. Holloway
___________________________________
James B. Holloway
Controller
(Principal Accounting Officer)
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<TABLE>
LIQUI-BOX CORPORATION
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
Thirteen Weeks Ended Twenty-six Weeks Ended
--------------------- ----------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Primary:
Weighted average number of common
shares outstanding ................................ 5,957,278 6,252,006 6,036,572 6,259,405
Net effect of dilutive stock options--
based on treasury stock method
using average market price ........................ 164,410 128,346 172,891 130,431
---------- ---------- ---------- ----------
Weighted average common and
common equivalent shares .......................... 6,121,688 6,380,352 6,209,463 6,389,836
========== ========== ========== ==========
Net Income ............................................. $4,529,000 $3,525,000 $7,670,000 $5,881,000
Earnings per common and
common equivalent share ........................... $ 0.74 $ 0.55 $ 1.24 $ 0.92
========== ========== ========== ==========
Fully Diluted:
Weighted average number of common
shares outstanding ................................ 5,957,278 6,252,006 6,036,572 6,259,405
Net effect of dilutive stock options-
based on treasury stock method using
the quarter-end market price if
higher than average market price ............... 164,410 128,346 172,891 132,610
---------- ---------- ---------- ----------
Fully Diluted Shares ................................... 6,121,688 6,380,352 6,209,463 6,392,015
========== ========== ========== ==========
Net Income ............................................. $4,529,000 $3,525,000 $7,670,000 $5,881,000
Earnings per share
assuming full dilution ............................ $ 0.74 $ 0.55 $ 1.24 $ 0.92
========== ========== ========== ==========
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and the consolidated statement of income and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> JUN-29-1996
<CASH> 6,789
<SECURITIES> 0
<RECEIVABLES> 20,899
<ALLOWANCES> 817
<INVENTORY> 22,251
<CURRENT-ASSETS> 52,228
<PP&E> 90,729
<DEPRECIATION> 60,060
<TOTAL-ASSETS> 96,189
<CURRENT-LIABILITIES> 16,168
<BONDS> 0
0
0
<COMMON> 1,210
<OTHER-SE> 77,406
<TOTAL-LIABILITY-AND-EQUITY> 96,189
<SALES> 76,342
<TOTAL-REVENUES> 76,342
<CGS> 50,721
<TOTAL-COSTS> 63,592
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 474
<INTEREST-EXPENSE> 1
<INCOME-PRETAX> 12,952
<INCOME-TAX> 5,282
<INCOME-CONTINUING> 7,670
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,670
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24
</TABLE>
