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 September 28, 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 November 6, 1996
- -------------------------- -------------------------------
Common Stock, no par value 5,856,483 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
September 28, 1996 and December 30, 1995 3-4
Condensed Consolidated Statements of Income
For the thirteen and thirty-nine week periods ended
September 28, 1996 and September 30, 1995 5
Condensed Consolidated Statements of Cash Flows
For the thirty-nine week periods ended
September 28, 1996 and September 30, 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
Signatures 11
Exhibit 11 - Statement Re Computation of Earnings Per Share 12
Exhibit 27 - Financial Data Schedule 13
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<PAGE>
<TABLE>
Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
UNAUDITED
---------------------------------------
September 28, 1996 December 30, 1995
------------------ -----------------
Assets
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 13,159,000 $ 9,424,000
Accounts receivable:
Trade, net of allowance for doubtful accounts
of $928,000 and $679,000 at respective dates 20,866,000 16,788,000
Other 704,000 1,511,000
------------- ------------
21,570,000 18,299,000
Inventories:
Raw materials and supplies 10,359,000 9,003,000
Work in process 5,730,000 5,534,000
Finished goods 4,859,000 4,035,000
------------- ------------
20,948,000 18,572,000
Other current assets 2,164,000 2,404,000
------------- ------------
Total Current Assets 57,841,000 48,699,000
Property, plant and equipment, at cost:
Buildings and leasehold improvements 9,508,000 9,243,000
Equipment and vehicles 58,791,000 56,355,000
Equipment leased to customers 18,870,000 17,548,000
Less accumulated depreciation (61,562,000) (57,140,000)
------------- ------------
25,607,000 26,006,000
Construction in process 5,851,000 1,965,000
Land 468,000 468,000
------------- ------------
31,926,000 28,439,000
Other Assets:
Loans to officers and employees 70,000 70,000
Goodwill, net of amortization 9,725,000 10,126,000
Deferred charges and other assets 3,336,000 3,462,000
------------- ------------
13,131,000 13,658,000
------------- ------------
Total Assets $ 102,898,000 $ 90,796,000
============= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE>
<TABLE>
Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
UNAUDITED
-------------------------------------
September 28, 1996 December 30, 1995
------------------ -----------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable 6,350,000 4,888,000
Dividends payable 767,000 673,000
Salaries, wages and related liabilities 5,747,000 1,295,000
Federal, state and local taxes 1,775,000 329,000
Other accrued liabilities 3,330,000 2,590,000
------------- ------------
Total Current Liabilities 17,969,000 9,775,000
Other noncurrent liabilities:
Deferred income taxes 1,430,000 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 6,489,000 5,178,000
Cumulative translation adjustment 758,000 618,000
Unrealized Gains on Marketable Securities 543,000 460,000
Retained earnings 107,823,000 97,494,000
Less:
Treasury stock, at cost -- 1,372,780 and 1,144,992
shares at respective dates (33,324,000) (25,305,000)
------------- ------------
Total Stockholders' Equity 83,499,000 79,655,000
------------- ------------
Total Liabilities and Stockholders' Equity $ 102,898,000 $ 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 Thirty-nine Weeks Ended
------------------------------ ------------------------------
September 28, September 30, September 28, September 30,
1996 1995 1996 1995
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 44,549,000 $ 48,230,000 $ 120,891,000 $ 124,860,000
Cost of sales 30,578,000 34,999,000 81,299,000 91,120,000
------------ ------------ ------------- -------------
13,971,000 13,231,000 39,592,000 33,740,000
Selling, administrative and
development expenses 6,148,000 6,166,000 19,019,000 16,721,000
------------ ------------ ------------- -------------
7,823,000 7,065,000 20,573,000 17,019,000
Interest and dividend income 110,000 67,000 355,000 124,000
Interest expense (4,000) (84,000) (5,000) (199,000)
Other income (expense) (29,000) 3,000 (71,000) (76,000)
------------ ------------ ------------- -------------
7,900,000 7,051,000 20,852,000 16,868,000
Taxes on income 3,162,000 2,828,000 8,444,000 6,764,000
------------ ------------ ------------- -------------
Net Income $ 4,738,000 $ 4,223,000 $ 12,408,000 $ 10,104,000
============= ============ ============= =============
Earnings per common and common
equivalent share
Primary $ 0.78 $ 0.66 $ 2.01 $ 1.59
============= ============ ============= =============
Fully diluted $ 0.78 $ 0.66 $ 2.01 $ 1.59
============= ============ ============= =============
Cash dividends per
common share $ 0.13 $ 0.11 $ 0.35 $ 0.31
============= ============ ============= =============
Weighted average number of
common and common
equivalent shares used in
computing earnings per share
Primary 6,058,031 6,357,224 6,158,986 6,363,843
============= ============ ============= =============
Fully diluted 6,072,974 6,357,224 6,163,967 6,363,843
============= ============ ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE>
<TABLE>
Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
UNAUDITED
------------------------------
Thirty-nine weeks ended
------------------------------
September 28, September 30,
1996 1995
------------- -------------
Operating Activities:
<S> <C> <C>
Net income $ 12,408,000 $ 10,104,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,909,000 4,599,000
Provision for loss on accounts receivable 474,000 185,000
Amortization of other noncurrent assets 721,000 849,000
Loss (gain) on disposal of property, plant and equipment (20,000) 0
Deferred compensation 341,000 328,000
Changes in deferred income tax accounts 64,000 0
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (3,707,000) (7,066,000)
(Increase) decrease in inventories (2,325,000) 2,511,000
(Increase) decrease in other current assets 223,000 (423,000)
Increase (decrease) in accounts & dividends payable 1,524,000 (1,317,000)
Increase (decrease) in salaries, wages and related liabilities 4,451,000 2,538,000
Increase (decrease) in other accrued liabilities 2,189,000 (311,000)
------------ ------------
Net Cash Provided by Operating Activities 21,252,000 11,997,000
Investing Activities:
Purchases of property, plant and equipment (9,777,000) (8,612,000)
Proceeds from sale of property, plant and equipment 1,445,000 2,870,000
Other asset changes, net (55,000) 92,000
------------ ------------
Net Cash Used in Investing Activities (8,387,000) (5,650,000)
Financing Activities:
Acquisition of treasury shares (10,219,000) (1,780,000)
Sale of common shares 3,170,000 315,000
Cash dividends (2,079,000) (1,935,000)
Changes in loans to officers and employees 0 6,000
Proceeds of short-term borrowings 0 4,500,000
Repayment of short and long-term borrowings 0 (4,000,000)
Principle payments on capital lease obligations 0 (28,000)
------------ ------------
Net Cash Provided by (Used in) Financing Activities (9,128,000) (2,922,000)
Effect of exchange rate changes on Cash (2,000) 93,000
------------ ------------
Increase in Cash and Cash Equivalents 3,735,000 3,518,000
Cash and cash equivalents at beginning of year 9,424,000 4,341,000
------------ ------------
Cash and Cash Equivalents at End of First Quarter $ 13,159,000 $ 7,859,000
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
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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 Company has guaranteed debt obligations of certain officers and
employees totaling $3,050,000 as of September 28, 1996.
5. 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.
-7-
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
During the Third Quarter 1996, Liqui-Box (the "Company") experienced a 7.6%
decrease in net sales dollars, while unit sales remained flat, compared to the
Third Quarter 1995. For the first three quarters of 1996, net sales dollars
have declined 3.2% compared with 1995 while unit sales have increased 4.7%.
This net sales decrease is primarily attributable to the elimination of
certain business that the Company felt was marginal, combined, to a lesser
extent, with 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.
Gross profit, as a percentage of net sales, was 31.4% in the Third Quarter
1996 and 27.4% in the Third Quarter 1995. For the first three quarters of
1996, gross profit, as a percentage of net sales, was 32.8% compared to 27.0%
in 1995. The increases in gross profit as a percent of net sales are primarily
the result of reduced costs related 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 Third Quarter of 1996, selling, administrative, and development
expenses were 13.6% of sales as compared to 12.8% in the Third Quarter of
1995. For the first nine months of 1996, selling, administrative, and
development expenses were 15.6% of sales as compared to 13.4% for the first
nine 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. To a lesser extent, the increase also
reflects an increase in the Company's research and development costs.
Income before taxes as a percentage of net sales was 17.7% in the Third
Quarter 1996 and 14.6% in the Third Quarter 1995. For the first nine months of
1996, income before taxes as a percentage of net sales was 17.2% of sales as
compared to 13.5% for the first nine 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
nine months of 1996.
The provision for income taxes was 40.0% of before tax income for the Third
Quarter of 1996 and 40.1% for the Third Quarter 1995. On a year-to-date basis,
the provision for income taxes was 40.5% in 1996 and 40.1% in 1995. The
effective tax rate for the first nine months of 1996 is based on the Company's
anticipated tax rate for the 1996 fiscal year.
At the end of the Third 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 September 28, 1996, was $39,872,000 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 Third Quarter 1996 and 5.0 to 1 at
year end 1995. Net cash provided from operations was $21,252,000 for the nine
months ended September 28, 1996 compared to $11,997,000 for the nine months
ended September 30, 1995. The increase in cash provided from operations
reflects the improved profitability in the first nine months of 1996, as well
as the timing of payment of various operating expenses.
-8-
<PAGE>
Net cash used in investing activities was $8,387,000 for the nine months ended
September 28, 1996 compared to $5,650,000 for the nine months ended September
30, 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 $9,128,000 for the nine months ended September 28, 1996,
compared to $2,922,000 for the nine months ended September 30, 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 September 28,
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 nine
months of 1996, except for the repurchase of and issuance of treasury shares.
The aggregate amount of purchase of treasury shares has been $10,219,000 which
were acquired throughout the first nine 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. In July 1996, the Company issued 112,000 common shares
to certain officers and employees at an aggregated cash purchase price of
$3,170,000. The Company has not entered into any significant financing
arrangements not reflected in the financial statements.
-9-
<PAGE>
PART II. OTHER INFORMATION
Items 1-5. 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
September 28, 1996.
-10-
<PAGE>
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 November 11, 1996 By /s/ Juan Jose Perez
------------------------------------
Juan Jose Perez
Vice President - Administration
(Duly Authorized Officer)
Date November 11, 1996 By /s/ James B. Holloway
------------------------------------
James B. Holloway
Controller
(Principal Accounting Officer)
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EXHIBIT (11)
<TABLE>
LIQUI-BOX CORPORATION
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
Thirteen Weeks Ended Thirty-nine Weeks Ended
----------------------------- ------------------------------
September 28, September 30, September 28, September 30,
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Primary:
Weighted average number of common
shares outstanding 5,913,503 6,237,156 5,995,549 6,237,156
Net effect of dilutive stock options--
based on treasury stock method
using average market price 144,528 120,068 163,437 126,687
------------- ------------- -------------- --------------
Weighted average common and
common equivalent shares 6,058,031 6,357,224 6,158,986 6,363,843
============= ============= ============== ==============
Net Income $ 4,738,000 $ 4,223,000 $ 12,408,000 $ 10,104,000
Earnings per common and
common equivalent share $ 0.78 $ 0.66 $ 2.01 $ 1.59
============= ============= ============== ==============
Fully Diluted:
Weighted average number of common
shares outstanding 5,913,503 6,237,156 5,995,549 6,237,156
Net effect of dilutive stock options --
based on treasury stock method using
the quarter-end market price
if higher than average market price 159,471 120,068 168,418 126,687
------------- ------------- -------------- --------------
Fully Diluted Shares 6,072,974 6,357,224 6,163,967 6,363,843
============= ============= ============== ==============
Net Income $ 4,738,000 $ 4,223,000 $ 12,408,000 $ 10,104,000
Earnings per share
assuming full dilution $ 0.78 $ 0.66 $ 2.01 $ 1.59
============= ============= ============== ==============
</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> SEP-28-1996
<CASH> 13,159
<SECURITIES> 0
<RECEIVABLES> 21,794
<ALLOWANCES> 928
<INVENTORY> 20,948
<CURRENT-ASSETS> 57,841
<PP&E> 93,488
<DEPRECIATION> 61,562
<TOTAL-ASSETS> 102,898
<CURRENT-LIABILITIES> 17,969
<BONDS> 0
0
0
<COMMON> 1,210
<OTHER-SE> 82,289
<TOTAL-LIABILITY-AND-EQUITY> 102,898
<SALES> 120,891
<TOTAL-REVENUES> 120,891
<CGS> 81,299
<TOTAL-COSTS> 100,318
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 474
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 20,852
<INCOME-TAX> 8,444
<INCOME-CONTINUING> 12,408
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,408
<EPS-PRIMARY> 2.01
<EPS-DILUTED> 2.01
</TABLE>
