<PAGE> 1
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 28, 1997
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
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
6950 Worthington-Galena Road, Worthington, Ohio 43085
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 888-9280
------------------------------
Not Applicable
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(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 5, 1997
- -------------------------- -----------------------------
Common Stock, no par value 5,714,998 shares
Exhibit Index at Page 10
Page 1 of 13
<PAGE> 2
LIQUI-BOX CORPORATION
INDEX
Page No.
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Part I - Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
June 28, 1997 and December 28, 1996 3-4
Condensed Consolidated Statements of Income
For the thirteen and twenty-six week periods ended
June 28, 1997 and June 29, 1996 5
Condensed Consolidated Statements of Cash Flows
For the twenty-six week periods ended
June 28, 1997 and June 29, 1996 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
-2-
<PAGE> 3
LIQUI-BOX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
-----------------------------------
June 28, 1997 December 28, 1996
-------------- -----------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 16,591,000 $ 15,248,000
Accounts receivable:
Trade, net of allowance for doubtful accounts
of $810,000 and $742,000 at respective dates 20,506,000 16,265,000
Other 828,000 1,141,000
-------------- --------------
21,334,000 17,406,000
Inventories:
Raw materials and supplies 6,771,000 8,869,000
Work in process 5,755,000 4,194,000
Finished goods 6,594,000 4,491,000
-------------- --------------
19,120,000 17,554,000
Other current assets 1,687,000 1,517,000
-------------- --------------
TOTAL CURRENT ASSETS 58,732,000 51,725,000
Property, plant and equipment, at cost:
Buildings and leasehold improvements 12,272,000 9,872,000
Equipment and vehicles 70,094,000 62,469,000
Equipment leased to customers 15,968,000 18,940,000
Less accumulated depreciation (64,890,000) (62,494,000)
-------------- --------------
33,444,000 28,787,000
Construction in process 2,082,000 5,584,000
Land 658,000 658,000
-------------- --------------
36,184,000 35,029,000
Other Assets:
Goodwill, net of amortization 9,463,000 9,857,000
Deferred charges and other assets 3,321,000 3,405,000
-------------- --------------
12,784,000 13,262,000
TOTAL ASSETS $ 107,700,000 $ 100,016,000
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 4
LIQUI-BOX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
-----------------------------------
June 28, 1997 December 28, 1996
-------------- -----------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable 6,734,000 6,640,000
Dividends payable 745,000 758,000
Salaries, wages and related liabilities 5,435,000 1,696,000
Federal, state and local taxes 793,000 1,059,000
Other accrued liabilities 5,047,000 4,104,000
-------------- --------------
TOTAL CURRENT LIABILITIES 18,754,000 14,257,000
Other noncurrent liabilities:
Deferred income taxes 1,554,000 1,379,000
Commitments and Contingencies -- --
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 6,902,000 6,615,000
Cumulative translation adjustment 1,277,000 1,986,000
Unrealized Gains on Marketable Securities 716,000 605,000
Retained earnings 115,630,000 109,175,000
Less:
Treasury stock, at cost--1,525,955 and 1,432,203
shares at respective dates (38,343,000) (35,211,000)
-------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 87,392,000 84,380,000
-------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 107,700,000 $ 100,016,000
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 5
LIQUI-BOX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
UNAUDITED UNAUDITED
--------- ---------
Thirteen Weeks Ended Twenty-six Weeks Ended
---------------------------- ----------------------------
June 28, June 29, June 28, June 29.
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 42,979,000 $ 42,159,000 $ 76,937,000 $ 76,342,000
Cost of Sales 27,672,000 27,838,000 51,008,000 50,721,000
------------ ------------ ------------ ------------
15,307,000 14,321,000 25,929,000 25,621,000
Selling, administrative and
development expenses 7,500,000 6,815,000 13,116,000 12,871,000
------------ ------------ ------------ ------------
7,807,000 7,506,000 12,813,000 12,750,000
Interest and dividend income 218,000 156,000 373,000 245,000
Interest expense 3,000 0 (5,000) (1,000)
Other income (expense) 26,000 (11,000) 273,000 (42,000)
------------ ------------ ------------ ------------
8,054,000 7,651,000 13,454,000 12,952,000
Taxes on income 3,294,000 3,122,000 5,503,000 5,282,000
------------ ------------ ------------ ------------
NET INCOME $ 4,760,000 $ 4,529,000 $ 7,951,000 $ 7,670,000
============ ============ ============ ============
Earnings per common and common
equivalent share
Primary $ 0.80 $ 0.74 $ 1.33 $ 1.24
============ ============ ============ ============
Fully Diluted $ 0.80 $ 0.74 $ 1.33 $ 1.24
============ ============ ============ ============
Cash dividends per
common share $ 0.13 $ 0.11 $ 0.26 $ 0.22
============ ============ ============ ============
Weighted average number of
common and common
equivalent shares used in
computing earnings per share
Primary 5,941,871 6,121,688 5,972,251 6,209,463
============ ============ ============ ============
Fully Diluted 5,946,649 6,121,688 5,976,288 6,209,463
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 6
LIQUI-BOX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
UNAUDITED
---------------------------
Twenty-six Weeks Ended
---------------------------
June 28, June 29,
1997 1996
------------ ------------
<S> <C> <C>
Operating Activities:
Net income $ 7,951,000 $ 7,670,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,595,000 3,338,000
Provision for loss on accounts receivable 217,000 474,000
Amortization of other noncurrent assets 278,000 555,000
(Gain) on disposal of property, plant and equipment (258,000) (18,000)
Deferred Compensation 218,000 228,000
Changes in deferred income tax accounts 175,000 39,000
Changes in operating assets and liabilities:
(Increase) in accounts receivable (4,123,000) (3,147,000)
(Increase) in inventories (1,564,000) (3,666,000)
Decrease in other current assets (168,000) 205,000
Increase in accounts payable 109,000 1,133,000
Increase in salaries, wages and related
liabilities 3,739,000 4,192,000
Increase in other accrued liabilities 660,000 1,065,000
------------ ------------
Net Cash Provided by Operating Activities 10,829,000 12,068,000
Investing Activities:
Purchases of property, plant and equipment (5,297,000) (6,707,000)
Proceeds from sale of property, plant and equipment 822,000 1,168,000
Other asset changes, net 311,000 (123,000)
------------ ------------
Net Cash Used in Investing Activities (4,164,000) (5,662,000)
Financing Activities:
Acquisition of treasury shares (3,132,000) (7,822,000)
Exercise of stock options, including tax benefit 68,000 101,000
Cash dividends (1,496,000) (1,312,000)
------------ ------------
Net Cash (Used in) Financing Activities (4,560,000) (9,033,000)
Effect of exchange rate changes on Cash (762,000) (8,000)
------------ ------------
(Increase) decrease in Cash and Cash Equivalents 1,343,000 (2,635,000)
Cash and cash equivalents at beginning of year 15,248,000 9,424,000
------------ ------------
Cash and Cash Equivalents at End of Second Quarter $ 16,591,000 $ 6,789,000
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 7
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 to the 1997 presentation.
2. In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (SFAS 128), Earnings per Share
which simplifies the rules for computing earnings per share (EPS) and makes
U.S. requirements compatible with international standards. SFAS 128
simplifies the computation of EPS by replacing the presentation of primary
and fully diluted EPS with basic EPS and diluted EPS. Basic EPS excludes
dilution, and is computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding for
the period. Diluted EPS is computed in a manner similar to fully diluted
EPS. SFAS 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods. Although earlier
application is not permitted, prior-period EPS data is required to be
restated in financial statements after application of the standard. Using
the new standard, the Company's basic EPS were $.83 and $.76 per common
share for the thirteen weeks ended June 28, 1997 and June 29, 1996,
respectively. The Company's basic EPS, computed using the new standard, were
$1.38 and $1.27 per common share for the twenty-six weeks ended June 28,
1997 and June 29, 1996, respectively.
3. The accompanying unaudited consolidated financial statements are presented
in accordance with the requirements for Form 10-Q for interim reporting
purposes. Reference should be made to the Company's aforementioned Form 10-K
for additional disclosures including a summary of the Company's accounting
policies, which have not significantly changed.
-7-
<PAGE> 8
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
During the Second Quarter 1997, Liqui-Box (the Company) net sales rose 2%
to $42,979,000 compared to $42,159,000 the Second Quarter 1996. For the first
two quarters of 1997, net sales dollars were $76,937,000 compared with
$76,342,000.
Gross profit, as a percentage of net sales, was 35.6% in the Second Quarter
1997 and 34.0% in the Second Quarter 1996. For the first two quarters of
1997, gross profit, as a percentage of net sales, was 33.7% compared to 33.6%
in 1996. The increases in gross profit as a percent of net sales are
primarily the result of reduced costs due to improved plant operating
efficiencies as the result of previous plant consolidations.
For the Second Quarter of 1997, selling, administrative, and development
expenses were 17.5% of sales as compared to 16.2% in the Second Quarter of
1996. For the first six months of 1997, selling, administrative, and
development expenses were 17.0% of sales as compared to 16.9% for the first
six months of 1996.
Income before taxes as a percentage of net sales was 18.7% in the Second
Quarter 1997 and 18.1% in the Second Quarter 1996. For the first six months
of 1997, income before taxes as a percentage of net sales was 17.5% of sales
as compared to 17.0% for the first six months of 1996. These increases are a
result of increased gross profits that have been partially offset by the
increase in selling, administrative and development expenses for the first
six months of 1997.
The provision for income taxes was 40.9% of before tax income for the Second
Quarter of 1997 and 40.8% for the Second Quarter 1996. On a year-to-date
basis, the provision for income taxes was 40.9% in 1997 and 40.8% in 1996.
The effective tax rate for the first six months of 1997 is based on the
Company's anticipated tax rate for the 1997 fiscal year.
At the end of the Second Quarter of 1997 and 1996, the Company had no
significant backlog of orders, which is industry typical.
LIQUIDITY AND CAPITAL RESOURCES
Total working capital at June 28, 1997, was $39,978,000 compared to
$37,468,000 at December 28, 1996. The ratio of current assets to current
liabilities was 3.1 to 1 at the end of the Second Quarter 1997 and 3.6 to 1
at year-end 1996. Net cash provided from operations was $10,829,000 for the
six months ended June 28, 1997 compared to $12,068,000 for the six months
ended June 29, 1996.
Net cash used in investing activities was $4,164,000 for the six months ended
June 28, 1997 compared to $5,622,000 for the six months ended June 28, 1996.
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 $4,560,000 for the six months ended June 28, 1997, compared to
cash used of $9,033,000 for the six months ended June 29, 1996. The cash
used in financing activities was primarily for the acquisition of treasury
stock and payment of cash dividends.
-8-
<PAGE> 9
The Company's major commitments for capital expenditures as of June 28, 1997
were, as they have been in the past, primarily for increased capacity and/or
improved efficiencies 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 and/or improved
efficiencies 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 1997.
There have been no significant changes in capitalization during the first six
months of 1997, except for the repurchase of treasury shares in the aggregate
amount of $3,132,000 which were acquired throughout the first six months of
1997. 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.
-9-
<PAGE> 10
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 23, 1997 to elect four directors for terms expiring in
1999. No other matters came before the meeting.
At the close of business on the record date for the Annual
Meeting, 5,814,398 common shares of Liqui-Box Corporation
were outstanding and entitled to vote. Common shares present
at the meeting by proxy or in person were 3,950,895 or
69.9502%.
Proposal 1, Election of Directors for term ending in 1999:
<TABLE>
<CAPTION>
Abstain &
Broker
For Withheld Non-Votes
---------------------------------------------
<S> <C> <C> <C>
Carl J. Aschinger, Jr. 3,818,208 132,687 0
Charles R. Coate 3,817,292 133,603 0
Samuel N. Davis 3,815,146 135,749 0
C. William McBee 3,815,836 135,059 0
</TABLE>
Other directors whose terms of office continue after the
Annual Meeting are Samuel B. Davis, Robert S. Hamilton, and
Russell M. Gertmenian.
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 28, 1997.
-10-
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIQUI-BOX CORPORATION
---------------------------
(Registrant)
Date August 8, 1997 By /s/ C. William McBee
--------------------------- --------------------------------
C. William McBee
Vice President - Manufacturing
(Duly Authorized Officer)
Date August 8, 1997 By /s/ James B. Holloway
--------------------------- --------------------------------
James B. Holloway
Controller
(Principal Accounting Officer)
-13-
<PAGE> 1
EXHIBIT (11)
LIQUI-BOX CORPORATION
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
----------------------- -----------------------
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Primary:
Weighted average number of common
shares outstanding 5,746,323 5,957,278 5,782,479 6,036,572
Net effect of dilutive stock options--
based on treasury stock method
using average market price 195,548 164,410 189,772 172,891
---------- ---------- ---------- ----------
Weighted average common and
common equivalent shares 5,941,871 6,121,688 5,972,251 6,209,463
========== ========== ========== ==========
Net Income $4,760,000 $4,529,000 $7,951,000 $7,670,000
Earnings per common and
common equivalent share $ 0.80 $ 0.74 $ 1.33 $ 1.24
========== ========== ========== ==========
Fully Diluted:
Weighted average number of common
shares outstanding 5,746,323 5,957,278 5,782,479 6,036,572
Net effect of dilutive stock options--
based on treasury stock method
using the quarter-end market price
if higher than average market price 200,326 164,410 193,809 172,891
---------- ---------- ---------- ----------
Fully Diluted Shares 5,946,649 6,121,688 5,976,288 6,209,463
========== ========== ========== ==========
Net Income $4,760,000 $4,529,000 $7,951,000 $7,670,000
Earnings per common and
common equivalent share $ 0.80 $ 0.74 $ 1.33 $ 1.24
========== ========== ========== ==========
</TABLE>
<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> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> JUN-28-1997
<CASH> 16,591
<SECURITIES> 0
<RECEIVABLES> 21,316
<ALLOWANCES> 810
<INVENTORY> 19,120
<CURRENT-ASSETS> 58,732
<PP&E> 101,074
<DEPRECIATION> 64,890
<TOTAL-ASSETS> 107,700
<CURRENT-LIABILITIES> 18,754
<BONDS> 0
<COMMON> 1,210
0
0
<OTHER-SE> 86,182
<TOTAL-LIABILITY-AND-EQUITY> 107,700
<SALES> 76,937
<TOTAL-REVENUES> 76,937
<CGS> 51,008
<TOTAL-COSTS> 64,124
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 217
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 13,454
<INCOME-TAX> 5,503
<INCOME-CONTINUING> 7,951
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,951
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.33
</TABLE>
