<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 September 27, 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
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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 November 6, 1997
- ------------------------- -------------------------------
Common Stock, no par value 5,413,439 shares
Exhibit Index at Page 10
Page 1 of 13
<PAGE> 2
LIQUI-BOX CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
Part I - Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
September 27, 1997 and December 28, 1996 3-4
Condensed Consolidated Statements of Income
For the thirteen and thirty-nine week periods ended
September 27, 1997 and September 28, 1996 5
Condensed Consolidated Statements of Cash Flows
For the thirty-nine week periods ended
September 27, 1997 and September 28, 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
Item 3. Quantitative and Qualitative Disclosure about Market Risk 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
</TABLE>
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<PAGE> 3
LIQUI-BOX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
----------------------------------------
September 27, 1997 December 28, 1996
------------------ -----------------
Assets
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 21,041,000 $ 15,248,000
Accounts receivable:
Trade, net of allowance for doubtful accounts
of $979,000 and $742,000 at respective dates 19,850,000 16,265,000
Other 533,000 1,141,000
------------- -------------
20,383,000 17,406,000
Inventories:
Raw materials and supplies 6,859,000 8,869,000
Work in process 3,728,000 4,194,000
Finished goods 5,801,000 4,491,000
------------- -------------
16,388,000 17,554,000
Other current assets 1,525,000 1,517,000
------------- -------------
TOTAL CURRENT ASSETS 59,337,000 51,725,000
Property, plant and equipment, at cost:
Buildings and leasehold improvements 12,820,000 9,872,000
Equipment and vehicles 70,454,000 62,469,000
Equipment leased to customers 16,439,000 18,940,000
Less accumulated depreciation (66,532,000) (62,494,000)
------------- -------------
33,181,000 28,787,000
Construction in process 3,407,000 5,584,000
Land 658,000 658,000
------------- -------------
37,246,000 35,029,000
Other Assets:
Goodwill, net of amortization 9,231,000 9,857,000
Deferred charges and other assets 3,218,000 3,405,000
------------- -------------
12,449,000 13,262,000
------------- -------------
TOTAL ASSETS $ 109,032,000 $ 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
---------------------------------------
September 27, 1997 December 28, 1996
------------------ -----------------
Liabilities and Stockholders' Equity
Current Liabilities:
<S> <C> <C>
Accounts payable $ 8,315,000 6,640,000
Dividends payable 725,000 758,000
Salaries, wages and related liabilities 5,238,000 1,696,000
Federal, state and local taxes 2,316,000 1,059,000
Other accrued liabilities 5,004,000 4,104,000
------------- -------------
TOTAL CURRENT LIABILITIES 21,598,000 14,257,000
Other noncurrent liabilities:
Deferred income taxes 1,566,000 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 7,033,000 6,615,000
Cumulative translation adjustment 917,000 1,986,000
Unrealized Gains on Marketable Securities 734,000 605,000
Retained earnings 120,015,000 109,175,000
Less:
Treasury stock, at cost--1,688,501 and 1,432,203
shares at respective dates (44,041,000) (35,211,000)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 85,868,000 84,380,000
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 109,032,000 $ 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 Thirty-nine Weeks Ended
--------------------------------- ---------------------------------
September 27, September 28, September 27, September 28,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Sales $ 44,239,000 $ 44,549,000 $ 121,176,000 $ 120,891,000
Cost of Sales 29,179,000 30,578,000 80,187,000 81,299,000
---------- ---------- ---------- ----------
15,060,000 13,971,000 40,989,000 39,592,000
Selling, administrative and
development expenses 6,706,000 6,148,000 19,822,000 19,019,000
--------- --------- ---------- ----------
8,354,000 7,823,000 21,167,000 20,573,000
Interest and dividend income 273,000 110,000 646,000 355,000
Interest expense (5,000) (4,000) (10,000) (5,000)
Other income (expense) (109,000) (29,000) 164,000 (71,000)
-------- ------- ------- -------
8,513,000 7,900,000 21,967,000 20,852,000
Taxes on income 3,405,000 3,162,000 8,908,000 8,444,000
--------- --------- --------- ---------
NET INCOME $ 5,108,000 $ 4,738,000 $ 13,059,000 $ 12,408,000
============= ============= ============= =============
Earnings per common and common
equivalent share
Primary $ 0.87 $ 0.78 $ 2.20 $ 2.01
============= ============= ============= =============
Fully Diluted $ 0.86 $ 0.78 $ 2.19 $ 2.01
============= ============= ============= =============
Cash dividends per
common share $ 0.13 $ 0.13 $ 0.39 $ 0.35
============= ============= ============= =============
Weighted average number of
common and common
equivalent shares used in
computing earnings per share
Primary 5,883,780 6,058,031 5,942,662 6,158,986
========= ========= ========= =========
Fully Diluted 5,911,875 6,072,974 5,955,054 6,163,967
========= ========= ========= =========
</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
------------------------------------------------
Thirty-nine Weeks Ended
------------------------------------------------
September 27, September 28,
1997 1996
--------------------- ----------------------
<S> <C> <C>
Operating Activities:
Net income $ 13,059,000 $ 12,408,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,430,000 4,909,000
Provision for loss on accounts receivable 463,000 474,000
Amortization of other noncurrent assets 818,000 721,000
(Gain) on disposal of property, plant and equipment (260,000) (20,000)
Deferred Compensation 328,000 341,000
Changes in deferred income tax accounts 187,000 64,000
Changes in operating assets and liabilities:
(Increase) in accounts receivable (3,464,000) (3,707,000)
(Increase) decrease in inventories 1,178,000 (2,325,000)
(Increase) decrease in other current assets (4,000) 223,000
Increase in accounts payable 1,695,000 1,524,000
Increase in salaries, wages and related liabilities 3,542,000 4,451,000
Increase in other accrued liabilities 2,126,000 2,189,000
------------ ------------
Net Cash Provided by Operating Activities 25,098,000 21,252,000
Investing Activities:
Purchases of property, plant and equipment (8,894,000) (9,777,000)
Proceeds from sale of property, plant and equipment 1,499,000 1,445,000
Other asset changes, net 123,000 (55,000)
------------ ------------
Net Cash Used in Investing Activities (7,272,000) (8,387,000)
Financing Activities:
Acquisition of treasury shares (9,094,000) (10,340,000)
Sale of common shares 0 3,170,000
Exercise of stock options, including tax benefit 354,000 121,000
Cash dividends (2,220,000) (2,079,000)
------------ ------------
Net Cash (Used in) Financing Activities (10,960,000) (9,128,000)
Effect of exchange rate changes on Cash (1,073,000) (2,000)
------------ ------------
Increase in Cash and Cash Equivalents 5,793,000 3,735,000
Cash and cash equivalents at beginning of year 15,248,000 9,424,000
------------ ------------
Cash and Cash Equivalents at End of Third Quarter $ 21,041,000 $ 13,159,000
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<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 $.90 and
$.80 per common share for the thirteen weeks ended September 27, 1997 and
September 28, 1996, respectively. The Company's basic EPS, computed using
the new standard, were $2.27 and $2.07 per common share for the
thirty-nine weeks ended September 27, 1997 and September 28, 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 Form 10-K for the
fiscal year ended December 28, 1996, 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 Third Quarter 1997, Liqui-Box (the "Company") net sales declined
1% to $44,239,000 compared to $44,549,000 for the Third Quarter 1996. The
decline in sales is attributable to a slight decrease in unit sales and
relatively stable sales prices. For the first three quarters of 1997, net
sales dollars were $121,176,000 compared with $120,891,000.
Gross profit, as a percentage of net sales, was 34.0% in the Third Quarter
1997 and 31.4% in the Third Quarter 1996. For the first three quarters of
1997, gross profit, as a percentage of net sales, was 33.8% compared to 32.8%
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 Third Quarter of 1997, selling, administrative, and development
expenses were 15.2% of sales as compared to 13.8% in the Third Quarter of
1996. For the first nine months of 1997, selling, administrative, and
development expenses were 16.4% of sales as compared to 15.7% for the first
nine months of 1996. The increase is primarily due to increased depreciation
expense related to the significant investment the Company has made in
expanding existing plants and equipment for these plants in the past two
years. To a lesser extent, the increase also reflects increased compensation
costs under the Company's broad-based profit sharing plan, which costs are
directly related to the improved profitability of the Company.
Interest and dividend income for the Third Quarter 1997 was $273,000 compared
to $110,000 in the Third Quarter 1996. For the first nine months of 1997,
interest and dividend income was $646,000 as compared to $355,000 for the
first nine months of 1996. The increase is due to an increase in the cash
available for investment and improved returns on cash equivalent investments.
Income before taxes as a percentage of net sales was 19.2% in the Third
Quarter 1997 and 17.7% in the Third Quarter 1996. For the first nine months
of 1997, income before taxes as a percentage of net sales was 18.1% of sales
as compared to 17.2% for the first nine 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
nine months of 1997.
The provision for income taxes was 40.0% of before tax income for the Third
Quarter of 1997 and 40.0% for the Third Quarter 1996. On a year-to-date
basis, the provision for income taxes was 40.6% in 1997 and 40.5% in 1996.
The effective tax rate for the first nine months of 1997 is based on the
Company's anticipated tax rate for the 1997 fiscal year.
At the end of the Third Quarter of 1997 and 1996, the Company had no
significant backlog of orders, which is industry typical.
-8-
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
Total working capital at September 27, 1997, was $37,739,000 compared to
$37,468,000 at December 28, 1996. The ratio of current assets to current
liabilities was 2.7 to 1 at the end of the Third Quarter 1997 and 3.6 to 1 at
year-end 1996. The ratio of current assets to current liabilities is
typically lower for the Company at the end of the Third Quarter than at the
end of the fiscal year. This is primarily the result of lower levels of
payables related to inventory at year end due to the seasonal nature of the
business and the fact the Company's profit sharing payment is made prior to
fiscal year end. Net cash provided from operations was $25,098,000 for the
nine months ended September 27, 1997 compared to $21,252,000 for the nine
months ended September 28, 1996. The increase in cash provided from
operations is primarily the result of better asset and liability management,
coupled with the improved profitability of the Company.
Net cash used in investing activities was $7,272,000 for the nine months
ended September 27, 1997 compared to $8,387,000 for the nine months ended
September 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 $10,960,000 for the nine months ended
September 27, 1997, compared to cash used of $9,128,000 for the nine months
ended September 28, 1996. 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 27,
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
nine months of 1997, except for the repurchase of treasury shares in the
aggregate amount of $9,094,000 which were acquired throughout the first nine
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. The Company has not entered into
any significant financing arrangements not reflected in the financial
statements.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK
Inapplicable
-9-
<PAGE> 10
PART II. OTHER INFORMATION
Item 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 27, 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 November 7, 1997 By /s/ C. William McBee
---------------------------------- -----------------------
C. William McBee
Vice President - Manufacturing
and Administration
(Duly Authorized Officer)
Date November 7, 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 Thirty-nine Weeks Ended
----------------------------- ------------------------------
September 27, September 28, September 27, September 28,
1997 1996 1997 1996
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Primary:
Weighted average number of common
shares outstanding 5,664,173 5,913,503 5,743,251 5,995,549
Net effect of dilutive stock options--
based on treasury stock method
using average market price. 219,607 144,528 199,411 163,437
---------- ---------- ----------- -----------
Weighted average common and
common equivalent shares 5,883,780 6,058,031 5,942,662 6,158,986
========== ========== =========== ===========
Net Income $5,108,000 $4,738,000 $13,059,000 $12,408,000
Earnings per common and
common equivalent share $ 0.87 $ 0.78 $ 2.20 $ 2.01
========== ========== =========== ===========
Fully Diluted:
Weighted average number of common
shares outstanding 5,664,173 5,913,503 5,743,251 5,995,549
Net effect of dilutive stock options--
based on treasury stock method
using the quarter-end market price
if higher than average market price. 247,702 159,471 211,803 168,418
---------- ---------- ----------- -----------
Fully Diluted Shares 5,911,875 6,072,974 5,955,054 6,163,967
========== ========== =========== ===========
Net Income $5,108,000 $4,738,000 $13,059,000 $12,408,000
Earnings per common and
common equivalent share $ 0.86 $ 0.78 $ 2.19 $ 2.01
========== ========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> SEP-27-1997
<CASH> 21,041
<SECURITIES> 0
<RECEIVABLES> 20,829
<ALLOWANCES> 979
<INVENTORY> 16,388
<CURRENT-ASSETS> 59,337
<PP&E> 103,778
<DEPRECIATION> 66,532
<TOTAL-ASSETS> 109,032
<CURRENT-LIABILITIES> 21,598
<BONDS> 0
0
0
<COMMON> 1,210
<OTHER-SE> 84,658
<TOTAL-LIABILITY-AND-EQUITY> 109,032
<SALES> 121,176
<TOTAL-REVENUES> 121,176
<CGS> 80,187
<TOTAL-COSTS> 100,009
<OTHER-EXPENSES> 164
<LOSS-PROVISION> 463
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> 21,967
<INCOME-TAX> 8,908
<INCOME-CONTINUING> 13,059
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,059
<EPS-PRIMARY> 2.20
<EPS-DILUTED> 2.19
</TABLE>
