<PAGE>
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 July 3,1999
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, 1999
- -------------------------- -----------------------------
Common Stock, no par value 4,517,500 shares
Exhibit Index at Page 14
<PAGE>
LIQUI-BOX CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE NO.
- ------------------------------------------------------------------------------
<S> <C>
Part I - Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
July 3, 1999 and January 2, 1999 3-4
Condensed Consolidated Statements of Income and
Comprehensive Income
For the thirteen and twenty-six week periods ended
July 3, 1999 and July 4, 1998 5
Condensed Consolidated Statements of Cash Flows
For the twenty-six week periods ended
July 3, 1999 and July 4, 1998 6
Notes to Unaudited Condensed Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-11
Item 3. Quantitative and Qualitative Disclosure About Market Risk 11
Part II - Other Information - Items 1-6 12-13
Exhibit 27 - Financial Data Schedule 14
Signatures 15
</TABLE>
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<PAGE>
LIQUI-BOX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
-----------------------------------
July 3, 1999 January 2, 1999
------------ ---------------
<S> <C> <C>
ASSETS
- ------------------------------------------------------------------------------------------------
CURRENT ASSETS
- ------------------------------------------------------------------------------------------------
Cash and cash equivalents $ 3,688,000 $ 8,685,000
Accounts receivable:
Trade, net of allowance for doubtful accounts
of $1,014,000 and $946,000, respectively 21,593,000 14,613,000
Other 812,000 423,000
------------ ------------
Total receivables 22,405,000 15,036,000
Inventories:
Raw materials and supplies 10,732,000 7,551,000
Work in process 2,753,000 3,699,000
Finished goods 4,095,000 3,066,000
------------ ------------
Total Inventories 17,580,000 14,316,000
Other current assets 2,148,000 3,247,000
------------ ------------
TOTAL CURRENT ASSETS 45,821,000 41,284,000
- ------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT - AT COST
- ------------------------------------------------------------------------------------------------
Land, buildings and leasehold improvements 15,016,000 14,986,000
Equipment and vehicles 73,056,000 71,299,000
Equipment leased to customers 18,021,000 18,497,000
Construction in process 2,424,000 2,660,000
------------ ------------
TOTAL 108,517,000 107,442,000
Less accumulated depreciation and amortization (74,139,000) (70,847,000)
------------ ------------
Property, plant and equipment - net 34,378,000 36,595,000
- ------------------------------------------------------------------------------------------------
OTHER ASSETS
- ------------------------------------------------------------------------------------------------
Goodwill, net of amortization 8,062,000 8,515,000
Deferred charges and other assets, net 5,618,000 5,680,000
------------ ------------
Total other assets 13,680,000 14,195,000
TOTAL ASSETS $ 93,879,000 $ 92,074,000
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE>
LIQUI-BOX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
-----------------------------------
July 3, 1999 January 2, 1999
------------ ---------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
- ------------------------------------------------------------------------------------------------
Accounts payable $ 8,855,000 $ 6,638,000
Short-term borrowings 5,946,000 10,800,000
Dividends payable 813,000 837,000
Salaries, wages and related liabilities 5,762,000 1,883,000
Federal, state and local taxes 405,000 1,172,000
Other accrued liabilities 3,665,000 3,707,000
------------ ------------
TOTAL CURRENT LIABILITIES 25,446,000 25,037,000
- ------------------------------------------------------------------------------------------------
OTHER NONCURRENT LIABILITIES
- ------------------------------------------------------------------------------------------------
Deferred income taxes 1,258,000 1,271,000
- ------------------------------------------------------------------------------------------------
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 8,872,000 8,588,000
Cumulative other comprehensive income 1,592,000 2,185,000
Retained earnings 144,655,000 135,929,000
Less:
Treasury stock, at cost - 2,743,559
and 2,611,117 shares, respectively (89,154,000) (82,146,000)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 67,175,000 65,766,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 93,879,000 $ 92,074,000
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE>
LIQUI-BOX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
UNAUDITED UNAUDITED
------------------------------ ------------------------------
Thirteen Weeks Ended Twenty-six Weeks Ended
------------------------------ ------------------------------
July 3, July 4, July 3, July 4,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $44,141,000 $43,934,000 $80,807,000 $79,927,000
Cost of Sales 26,292,000 27,298,000 48,014,000 51,612,000
----------- ----------- ----------- -----------
Gross Margin 17,849,000 16,636,000 32,793,000 28,315,000
Selling, administrative and
development expenses 7,903,000 7,436,000 15,224,000 12,898,000
----------- ----------- ----------- -----------
Operating income 9,946,000 9,200,000 17,569,000 15,417,000
OTHER INCOME (EXPENSE):
Interest and dividend income 90,000 87,000 195,000 190,000
Interest expense 6,000 (130,000) (149,000) (284,000)
Other, net 28,000 (22,000) (60,000) (2,000)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 10,070,000 9,135,000 17,555,000 15,321,000
TAXES ON INCOME 4,119,000 3,736,000 7,180,000 6,266,000
----------- ----------- ----------- -----------
NET INCOME 5,951,000 5,399,000 10,375,000 9,055,000
OTHER COMPREHENSIVE INCOME (EXPENSE),
NET OF TAX:
Foreign currency translation adjustments (148,000) 107,000 (490,000) (83,000)
Unrealized gain (loss) on marketable securities 146,000 (15,000) 23,000 28,000
----------- ----------- ----------- -----------
Other comprehensive income (expense) (2,000) 92,000 (467,000) (55,000)
----------- ----------- ----------- -----------
COMPREHENSIVE INCOME $ 5,949,000 $ 5,491,000 $ 9,908,000 $ 9,000,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
- ------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE
- ------------------------------------------------------------------------------------------------------------------------
Basic $1.30 $1.14 $2.25 $1.91
Diluted $1.24 $1.10 $2.15 $1.84
Cash dividends per common share $0.18 $0.15 $0.36 $0.30
- ------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF SHARES
USED IN COMPUTING EARNINGS PER SHARE:
- ------------------------------------------------------------------------------------------------------------------------
Basic 4,570,583 4,723,138 4,611,351 4,739,392
Diluted 4,794,956 4,927,004 4,834,960 4,925,261
</TABLE>
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE>
LIQUI-BOX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
UNAUDITED
---------------------------------
Twenty-six Weeks Ended
---------------------------------
July 3, July 4,
1999 1998
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- ----------------------------------------------------------------------------------------------------------------
Net income $ 10,375,000 $ 9,055,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,818,000 3,867,000
Provision for loss on accounts receivable 309,000 383,000
Amortization of other noncurrent assets 436,000 473,000
Loss (Gain) on disposal of property, plant and equipment 39,000 (1,000)
Deferred compensation 155,000 230,000
Changes in deferred income tax accounts (13,000) 14,000
Changes in operating assets and liabilities:
Accounts receivable (7,666,000) (7,821,000)
Inventories (3,244,000) (2,980,000)
Other current assets 1,092,000 (334,000)
Accounts payable 2,189,000 2,496,000
Salaries, wages and related liabilities 3,879,000 3,686,000
Other accrued liabilities (818,000) 872,000
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 10,551,000 9,940,000
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- ----------------------------------------------------------------------------------------------------------------
Purchase of property, plant and equipment (2,102,000) (5,378,000)
Proceeds from sale of property, plant and equipment 474,000 1,575,000
Other changes, net 66,000 65,000
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (1,562,000) (3,738,000)
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- ----------------------------------------------------------------------------------------------------------------
Acquisition of treasury shares (7,179,000) (18,839,000)
Sale of treasury shares 10,000 0
Exercise of stock options, including tax benefit 291,000 1,368,000
Cash dividends (1,674,000) (1,334,000)
Proceeds from short-term borrowings 5,946,000 -
Repayment of short-term borrowings (10,800,000) (2,501,000)
------------ ------------
NET CASH USED IN FINANCING ACTIVITIES (13,406,000) (21,306,000)
- ----------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (580,000) (91,000)
- ----------------------------------------------------------------------------------------------------------------
(DECREASE) IN CASH AND CASH EQUIVALENTS (4,997,000) (15,195,000)
CASH AND CASH EQUIVALENTS, Beginning of year 8,685,000 17,425,000
------------ ------------
CASH AND CASH EQUIVALENTS, End of first quarter $ 3,688,000 $ 2,230,000
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
-6-
<PAGE>
LIQUI-BOX CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 1999 presentation.
2. In June 1998, the FASB (Financial Accounting Standards Board) issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities".
The statement establishes accounting and reporting standards requiring that
all derivative instruments (including certain derivative instruments
imbedded in other contracts) be recorded in the balance sheet as either an
asset or a liability measured at its fair market value. The statement
requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met.
The accounting provisions for qualifying hedges allow a derivative's gains
and losses to offset related results on the hedged item in the income
statement, and requires that the Company formally document, designate and
assess the effectiveness of transactions that qualify for hedge accounting.
The Company is not required to adopt this statement until January 2001. The
Company has not determined its method or timing of adopting this statement
or the impact on its financial statements.
3. The Company adopted FASB Statement No. 131, "Disclosures about Segments of
a Business Enterprise and Related Information." The Company is managed in
two operating segments, United States and Europe. Inter-segment
transactions are accounted for on the same basis as sales to unaffiliated
parties. Identifiable assets are those assets associated with a specific
segment. There were no significant inter-segment sales. Substantially all
sales were derived from plastic packaging products for year to date 1999
and 1998. Net sales for the United States and Europe was $38,744,000 and
$5,397,000 for the Second Quarter 1999 and $38,701,000 and $5,233,000 for
the Second Quarter 1998. For the first six months of 1999 net sales for
the United States and Europe was $70,703,000 and $10,104,000 compared to
$69,256,000 and $10,671,000 for the first six months of 1998. Operating
income for the United States and Europe was $9,550,000 and $396,000 for
the Second Quarter 1999 and $8,962,000 and $238,000 for the Second Quarter
1998. For the first six months of 1999 operating income for the United
States and Europe was $16,769,000 and $800,000 compared to $14,842,000 and
$575,000 for the first six months of 1998.
4. The accompanying unaudited consolidated financial statements are presented
in accordance with the requirements for Form 10-Q and Article 10 of
Regulation S-X for interim reporting purposes. Accordingly, they do not
include all information and footnotes required by generally accepted
accounting principles for complete financial statements. These financial
statements should be read in conjunction with the year ended January 2,
1999 consolidated financial statements of Liqui-Box Corporation contained
in the Annual Report on Form 10-K (File No. 0-8514). 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>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
During the Second Quarter 1999, Liqui-Box Corporation and its subsidiaries
(the "Company") experienced a .5% increase in sales dollars and a 3% increase
in unit sales compared to the Second Quarter 1998. The increase in sales
dollars for the quarter was the result of the increase in unit sales, partly
offset by the sales mix and price changes.
Gross profit, as a percentage of net sales, was 40.4% for the Second Quarter
1999 and 37.9% for the Second Quarter 1998. For the first two quarters of
1999, gross profit as a percentage of net sales was 40.6% compared to 35.4%
for the same period in 1998. The increase in gross profit as a percent of net
sales is primarily the result of improvements in plant operating
efficiencies, product mix and improved margins.
For the Second Quarter of 1999, selling, administrative, and development
expenses were $7,903,000 as compared to $7,436,000 in the Second Quarter of
1998, an increase of 6%. For the first six months of 1999, selling,
administrative, and development expenses were $15,224,000 compared to
$12,898,000 for the first six months of 1998. The increase is primarily due
to an increase in compensation related costs.
Income before taxes as a percentage of net sales was 22.8% in the Second
Quarter 1999 and 20.8% in the Second Quarter 1998, due to the increase in
gross profits, offset by the increase in selling, administrative, and
development expenses. For the first six months of 1999, income before taxes
as a percentage of net sales was 21.7% of sales as compared to 19.2% for the
first six months of 1998.
The provision for income taxes was 40.9% of before tax income for the Second
Quarter of 1999 and 40.9% for the Second Quarter 1998. On a year-to-date
basis, the provision for income taxes was 40.9% in 1999 and 40.9% in 1998.
The effective tax rate for the first six months of 1999 is based on the
Company's anticipated tax rate for the 1999 fiscal year.
At the end of the Second Quarter of 1999 and 1998, the Company had no
significant backlog of orders, which is industry typical.
LIQUIDITY AND CAPITAL RESOURCES
Total working capital at July 3, 1999, was $20,375,000 compared to
$16,247,000 at January 2, 1999. This increase is the result of improved
operating activities and the seasonal needs of the Company. The ratio of
current assets to current liabilities was 1.8 to 1 at the end of the Second
Quarter 1999 and 1.6 to 1 at year-end 1998. Net cash used in investing
activities was $1,562,000 for the six months ended July 3, 1999 compared to
$3,738,000 for the six months ended July 4, 1998. During both periods, 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 $13,406,000 for the six months ended July 3, 1999, compared to cash used
of $21,306,000 for the six months ended July 4, 1998. The cash used in
financing activities was primarily for the acquisition of treasury stock,
repayment of short-term debt and payment of cash dividends.
-8-
<PAGE>
The Company's major commitments for capital expenditures as of July 3, 1999
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 by operations with any additional funding needed coming from
credit facilities that aggregate $30,000,000 with The Huntington National
Bank. There was $5,946,000 outstanding under these credit facilities as of
July 3, 1999.
Longer-term cash requirements, other than normal operating expenses, are
needed for financing anticipated growth; increasing capacity at existing
plants; development of new products and enhancement of 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 1999.
There have been no significant changes in capitalization during the first six
months of 1999, except for the repurchase of outstanding common shares in the
aggregate amount of $7,179,000 which were acquired throughout the first six
months of 1999 on the open market. 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.
COMPREHENSIVE INCOME
Comprehensive income is based on revenues, expenses, gains and losses which,
under generally accepted accounting principles, are excluded from net income
and reflected as a component of equity, such as currency translation and gain
or loss on securities adjustments. Comprehensive income, net of tax, was
$5,949,000 and $5,491,000 in Second Quarter 1999 and Second Quarter 1998,
respectively. Comprehensive income differs from net income per the
Consolidated Statements of Income due to foreign currency translation losses
in the Second Quarter 1999 and currency translation gains in the Second
Quarter 1998, and gain on marketable securities in the Second Quarter 1999
compared to a loss on marketable securities in the Second Quarter 1998. Other
comprehensive income is derived from the change in foreign currency
translation and the change in the value of marketable securities held for
investment.
YEAR 2000
In prior years, certain computer programs were written using two digits,
rather than four, to define the applicable year. These programs were written
without considering the impact of the upcoming century and may experience
problems handling dates beyond the year 1999. This could cause computer
applications to fail or to create erroneous results unless corrective
measures are taken. Incomplete or untimely resolution of the Year 2000 issue
could have a material adverse impact on the Company's business, operations or
financial condition in the future.
The Company has identified its Year 2000 risk in three categories: internal
business software; internal non-financial software and imbedded chip
technology; and external non-compliance by suppliers and customers.
INTERNAL BUSINESS SOFTWARE. The Company has been assessing the impact that
the Year 2000 issue will have on its computer systems since 1995. In response
to these assessments, the Company has replaced all critical systems. The
Company's project plan called for the implementation of an integrated
application software package purchased from a software vendor. This
application software has received ITAA*2000 certification from the
Information Technology Association of America as Year 2000 compliant. In
-9-
<PAGE>
addition, the Company replaced all critical computer hardware and PC software
with Year 2000 compliant products. The project was implemented in the Second
Quarter of 1998 at a total estimated cost of $1,600,000, of which $1,360,000
has been incurred to date. The project has been funded through operating cash
flows.
INTERNAL NON-FINANCIAL SOFTWARE AND IMBEDDED CHIP TECHNOLOGY. During the
First Quarter, 1999, the Company completed the data-gathering phase, with
regard to non-financial software and imbedded chip technology. The Company
has not found any critical non-financial systems or imbedded chip technology
not to be Year 2000 compliant.
EXTERNAL NONCOMPLIANCE BY SUPPLIERS AND CUSTOMERS. During the Second
Quarter, 1999, the Company completed the data-gathering phase with regard to
major suppliers. The Company has not found any major suppliers not to be Year
2000 compliant. The Company anticipates completing the process of surveying
customers to determine the status of their Year 2000 compliance programs
during the Third Quarter of 1999. In the event that any of the Company's
major customers do not achieve successful and timely Year 2000 compliance,
and the Company is not successful in replacing them with comparable
customers, the Company's business or operations could be adversely affected.
Based on the work to date, the Company believes future costs relating to the
Year 2000 issue will not have a material adverse impact on the Company's
consolidated financial position, results of operations or cash flows.
EFFECT OF NEW EUROPEAN CURRENCY
The implementation of the Euro currency in certain European countries in 2002
could adversely impact the Company. In January 1999, a new currency called
the "Euro" was introduced in certain Economic and Monetary Union ("EMU")
countries. During 2002, all EMU countries are expected to be operating with
the Euro as their single currency. Uncertainty exists as to the effect the
Euro currency will have on the marketplace. Additionally, all of the final
rules and regulations have not yet been defined and finalized by the European
Commission with regard to the Euro currency. The Company is still assessing
the impact the EMU formation and Euro implementation will have on internal
systems and the sale of its products. The Company expects to take appropriate
actions based on the results of such assessment. The Company has not become
aware of any negative impact resulting from the EMU formation and Euro
implementation. The Company has not yet determined the cost related to
addressing this issue, if any, and there can be no assurance that this issue
and its related costs will not have a material adverse effect on the
Company's business, operating results and financial condition.
NEW ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". The statement
establishes accounting and reporting standards requiring that all derivative
instruments (including certain derivative instruments imbedded in other
contracts) be recorded in the balance sheet as either an asset or a liability
measured at its fair value. The statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. The accounting provisions for qualifying
hedges allow a derivative's gains and losses to offset related results on the
hedged item in the income statement, and requires that the Company formally
document, designate and assess the effectiveness of transactions that qualify
for hedge accounting. The Company is not required to adopt this statement
until January 2001. The Company has not determined its method or timing of
adopting this statement or the impact on its financial statements.
-10-
<PAGE>
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe-harbor
for forward-looking statements made by or on behalf of the Company. The
Company and its representatives may from time to time make written or verbal
forward-looking statements, including statements contained in the Company's
filings with the Securities and Exchange Commission and in its reports to
shareholders. All such statements which are not historical fact are
forward-looking statements based upon the Company's current plans and
strategies, and reflect the Company's current assessment of the risks and
uncertainties related to its business, including such things as product
demand and market acceptance; the economic and business environment and the
impact of governmental regulations, both in the United States and abroad; the
effects of competitive products and pricing pressures; the impact of
fluctuations in foreign currency exchange rates and the implementation of the
EURO; capacity; efficiency and supply constraints; effective remediation of
Year 2000 issues; weather conditions; and other risks detailed in the
Company's press releases, shareholder communications and Security and
Exchange Commission filings. Actual events affecting the Company and the
impact of such events on the Company's operations may vary from those
currently anticipated.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK
The Company, in the normal course of business, is exposed to market risks
associated with foreign currency exchange rates, fluctuations in the market
value of equity securities available for sale, and changes in interest rates.
The Company is also exposed to changes in the price of commodities used in
its manufacturing operations. However, commodity price risk is not material
as price changes are customarily passed along to the customer.
FOREIGN CURRENCY EXCHANGE RISK
In the Second Quarter 1999, European operations accounted for approximately
12% of the Company's net sales. As a result, there is exposure to foreign
exchange risk on transactions that are denominated in a currency other than
the business unit's functional currency. The Company borrows from a bank the
amounts of its foreign currency sales in that foreign currency. Upon
collection of the related accounts receivable, the corresponding bank loan is
repaid in that foreign currency. Reference is made to Note 1 -Accounting
Policies- Foreign Currency Translation, in the Notes to Consolidated
Financial Statements in the Company's 1998 Annual Report for further
information with respect to foreign currency exchanges. The Company's hedging
activities provide only limited protection against currency exchange risks,
however, a hypothetical 10% foreign exchange fluctuation would not materially
impact operating results or cash flow.
MARKETABLE SECURITIES RISK
The Company maintains a portfolio of marketable equity securities available
for sale. The fair market value of these securities at July 3, 1999 was
approximately $1,600,000 with the corresponding unrealized gain included as a
component of stockholders' equity. A hypothetical 10% decrease in the quoted
market price of the marketable securities would not materially impact
operating results or cash flow.
INTEREST RATE RISK
The interest payable for the Company's revolving credit facilities is
principally 50 basis points above the London Interbank Offered Rate and
therefore affected by changes in market interest rates. A hypothetical 10%
increase in the interest rate would not materially impact operating results
or cash flow.
-11-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
Not Applicable
ITEM 2. Inapplicable
ITEM 3. Inapplicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The 1999 Annual Meeting of Shareholders of the Company (the
"Annual Meeting") was held on April 21, 1999. At the close of
business on February 24, 1999 (the "record date"), 4,654,026
common shares of the Company were outstanding and entitled to
vote at the Annual Meeting. At the Annual Meeting, 3,050,761
common shares or 65.55% of the outstanding common shares of
the Company entitled to be voted at the meeting were
represented in person or by proxy.
(b) Directors elected at the Annual Meeting were:
<TABLE>
<S> <C> <C>
Carl J. Aschinger, Jr.:
Votes For: 3,045,196 Votes Withheld: 5,565 Broker Non-Votes: None
Charles R. Coate:
Votes For: 3,045,196 Votes Withheld: 5,565 Broker Non-Votes: None
Samuel N. Davis:
Votes For: 3,045,134 Votes Withheld: 5,627 Broker Non-Votes: None
C. William McBee:
Votes For: 3,044,067 Votes Withheld: 6,694 Broker Non-Votes: None
</TABLE>
Other directors whose terms of office continued after the Annual
Meeting are:
Samuel B. Davis
Robert S. Hamilton
Russell M. Gertmenian
(c) See Item 4(b) for the voting results for directors.
(d) Not applicable
ITEM 5. Inapplicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
Exhibit 3A. Amended Articles of Incorporation of the
Registrant incorporated herein by Reference to Exhibit 3A to
the Registrants Form 10K for the fiscal year Ended December
30, 1995.
-12-
<PAGE>
Exhibit 3B. Code of Regulations as Amended of the Registrant
incorporated herein by Reference to Exhibit 3 (B) to the
Registrant's Form 10Q for the fiscal Quarter ended July 1,
1995.
Exhibit 27. Financial Data Schedule (page 14)
(b) No reports on Form 8-K were filed during the quarter ended
July 3, 1999.
-13-
<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 August 11, 1999 By /s/ C. William McBee
--------------- ----------------------------
C. William McBee
President and Chief Operating Officer
(Duly Authorized Officer)
Date August 11, 1999 By /s/ Paul J. Maynard
--------------- ----------------------------
Paul J. Maynard
Director of Finance
(Principal Accounting Officer)
-15-
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