<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 1, 2000
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.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT AUGUST 4, 2000
--------------------------------- -----------------------------
<S> <C>
Common Stock, no par value 4,411,277 shares
</TABLE>
Exhibit Index on Page 12
<PAGE>
LIQUI-BOX CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (unaudited)
July 1, 2000 and January 1, 2000 3-4
Condensed Consolidated Statements of Income and
Comprehensive Income (unaudited)
For the thirteen and twenty-six week periods ended
July 1, 2000 and July 3, 1999 5
Condensed Consolidated Statements of Cash Flows (unaudited)
For the twenty-six week periods ended
July 1, 2000 and July 3, 1999 6
Notes to Unaudited Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
Item 3. Quantitative and Qualitative Disclosure About Market Risk 10-11
Part II - Other Information - Items 1-6 11-12
Signatures 13
Exhibit 3C - Amendment to the Code of Regulations 15
Exhibit 27 - Financial Data Schedule
</TABLE>
-2-
<PAGE>
LIQUI-BOX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
---------------------------------------------------------
July 1, 2000 January 1, 2000
----------------------- -----------------------
<S> <C> <C>
ASSETS
----------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents $6,307,000 $11,635,000
Accounts receivable:
Trade, net of allowance for doubtful accounts
of $994,000 and $730,000, respectively 18,697,000 19,579,000
Other 588,000 446,000
----------------------- -----------------------
Total receivables 19,285,000 20,025,000
Inventories:
Raw materials and supplies 11,336,000 8,256,000
Work in process 3,202,000 2,460,000
Finished goods 4,634,000 3,334,000
----------------------- -----------------------
Total Inventories 19,172,000 14,050,000
Deferred tax assets 2,602,000 2,602,000
Other current assets 550,000 808,000
----------------------- -----------------------
TOTAL CURRENT ASSETS 47,916,000 49,120,000
----------------------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT - at Cost
----------------------------------------------------------------------------------------------------------------------------
Land, buildings and leasehold improvements 17,933,000 15,158,000
Equipment and vehicles 78,333,000 77,122,000
Equipment leased to customers 16,660,000 16,691,000
Construction in process 5,184,000 2,706,000
----------------------- -----------------------
TOTAL 118,110,000 111,677,000
Less accumulated depreciation and amortization (81,362,000) (78,448,000)
----------------------- -----------------------
Property, plant and equipment - net 36,748,000 33,229,000
----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS
----------------------------------------------------------------------------------------------------------------------------
Goodwill, net of amortization 7,388,000 7,855,000
Deferred charges and other assets, net 4,847,000 4,686,000
----------------------- -----------------------
Total other assets 12,235,000 12,541,000
TOTAL ASSETS $ 96,899,000 $ 94,890,000
======================= =======================
</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 1, 2000 January 1, 2000
--------------------- ------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
-----------------------------------------------------------------------------------------------------------------------------
Accounts payable $5,171,000 $10,955,000
Short-term borrowings 2,315,000 3,283,000
Dividends payable 886,000 903,000
Salaries, wages and related liabilities 5,930,000 1,971,000
Federal, state and local taxes 1,395,000 0
Other accrued liabilities 3,789,000 2,766,000
--------------------- ------------------------
TOTAL CURRENT LIABILITIES 19,486,000 19,878,000
-----------------------------------------------------------------------------------------------------------------------------
OTHER NONCURRENT LIABILITIES
-----------------------------------------------------------------------------------------------------------------------------
Deferred income taxes 1,343,000 1,468,000
-----------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------------------------------------
Preferred stock, without par value,
2,000,000 shares authorized; none issued
- -
Common stock, without par value, $.1667 stated value,
20,000,000 shares authorized,
7,262,598 shares issued 1,210,000 1,210,000
Additional paid-in capital 10,075,000 9,505,000
Accumulated other comprehensive income 731,000 1,596,000
Retained earnings 159,322,000 151,608,000
Less:
Treasury stock, at cost - 2,840,131
and 2,751,439 shares, respectively (95,268,000) (90,375,000)
----------------------------------------------------------------------------------------------- ------------------------
TOTAL STOCKHOLDERS' EQUITY 76,070,000 73,544,000
--------------------- ------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 96,899,000 $ 94,890,000
===================== ========================
</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 1, July 3, July 1, July 3,
2000 1999 2000 1999
------------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
NET SALES $43,183,000 $ 44,141,000 $ 79,737,000 $80,807,000
Cost of Sales 27,638,000 26,292,000 50,084,000 48,014,000
------------------- ---------------- ------------------------------------
Gross Margin 15,545,000 17,849,000 29,653,000 32,793,000
Selling, administrative and
development expenses 7,456,000 7,903,000 13,982,000 15,224,000
------------------- ---------------- ----------------- ----------------
Operating income 8,089,000 9,946,000 15,671,000 17,569,000
OTHER INCOME (EXPENSE):
Interest and dividend income 174,000 90,000 336,000 195,000
Interest expense (45,000) 6,000 (74,000) (149,000)
Other, net (81,000) 28,000 (246,000) (60,000)
------------------- ---------------- ----------------- ----------------
INCOME BEFORE INCOME TAXES 8,137,000 10,070,000 15,687,000 17,555,000
TAXES ON INCOME 3,214,000 4,119,000 6,196,000 7,180,000
------------------- ---------------- ----------------- ----------------
NET INCOME 4,923,000 5,951,000 9,491,000 10,375,000
OTHER COMPREHENSIVE INCOME (EXPENSE),
NET OF TAX:
Foreign currency translation adjustments (582,000) (148,000) (677,000) (490,000)
Unrealized gain (loss) on marketable securities 60,000 146,000 (188,000) 23,000
------------------- ---------------- ----------------- ----------------
Other comprehensive income (expense) (522,000) (2,000) (865,000) (467,000)
------------------- ---------------- ----------------- ----------------
COMPREHENSIVE INCOME $4,401,000 $5,949,000 $8,626,000 $9,908,000
=================== ================ ================= ================
---------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE
---------------------------------------------------------------------------------------------------------------------------------
Basic $1.11 $1.30 $2.13 $2.25
Diluted $1.06 $1.24 $2.04 $2.15
Cash dividends per common share $0.20 $0.18 $0.40 $0.36
---------------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF SHARES
USED IN COMPUTING EARNINGS PER SHARE:
---------------------------------------------------------------------------------------------------------------------------------
Basic 4,445,059 4,570,583 4,459,526 4,611,351
Diluted 4,637,489 4,794,956 4,651,034 4,834,960
</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
-----------------------------------------------
-----------------------------------------------
July 1, 2000 July 3, 1999
---------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income $9,491,000 $10,375,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,106,000 3,818,000
Provision for loss on accounts receivable 20,000 309,000
Amortization of other noncurrent assets 433,000 436,000
Loss on disposal of property, plant and equipment 0 39,000
Deferred compensation 94,000 155,000
Changes in deferred income tax accounts (125,000) (13,000)
Changes in operating assets and liabilities:
Accounts receivable 568,000 (7,666,000)
Inventories (5,101,000) (3,244,000)
Other current assets 280,000 1,092,000
Accounts payable (5,691,000) 2,189,000
Salaries, wages and related liabilities 3,959,000 3,879,000
Other accrued liabilities 2,406,000 (818,000)
---------------------- ---------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 10,440,000 10,551,000
---------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
---------------------------------------------------------------------------------------------------------------------------
Purchase of property, plant and equipment (8,174,000) (2,102,000)
Proceeds from sale of property, plant and equipment 557,000 474,000
Other changes, net (314,000) 66,000
---------------------- ---------------------
NET CASH USED IN INVESTING ACTIVITIES (7,931,000) (1,562,000)
---------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
---------------------------------------------------------------------------------------------------------------------------
Acquisition of treasury shares (5,069,000) (7,179,000)
Sale of treasury shares 515,000 10,000
Exercise of stock options, including tax benefit 137,000 291,000
Cash dividends (1,794,000) (1,674,000)
Proceeds from short-term borrowings 295,000 5,946,000
Repayment of short-term borrowings (1,263,000) (10,800,000)
---------------------- ---------------------
NET CASH USED IN FINANCING ACTIVITIES (7,179,000) (13,406,000)
---------------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (658,000) (580,000)
---------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,328,000) (4,997,000)
CASH AND CASH EQUIVALENTS, Beginning of year 11,635,000 8,685,000
---------------------- ---------------------
CASH AND CASH EQUIVALENTS, End of second quarter $6,307,000 $3,688,000
====================== =====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
-6-
<PAGE>
LIQUI-BOX CORPORATION AND SUBSIDIARIES
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.
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 market 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 required to adopt this statement in
January 2001. The Company does not believe the adoption of this statement
by the Company will have a significant impact, if any, on its financial
statements.
3. In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101(SAB 101), "Revenue Recognition in Financial
Statements." SAB 101 provides guidance for revenue recognition under
certain circumstances. The Company has not completed the process of
evaluating the impact that will result from adopting SAB 101 and is,
therefore, unable to disclose the impact that adoption will have on its
financial position and results of operation. SAB 101 will be effective no
later than the fourth quarter of the fiscal year ended December 30, 2000.
4. 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 2000
and 1999. Net sales for the United States and Europe were $38,310,000 and
$4,873,000 for the Second Quarter 2000 and $38,744,000 and $5,397,000 for
the Second Quarter 1999. For the first six months of 2000 net sales for
the United States and Europe was $70,072,000 and $9,665,000 compared to
$70,703,000 and $10,104,000 for the first six months of 1999. Operating
income for the United States and Europe were $7,654,000 and $435,000 for
the Second Quarter 2000 and $9,550,000 and $396,000 for the Second Quarter
1999. For the first six months of 2000 operating income for the United
States and Europe were $14,963,000 and $708,000 compared to $16,769,000
and $800,000 for the first six months of 1999.
5. 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 1,
2000 consolidated financial statements of Liqui-Box Corporation and its
subsidiaries contained in the Company's Annual Report on Form 10-K for the
fiscal year ended January 1, 2000 (Commission 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 2000, Liqui-Box Corporation and its subsidiaries
(the "Company") experienced a slight decrease in sales dollars and units
compared to the Second Quarter 1999. The decrease in sales dollars and units
is attributable to a cooler than normal spring.
Gross margin, as a percentage of net sales, was 36.0% for the Second Quarter
2000 and 40.4% for the Second Quarter 1999. For the first two quarters of
2000, gross margin as a percent of net sales was 37.2% compared to 40.6% for
the same period in 1999. The decrease in gross margin is attributable to
increased raw material prices that have not been passed on to our customers.
For the Second Quarter of 2000, selling, administrative, and development
expenses were $7,456,000 as compared to $7,903,000 in the Second Quarter of
1999, a decrease of 5.7%. The decrease is primarily due to a decrease in our
Profit Participation Plan costs. For the first six months of 2000, selling,
administrative, and development expenses were $13,982,000 compared to
$15,224,000 for the first six months of 1999. The decrease for the first six
months of 2000 was due to a combination of the Company adjusting reserves in
the First Quarter and a reduction in the Profit Participation Plan costs in
the Second Quarter.
Income before taxes as a percentage of net sales was 18.8% in the Second
Quarter 2000 and 22.8% in the Second Quarter 1999, due to the decrease in
gross margin, partially offset by the decrease in selling, administrative,
and development expenses. For the first six months of 2000, income before
taxes as a percentage of net sales was 19.7% of sales as compared to 21.7%
for the first six months of 1999.
The provision for income taxes was 39.5% of before taxable income for the
Second Quarter of 2000 and 40.9% for the Second Quarter 1999. On a
year-to-date basis, the provision for income taxes was 39.5% in 2000 and
40.9% in 1999. The effective tax rate used for the first six months of 2000
is based on the Company's anticipated tax rate for the 2000 fiscal year.
At the end of the Second Quarter 2000 and 1999, the Company had no
significant backlog of orders, which is industry typical.
LIQUIDITY AND CAPITAL RESOURCES
Total working capital at July 1, 2000, was $28,430,000 compared to
$29,242,000 at January 1, 2000. This decrease reflects the seasonal needs of
the Company. Net cash provided by operations was $10,440,000 for the six
months ended July 1, 2000, compared to $10,551,000 for the six months ended
July 3, 1999. Net cash used in investing activities was $7,931,000 for the
six months ended July 1, 2000 compared to $1,562,000 for the six months ended
July 3, 1999. 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 $7,179,000 for the six
months ended July 1, 2000, compared to cash used of $13,406,000 for the six
months ended July 3, 1999. The cash used in financing activities was
primarily for the repurchase of outstanding shares and payment of cash
dividends.
-8-
<PAGE>
The Company's major commitments for capital expenditures as of July 1, 2000
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. No amounts were outstanding under these credit facilities as of July 1,
2000. Banks provide secured credit facilities to the Company's European
subsidiaries. The total amount outstanding under these facilities were
$2,315,000 at July 1, 2000.
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 2000.
There have been no significant changes in capitalization during the first six
months of 2000, except for the repurchase of outstanding common shares in the
aggregate amount of $5,069,000 which were acquired throughout the first six
months of 2000 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
$4,401,000 and $5,949,000 in Second Quarter 2000 and Second Quarter 1999,
respectively. Comprehensive income, net of tax, was $8,626,000 and $9,908,000
for the first six months of 2000 and 1999, respectively. Comprehensive income
differs from net income per the Consolidated Statements of Income due to
foreign currency translation losses in the Second Quarter 2000 and in the
Second Quarter 1999, and a gain on marketable securities in the Second
Quarter 2000 and Second Quarter 1999. Other comprehensive income is derived
from the change in foreign currency translation and the change in the value
of marketable securities held for investment.
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.
-9-
<PAGE>
NEW ACCOUNTING STANDARDS
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 market value. The statement requires that changes in the
derivative's fair market 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 does not believe the
adoption of this statement by the Company will have a significant impact, if
any, on its financial statements.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial
Statements." SAB 101 provides guidance for revenue recognition under certain
circumstances. The Company has not completed the process of evaluating the
impact that will result from adopting SAB 101 and is, therefore, unable to
disclose the impact that adoption will have on its financial position and
results of operations. SAB 101 will be effective no later than the fourth
quarter of the fiscal year ended December 30, 2000.
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; weather conditions; and
other risks detailed in the Company's press releases, shareholder
communications and Securities 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. The Company is not
obligated to update or revise forward-looking statements relating to the
Company to reflect new events or circumstances.
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 when
competitive conditions allow.
-10-
<PAGE>
FOREIGN CURRENCY EXCHANGE RISK
In the Second Quarter 2000, European operations accounted for approximately
11% 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 1999 Annual Report to shareholders 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 1, 2000 was
approximately $940,000 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.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
The case styled GREAT PINES WATER COMPANY, INC. V. LIQUI-BOX CORPORATION, in
the United States District Court in Texas reported previously under Item 3 of
the Company's Annual Report on Form 10-K for the fiscal year ended January 1,
2000 as filed with the Securities and Exchange Commission has been settled
and was dismissed in July of 2000. Terms of the settlement are confidential
and have been sealed by the court.
ITEM 2. CHANGES IN SECURITIES: Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES: Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
(a) The 2000 Annual Meeting of Shareholders of the Company (the
"Annual Meeting") was held on April 20, 2000.
(b) No response required.
(c) The only matters voted on at the Annual Meeting were (i) the
uncontested election of Samuel B. Davis, Russell M. Gertmenian,
John Trostheim and Robert L. Zieg as directors of the Company;
and (ii) a proposal to approve an amendment to the Company's
Code of Regulations, as amended, to permit electronic proxy
voting. There were 1,716,674 common shares of the Company
represented in person or by proxy at the meeting.
-11-
<PAGE>
The manner in which the votes were cast with respect to the
election of directors was as follows:
<TABLE>
<CAPTION>
BROKER
NOMINEE VOTES FOR VOTES WITHHELD NONVOTES
------- --------- -------------- --------
<S> <C> <C> <C>
Samuel B. Davis 1,708,141 8,533 None
Russell M. Gertmenian 1,708,508 8,166 None
John Trostheim 1,708,474 8,200 None
Robert L. Zieg 1,708,496 8,178 None
</TABLE>
The manner in which the votes were cast with respect to the
proposal to amend The Company's Code of Regulations, as
amended, was as follows:
<TABLE>
<CAPTION>
SHARES VOTED
FOR AGAINST ABSTENTIONS BROKER NONVOTES
--- ------- ----------- ---------------
<S> <C> <C> <C> <C>
1,561,305 1,986 153,383 None
</TABLE>
ITEM 5. OTHER INFORMATION: Not applicable
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 Registrant's Form 10K for the fiscal year Ended December
30, 1995.
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 3C. Amendments to Registrant's Code of Regulation
approved by shareholders of Registrant at the April 20, 2000
Annual Meeting of Shareholders (page 15).
Exhibit 27. Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
July 1, 2000.
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<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 15, 2000 By /s/ C. William McBee
----------------------- -------------------------------------
C. William McBee
President and Chief Operating Officer
(Duly Authorized Officer)
Date August 15, 2000 By /s/ Peter J. Linn
----------------------- -------------------------------------
Peter J. Linn
(Principal Accounting Officer)
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<PAGE>
EXHIBIT INDEX
Exhibit 3A. Amended Articles of Incorporation of the Registrant incorporated
herein by Reference to Exhibit 3A to the Registrant's Form 10K for the fiscal
year Ended December 30, 1995.
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 3C. Amendments to Registrant's Code of Regulation approved by
shareholders of Registrant at the April 20, 2000 Annual Meeting of
Shareholders (page 15).
Exhibit 27. Financial Data Schedule
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