<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year (fifty-two weeks) ended January 1, 2000.
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from N/A To N/A .
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 of (I.R.S. Employer
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
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Securities registered pursuant to Section 12(b) of the Act: NONE
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Securities registered pursuant to Section 12(g) of the Act:
Common Shares, No Par Value
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(Title of Class)
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
Based upon the closing price reported on The NASDAQ National Market on February
24, 2000, the aggregate market value of the voting stock held by non-affiliates
of the Registrant was $115,862,000. The number of common shares outstanding at
February 24, 2000 was 4,468,476.
Documents Incorporated by Reference:
(1) Portions of the Registrant's Annual Report to Stockholders for the
fiscal year ended January 1, 2000 are incorporated by reference into
Parts I and II of this Annual Report on Form 10-K.
(2) Portions of the Registrant's Definitive Proxy Statement for its
Annual Meeting of Stockholders to be held on April 20, 2000 are
incorporated by reference into Part III of this Annual Report on Form
10-K.
Exhibit Index on Page 13
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PART I
Item 1. Business:
GENERAL DEVELOPMENT OF BUSINESS - Liqui-Box Corporation and its subsidiaries
("Liqui-Box" or the "Company") is one of the largest companies in the world
specializing in the research, development and manufacture of bag-in-box flexible
liquid packaging systems. The Company was incorporated in January, 1962 in the
state of Ohio. Its principal offices are located at 6950 Worthington-Galena
Road, Worthington, Ohio.
Liqui-Box is a major producer of bag-in-box flexible packaging and related
filling equipment systems for the beverage, processed foods, dairy, wine and
other specialty products industries. The Company is also the leading supplier of
containers and dispensing systems to the bottled water industry.
The Company and its subsidiaries operate 11 manufacturing plants in the United
States and Europe. Through licensees, agents and direct exporters, Liqui-Box
serves markets in many countries worldwide.
DESCRIPTION OF PRINCIPAL PRODUCTS - The principal product of the Company is
plastic packaging. Such packaging includes specialty plastic bags and plastic
blow molded containers; injection molded plastic products used in liquid
packaging and a variety of industrial and commercial plastic packaging films. In
addition, the Company manufactures equipment for filling such packaging products
(approximately 4% of total net sales). These products are marketed nationwide
primarily to the edible products industries principally through a direct sales
force. These products are also marketed internationally through a direct sales
force, licensees, agents and the Company's own export operations. In 1999, the
Company maintained its position in its principal markets of beverage, processed
foods and specialty industrial products.
COMPETITION - The plastic packaging market is large and highly fragmented. There
are numerous competitors and the major market in which the Company sells its
products is very competitive. These products are in competition with similar
products produced by other manufacturers, and in some instances, with products
produced by other industries from other raw materials.
The plastic packaging industry is, therefore, highly price competitive. A
substantial number of manufacturers compete in the national and international
markets. None are considered to be dominant. According to information in the
public domain, Liqui-Box supplies less than one percent of the total plastic
packaging market in the United States.
While Liqui-Box's product and customer mix is generally diverse, The Perrier
Group of America constitutes a buying group of customers that is a material part
of the Company's business to the extent that loss of this buying group, with
which the Company has a good relationship, would have a material effect on the
Company's business. The risk associated with such a potential loss is mitigated
by an exclusive 3-year supply agreement between the Company and The Perrier
Group of America. This agreement, which was renegotiated in 1997 in accordance
with the terms of the original supply agreement, expires on December 31, 2000.
Sales to this customer constituted 22%, 20% and 19% of total sales in 1999, 1998
and 1997, respectively.
RESEARCH AND DEVELOPMENT - Liqui-Box emphasizes applied research and development
as a vital aspect of meeting the needs of its customers for plastic packaging.
Thus, the Company's research activities focus on the development of new plastic
packaging products and packaging systems to increase quality, improve production
efficiency and/or reduce costs to its customers and to the ultimate consumer.
The Company also devotes significant efforts to the research, development and
improvement of plastic packaging machinery and equipment for use by its
customers and in its own production operations.
2
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R & D expenditures in 1999, 1998 and 1997 were $1,436,000, $1,221,000 and
$1,371,000, respectively. All such activities were entirely Company-funded from
operations. It should also be noted that the funding levels only represent costs
directly charged to research and development. The amounts do not represent the
commitment and work of all employees of Liqui-Box to improving existing products
and processes and to developing new products and processes. Many employees who
are not part of the research and development organization of the Company spend
part of their efforts on developing new products and processes.
Information on research and development can also be found on Pages 4 and 5
[Management's Discussion and Analysis] and on Page 15 [Note 1, Accounting
Policies, of the Notes to Consolidated Financial Statements] of the 1999 Annual
Report and is incorporated herein by reference.
PATENTS AND LICENSES - Liqui-Box holds and maintains patents for packaging
design, fitments and packaging equipment which are used by the Company in its
production and which are also licensed to other manufacturers. Revenues from
royalties from these patents and licenses are not material to the total revenues
of the Company.
ENVIRONMENT - Consumer recognition of environmental friendliness of liquid
plastic packaging systems is growing. Compared to a conventional 5-gallon
plastic pail, the 5-gallon plastic bag-in-box reduces total plastic use by 90
percent. An empty, collapsed 5-gallon bag requires a small fraction of the
disposal space of a comparable number of No. 10 cans, five wide-mouth one gallon
jars or one 5-gallon pail occupy. The corrugated box used to transport and store
packaged liquids is completely recyclable. Liqui-Box utilizes proper recycling
codes on all of its products for quick identification in community recycling
programs.
The bag-in-box design is increasingly seen as a major part of the solution to
the problem of environmental waste, storage and disposal. In addition, Liqui-Box
is asking its suppliers to experiment in the use of reprocessed material in the
products furnished to the Company and several promising applications are being
actively explored. The Company has also committed to zero scrap in the waste
stream of its plant operations through sorting and recycling for use in shipping
bags and other non-food applications. This commitment represents the elimination
of more than one million pounds of waste annually.
As a major player in the solution of societal environmental problems, the
Company supports such conscientiousness and is not aware of any federal, state
or local statutory or regulatory provisions concerning environmental protection
or the discharge of materials into the environment that will have any material
effect on the capital expenditures, sales, earnings or competitive position of
the Company in the future.
RAW MATERIALS - The primary raw material essential to the Company's business is
plastic resin. There are a number of suppliers for this material and the market
is highly competitive. The Company is confident that its sources of supply of
resin are adequate for its needs in the foreseeable future.
SEASONALITY OF BUSINESS - The demand for some applications of plastic packaging
products is seasonal in nature. A mild summer, for example, can reduce the
Company's sales to the beverage industry. However, experience over the years has
shown that these variations generally offset each other and tend to level the
total demand for the Company's products throughout the year. As a result, the
Company usually experiences only minor variations in sales volume attributable
to seasonal demands.
BACKLOG OF ORDERS - Sales of the Company's packaging products generally are
closely coordinated with the product production of its customers. Typically,
orders are filled within 30 days. Therefore, the backlog of orders is not
significant.
EMPLOYEES - Liqui-Box employed 729 individuals in its operations throughout the
United States and in Europe on January 1, 2000. Approximately 2% of these
employees are members of collective bargaining units. The Company considers
itself an industry leader in participative management of its human resources,
placing a premium value on innovation, creativity and attentiveness to solving
customers' problems in packaging. Accordingly, the Company believes its
relations with its employee group to be an asset.
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FOREIGN OPERATIONS AND SALES - The Company's European operations constituted 13%
of consolidated net sales, less than 6% of consolidated income before taxes and
24% of consolidated identifiable assets as of and for the year ended January 1,
2000. European operations constituted 13% of consolidated net sales, less than
4% of consolidated income before taxes and 21% of consolidated identifiable
assets as of and for the year ended January 2, 1999. Further information can be
found on page 21 [Note 9 of the Notes to Consolidated Financial Statements] of
the 1999 Annual Report and is incorporated herein by reference.
Item 2. Properties:
At January 1, 2000, the Company owned or leased property at fifteen (15)
locations for manufacturing and offices with a total of approximately 609,000
square feet of floor space. The following table summarizes the properties owned
or leased.
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Approximate Owned Expiration
Floor Space or Date of
Use and Location: (Sq. Ft.) Leased Lease
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Executive offices, research and
manufacturing:
Worthington, Ohio 63,000 Owned N/A
Manufacturing:
Ashland, Ohio 43,000 Leased Less than 1 year
Ashland, Ohio 22,000 Owned N/A
Houston, Texas 33,000 Leased 2005
Elkton, Maryland 58,000 Leased 2015
Auburn, Massachusetts 30,000 Owned N/A
Ontario, California 61,000 Leased 2003
Upper Sandusky, Ohio 76,000 Owned N/A
Lake Wales, Florida 8,000 Owned N/A
Lake Wales, Florida 12,000 Owned N/A
Sacramento, California 74,000 Leased 2002
Sacramento, California 24,000 Leased Month to Month
Allentown, Pennsylvania 40,000 Leased 2006
Romiley, England 53,000 Leased 2006
Romiley, England 12,000 Leased 2006
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The Company believes that its properties, plant and equipment are all in good
operating condition and are adequate for its expected needs. Certain of the
leases contain renewal options which the Company expects to exercise to maintain
its operations at the facilities.
Item 3. Legal Proceedings:
See page 17 [Note 3 of the Notes to Consolidated Financial Statements] of the
1999 Annual Report which is incorporated herein by reference.
Item 4. Submission of Matters to a Vote of Security Holders:
Not applicable
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EXECUTIVE OFFICERS OF THE REGISTRANT:
The names, ages and positions of all of the executive officers of Liqui-Box, as
of February 24, 2000, are listed below along with their business experience
during the past five years. Executive officers are appointed annually by the
Board of Directors at the annual meeting of directors immediately following the
annual meeting of shareholders. There are no arrangements or understandings
between any executive officer and any other person pursuant to which the
executive officer was selected.
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NAME AGE TITLE
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Samuel B. Davis (1) 58 Chairman of the Board, Chief Executive
Officer, Treasurer and Director
Robert S. Hamilton (2) 71 Vice Chairman of the Board and Director
C. William McBee (3) 57 Chief Operating Officer, President, Secretary
and Director
Samuel N. Davis (4) 35 Vice President, Development and Director
William A. Duelge (5) 41 Vice President, Sales and Marketing
Stewart M. Graves (6) 49 Vice President, International
Barry Pritchard (7) 41 Vice President, Technology and Equipment
Development
</TABLE>
(1) Samuel B. Davis has been Chairman of the Board, Chief Executive Officer
and Treasurer since August, 1982. Mr. Davis was President from
September, 1991 to December, 1997 upon the promotion of C. William
McBee.
(2) Robert S. Hamilton has been Vice Chairman of the Board since July,
1989. Mr. Hamilton was President and Chief Operating Officer from
April, 1984 to September, 1991 with a period of retirement from
January, 1990 to May, 1990 and another period of retirement from
September, 1991 until May, 1995.
(3) C. William McBee has been Chief Operating Officer and President since
December, 1997. Mr. McBee became a director in April, 1995. From
October, 1994 until December, 1997, Mr. McBee was Vice President of
Manufacturing. Mr. McBee was also Vice President, Administration from
February, 1994 to October, 1995.
(4) Samuel N. Davis became Vice President, Development and an executive
officer in April, 1996. From September, 1995 until April, 1996, Mr.
Davis held the position of Special Projects Coordinator. From January,
1993 through August, 1995, Mr. Davis was an active investor in
Zacchaeus Clothiers, Columbus, Ohio, a clothing retailer. Prior to
January, 1993, Mr. Davis held various offices with Liqui-Box.
(5) William A. Duelge became Vice President, Sales and Marketing and an
executive officer in December, 1999. Mr. Duelge was Vice President of
National Applications for Xpedx Division of International Paper in
Atlanta, Georgia from August 1998 through July 1999. From January, 1995
through August, 1998, Mr. Duelge was Vice President of National
Applications for Zellerbach Division of Mead Corporation in Tampa,
Florida and Atlanta, Georgia.
(6) Stewart M. Graves became Vice President, International and an executive
officer in August, 1996. From January, 1994 until August, 1996, Mr.
Graves held the position of Managing Director of LB Europe Limited.
(7) Barry Pritchard became Vice President, Technology and Equipment
Development and an executive officer December, 1998. Prior to December,
1998, Mr. Pritchard held the position of Service Engineering Manager
and Vice President of Technology and Development, Inpaco, Division of
Liqui-Box.
5
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PART II
Item 7a. Quantitative and Qualitative Disclosures 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 1999 and 1998, European operations accounted for approximately 13% 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. During 1999, the Company entered into forward exchange
contacts to hedge against foreign currency fluctuations wherever economically
feasible. The contracts were generally less than one year and at January 1, 2000
there were no contracts outstanding. The counter-parties to the forward exchange
contracts were financial institutions with investment grade credit ratings.
During 1999, the Company changed its hedging methodology and began maintaining
cash balances in various foreign currencies to hedge transactions which are to
be settled in the business unit's functional currency. Reference is made to Note
1 Foreign Currency Translation in the Notes to the Financial Statements 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 January 1, 2000 was
approximately $1,252,000 with the corresponding unrealized gain included as a
component of stockholders' equity. A hypothetical 10% decrease in the quoted
market price of marketable securities would not materially impact operating
results or cash flow.
Interest Rate Risk
The interest payable for the Company's revolving credit facilities are affected
by changes in market interest rates. However, the Company has the option to pay
balances in full at any time without penalty. As a result, the Company believes
that the market risk is minimal.
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Pages
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The following items are incorporated herein by reference from the indicated
pages of the 1999 Annual Report:
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters 3
Item 6. Selected Financial Data 3
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operation 4 - 7
Item 8. Financial Statements and Supplementary Data 8 - 22
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure None
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6
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PART III
The following items are incorporated herein by reference from the indicated
pages of the Registrant's definitive Proxy Statement for its 2000 Annual Meeting
filed pursuant to Regulation 14A of the Securities Exchange Act of 1934.
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Item 10. Directors and Executive Officers of the Registrant 3 - 4
In addition, certain information concerning the executive officers
of the Registrant called for in this Item 10 is set forth in the
portion of Part I of this Annual Report on Form 10-K, entitled
"Executive Officers of the Registrant".
Item 11. Executive Compensation 5 - 8
Neither the Report of the Board of Directors and Stock Option Committee
on executive compensation, nor the performance graph included in the
Registrant's definitive Proxy Statement for its 2000 Annual Meeting,
are incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners 2 - 3
and Management
Item 13. Certain Relationships and Related Transactions 4, 5 and 10
</TABLE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K:
(a)(1) The following consolidated financial statements of Liqui-Box
Corporation and Subsidiaries, included in the Registrant's 1999 Annual
Report, are incorporated by reference in Item 8 and filed as Exhibit 13
to this report. The page numbers indicate the location of the
consolidated financial statements in the Registrant's 1999 Annual
Report.
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Consolidated Balance Sheets
--January 1, 2000 and January 2, 1999 8 - 9
Consolidated Statements of Income
--Fifty-two weeks ended January 1, 2000,
Fifty-two weeks ended January 2, 1999 and
Fifty-three weeks ended January 3, 1998 10
Consolidated Statements of Cash Flows
--Fifty-two weeks ended January 1, 2000,
Fifty-two weeks ended January 2, 1999,
Fifty-three weeks ended January 3, 1998 11
Consolidated Statements of Stockholders' Equity
--Fifty-two weeks ended January 1, 2000,
Fifty-two weeks ended January 2, 1999 and
Fifty-three weeks ended January 3, 1998 12 - 13
</TABLE>
7
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Item 14. (continued)
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Notes to Consolidated Financial Statements 14 - 21
Report of Independent Auditors 22
Report of Independent Auditors on Financial Statement Schedules.
The page number indicates the location in this Form 10-K 61
(a)(2) The following consolidated financial statement schedules of
Liqui-Box Corporation and Subsidiaries are included pursuant to Item
14(d). The page number indicates the location in this Form 10-K.
II - Valuation and Qualifying Accounts 10
</TABLE>
Schedules other than those listed above are omitted because they are not
required or are not applicable.
(a)(3) Listing of Exhibits - The following exhibits are included
pursuant to Item 14(c). The page number indicates the location
of the exhibit in this Form 10-K.
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EXHIBIT NO. DESCRIPTION PAGES
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3A Amended Articles of Incorporation of the Registrant as filed
with the Ohio Secretary of State on December 14, 1995 are
incorporated by reference to the Registrant's Form 10-K for
the fiscal year ended December 30, 1995 filed with the
Securities and Exchange Commission (Exhibit 3A) (File number
0-8514) N/A
3B Code of Regulations as amended of the Registrant are
incorporated by reference to the Registrant's Form 10-Q for
the fiscal quarter ended July 1, 1995 filed with the
Securities and Exchange Commission (Exhibit 3B) (File number
0-8514) N/A
9 Voting Trust and Right of First Refusal Agreement, effective
as of September 29, 1993, by and among Mary Ann Davis, Samuel
B. Davis, as Voting Trustee, and Samuel B. Davis,
individually, is incorporated by reference to Amendment No. 6
to Schedule 13D of Samuel B. Davis filed on March 6, 1995
(Exhibit 1). N/A
10A-C EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
10A 1990 Liqui-Box Stock Option Plan is incorporated by reference
to the Registrant's Form 10-Q for the fiscal quarter ended
June 30, 1990 filed with the Securities and Exchange
Commission ( Exhibit 19(a)) (File number 0-8514). N/A
10B Summary of Profit Participation Program is incorporated by
reference to the Registrant's Form 10-K for the fiscal year
ended January 2, 1993 filed with the Securities and Exchange
Commission (Exhibit 10E) (File number 0-8514). N/A
10C Executive Deferred Compensation Plan 15 - 34
13 Annual Report to Stockholders for the fiscal year ended
January 1, 2000 36 - 59
21 Subsidiaries of the Registrant 60
23 Independent Auditors' Consent and Report on Schedule (Deloitte
& Touche LLP) 61
24 Powers of Attorney 62 - 69
27 Financial Data Schedule 70
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(b) No report on Form 8-K was filed during the fourteen weeks
ended January 1, 2000.
8
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(c) Exhibits filed with this Annual Report on Form 10-K are
attached hereto. See Index to Exhibits at page 13.
(d) Financial Statement Schedules -- See Item 14.(a)(2)
9
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(amounts rounded to the nearest thousand dollars)
LIQUI-BOX CORPORATION AND SUBSIDIARIES
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Column A Column B Column C Column D Column E
Additions
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Balance at Charged to Charged Balance at
Beginning Costs and to Other End of
Description of Period Expenses Accounts Deductions (1) Period
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Reserves deducted from assets:
Fifty-two weeks ended
January 1, 2000:
Allowance for
doubtful accounts $ 946,000 $ 209,000 $ (425,000) $ 730,000
Fifty-two weeks ended
January 2, 1999:
Allowance for
doubtful accounts $ 933,000 $ 384,000 $ (371,000) $ 946,000
Fifty-three weeks ended
January 3, 1998:
Allowance for
doubtful accounts $ 742,000 $ 685,000 $ (494,000) $ 933,000
</TABLE>
(1) Uncollectible accounts written off, net of recoveries and other adjustments.
10
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Date: 3/29/00 By: *Samuel B. Davis
--------------------------------- ---------------------------------
Samuel B. Davis
Chairman of the Board, Chief
Executive Officer, Treasurer and
Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: 3/29/00 By: *Samuel B. Davis
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Samuel B. Davis
Chairman of the Board,
Chief Executive Officer,
Treasurer and Director
Date: 3/29/00 By: *Samuel N. Davis
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Samuel N. Davis
Director
Date: 3/29/00 By: *Robert S. Hamilton
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Robert S. Hamilton
Director
Date: 3/29/00 By: *Charles R. Coate
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Charles R. Coate
Director
Date: 3/29/00 By: *C. William McBee
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C. William McBee
President, Chief Operating
Officer, Director
and Secretary
Date: 3/29/00 By: *Carl J. Aschinger, Jr.
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Carl J. Aschinger, Jr.
Director
Date: 3/29/00 By: *Russell M. Gertmenian
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Russell M. Gertmenian
Director
Date: 3/29/00 By: *Paul J. Maynard
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Paul J. Maynard
Director of Finance
11
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Date: 3/29/00 By: /s/ Paul J. Maynard
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Paul J. Maynard
Attorney in Fact
12
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Index to Exhibits
Listing of Exhibits - The following exhibits are included in Item 14(c). The
page number indicates the location of the exhibit in this Form 10-K.
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Exhibit No. Description Pages
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3A Amended Articles of Incorporation of the Registrant as filed with the
Ohio Secretary of State on December 14, 1995 are incorporated by
reference to the Registrant's Form 10-K for the fiscal year
ended December 30, 1995 filed with the Securities and Exchange
Commission (Exhibit 3A) (File number 0-8514) N/A
3B Code of Regulations as amended of the Registrant are
incorporated by reference to the Registrant's Form 10-Q for
the fiscal quarter ended July 1, 1995 filed with the
Securities and Exchange Commission (Exhibit 3B) (File number
0-8514) N/A
9 Voting Trust and Right of First Refusal Agreement, effective
as of September 29, 1993, by and among Mary Ann Davis, Samuel
B. Davis, as Voting Trustee, and Samuel B. Davis,
individually, is incorporated by reference to Amendment No. 6
To Schedule 13D of Samuel B. Davis filed on March 6, 1995
(Exhibit 1). N/A
10A 1990 Liqui-Box Stock Option Plan is incorporated by reference
to the Registrant's Form 10-Q for the fiscal quarter ended
June 30, 1990 filed with the Securities and Exchange
Commission ( Exhibit 19(a)) (File number 0-8514). N/A
10B Summary of Profit Participation Program is incorporated by
reference to the Registrant's Form 10-K for the fiscal year
ended January 2, 1993 filed with the Securities and Exchange
Commission (Exhibit 10E) (File number 0-8514). N/A
10C Executive Deferred Compensation Plan 15 - 34
13 Annual Report to Stockholders for the fiscal year ended
January 1, 2000 36 - 59
21 Subsidiaries of the Registrant 60
23 Independent Auditors' Consent and Report on Schedule (Deloitte
& Touche LLP) 61
24 Powers of Attorney 62 - 69
27 Financial Data Schedule 70
</TABLE>
13
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LIQUI-BOX CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
EFFECTIVE: DECEMBER 1, 1999
<PAGE>
LIQUI-BOX CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
Effective December 1, 1999, Liqui-Box Corporation adopts this Plan to provide
deferred compensation to a select group of its management or highly compensated
employees. This Plan is intended to be an unfunded, nonqualified program of
deferred compensation within the meaning of Title I of ERISA.
ARTICLE I
DEFINITIONS
Whenever used in this Plan, the following words and phrases will have the
meaning given below. Also, the singular form of any term will include the
plural, the plural form will include the singular, the masculine pronoun will
include the feminine and the feminine pronoun will include the masculine. Other
words and phrases also may be defined in the Plan text.
ACCOUNTS means the Nonqualified Employee Deferral Accounts, Employer
Nonqualified Matching Contribution Accounts, Nonqualified Stock Option Accounts
and Employer Discretionary Contribution Accounts described in Section 4.01.
AFFILIATE means any entity which, together with the Company, is a member of a
controlled group of corporations or of a commonly controlled group of trades or
businesses [as defined in Code (delta)(delta)414(b) and (c), as modified by
Code(delta)415(h)] or of an affiliated service group [as defined in Code
(delta)414(m)] or other organization described in Code (delta)414(o).
BENEFICIARY means the person or persons designated by a Participant under
Section 2.02 to receive any death benefits payable under Section 6.03.
BOARD means the Company's board of directors.
CHANGE IN CONTROL means the earliest of any of the following:
(a) A date after the Effective Date that any entity or person
(including a "group" as defined in Section 13(d)(3) of the Exchange
Act) becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of 20 percent or more of the Company's outstanding Common
Shares. However, a Change in Control under this paragraph will be
determined without regard to:
(i) Any acquisition by or through an employee benefit plan
maintained by the Company or any Affiliate;
(ii) Any acquisition through a stock option program
maintained by the Company or any Affiliate;
<PAGE>
(iii) Any acquisition through inheritance, gift, bequest or
by operation of law on the death of an individual by
distribution from a trust in existence on the Effective
Date; or
(iv) The redemption of Common Shares by the Company.
(b) The date the Company's shareholders approve a definitive
agreement (i) to merge or consolidate the Company with or
into another corporation in which the Company is not the
continuing or surviving corporation or pursuant to which any
Common Shares would be converted into cash, securities or
other property of another corporation, other than a merger
of the Company in which holders of Common Shares immediately
before the merger have the same proportionate ownership of
shares of the surviving corporation immediately after the
merger as immediately before, or (ii) to sell or otherwise
dispose of substantially all of the Company's assets.
(c) The date there is a change in a majority of the Board within
a 12 month period; provided, however, that any new director
whose nomination for election by the Company's shareholders
was approved, or who was appointed or elected to the Board
by, the vote of two-thirds of the directors then still in
office who were in office at the beginning of the 12 month
period will not be counted when determining if there has
been a change in the majority of the Board.
CODE means the Internal Revenue Code of 1986, as amended.
COMMITTEE means the Plan Committee described in Article VII.
COMMON SHARES means the common shares of the Company, without par value.
COMPANY means Liqui-Box Corporation and any successor to it.
COMPENSATION means (a) each Participant's taxable remuneration (including salary
and incentive bonuses) earned from an Employer after the latest of (i) the
Effective Date, (ii) the date he or she becomes a Participant or (iii) the date
specified in the Participant's Deferral Notice, (b) reduced by any non-cash
remuneration and (c) increased by deferrals made during the same period under
(i) the Qualified 401K Plan, (ii) this Plan and (iii) any cafeteria plan
maintained by an Employer under Code (delta)125.
DEFERRAL NOTICE means the notice that each Executive must complete to specify
the portion of his or her Compensation to be deferred under the Plan. In
addition, a Participant's Deferral Notice may specify the portion of any gain on
the exercise of any Nonqualified Stock Option that is to be deferred under the
Plan. Although a copy of this form is attached to the Plan, it is not a part of
the Plan and may be modified by the Committee without separate action by the
Board.
EFFECTIVE DATE means December 1, 1999.
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EMPLOYER means the Company and any Affiliate which, with the Company's consent,
adopts this Plan.
EMPLOYER DISCRETIONARY CONTRIBUTION ACCOUNT means the account established for
any Participant to whom the Board or the Board's compensation committee awards
an Employer Discretionary Contribution described in Section 3.03.
EMPLOYER NONQUALIFIED MATCHING CONTRIBUTION ACCOUNT means the account
established for each Participant to which Nonqualified Employer Matching
Contributions described in Section 3.02 are allocated.
ENROLLMENT FORM means the form that each Executive must complete before he or
she may participate in the Plan. To be effective, this notice must include all
of the information described in Section 2.01(b). Although a copy of this form is
attached to the Plan, it is not a part of the Plan and may be modified by the
Committee without separate action by the Board.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
EXECUTIVE means each (a) officer of the Company or an Affiliate or (b) employee
of the Company or an Affiliate who is included in the "B-1," "C" or "D"
incentive bonus pools and (c) who also is a member of a select group of
management or highly compensated employees of the Company or an Affiliate.
INACTIVE PARTICIPANT means a Participant who is actively employed by an Employer
but (a) no longer meets the eligibility conditions described in Section 2.01 or
(b) has suspended his or her deferrals under Sections 3.01(b) and 3.04 and is
not receiving an allocation under Section 3.03.
INVESTMENT FUNDS means the funds established by the Committee under Section
5.01. At least one Investment Fund must be comprised of securities other than
Common Shares.
NONQUALIFIED EMPLOYEE DEFERRAL ACCOUNT means the account established for each
Participant to which the deferrals described in Section 3.01 are allocated.
NONQUALIFIED STOCK OPTION means any nonqualified stock option granted to an
Executive under any stock option or stock incentive plan or program maintained
by the Company.
NONQUALIFIED STOCK OPTION ACCOUNT means the account established for each
Participant to which the deferrals described in Section 3.03 are allocated.
PARTICIPANT means (a) an Executive who is participating in the Plan as provided
in Section 2.01, (b) an Inactive Participant or (c) a former Executive who has
terminated employment with each Employer but for whom Participant Accounts are
being maintained.
PLAN means the Liqui-Box Corporation Executive Deferred Compensation Plan, as
described in this document and any amendments to it.
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PLAN YEAR means the calendar year. For the initial year of the Plan, the Plan
Year will be a short year, beginning on the Effective Date and ending on
December 31, 1999.
QUALIFIED 401K PLAN means the Liqui-Box Corporation Employees' Profit Sharing
and Salary Deferral Plan and any amendments to it.
QUALIFIED 401K LIMIT means (a) the limits imposed by Code
(delta)(delta)401(a)(17), 402(g) and 415 and (b) the actual deferral and
contribution percentages for highly compensated employees calculated under the
Qualified 401K Plan for the year that any Deferral Notice is in effect.
SPOUSE OR SURVIVING SPOUSE means an individual who is legally married to the
Participant.
TRUST AGREEMENT means the separate agreement between the Company and the Trustee
described in Article X.
TRUSTEE means the person appointed to administer the fund created under the
Trust Agreement.
VALUATION DATE means the last day of each calendar quarter ending with or within
each Plan Year, or more frequent periods if the Committee, in its sole
discretion, decides that more frequent valuations are needed for any reason.
YEAR OF SERVICE means a year of service credited to a Participant under the
Qualified 401K Plan for purposes of calculating the extent to which the
Participant is vested in his or her Qualified 401K Plan benefit.
ARTICLE II
PARTICIPATION
2.01. ELIGIBILITY AND ELECTION TO PARTICIPATE
(a) In its sole discretion, the Committee will decide which Executives may
participate in the Plan and the earliest date on which they may participate.
(b) Before he or she may participate in the Plan, each eligible Executive must
complete:
(i) An Enrollment Form specifying (A) the date on which the Executive
elects to participate (which may not be earlier than the date specified
by the Committee), (B) the time when his or her Accounts will be
distributed (Section 6.02), (C) if appropriate, how his or her Accounts
will be distributed (Section 6.06), (D) how the value of his or her
Accounts will be measured (subject to the restrictions imposed under
Section 5.01), and (E) his or her Beneficiary.
(ii) A Deferral Notice, to specify (A) the portion of his or her
Compensation to be deferred to the Plan and the portion (if any) of his
or her gain on the exercise of any Nonqualified Stock Option to be
deferred to the Plan.
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The elections made in an Enrollment Form and a Deferral Notice will continue to
be effective until changed.
(c) An eligible Executive will continue to participate until the earlier of the
date he or she (i) becomes an Inactive Participant or (ii) terminates employment
with all Employers.
2.02. DESIGNATION OF BENEFICIARY
(a) Each Executive must designate one or more Beneficiaries when he or she
completes an Enrollment Form. Unless a Participant who designates more than one
Beneficiary also specifies the sequence or the portion of the death benefit to
be paid to each Beneficiary, the death benefit will be paid in equal shares to
all named Beneficiaries.
(b) A Participant may change his or her Beneficiary at any time by identifying
the new Beneficiary in the appropriate portion of a revised Enrollment Form and
delivering that completed form to the Committee. No change of Beneficiary will
be effective until the revised Enrollment Form is received by the Committee. The
identity of a Participant's Beneficiary will be based only on the designation in
the form described in this Section and will not be inferred from any other
evidence.
(c) If a Participant has not made an effective Beneficiary designation or if all
of his or her Beneficiaries die before the Participant, Plan death benefits will
be paid to the Participant's Surviving Spouse. If there is no Surviving Spouse,
these death benefits will be paid (i) to the Participant's issue, then living,
per stirpes; or, if there are none (ii) to the Participant's executors or
administrators. Any minor's share of a Plan death benefit will be paid to the
adult who has been appointed to act as the minor's legal guardian and who has
assumed custody and support of that minor.
(d) The Participant and the Beneficiary (and not the Committee) are responsible
for ensuring that the Committee has the Beneficiary's current address.
ARTICLE III
CONTRIBUTIONS
3.01. PARTICIPANT DEFERRALS
(a) For each Plan Year, every Participant may defer up to 100 percent of
his or her Compensation. The Committee will establish deferral election
procedures that must be followed to make this election. Each
Participant's deferrals will be credited first to his or her account
under the Qualified 401K Plan. However, after the Qualified 401K Limit
has been reached for the year, all subsequent deferrals will be
credited under this Plan to the Participant's Nonqualified Employee
Deferral Account.
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<PAGE>
(b) A Participant may change or suspend the amount being deferred under
paragraph (a) by revising the appropriate Deferral Notice or Enrollment Form in
accordance with rules established by the Committee. Subject to Section 2.01(a),
a Participant who suspends his or her deferrals under paragraph (a) may rejoin
the Plan by returning to the Committee a completed Enrollment Form and by
completing a Deferral Notice that includes all of the information described in
Section 2.01(b). A suspension of his or her deferrals under paragraph (a) will
have no effect on the Participant's ability to make a deferral election under
Section 3.04.
(c) Participant deferrals under paragraph (a) will be made only by payroll
deductions authorized by the Participant.
3.02. EMPLOYER NONQUALIFIED MATCHING CONTRIBUTIONS
(a) For each Plan Year, the Employer will contribute for each Participant the
amount calculated under the following formula:
(i) The smaller of (A) the deferral made under Section 3.01(a) or (B)
the deferral made under Section 3.01(a) that would have been matched
under the Qualified 401K Plan but for the Qualified 401K Limits,
MULTIPLIED BY
(ii) The rate at which these deferrals are matched under the Qualified
401K Plan for that Plan Year, MINUS
(iii) The actual matching contribution made for that Plan Year under
the Qualified 401K Plan.
(b) Employer Nonqualified Matching Contributions calculated under this formula
will be allocated to the Employer Nonqualified Matching Contribution Accounts of
Participants who both (i) deferred a portion of their Compensation to the Plan
for the Plan Year for which the matching contribution is made; and (ii) are
employed by an Employer on the last day of the Plan Year for which the
contribution is made. The Committee will determine the time and manner in which
Employer Nonqualified Matching Contributions will be made.
3.03 EMPLOYER DISCRETIONARY CONTRIBUTIONS
The Board or the Board's compensation committee may make Employer Discretionary
Contributions for any Plan Year. This contribution may be different for each
Plan Year. Also, the Board or the Board's compensation committee may decide to
make no Employer Discretionary Contribution for any Plan Year or to make
different Employer Discretionary Contributions for each Participant. Any
Employer Discretionary Contribution will be allocated to the Employer
Discretionary Contribution Account established for the Executive for whose
benefit this contribution is made.
3.04 NONQUALIFIED STOCK OPTION DEFERRALS
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By completing the appropriate portion of the Deferral Notice, each Executive may
elect to defer any gain that would otherwise be recognized on the exercise of
any Nonqualified Stock Option. If this is done, any gain that the Executive
otherwise would have received on the exercise of the Nonqualified Stock Option
will be credited to his or her Nonqualified Stock Option Account. However, an
Executive may defer this gain only if (a) he or she exercises the Nonqualified
Stock Options under the terms of the plan or program through which the
Nonqualified Stock Options are issued and (b) that plan or program provides that
the gain may be deferred under this Plan. Once made, an election under this
Section may not be revoked.
ARTICLE IV
PARTICIPANT'S ACCOUNTS; ALLOCATIONS
4.01. PARTICIPANT'S ACCOUNTS
The Committee will maintain:
(a) An Employer Nonqualified Matching Contribution Account to record the
Participant's share of:
(i) The Employer Nonqualified Matching Contributions calculated under
Section 3.02, adjusted by the net income, gains or losses attributable
to those amounts (Section 4.02); MINUS
(ii) Any distributions made from this account.
(b) A Nonqualified Employee Deferral Account to record:
(i) The Participant's deferrals calculated under Section 3.01, adjusted
by the net income, gains or losses attributable to those amounts
(Section 4.02); MINUS
(ii) Any withdrawals or distributions made from this account.
(c) An Employer Discretionary Contribution Account to record:
(i) Any Employer Discretionary Contributions awarded to that
Participant under Section 3.03, adjusted by the net income, gains and
losses attributable to those amounts (Section 4.02) MINUS
(ii) Any distributions from this account.
(d) A Nonqualified Stock Option Account to record:
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<PAGE>
(i) The amount of any the Participant has elected to defer on the
exercise of his or her Nonqualified Stock Options under Section 3.04,
adjusted by the net income, gains and losses attributable to those
amounts (Section 4.02) MINUS
(ii) Any distributions from this account.
4.02. CALCULATING NET GAINS OR LOSSES; CREDITING OF ACCOUNTS
As of each Valuation Date, the fair market value of each Investment Fund will be
calculated under Section 5.02. Any increase or decrease in the value of each
Investment Fund, less associated administrative and other Plan expenses
described in Section 7.07, will be allocated to the Accounts of each Participant
who invested in that fund since the preceding Valuation Date. This allocation
will be based on (a) the value of the Investment Fund on the preceding valuation
date and (b) the portion of that value comprised of the Participant's Accounts.
ARTICLE V
INVESTMENT OF CONTRIBUTIONS AND VALUATION OF FUNDS
5.01. INVESTMENT FUNDS
(a) The Committee will establish and maintain one or more Investment Funds under
the Trust described in Article X. Each Participant must select the Investment
Fund or funds into which amounts credited to his or her Employer Nonqualified
Matching Contribution Account, Nonqualified Employee Deferral Account and
Employer Discretionary Contribution Account will be invested. This is done by
completing the appropriate section of the Enrollment Form. The Committee will
establish and announce to Participants rules and regulations relating to
Participants' investment selections, including the frequency with which
investment selections may be changed and the minimum percentage of a
Participant's Account that may be treated as invested in each Investment Fund.
(b) Subject to Section 6.09, all amounts held in a Participant's Nonqualified
Stock Option Account will be invested in Common Shares. These shares will be
credited with any stock and cash dividends paid with respect to other Common
Shares of the same class and type and will be adjusted for any stock splits.
Cash dividends paid with respect to these Common Shares will be invested as
provided in Section 5.01(a). Stock dividends will be held in Common Shares.
5.02. VALUATION OF INVESTMENT FUNDS
As of each Valuation Date, the Committee will determine the actual market value
of each Investment Fund established under Section 5.01. The value of each
Investment Fund will be allocated to Participants' Accounts as provided in
Section 4.02.
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ARTICLE VI
AMOUNT AND DISTRIBUTION OF BENEFITS
6.01. DISTRIBUTION EVENTS
Participants' Accounts will be distributed at the earliest of (a) the time the
Participant specifies in his or her Enrollment Form (Section 6.02) or (b) the
date the Participant (i) dies (Section 6.03), (ii) becomes disabled (Section
6.04), (iii) incurs a financial hardship (Section 6.05) or (iv) terminates
employment with all Employers.
6.02. SPECIFIED DISTRIBUTIONS
Subject to Section 9.01, when completing an Enrollment Form, each Participant
must specify the date that the value of his or her Accounts will be distributed.
Once made, this election will continue to apply until it is changed, subject to
any limitations imposed by the Committee.
6.03. DEATH BENEFITS
The vested value of the Accounts maintained for a deceased Participant will be
paid to that Participant's Beneficiary as of the Valuation Date following the
Participant's death and in the form selected in the Enrollment Form. Any
Beneficiary claiming a death benefit under the Plan must provide the Committee
with satisfactory proof of the Participant's death before any death benefit will
be paid. These distributions will be made in the form described in Section 6.06.
6.04. DISABILITY BENEFITS
A Participant who becomes disabled will receive a distribution of the vested
value of his or her Accounts, determined as of the Valuation Date following the
date the disability is established in the form selected in the Enrollment Form.
A Participant will be considered disabled on the date that it is established by
a licensed physician selected by the Committee that he or she is not able to
engage in any substantial gainful activity because of a medically determinable
physical or mental impairment that is expected to result in death or to be of
long, continued and indefinite duration. The Committee will consistently apply
uniform principles when determining if a Participant is disabled. These
distributions will be made in the form described in Section 6.06.
6.05. HARDSHIP WITHDRAWALS
In its sole discretion, the Committee may distribute all or a portion of the
vested value of a Participant's Beneficiary's Nonqualified Employee Deferral
Account and Nonqualified Stock Option Account before the date otherwise
determined under Section 6.02 if the Committee decides that the applicant has
encountered a severe financial hardship. For these purposes, an applicant will
have incurred a "severe financial hardship" only if he or she needs an immediate
distribution to meet a current and heavy financial expense associated with (i) a
sudden or unexpected illness or accident incurred by the applicant or a member
of the applicant's immediate family or (ii) the loss of the applicant's property
due to casualty or other similar extraordinary and unforeseeable circumstance
attributable to events beyond the applicant's
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<PAGE>
control. A distribution based on financial hardship will be made in a lump sum
and will not be larger than the smaller of (iii) the amount needed to meet the
immediate financial need created by the hardship, reduced by the value of the
amount that may be withdrawn as a hardship withdrawal from the Qualified 401K
Plan or (iv) the value of the applicant's Nonqualified Employee Deferral and
Nonqualified Stock Option Accounts as of the most recent Valuation Date. If a
financial event qualifies as a "hardship" under both this Plan and the Qualified
401K Plan, an applicant may not withdraw any amount from this Plan until he or
she has made the maximum withdrawal allowable under the Qualified 401K Plan and
any withdrawal rights under this Plan will not be available for purposes of
calculating the amount that may be withdrawn from the Qualified 401K Plan.
6.06. AMOUNT AND PAYMENT OF WITHDRAWALS
Subject to Sections 6.09 and 9.01, all distributions made from the Plan to a
Participant or to his or her Beneficiary will be effective as of the Valuation
Date immediately preceding the date the distribution is to be made and will be
paid in the form the Participant selected from among those described in the
Enrollment Form. These distribution forms will be limited to (i) a single lump
sum payment of the full value of the Participant's Account, or (ii) a series of
monthly, quarterly or annual installments (whichever the Participant selected)
for a period not longer than ten years. A Participant or Beneficiary may ask the
Committee to change the form in which his or her benefit will (or is) being
distributed. This request must be made in writing and, unless it relates to a
hardship distribution described in Section 6.05, will be approved by the
Committee only to the extent that it affects distributions made more than 12
months after the date that request is received by the Committee. Once a
Participant's Accounts have been fully distributed, the Company, all Employers
and the Plan will have no further liability to the Participant or, if
appropriate, to his or her Beneficiary.
6.07. VESTED BENEFITS
Subject to paragraph (c), the benefit payable under the Plan to any Participant
will equal:
(a) 100 percent of the value of his or her Nonqualified Employee Deferral and
Nonqualified Stock Option Accounts; and
(b) Subject to Sections 6.09 and the other provisions of this Section, the
percentage of the undistributed value of his or her Employer Nonqualified
Matching Contribution and Employer Discretionary Contribution Accounts
determined under the following schedule:
<TABLE>
<CAPTION>
YEARS OF SERVICE VESTED PERCENTAGE
---------------- -----------------
<S> <C>
Fewer than 3 0 percent
3 20 percent
4 40 percent
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<PAGE>
5 60 percent
6 80 percent
7 or more 100 percent
</TABLE>
Any forfeitures that arise from a Participant's termination of employment before
he or she is fully vested (other than terminations described in Section
6.07(c)(i) and (ii)) in his or her Employer Nonqualified Matching Contribution
or Employer Discretionary Contribution Accounts are fully vested will, in the
Company's discretion, be used to reduce future Employer Nonqualified Matching or
Employer Discretionary Contributions.
(c) A Participant's Employer Nonqualified Matching Contribution and Employer
Discretionary Contribution Accounts will be fully vested and nonforfeitable if
(i) the Participant dies while actively employed by the Company or any Affiliate
or (ii) the Participant becomes disabled (as defined in Section 6.04) while
actively employed by the Company or any Affiliate.
6.08. DISTRIBUTION OF BENEFITS AND ORDER OF DISTRIBUTION
(a) Benefit distributions will begin not later than 60 days after the date the
benefit is payable.
(b) Benefits will be distributed proportionately from each Participant's or
Beneficiary's Nonqualified Employee Deferral Account, Employer Nonqualified
Matching Contribution Account, and Employer Discretionary Contribution Account.
Benefits will be paid from the Participant's or Beneficiary's Nonqualified Stock
Option Account only after the three Accounts named in the preceding sentence
have been exhausted.
6.09 EFFECT OF CHANGE IN CONTROL
(a) If, within 12 calendar months after a Change in Control, (i) a Participant
terminates employment with the Company and each Affiliate for "Good Reason" or
(ii) his or her employment with the Company and each Affiliate is terminated
without "Cause," the amount credited to his or her Employer Discretionary
Contribution Account and Employer Nonqualified Matching Contribution Account
will be 100 percent vested and will be distributed in a lump sum within 60 days
after the date the Participant's employment terminates.
(b) For purposes of this Section:
(i) "Cause" means a termination of the Participant's employment for any
of the following reasons (A) any unauthorized disclosure by the
Participant of the Company's or Affiliate's business practices or
accounts to a competitor which results in serious damage to the Company
or an Affiliate, (B) willful and wrongful misappropriation by the
Participant of funds, property or rights of the Company or an Affiliate
that results in serious damage to the Company or an Affiliate, (C)
willful and wrongful destruction of business records or other property
by the Participant, that results in serious damage to the
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Company or an Affiliate, (D) conviction of the Participant of a felony
involving moral turpitude or, as the result of a plea bargain,
conviction of the Participant of a misdemeanor, provided the
Participant was originally charged (prior to the plea bargain) with a
felony involving moral turpitude, (E) gross and willful misconduct by
the Participant which results in serious damage to the Company or an
Affiliate or (F) the Participant's material breach of, or inability to
perform his or her regularly assigned duties other than by reason of
disability (as defined in Section 6.04).
(iii) "Good Reason" means a termination of employment because the
Company or Affiliate (A) reduced the Participant's base salary for any
reason other than in connection with the termination of his or her
employment, (B) for any reason other than in connection with the
termination of the Participant's employment, the Company or Affiliate
materially reduces any fringe benefit provided to the Participant below
the level of such fringe benefit provided generally to other actively
employed similarly situated executives of the Company or Affiliate,
unless the Company or Affiliate agrees to fully compensate the
Participant for any such material reduction, (C) the Company or
Affiliate assigns the Participant duties inconsistent in any respect
with his or her position (including, without limitation, his status,
office and title), authority, duties or responsibilities allotted to
the Participant before the Change in Control or takes any other action
that results in a material diminution in such position, authority,
duties or responsibilities or (D) the Company or Affiliate otherwise
materially breaches or is unable to perform its normal obligations to
the Participant under this Plan or any other plan, program or contract.
6.10 SPECIAL PROVISIONS RELATED TO "GOLDEN PARACHUTE" AMOUNTS AND ACCELERATED
INCOME TAX LIABILITIES
(a) If any provision under this Plan, when combined with similar provisions
under any other plan, program or contract between the Company, an Affiliate or
any Participant, results in a "golden parachute" payment larger than the limit
prescribed in Code (delta)280G, the Committee and the Trustee will
proportionately reduce benefits payable under this Plan and any other plan,
program or contract to the limit prescribed by Code (delta)280G.
(b) If the Internal Revenue Service or any other taxing authority establishes
that a Participant is in constructive receipt of any Plan benefit, the Committee
will direct the Trustee to distribute (and the Trustee will immediately
distribute) to the Participant a lump sum amount equal to (i) the amount in
which the Participant is deemed to be in constructive receipt plus (ii) the
additional amount the Participant needs to pay the additional taxes, interest
and penalties arising from that determination.
ARTICLE VII
PLAN COMMITTEE
7.01. APPOINTMENT OF COMMITTEE
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The Board will appoint a committee of at least three persons to administer the
Plan. A Committee member may resign at any time by sending written notice to the
Board specifying the effective date of his or her termination (which must always
be prospective). Vacancies in the Committee will be filled by the Board as the
need arises. Also, in its sole discretion, the Board may remove any Committee
member at any time by giving written notice of removal to the affected Committee
member and specifying the effective date of that action (which must always be
prospective).
7.02. POWERS AND DUTIES
The Committee is fully empowered to exercise complete discretion to administer
the Plan and to construe and apply all of its provisions. The Committee may
delegate any of its powers and duties to any other person or organization. These
powers and duties include:
(a) Deciding which employees are Executives, which of them may participate in
the Plan and the value of their benefit;
(b) Resolving disputes that may arise with regard to the rights of Executives,
Participants and their legal representatives or Beneficiaries under the terms of
the Plan. Subject to Section 7.08, the Committee's decisions in these matters
will be final in each case;
(c) Obtaining from each Employer, Participant and Beneficiary information that
the Committee needs to determine any Participant's or Beneficiary's rights and
benefits under the Plan. The Committee may rely conclusively upon any
information furnished by an Employer, a Participant or Beneficiary;
(d) Compiling and maintaining all records it needs to administer the Plan;
(e) Upon request, furnishing the Company with reasonable and appropriate reports
of its administration of the Plan;
(f) Authorizing the distribution of all benefits that are payable under the
Plan;
(g) Engaging legal, administrative, actuarial, investment, accounting,
consulting and other professional services that the Committee believes are
necessary and appropriate;
(h) Adopting rules and regulations for the administration of the Plan that are
not inconsistent with the terms of the Plan; and
(i) Doing and performing any other acts provided for in the Plan.
7.03. ACTIONS BY THE COMMITTEE
The Committee may act at a meeting, or in writing without a meeting, by the vote
or assent of a majority of its members. The Committee will appoint one of its
members to act as a secretary to
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record all Committee action. The Committee also may authorize one or more of its
members to execute papers and perform other ministerial duties on behalf of the
Committee.
7.04. INTERESTED COMMITTEE MEMBERS
No member of the Committee may participate in any Committee action that directly
and uniquely affects that member's individual interest in the Plan; these
matters will be determined by a majority of the remainder of the Committee.
7.05. INDEMNIFICATION
(a) The Company will indemnify and hold harmless any Committee member or
employee who performs services to or on behalf of the Plan ("Indemnified Party")
against all liabilities and all reasonable expenses (including attorney fees and
amounts paid in settlement other than to the Employer) incurred or paid in
connection with any threatened or pending action, suit or proceeding brought by
any party in connection with the Plan. However, this indemnification will not
extend to any Indemnified Party whose conduct in connection with the Plan is
found to have been grossly negligent or wrongful. This determination will be
based on any final judgment rendered in connection with the action, suit or
proceeding complaining of the conduct or its effect or, if no final judgment is
rendered, by a majority of the Board or by independent counsel to whom the Board
has referred the matter.
(b) The obligations under this section may be satisfied, in the Company's
discretion, through the purchase of a policy or policies of insurance providing
equivalent protection.
7.06. CONCLUSIVENESS OF ACTION
Subject to Section 7.08, any action on matters within the discretion of the
Committee will be conclusive, final and binding upon all Participants and upon
all persons claiming any rights hereunder including Beneficiaries.
7.07. PAYMENT OF EXPENSES
(a) Committee members will not be separately compensated for their services as
Committee members. However, the Employer will reimburse Committee members for
all appropriate expenses they incur while carrying out their Plan duties.
(b) The compensation or fees of accountants, counsel and other specialists and
any other costs of administering the Plan will be paid by the Company or
allocated among Employers.
7.08. CLAIMS PROCEDURE
(a) FILING CLAIMS. Any Participant or Beneficiary who believes that he or she is
entitled to an unpaid Plan benefit may file a claim with the Committee.
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(b) NOTIFICATION TO CLAIMANT. If a claim is wholly or partially denied, the
Committee will send a written notice of denial to the claimant. This notice must
be written in a manner calculated to be understood by the claimant and must
include:
(i) The specific reason or reasons for which the claim was denied;
(ii) Specific reference to pertinent Plan provisions, rules, procedures
or protocols upon which the Committee relied to deny the claim;
(iii) A description of any additional material or information that the
claimant may file to perfect the claim and an explanation of why this
material or information is necessary; and
(iv) A description of the steps the claimant may take to appeal an
adverse determination.
The Committee will render its decision within 90 days of receiving a benefit
claim. However, if special circumstances (such as the need for additional
information) require additional time, this decision will be rendered as soon as
possible, but, not later than 180 days after receipt of the claim and only if
the Committee notifies the claimant, in writing, that it needs more time to
review a claim and why that additional time is needed. If the Committee does not
issue its decision within this period, the claim will be deemed to have been
denied.
(c) REVIEW PROCEDURE. If a claim has been wholly or partially denied, the
affected claimant, or his or her authorized representative may:
(i) Request that the Committee reconsider its initial denial by filing
a written appeal no more than 60 days after receiving written notice
that all or part of the initial claim was denied;
(ii) Review pertinent documents and other material upon which the
Committee relied when denying the initial claim; and
(iii) Submit a written description of the reasons for which the
claimant disagrees with the Committee's initial adverse decision.
An appeal of an initial denial of benefits and all supporting material must be
made in writing and directed to the Committee. The Committee is solely
responsible for reviewing all benefit claims and appeals and taking all
appropriate steps to implement its decision.
The Committee's decision on review will be sent to the claimant in writing and
will include specific reasons for the decision, written in a manner calculated
to be understood by the claimant, as well as specific references to the
pertinent Plan provisions, rules, procedures or protocols upon which the
Committee relied to deny the appeal.
15
<PAGE>
The Committee will render its decision within 60 days of receiving a benefit
appeal. However, if special circumstances (such as the need to hold a hearing on
any matter pertaining to the denied claim) require additional time, this
decision will be rendered as soon as possible, but not later than 120 days after
receipt of the claimant's written appeal and only if the Committee notifies the
claimant, in writing, that it needs more time to review an appeal and why that
additional time is needed. If the Committee does not issue its decision within
this period, the claim will be deemed to have been denied.
ARTICLE VIII
AMENDMENT TO THE PLAN
8.01. RIGHT TO AMEND
(a) Subject to paragraph (b), the Company may modify, alter or amend the Plan or
the Trust Agreement at any time. However, no amendment may affect any
Participant's or Beneficiary's right to receive the value of benefits accrued
under the Plan before the effective date of that amendment.
(b) Regardless of the rights reserved in Section 9.01(a), none of the Company,
any Affiliate or any successor to any of them may amend either the Plan or the
Trust Agreement after a Change of Control.
8.02. AMENDMENT PROCEDURE
The Board of Directors, an executive committee of the Board of Directors, or
other Board committee or any executive officer to which or to whom the Board of
Directors delegates discretionary authority over the Plan, may exercise the
Company's right to amend the Plan.
ARTICLE IX
TERMINATION OF THE PLAN
9.01. RIGHT TO TERMINATE
(a) Subject to paragraph (b), the Company may terminate the Plan or the Trust
Agreement in whole or in part at any time by written action of its. Each
Participant affected by a full or partial Plan termination or by a complete
discontinuance of contributions will be 100 percent vested in the value of all
of his or her Accounts. Also, the Committee may (a) distribute an affected
Participant's Accounts at the time the Plan terminates or partially terminates,
even if this date is earlier than the date benefits otherwise would be
distributed under Article VI or (b) hold those benefits until they are otherwise
payable under the terms of the Plan.
16
<PAGE>
(b) Regardless of the rights reserved in Section 9.01(a), none of the Company,
any Affiliate or any successor to any of them may terminate the Trust Agreement
after a Change of Control.
9.02. PLAN MERGER AND CONSOLIDATION
If the Plan is merged into or consolidated with any other plan, each affected
Participant will be entitled to a benefit immediately after the merger,
consolidation or transfer (determined as if the surviving plan had then
terminated) at least equal to the benefit he or she had accrued immediately
before the merger or consolidation (determined as if the Plan terminated
immediately before that merger or consolidation).
9.03. SUCCESSOR EMPLOYER
If any Employer dissolves into, reorganizes, merges into or consolidates with
another business entity, provision may be made by which the successor will
continue the Plan, in which case the successor will be substituted for the
Employer under the terms and provisions of this Plan. The substitution of the
successor for the Employer will constitute an assumption by the successor of all
Plan liabilities and the successor will have all of the powers, duties and
responsibilities of the Employer under the Plan.
ARTICLE X
FUNDING
This Plan constitutes an unfunded, unsecured promise by the Company to pay only
those benefits that are accrued by Participants under the terms of the Plan.
Neither the Company nor any Affiliate will segregate any assets into a fund
established exclusively to pay Plan benefits unless the Company, in its sole
discretion, establishes a trust for the purpose of holding assets from which all
or part of a Plan benefit may be paid. In this case, the Company will calculate
the amounts to be credited under each Participant's Accounts under Article III
and transfer that amount to the Trustee no later than the end of the second
calendar month beginning after the end of the fiscal year for which the
contribution is made. Also, neither the Company nor any Affiliate is required to
pay any interest on any contribution that is transferred to the trustee within
the period described in the preceding sentence. Neither the Company nor any
Affiliate is liable for the payment of Plan benefits that are actually paid from
a trust established for that purpose. However, the Company (and each Affiliate)
are obliged to pay any benefits not paid from any trust. Also, Participants,
Beneficiaries and other persons claiming a Plan benefit through them have only
the rights of general unsecured creditors and do not have any interest in or
right to any specific asset of any Employer. Nothing in this Plan constitutes a
guaranty by the Company, any Affiliate or any other entity or person that the
assets of the Employer or any Affiliate will be sufficient to pay Plan benefits.
ARTICLE XI
MISCELLANEOUS
17
<PAGE>
11.01. VOLUNTARY PLAN
The Plan is purely voluntary on the part of each Employer; neither the
establishment of the Plan nor any amendment to it nor the creation of any fund
or account nor the payment of any benefits may be construed as giving any person
(a) a legal or equitable right against any Employer or the Committee other than
those specifically granted under the Plan or conferred by affirmative action of
the Committee or any Employer in a manner that is consistent with the terms and
provisions of this Plan or (b) the right to be retained in the service of any
Employer. All Participants remain subject to discharge to the same extent as
though this Plan had not been established.
11.02. NON-ALIENATION OF BENEFITS
The right of a Participant, Beneficiary or any other person to receive Plan
benefits may not be assigned, transferred, pledged or encumbered except as
provided in the Participant's Beneficiary designation, by will or by applicable
laws of descent and distribution. Any attempt to assign, transfer, pledge or
encumber a Plan benefit will be null and void and of no legal effect.
11.03. INABILITY TO RECEIVE BENEFITS
Any Plan benefit payable to a Participant or Beneficiary who is declared
incompetent will be paid to the guardian, conservator or other person legally
charged with the care of his or her person or estate. Also, if the Committee, in
its sole discretion, concludes that a Participant or Beneficiary is unable to
manage his or her financial affairs, the Committee may, but is not required to,
direct the Company or Trustee to distribute Plan benefits to any one or more of
his or her Spouse, lineal ascendants or descendants or other close living
relatives of the Participant or Beneficiary who demonstrates to the satisfaction
of the Committee the propriety of those distributions. Any payment made under
this Section will completely discharge the Plan's liability with respect to that
payment. The Committee is not required to see to the application of any
distribution made to any person.
11.04. LOST PARTICIPANTS
Each Participant is obliged to keep the Committee apprised of his or her current
mailing address and that of his or her Beneficiary. The Committee's obligation
to search for any Participant or Beneficiary is limited to sending a registered
or certified letter to the Participant's or Beneficiary's last known address.
Any amounts credited to the Accounts of any Participant or Beneficiary who does
not file a claim for benefits with the Committee will be forfeited no later than
12 months after benefits are otherwise payable and, in the Company's discretion,
be used to reduce future Employer Nonqualified Matching or Employer
Discretionary Contributions. However, this forfeited benefit will be restored
and paid if the Committee subsequently approves a claim for benefits under the
procedures described in Section 7.08.
11.05. LIMITATION OF RIGHTS
18
<PAGE>
Nothing in the Plan, expressed or implied, is intended or may be construed as
conferring upon or giving to any person, firm or association (other than the
Company, an Affiliate, Participants, their Beneficiaries and their successors in
interest) any right, remedy or claim under or by reason of this Plan.
11.06. INVALID PROVISION
If any provision of this Plan is held to be illegal or invalid for any reason,
the Plan will be construed and enforced as if the offending provision had not
been included in the Plan. However, that determination will not affect the
legality or validity of the remaining parts of this Plan.
11.07. ONE PLAN
This Plan may be executed in any number of counterparts, each of which will be
deemed to be an original.
11.08. GOVERNING LAW
The Plan will be governed by and construed in accordance with the laws of the
United States and, to the extent applicable, the laws of Ohio.
IN WITNESS WHEREOF, the undersigned authorized officer of the Company has
executed this Plan to be effective as of December 1, 1999.
LIQUI-BOX CORPORATION
By: _______________________________
Print Name: ________________________
Title: ______________________________
Date: ____________
19
<PAGE>
LETTER TO THE SHAREHOLDERS
I am pleased to report that 1999 was another great year of increased profits for
Liqui-Box Corporation. We maintained a consistent focus on improving operations
and developing innovations to our product lines in order to meet the
ever-changing needs of the marketplace. These critical elements have improved
the top line as well. As a result (and thanks in part to the Y2K phenomenon), we
made some significant gains in sales across all product lines.
In 1999 we made important organizational decisions that will shape our future.
To support the strategic direction of increasing our value to customers, we
continued to strengthen the sales management group. As a direct result of
regular strategy meetings, we directed the efforts of the sales team to focus on
key markets. We now have industry managers who are empowered to draw on all
resources of the company to utilize the best personnel available in providing
solutions to customer needs.
We also hold monthly Executive Steering Committee meetings, where key staff
members come together to better focus on the key initiatives of the company.
These face-to-face meetings have vastly improved our communication around the
issues of developing markets, engineering and product development.
Expanding Liqui-Box's global presence is a longer-term goal. We are keenly
interested in new geographic areas where we can leverage our skills and
technologies. We have made key contacts and progress in this area as well, but
the benefits will be longer in coming.
As we enter the new century, we see exciting challenges as well as progress in
sharpening and executing our strategies for growth and innovation. On an ongoing
basis we study the evolving business practices of our customers. In conjunction
with this we consistently analyze our products and processes for new product
development.
We strive to retain talented, committed associates with a profound passion for
winning. In doing so, we build on our strengths, seize our opportunities and
capitalize on them to the continued benefit of our shareholders.
This focus is becoming increasingly more critical as consolidations continue in
all industries and the marketplace becomes more competitive. However, this is an
ideal environment where innovation becomes more valuable than ever. We continue
to believe that this is our key strength, and one which is shared by all
Liqui-Box personnel.
<PAGE>
DATA PER COMMON SHARE
The reported low and high closing prices on the NASDAQ National Market as
reported by the National Quotation Bureau,
Inc. and cash dividends per share were as follows:
<TABLE>
<CAPTION>
1999 1998
Cash Cash
Dividends Dividends
Low High Per Share Low High Per Share
<S> <C> <C> <C> <C> <C> <C>
First Quarter 48 1/4 55 $0.18 36 3/4 49 1/2 $0.15
Second Quarter 47 1/4 54 7/16 $0.18 40 3/16 53 3/8 $0.15
Third Quarter 51 1/4 55 $0.20 41 1/2 57 $0.18
Fourth Quarter 49 1/2 55 1/2 $0.20 38 1/4 53 7/8 $0.18
</TABLE>
As of January 1, 2000, there were 653 holders of record of common shares.
Credit facility covenants restrict cash dividends to 50% of net income.
<PAGE>
FINANCIAL HIGHLIGHTS
For the Five Fiscal Years Ended January 1, 2000 (In thousands of dollars, except
for per share data)
<TABLE>
<CAPTION>
SELECTED INCOME STATEMENT DATA 1999 1998 1997 (1) 1996 1995
<S> <C> <C> <C> <C> <C>
Net Sales $165,227 $154,656 $154,145 $152,368 $156,373
Income Before Taxes 31,649 28,838 26,115 24,109 20,038
Net Income 19,134 17,043 15,646 14,519 12,085
Net Income as a % of Net Sales 11.6% 11.0% 10.2% 9.5% 7.7%
Return on Stockholders' Equity 27.5% 24.7% 19.9% 17.7% 15.8%
Earnings Per Share
Basic $4.20 $3.62 $2.77 $2.44 $1.94
Diluted $4.00 $3.45 $2.72 $2.41 $1.92
SELECTED BALANCE SHEET DATA
Total Assets $94,890 $92,074 $97,442 $100,016 $90,796
Long-term Obligations - - - - -
Cash Dividends Per Share $0.76 $0.66 $0.52 $0.48 $0.42
Book Value Per Share $16.30 $14.14 $14.06 $14.47 $13.02
Market Price at Fiscal Year-end $49.50 $52.00 $39.06 $32.75 $29.63
</TABLE>
(1) Includes 53 weeks
<PAGE>
SHARE REPURCHASE PROGRAM
Liqui-Box is committed to increasing the market value of each share of its
common stock outstanding. As part of this commitment the Company closely
monitors the current market price on a daily basis. During 1999, 1998 and
1997 the Company felt that the market undervalued its common stock and as a
result, the Company began an aggressive campaign to repurchase its common
shares outstanding. During 1999 and 1998 Liqui-Box repurchased 172,168 common
shares at an aggregate cost of $8,773,000 and 605,863 common shares at an
aggregate cost of $23,902,000, respectively. The Company purchased an
additional 58,700 common shares from January 2, 2000 through March 13, 2000
at an aggregate cost of $2,734,000. The grand total of the above purchases
was $11,507,000 at an average cost of $49.84. These would have had a total
market value of $10,923,000 based on a closing price of $47 5/16 on March 13,
2000.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
1999 COMPARED TO 1998
During 1999, Liqui-Box Corporation (the "Company") experienced a 7% increase in
net sales dollars on a 6% increase in unit sales compared to 1998. The increase
in net sales dollars can be primarily attributed to comparable increases in unit
sales. Selling prices on most products generally increased as did the cost of
the Company's prime raw material, plastic resin.
Gross margin, as a percentage of net sales, was 37.2% in 1999 and 35.4% in 1998.
This increase is primarily the result of improvements in plant efficiencies and
mix of product sales.
Selling, administrative and development expenses in 1999 were $29,908,000
compared to $25,589,000 in 1998, an increase of $4,319,000. This increase is
primarily due to an increase in compensation-related costs, depreciation and
maintenance costs, and an increase in data processing expenses. The increase in
compensation-related costs in 1999 is the result of the Company's compensation
program, which bases a significant portion of employees' total compensation on
Company profitability. The increase in depreciation and maintenance results from
the Company's commitment to ensure its facilities and production equipment
operate efficiently. The increase in data processing expenses is the result of
continued updating of the Company's computer systems.
Research and development costs were $1,436,000 in 1999 and $1,221,000 in 1998,
an increase of $215,000. The 1999 costs included significant costs associated
with improvements of existing products, as well as the development of new
generation products. These amounts include direct costs associated with research
and development only. The Company and all of its employees share a commitment to
continually improve existing products and processes as well as developing new
products.
Net income increased by 12% to $19,134,000 compared to $17,043,000 in 1998. This
increase is a result of the increase in gross margin, which was partially offset
by the increase in selling, administrative and development expenses and income
taxes. The provision for income taxes was 39.5% and 40.9% of before tax income
in 1999 and 1998, respectively. The decrease in the effective tax rate resulted
primarily from state and local tax refunds from the prior year.
At the end of 1999 and 1998 Liqui-Box had no significant backlog of orders,
which is industry typical.
1998 COMPARED TO 1997
During 1998, the Company experienced a 0.3% increase in net sales dollars on a
5.3% increase in unit sales compared to 1997. The increase in net sales dollars
to $154,656,000 in 1998 from $154,145,000 in 1997 was the result of the increase
in unit sales. The unit sales were partly offset by sales mix and price changes
attributed to decreased selling prices due to a 1998 decrease in the cost
<PAGE>
of the Company's prime raw material, plastic resin. Fiscal year 1998 consisted
of 52 weeks while fiscal year 1997 consisted of 53 weeks.
Gross margin, as a percentage of net sales, was 35.4% in 1998 and 31.9% in 1997.
This increase is primarily the result of improvements in plant efficiencies and
mix of product sales.
Selling, administrative and development expenses in 1998 were $25,589,000
compared to $24,151,000 in 1997, an increase of $1,438,000. This increase is
primarily due to an increase in compensation-related costs and an increase in
data processing expenses. The increase in compensation-related costs in 1998 is
the result of the Company's compensation program, which bases a significant
portion of employees' total compensation on Company profitability. The increase
in data processing expenses is the result of updating the Company's computer
systems.
Research and development costs were $1,221,000 in 1998 and $1,371,000 in 1997, a
decrease of $150,000. The 1997 costs included significant costs associated with
development of the Company's new clear PET Handi-Tap. These amounts include
direct costs associated with research and development.
Net income increased by 8.9% to $17,043,000 compared to $15,646,000 in 1997.
This increase is a result of the increase in gross margin, which was partially
offset by the increase in selling, administrative and development costs and
income taxes. The provision for income taxes was 40.9% and 40.1% of before tax
income in 1998 and 1997, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Total working capital at year-end was $29,242,000, $16,247,000 and $23,521,000
in 1999, 1998 and 1997, respectively. The ratio of current assets to current
liabilities was 2.5 to 1 in 1999, 1.6 to 1 in 1998 and 2.0 to 1 in 1997. The
1999 increase is primarily the result of an increase in accounts receivable and
a reduction of short-term borrowings. Net cash provided from operations was
$26,254,000 for 1999 compared to $23,957,000 in 1998 and $30,177,000 in 1997.
The increase in cash provided in 1999 was the result of the increase in net
income, which was offset by changes in operating assets and liabilities. Net
cash used in investing activities was $4,547,000 for 1999 compared to $9,591,000
in 1998 and $9,628,000 in 1997. The cash used in investing activities was
primarily for purchases of new plant equipment and improvements to existing
property and plant equipment. Cash used in financing activities was $18,542,000
for 1999 compared to $23,124,000 in 1998 and $17,615,000 in 1997. The cash used
in financing activities was primarily for the acquisition of treasury stock, the
payment of cash dividends and repayment of the Company's revolving line of
credit.
Liqui-Box's major commitments for capital expenditures as of January 1, 2000,
were, as they have been in the past, primarily for increasing capacity at
existing locations, building filling machines for lease and tooling for new
products. Funds required to fulfill these commitments are expected to be
provided by operations.
There have been no significant changes in the Company's capitalization during
the past three years except for the repurchase of and the issuance of treasury
shares. The common shares have been
<PAGE>
purchased at prices considered fair by management and there has been cash
available for the purchases. The Company feels the purchases represent a good
investment and secure common shares for issuance under the Company's employee
benefit plans.
Financing arrangements with The Huntington National Bank ("Bank") provide
various credit facilities with a total commitment of $30,000,000. There was
nothing outstanding under these commitments as of January 1, 2000. A portion of
these credit facilities ($20,000,000) expires on April 30, 2000; however,
management has a commitment from the Bank to renew these facilities on terms
comparable to the existing facility. The remaining portion of these facilities
expires on April 30, 2004. Barclays Bank PLC provides a secured credit facility
to the Company's European subsidiary of $3,280,000 that expires August 10, 2000.
The amount outstanding under this facility was $3,283,000 at January 1, 2000.
Longer-term cash requirements, other than those related to normal operations,
relate to financing anticipated growth; increasing capacity at existing plants;
developing new products and enhancing of existing products; dividend payments;
and possibly continuing 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 2000 fiscal year.
During 1999, the Company experienced general increases in the costs of plastic
resin, but the Company was able to obtain an adequate supply for its needs. In
2000, it is uncertain what will happen to plastic resin prices. The Company
anticipates that during 2000, there will be an adequate supply of the major
types of plastic resin it purchases.
Management feels that inflation did not have a material effect on the Company
during 1999, 1998 or 1997. The Company has the ability to adjust prices as the
cost of resin changes; however, there is generally a time lag between when the
Company incurs a change in resin cost and when that change is passed on to a
customer.
YEAR 2000
The Year 2000 (Y2K) issue concerned the inability of information systems to
properly recognize and process date-sensitive information beyond January 1,
2000. The Company has completed the required modifications to its information
systems. Modification costs have been expensed as incurred. Since inception of
the Company's efforts to address the Y2K issue, approximately $1,600,000 has
been incurred. The Company does not anticipate additional material expenses
related to the Y2K issue.
The Company has not experienced significant Y2K issues subsequent to 1999's
fiscal year end and does not anticipate any future incidents which would
materially impact operations.
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
<PAGE>
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. As of March
13, 2000, the Company has not become aware of any negative impact on the Company
resulting from the EMU formation and Euro implementation. The Company has not
yet determined the cost, if any, related to addressing this issue 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 required to adopt this statement in January
2001. The Company does not believe adoption of this statement will have a
significant impact, if any, on its financial statements.
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
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. It is
not possible to identify or foresee all such risks and uncertainties, and the
foregoing should not be considered an exhaustive statement of all risks or
uncertainties relating to such forward-looking statements. 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 these forward-looking statements to reflect new events or
circumstances.
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS January 1, 2000 January 2, 1999
- ------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $ 11,635,000 $ 8,685,000
Accounts receivable:
Trade, net of allowance for doubtful accounts
of $730,000 and $946,000, respectively 19,579,000 14,613,000
Other 446,000 423,000
--------------- ---------------
Total receivables 20,025,000 15,036,000
Inventories:
Raw materials and supplies 8,256,000 7,551,000
Work in process 2,460,000 3,699,000
Finished goods 3,334,000 3,066,000
--------------- ---------------
Total Inventories 14,050,000 14,316,000
Deferred tax assets 2,602,000 2,564,000
Other current assets 808,000 683,000
--------------- ---------------
TOTAL CURRENT ASSETS 49,120,000 41,284,000
- ------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT - at Cost
- ------------------------------------------------------------------------------------------------------------
Land, buildings and leasehold improvements 15,158,000 14,986,000
Equipment and vehicles 77,122,000 71,299,000
Equipment leased to customers 16,691,000 18,497,000
Construction in process 2,706,000 2,660,000
--------------- ---------------
TOTAL 111,677,000 107,442,000
Less accumulated depreciation and amortization (78,448,000) (70,847,000)
--------------- ---------------
Property, plant and equipment, net 33,229,000 36,595,000
- ------------------------------------------------------------------------------------------------------------
OTHER ASSETS
- ------------------------------------------------------------------------------------------------------------
Goodwill, net of amortization 7,855,000 8,515,000
Deferred charges and other assets, net 4,686,000 5,680,000
--------------- ---------------
Total other assets 12,541,000 14,195,000
TOTAL ASSETS $ 94,890,000 $ 92,074,000
=============== ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY January 1, 2000 January 2, 1999
- -------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accounts payable $10,955,000 $7,718,000
Short-term borrowings 3,283,000 10,800,000
Dividends payable 903,000 837,000
Salaries, wages and related liabilities 1,971,000 1,883,000
Federal, state and local taxes - 1,172,000
Other accrued liabilities 2,766,000 2,627,000
--------------- ---------------
TOTAL CURRENT LIABILITIES 19,878,000 25,037,000
- -------------------------------------------------------------------------------------------------------
OTHER NONCURRENT LIABILITIES
- -------------------------------------------------------------------------------------------------------
Deferred income taxes 1,468,000 1,271,000
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 9,505,000 8,588,000
Accumulated other comprehensive income 1,596,000 2,185,000
Retained earnings 151,608,000 135,929,000
Less:
Treasury stock, at cost - 2,751,439 and
2,611,117 shares, respectively (90,375,000) (82,146,000)
=======================================================================================================
TOTAL STOCKHOLDERS' EQUITY 73,544,000 65,766,000
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 94,890,000 $ 92,074,000
=============== ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
- ----------------------------------------------------------------------------------------------------------
Fifty-two Fifty-two Fifty-three
Weeks Ended Weeks Ended Weeks Ended
January 1, January 2, January 3,
2000 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
NET SALES $165,227,000 $154,656,000 $154,145,000
Cost of Sales 103,693,000 99,849,000 104,984,000
-------------- -------------- --------------
Gross Margin 61,534,000 54,807,000 49,161,000
Selling, administrative and
development expenses 29,908,000 25,589,000 24,151,000
-------------- -------------- --------------
Operating Income 31,626,000 29,218,000 25,010,000
OTHER INCOME (EXPENSE):
Interest and dividend income 381,000 331,000 923,000
Interest expense (315,000) (536,000) (59,000)
Other, net (43,000) (175,000) 241,000
-------------- -------------- --------------
INCOME BEFORE INCOME TAXES 31,649,000 28,838,000 26,115,000
TAXES ON INCOME 12,515,000 11,795,000 10,469,000
-------------- -------------- --------------
NET INCOME $19,134,000 $17,043,000 $15,646,000
OTHER COMPREHENSIVE INCOME
(EXPENSE), NET OF TAX:
Foreign currency translation adjustments (213,000) 8,000 (744,000)
Unrealized gain (loss) on marketable securities (376,000) 63,000 267,000
-------------- -------------- --------------
Other comprehensive income (expense) (589,000) 71,000 (477,000)
-------------- -------------- --------------
COMPREHENSIVE INCOME $18,545,000 $17,114,000 $15,169,000
============== ============== ==============
- -------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE
- -------------------------------------------------------------------------------------------------------
Basic $4.20 $3.62 $2.77
Diluted $4.00 $3.45 $2.72
Cash dividends per common share $0.76 $0.66 $0.52
- -------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF SHARES
USED IN COMPUTING EARNINGS PER SHARE:
- -------------------------------------------------------------------------------------------------------
Basic 4,561,383 4,703,198 5,643,479
Diluted 4,785,556 4,944,183 5,760,163
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ----------------------------------------------------------------------------------------------------------------------
Fifty-two Fifty-two Fifty-three
Weeks Ended Weeks Ended Weeks Ended
January 1, January 2, January 3,
2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $19,134,000 $17,043,000 $15,646,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,258,000 7,991,000 7,142,000
Provision for loss on accounts receivable 186,000 370,000 428,000
Amortization of other noncurrent assets 883,000 959,000 1,052,000
Loss (gain) on disposal of property, plant and equipment 57,000 (33,000) (56,000)
Deferred compensation 324,000 275,000 446,000
Changes in deferred income tax accounts 159,000 (1,439,000) (236,000)
Changes in operating assets and liabilities:
Accounts receivable (5,165,000) (592,000) 2,167,000
Inventories 269,000 (563,000) 3,799,000
Other current assets (128,000) (218,000) 54,000
Accounts payable 3,230,000 758,000 321,000
Salaries, wages and related liabilities 79,000 (79,000) 266,000
Other accrued liabilities (1,032,000) (515,000) (852,000)
------------- ------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 26,254,000 23,957,000 30,177,000
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- ----------------------------------------------------------------------------------------------------------------------
Purchase of property, plant and equipment (6,528,000) (9,050,000) (11,467,000)
Proceeds from sale of property, plant and equipment 1,586,000 2,042,000 1,863,000
Purchase of patents and other intangibles - (2,500,000) -
Purchase of investments (261,000) - -
Other changes, net 656,000 (83,000) (24,000)
------------- ------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (4,547,000) (9,591,000) (9,628,000)
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- ----------------------------------------------------------------------------------------------------------------------
Acquisition of treasury shares (8,773,000) (23,902,000) (25,250,000)
Sale of treasury shares 20,000 255,000 -
Exercise of stock options, including tax benefit 1,117,000 2,603,000 611,000
Cash dividends (3,389,000) (2,880,000) (2,976,000)
Proceeds from short-term borrowings 13,620,000 6,300,000 10,000,000
Repayment of short-term borrowings (21,137,000) (5,500,000) -
------------- ------------- -------------
NET CASH USED IN FINANCING ACTIVITIES (18,542,000) (23,124,000) (17,615,000)
- ----------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (215,000) 18,000 (757,000)
- ----------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,950,000 (8,740,000) 2,177,000
CASH AND CASH EQUIVALENTS, Beginning of year 8,685,000 17,425,000 15,248,000
------------- ------------- -------------
CASH AND CASH EQUIVALENTS, End of year $11,635,000 $8,685,000 $17,425,000
------------- ------------- -------------
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
Additional Other
Shares Common Paid-in Comprehensive Treasury Retained
Outstanding Stock Capital Income Stock Earnings
<S> <C> <C> <C> <C> <C> C>
BALANCE AT DECEMBER 28, 1996 5,830,395 $1,210,000 $6,615,000 $2,591,000 $(35,211,000) $109,175,000
Net income 15,646,000
Cash dividends (2,842,000)
Purchase of treasury stock (696,801) (25,250,000)
Proceeds from exercise of stock options 23,451 107,000 438,000
Tax benefit on stock options exercised 66,000
Deferred compensation 446,000
Translation loss (744,000)
Unrealized gain on marketable securities 267,000
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 3, 1998 5,157,045 1,210,000 7,234,000 2,114,000 (60,023,000) 121,979,000
Net income 17,043,000
Cash dividends (3,093,000)
Purchase of treasury stock (605,863) (23,902,000)
Proceeds from exercise of stock options 93,937 698,000 1,671,000
Sale of treasury stock 6,362 147,000 108,000
Tax benefit on stock options exercised 234,000
Deferred compensation 275,000
Translation gain 8,000
Unrealized gain on marketable securities 63,000
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 2, 1999 4,651,481 1,210,000 8,588,000 2,185,000 (82,146,000) 135,929,000
Net income 19,134,000
Cash dividends (3,455,000)
Purchase of treasury stock (172,168) (8,773,000)
Proceeds from exercise of stock options 31,454 411,000 537,000
Sale of treasury stock 392 13,000 7,000
Tax benefit on stock options exercised 169,000
Deferred compensation 324,000
Translation loss (213,000)
Unrealized loss on marketable securities (376,000)
BALANCE AT JANUARY 1, 2000 4,511,159 $1,210,000 $9,505,000 $1,596,000 $(90,375,000) $151,608,000
See notes to consolidated financial statements.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 ACCOUNTING POLICIES
Liqui-Box Corporation and subsidiaries (the "Company") is a manufacturer of
bag-in-box flexible packaging, blow-molded containers, filling equipment and
bulk liquid dispensing systems for the beverage, processed foods, dairy,
detergent, wine and other specialty products industries. The Company operates
eleven manufacturing plants in the United States and Europe in primarily the
plastic packaging industry. Significant accounting policies of the Company are
as follows:
CONSOLIDATION - The consolidated financial statements include the accounts of
Liqui-Box Corporation and its subsidiaries, all of which are wholly-owned. The
Company eliminates all significant intercompany balances and transactions in the
consolidated financial statements.
BASIS OF ACCOUNTING - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH EQUIVALENTS - The Company considers money market funds and all highly
liquid investments with a maturity of three months or less when purchased to be
cash equivalents. Cash and cash equivalents are on deposit primarily with three
financial institutions.
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMER - The Company's exposure to
credit risk is impacted by the economic climate affecting its diverse customer
base and wide geographic dispersion. The Company manages this risk by performing
ongoing credit evaluations of its customers. Reserves for credit losses are
maintained by the Company and losses have been within Company expectations.
Approximately 22%, 20% and 19% of the Company's revenues in 1999, 1998 and 1997,
respectively, were derived from sales to one major customer. Trade receivables
due from this customer were $3,908,000 and $1,292,000 at January 1, 2000 and
January 2, 1999, respectively. This increase from one year to the next was
primarily due to heavy buying in answer to the Y2K demand during the last
quarter of 1999.
INVENTORY VALUATION - Inventories are stated at the lower of cost or market.
Substantially all of the Company's domestic product inventories are valued on
the last-in, first-out (LIFO) method. If current cost had been used, inventories
would have increased approximately $1,976,000 and $1,137,000 at January 1, 2000
and January 2, 1999, respectively. The Company's inventory of machine parts and
inventories of certain subsidiaries are valued on the first-in, first-out (FIFO)
method. These inventories approximated $7,817,000 and $7,589,000 at January 1,
2000 and January 2, 1999, respectively.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is stated at cost.
Depreciation is computed using the straight-line method (accelerated methods are
generally used for tax purposes) in amounts adequate to amortize the cost over
the estimated useful lives of the assets as follows: buildings and improvements
- -- 5 to 30 years and equipment -- 3 to 7 years.
GOODWILL AND OTHER INTANGIBLES - Goodwill represents the excess purchase price
over net assets acquired and is being amortized using the straight-line method
over 15 to 24 years. Other intangibles resulting from business acquisitions,
comprised mainly of costs related to sales agreements, patents and non-compete
agreements, are being amortized using the straight-line method over 15 to 17
years. Accumulated
<PAGE>
amortization of goodwill and other intangibles as of January 1, 2000 and January
2, 1999 approximated $6,501,000 and $7,622,000, respectively. At each balance
sheet date, a determination is made by the Company as to whether any intangible
assets have been impaired based on several criteria including, but not limited
to, sales trends, operating factors and undiscounted cash flows.
MARKETABLE SECURITIES - Marketable securities consist primarily of common stocks
and are included in other noncurrent assets. The Company classifies its
securities as available for sale and accordingly carries such at fair market
value, based on quoted market prices, with unrealized gains and losses reported
as other comprehensive income. The fair market value, cost and cumulative
unrealized gains, net of tax, were $1,252,000, $321,000 and $559,000,
respectively, at January 1, 2000 and $1,618,000, $59,000 and $935,000,
respectively, at January 2, 1999. The unrealized gain, net of tax, is a
supplemental non-cash transaction for the statement of cash flows.
TREASURY STOCK - During 1999 and 1998, Liqui-Box repurchased 172,168 common
shares at an aggregate cost of $8,773,000 and 605,863 common shares at an
aggregate cost of $23,902,000, respectively. Included in the 1999 amounts,
referred to above, the Company repurchased 922 Liqui-Box common shares from an
executive officer of Liqui-Box, at $54.1875 per common share, which was the fair
market value of the common shares on the date of the repurchase. This purchase
was offset by options exercised of 1,800 shares of common stock.
REVENUE RECOGNITION - Revenue from product sales is recognized at the time
products are shipped.
RESEARCH AND DEVELOPMENT - All research and development costs are expensed as
incurred. Such costs amounted to $1,436,000, $1,221,000 and $1,371,000 in 1999,
1998 and 1997, respectively.
ADVERTISING COSTS - Advertising costs primarily relate to trade shows, product
catalogues and product literature. Such costs are expensed as incurred. Total
advertising expenses were $830,000, $769,000 and $686,000 in 1999, 1998 and
1997, respectively.
EARNINGS PER SHARE - Basic income per share amounts are based on the weighted
average number of shares of common stock outstanding during the years presented.
Diluted income per share amounts are based on the weighted average number of
shares of common stock and stock options outstanding during the years presented.
FOREIGN CURRENCY TRANSLATION - All assets and liabilities of wholly-owned
foreign subsidiaries have been translated using the current exchange rate in
effect at the balance sheet dates. Revenue and expense accounts of such
subsidiaries have been translated using the average exchange rate prevailing
during the year and capital accounts have been translated using historic rates.
Gains and losses resulting from the elimination of long-term intercompany
receivable balances and the translation of the foreign financial statements into
U.S. dollars are reflected as translation adjustments in comprehensive income.
The foreign currency cumulative translation adjustment was $1,037,000,
$1,250,000, $1,242,000 and $1,986,000 at fiscal year ended 1999, 1998, 1997 and
1996, respectively. The related deferred income tax expense (benefit) was
$(128,000), $5,000 and $(496,000) in fiscal years 1999, 1998 and 1997,
respectively.
Foreign currency exchange gains (losses) arise primarily from transactions
denominated in foreign currencies and from forward exchange contracts and are
included in other income (expense) in the amount of approximately $5,000,
$(10,000) and $(236,000) in 1999, 1998 and 1997, respectively. There were no
forward exchange contracts outstanding at January 1, 2000.
DISCLOSURES CONCERNING FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying value
of cash and cash equivalents; trade and other receivables; accounts payable;
fair value of guaranteed debt obligations to certain officers and employees;
short-term borrowings and other current liabilities are estimated to approximate
fair value because of the short-term maturity of these items.
<PAGE>
NEW ACCOUNTING STANDARD - In June 1998, the FASB 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 required to adopt this statement in January
2001. The Company does not believe the adoption of this statement will have a
significant impact, if any, on its financial statements.
RECLASSIFICATION - Certain reclassifications have been made to the 1998
financial statements to conform to the 1999 presentation.
<PAGE>
NOTE 2 TAXES ON INCOME
Deferred income taxes are provided for the temporary differences between the
carrying amounts of assets and liabilities for financial reporting and income
tax purposes by applying enacted statutory tax rates applicable to future years
to the basis differences. The effect on deferred income taxes of a change in tax
rates is recognized in income in the period that includes the enactment date.
Significant components of the Company's deferred tax liabilities and assets are
as follows:
<TABLE>
<CAPTION>
AS OF FISCAL YEAR END
January 1, January 2,
2000 1999
<S> <C> <C>
Current deferred tax assets:
Accounts receivable $209,000 $305,000
Reserves, accruals and other 2,393,000 2,259,000
---------- ----------
Net current deferred tax assets $2,602,000 $2,564,000
========== ==========
Long-term deferred tax liabilities:
Tax over book depreciation $1,800,000 $1,520,000
Marketable securities and other 756,000 770,000
---------- ----------
Total long-term deferred
tax liabilities 2,556,000 2,290,000
---------- ----------
Long-term deferred tax assets:
Intangibles 436,000 492,000
Deferred compensation and other 652,000 527,000
---------- ----------
Total long-term deferred
tax assets 1,088,000 1,019,000
---------- ----------
Net long-term deferred tax liabilities $1,468,000 $1,271,000
========== ==========
</TABLE>
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Current:
Federal $10,169,000 $10,762,000 $8,874,000
Foreign 483,000 107,000 83,000
State 1,704,000 2,365,000 1,927,000
----------- ----------- -----------
Total current taxes 12,356,000 13,234,000 10,884,000
----------- ----------- -----------
Deferred:
Federal and State (credit) 159,000 (1,439,000) (415,000)
----------- ----------- -----------
Total taxes $12,515,000 $11,795,000 $10,469,000
=========== =========== ============
</TABLE>
<PAGE>
The following table summarizes the difference between income taxes computed at
the expected Federal statutory rate and actual amounts:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Expense at Federal statutory rates $11,077,000 $10,093,000 $9,140,000
Foreign income taxes 321,000 107,000 118,000
State income taxes, net of Federal
tax benefit 1,493,000 1,425,000 1,271,000
Other, net (376,000) 170,000 (60,000)
----------- ----------- ------------
Total $12,515,000 $11,795,000 $10,469,000
=========== =========== ============
Effective income tax rate 39.5 % 40.9 % 40.1 %
</TABLE>
The Company made income tax payments, net of refunds, of approximately
$13,865,000, $12,746,000 and $11,259,000 in 1999, 1998 and 1997, respectively.
NOTE 3 COMMITMENTS AND CONTINGENCIES
The Company leases property and equipment pursuant to various non-cancelable
operating lease agreements. Certain leases contain renewal options and generally
provide that the Company shall pay for insurance, taxes and maintenance. Future
minimum payments on non-cancelable operating leases with initial or remaining
terms in excess of one year for the five fiscal years subsequent to January 1,
2000 are: $1,219,000, $805,000, $685,000, $490,000 and $481,000. Lease payments
under non-cancelable operating leases subsequent to the year 2004 aggregate
$1,995,000.
Total rent expense including other cancelable and short-term leases was
$1,885,000, $1,895,000 and $2,023,000 in 1999, 1998 and 1997, respectively.
In 1997, a jury in a United States District Court in Texas returned a verdict
against the Company in a lawsuit over an allegedly defective product. The
verdict was in the amount of approximately $800,000 in actual damages and
$1,360,000 in punitive damages. In February of 2000 the appellate court reversed
the 1997 judgement against the Company and remanded the case for a new trial on
damages. Legal counsel has advised the Company that it has various defenses
available and the Company intends to pursue all available avenues. The ultimate
liability related to this matter is presently not determinable. Because of the
risks associated with any litigation, the ultimate outcome may differ.
The Company is also involved in various other litigation arising in the ordinary
course of business. The Company believes that the reserves recorded in the
Company's financial statements are adequate to satisfy the outcome of
litigation. However, because of the risks associated with any litigation, the
ultimate outcome may differ.
The Company has guaranteed debt obligations of certain officers and employees
totaling $3,402,000 as of January 1, 2000.
NOTE 4 STOCK OPTIONS
As of January 1, 2000, the Company has stock-based compensation programs which
are described below. The Company applies APB Opinion 25 and related
Interpretations in accounting for its plans. Accordingly, the
<PAGE>
only compensation expense charged against income is related to deferred
compensation for options issued at a discount from market value at the
measurement date of the grant. Compensation expense recorded in 1999, 1998 and
1997 was $324,000, $275,000 and $446,000, respectively. Had the compensation
costs for the Company's stock-based compensation plans been determined using the
fair value at the grant dates for awards under those plans consistent with the
method of FASB Statement No. 123, the Company's net income and earnings per
share would have been as indicated in the pro forma amounts below:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C> <C>
Net income As Reported $ 19,134 $ 17,043 $ 15,646
Pro forma $ 18,920 $ 16,797 $ 15,506
Basic earnings per share As Reported $ 4.20 $ 3.62 $ 2.77
Pro forma $ 4.15 $ 3.57 $ 2.75
Diluted earnings per share As Reported $ 4.00 $ 3.45 $ 2.72
Pro forma $ 3.95 $ 3.40 $ 2.69
</TABLE>
The pro forma amounts are not representative of the effects on reported net
income for future years.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions used for grants in 1999: dividend yield of 1.5%; expected volatility
of 21%; risk-free interest rates of 6.00%; and expected lives of 7 years. The
assumption for 1998 grants assumed a dividend yield of 1.7%; expected volatility
of 23%; risk-free interest rates of 5.25%; and expected lives of 7 years. The
assumption for 1997 grants assumed a dividend yield of 1.5%; expected volatility
of 23%; risk-free interest rates of 6.6%; and expected lives of 7 years.
Under the 1990 Liqui-Box Stock Option Plan ("the Plan"), the Company may grant
incentive, non-qualified and deferred compensation stock options, or other
stock-based awards, as authorized by the Board of Directors. The terms and
issuance prices of such awards are to be determined by the Board as limited by
Internal Revenue Service rules where applicable. The maximum number of common
shares that may be reserved for issuance under the Plan annually is limited to
3% of the outstanding common shares, but shares not awarded in one year may be
carried over to the next year. Options granted under the Plan are exercisable
according to the terms of each option. However, in the event of a change in
control as defined, the options shall become immediately exercisable, except
those awarded within the last six months. Options granted under the Plan include
the LBShares program, supplemental retirement options and other options.
Under its program entitled LBShares, the Company grants options annually to the
majority of employees based on the prior year's wages. Options are granted at
exercise prices that equal the fair market value at date of grant. The options
become exercisable in 25% increments on each anniversary of the grant date and
are forfeited upon termination of employment for reasons other than death or
disability. The options expire 10 years after the grant date.
The Company has granted supplemental retirement options to certain Company
executives. Options are granted at exercise prices equal to 50% of the fair
market value at date of grant. These options vest 50% after six months and 50%
upon termination of employment for other than cause, except they are subject to
specified reductions based on age and non-competition arrangements in the event
employment is terminated for any reason other than retirement, death or
disability.
Other options outstanding under the Plan include non-qualified grants and
incentive grants for the purchase of common shares. The exercise prices for the
incentive stock options were not less than the market value at date of grant and
for the non-qualified options were at or below market value at date of grant.
The incentive and
<PAGE>
certain of the non-qualified options become exercisable in 25% increments on
each anniversary of the grant date. The remaining non-qualified options
generally become exercisable in 10% increments on each anniversary of the grant
date.
A summary of the status of the Company's stock option plan as of January 1, 2000
and for the three years then ended is presented below:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------- ------------------------- ----------------------------
Shares Weighted-Average Shares Weighted-Average Shares Weighted-Average
(000) Exercise Price (000) Exercise Price (000) Exercise Price
----- -------------- ----- -------------- ----- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 671 $26 721 $25 758 $25
Granted 42 $53 60 $41 42 $36
Exercised (31) $30 (94) $25 (23) $26
Forfeited (43) $36 (16) $31 (56) $29
----- ----- -----
Outstanding at end of year 639 $27 671 $26 721 $25
===== ===== =====
Options Exercisable at year-end 387 $28 333 $28 307 $27
1999 1998 1997
Weighted-average fair value of
options granted during the year
where market price at date of grant
is at exercise price $17 $12 $15
</TABLE>
The following table summarizes information about stock options outstanding at
January 1, 2000:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------------------------- --------------------------------------
Number Weighted-Average Number
Range of Outstanding Remaining Weighted-Average Outstanding Weighted-Average
Exercise Prices (000) Contractual Life Exercise Price (000) Exercise Price
----- ---------------- -------------- ----- --------------
<S> <C> <C> <C> <C> <C>
$12.50 to $18.50 202 5.4 $14 44 $14
$22.50 to $24.625 22 2.3 $24 22 $24
$27.25 to $30.75 257 4.9 $28 251 $28
$31.50 to $37.00 74 4.6 $35 59 $35
$38.25 to $53.3125 84 8.7 $47 11 $42
-------------------------------------------------- --------------------------------------
639 5.8 $27 387 $28
================================================== ======================================
</TABLE>
The Company receives tax deductions for the difference between fair market value
and the exercise price of common shares at the time non-incentive options are
exercised. In addition, common shares obtained through the exercise of stock
options which are sold by the optionee within two years of grant or one year of
exercise result in a tax deduction for the Company equivalent to the taxable
gain recognized by the optionee. The tax benefit of this deduction is reflected
in additional paid-in capital and totaled $169,000, $234,000 and $66,000 in
1999, 1998 and 1997, respectively.
<PAGE>
NOTE 5 EQUIPMENT LEASED TO CUSTOMERS
The Company leases various types of filling machinery and equipment to its
customers to support its packaging products. The leases are classified as
operating leases and are generally cancelable at the option of the Company.
Assets available for lease and assets under current lease contracts are included
in the balance sheets as equipment leased to customers. Accumulated depreciation
on these assets at January 1, 2000 and January 2, 1999 approximated $12,380,000
and $14,002,000, respectively. Total lease income, including other cancelable
and short-term leases was $725,000, $753,000 and $651,000 in 1999, 1998 and
1997, respectively. The future minimum rental income on non-cancelable operating
leases for the five fiscal years subsequent to January 1, 2000 and thereafter
are: $472,000, $407,000, $307,000, $149,000, $30,000 and $59,000.
NOTE 6 CREDIT FACILITIES
The Company maintains unsecured credit facilities that aggregate $30,000,000 and
include $10,000,000 for a revolving term loan, the availability of which
terminates on April 30, 2004, when, at the option of the Company, outstanding
amounts can be converted to a term note under the terms of the agreement as
defined. No amounts were outstanding under these credit facilities as of January
1, 2000. The remaining portion of the credit facilities of $20,000,000 is a line
of credit that expires April 30, 2000; however, the Company has a commitment
from the Bank to renew this facility on terms comparable to the existing
facility. No amounts were outstanding under this facility as of January 1, 2000.
At the Company's option, the credit facilities bear interest at either the prime
rate, the London Interbank Offered Rate plus 0.50%, or a negotiated rate, as
defined (5.56% at January 1, 2000). The facilities require the maintenance of
certain financial ratios and restrict future common cash dividends to 50% of
consolidated net income. Additionally, the Company's European subsidiary
maintains a secured credit facility of $3,280,000 (subject to certain
limitations) that expires August 10, 2000. The amount outstanding under this
facility was $3,283,000 at January 1, 2000. The credit facility bears interest
at varying rates, based upon the currency borrowed (ranging from 4.0% to 6.5% as
of January 1, 2000). The facility is collateralized by a $1,633,000 guarantee by
the Company and the cash balances and accounts receivable of the European
subsidiary which total approximately $10,800,000 at January 1, 2000. Total
interest paid under all facilities in 1999, 1998 and 1997 was $315,000, $518,000
and $36,000, respectively.
NOTE 7 EMPLOYEE BENEFIT PLANS
The Company has a deferred profit sharing plan covering the majority of its
employees not covered by a collective bargaining agreement. The Company's
contributions to this plan, which are at the discretion of the Board of
Directors, were $599,000, $652,000 and $597,000 in 1999, 1998 and 1997,
respectively.
The Company also has an Employee Stock Ownership Plan ("ESOP") for the majority
of employees who are not covered by a collective bargaining agreement. Eligible
employees may elect to contribute not less than 2%, nor more than 6% of their
annual compensation to the ESOP. For each participating employee, the Company
contributes an amount equal to 50% of the employee's contribution. The Company
applies SOP 76-3 and related Interpretations in accounting for its ESOP plan. In
addition, all shares of common stock of the Company held by the ESOP are treated
as outstanding shares in the determination of earnings per share. Dividends paid
on all shares held by the ESOP are charged to retained earnings. Total ESOP
expenses were $82,000, $73,000 and $54,000 in 1999, 1998 and 1997, respectively.
ESOP allocated and unallocated shares were 187,000 and 5,000 at January 1, 2000
and 163,000 and 24,000 at January 2, 1999, respectively.
<PAGE>
In 1999, the Company adopted an Executive Deferred Compensation Plan. Under the
plan, eligible participants can defer up to 100% of their cash compensation as
well as realized gains from the exercise of non-qualified stock options. The
plan was inactive in 1999.
NOTE 8 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
($ in thousands, except per share data)
<TABLE>
<CAPTION>
Earnings per share
Net Gross Net --------------------
1999 Sales Margin Income Basic Diluted
<S> <C> <C> <C> <C> <C>
First quarter $36,666 $14,944 $4,424 $0.95 $0.91
Second quarter 44,141 17,849 5,951 1.30 1.24
Third quarter 44,327 16,126 5,811 1.29 1.23
Fourth quarter 40,093 12,615 2,948 0.65 0.62
-------- -------- -------- -------- -------
Total $165,227 $61,534 $19,134 $4.20 $4.00
======== ======== ======== ======== =======
<CAPTION>
Earnings per share
Net Gross Net --------------------
1998 Sales Margin Income Basic Diluted
<S> <C> <C> <C> <C> <C>
First quarter $35,993 $11,679 $3,656 $0.77 $0.74
Second quarter 43,934 16,636 5,399 1.14 1.10
Third quarter 42,177 14,774 5,301 1.13 1.08
Fourth quarter 32,552 11,718 2,687 0.58 0.55
-------- -------- -------- -------- -------
Total $154,656 $54,807 $17,043 $3.62 $3.45
======== ======== ======== ======== =======
</TABLE>
<PAGE>
NOTE 9 SEGMENT INFORMATION
Financial information by segment for each of the three years in the period ended
January 1, 2000, is summarized as follows:
<TABLE>
<CAPTION>
United
1999 States Europe Total
<S> <C> <C> <C>
Net sales $ 143,740,000 $ 21,487,000 $ 165,227,000
============= ============= =============
Operating income $ 29,804,000 $ 1,822,000 $ 31,626,000
============= ============= =============
Depreciation and amortization $ 7,542,000 $ 1,599,000 $ 9,141,000
============= ============= =============
Capital expenditures $ 5,523,000 $ 1,005,000 $ 6,528,000
============= ============= =============
Interest income (expense), net $ 148,000 $ (82,000) $ 66,000
============= ============= =============
Income tax expense $ 12,032,000 $ 483,000 $ 12,515,000
============= ============= =============
Net income $ 18,698,000 $ 436,000 $ 19,134,000
============= ============= =============
Identifiable assets $ 72,233,000 $ 22,657,000 $ 94,890,000
============= ============= =============
1998
Net sales $ 134,762,000 $ 19,894,000 $ 154,656,000
============= ============= =============
Operating income $ 28,216,000 $ 1,002,000 $ 29,218,000
============= ============= =============
Depreciation and amortization $ 7,627,000 $ 1,323,000 $ 8,950,000
============= ============= =============
Capital expenditures $ 7,016,000 $ 2,034,000 $ 9,050,000
============= ============= =============
Interest income (expense), net $ (205,000) - $ (205,000)
============= ============= =============
Income tax expense $ 11,688,000 $ 107,000 $ 11,795,000
============= ============= =============
Net income $ 16,851,000 $ 192,000 $ 17,043,000
============= ============= =============
Identifiable assets $ 72,661,000 $ 19,413,000 $ 92,074,000
============= ============= =============
1997
Net sales $ 133,779,000 $ 20,366,000 $ 154,145,000
============= ============= =============
Operating income $ 24,388,000 $ 622,000 $ 25,010,000
============= ============= =============
Depreciation and amortization $ 6,982,000 $ 1,212,000 $ 8,194,000
============= ============= =============
Capital expenditures $ 10,431,000 $ 1,036,000 $ 11,467,000
============= ============= =============
Interest income (expense), net $ 864,000 - $ 864,000
============= ============= =============
Income tax expense $ 10,386,000 $ 83,000 $ 10,469,000
============= ============= =============
Net income (loss) $ 16,043,000 $ (397,000) $ 15,646,000
============= ============= =============
Identifiable assets $ 78,172,000 $ 19,270,000 $ 97,442,000
============= ============= =============
</TABLE>
<PAGE>
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 in 1999, 1998 and 1997.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Directors of
Liqui-Box Corporation
We have audited the accompanying consolidated balance sheets of Liqui-Box
Corporation and subsidiaries as of January 1, 2000 and January 2, 1999, and the
related consolidated statements of income and comprehensive income,
stockholders' equity and cash flows for each of the three fiscal years in the
period ended January 1, 2000. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Liqui-Box Corporation and
subsidiaries at January 1, 2000 and January 2, 1999, and the results of their
operations and their cash flows for each of the three fiscal years in the period
ended January 1, 2000 in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Columbus, Ohio
March 13, 2000
<PAGE>
OFFICERS AND DIRECTORS
OFFICERS SAMUEL B. DAVIS
Chairman, Chief Executive Officer
and Treasurer
ROBERT S. HAMILTON
Vice Chairman
C. WILLIAM MCBEE
President, Chief Operating Officer and Secretary
SAMUEL N. DAVIS
Vice President, Development
STEWART M. GRAVES
Vice President, International
BARRY L. PRITCHARD
Vice President, Technology and Equipment Development
WILLIAM A. DUELGE
Vice President, Sales & Marketing
DIRECTORS CARL J. ASCHINGER, JR.
Chairman and Chief Executive Officer,
The Columbus Showcase Company
Retail and Bakery Deli Showcase Manufacturer
CHARLES R. COATE
Vice President,
Fifth Third Bank
SAMUEL B. DAVIS
Chairman, Chief Executive Officer
and Treasurer,
Liqui-Box Corporation
SAMUEL N. DAVIS
Vice President, Development,
Liqui-Box Corporation
RUSSELL M. GERTMENIAN
Partner,
Vorys, Sater, Seymour and Pease
ROBERT S. HAMILTON
Vice Chairman,
Liqui-Box Corporation
C. WILLIAM MCBEE
President, Chief Operating Officer and Secretary,
Liqui-Box Corporation
<PAGE>
LIQUI-BOX LOCATIONS
WORLD HEADQUARTERS Worthington, Ohio
MANUFACTURING FACILITIES Allentown, Pennsylvania
Ashland, Ohio
Auburn, Massachusetts
Elkton, Maryland
Houston, Texas
Lake Wales, Florida
Ontario, California
Sacramento, California
Upper Sandusky, Ohio
Worthington, Ohio
Romiley, England
CORPORATE INFORMATION
AUDITORS Deloitte & Touche LLP, Columbus, Ohio
TRANSFER AGENT National City Bank,
Cleveland, Ohio
FORM 10-K The Annual Report to the
Securities and Exchange Commission
on Form 10-K is available to
shareholders upon written request to
the Chairman of the Corporation.
ANNUAL MEETING The Annual Meeting of Shareholders will be at
the Columbus Marriott North, 6500
Doubletree Ave., Columbus, Ohio on
April 20, 2000 at 9:00 a.m.
STOCK TRADING Liqui-Box is traded on the
NASDAQ national market under the
symbol LIQB.
"Liqui-Box", "Handi-Tap", "QC/D", "Alaskan Falls",
"Inpaco" and "Pacesetter" are registered trademarks
of Liqui-Box Corporation
<PAGE>
Exhibit (21)
SUBSIDIARIES OF THE REGISTRANT
LIQUI-BOX CORPORATION AND SUBSIDIARIES
FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 1, 2000
<TABLE>
<CAPTION>
Percentage of
Voting Securities
Jurisdiction of Owned by
Subsidiaries Incorporation the Registrant
- ---------------------------------- ---------------------- ----------------------
<S> <C> <C>
Commander Systems, Inc. Ohio 100%
Corporate Design, Inc. Ohio 100%
LB Communications, Inc. Ohio 100%
LB Development Corp. Ohio 100%
LB Investments, Inc. Delaware 100%
LB Europe Limited England 100%
Inpaco Corporation Ohio 100%
Liqui-Box International, Inc. Ohio 100%
Liqui-Box International, Corp. Barbados 100%
Liqui-Box of Canada, Ltd. Canada 100%
</TABLE>
60
<PAGE>
Exhibit (23)
INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE
To the Stockholders and Directors of Liqui-Box Corporation
We consent to the incorporation by reference in Registration Statements No.
33-35815, No. 33-35816, No. 33-35817, and No. 33-42452 of Liqui-Box Corporation
on Form S-8 of our report dated March 13, 2000 incorporated by reference in this
Annual Report on Form 10-K of Liqui-Box Corporation for the year ended January
1, 2000.
Our audits of the consolidated financial statements referred to in our
aforementioned report also included the consolidated financial statement
schedule of Liqui-Box Corporation, listed in Item 14(a). This consolidated
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits. In our opinion,
such consolidated financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
/S/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Columbus, Ohio
March 27, 2000
61
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LIQUI-BOX CORPORATION, an Ohio corporation, which is about to file
with the Securities and Exchange Commission, Washington, D. C., under the
provisions of the Securities Exchange Act of 1934, as amended, an ANNUAL REPORT
ON FORM 10-K, hereby constitutes and appoints C. WILLIAM MCBEE and PAUL J.
MAYNARD his/her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him/her and in his/her name, place and
stead, in any and all capacities, to sign such Report and any or all amendments
or documents related thereto, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and substitute or
substitutes, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes and he/she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them or their or his/her substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her hand and seal as of
this 29th day of March, 2000.
/s/ Samuel B. Davis
----------------------------------------------
Samuel B. Davis
Chairman of the Board, Chief Executive Officer
Treasurer and Director
62
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LIQUI-BOX CORPORATION, an Ohio corporation, which is about to file
with the Securities and Exchange Commission, Washington, D. C., under the
provisions of the Securities Exchange Act of 1934, as amended, an ANNUAL REPORT
ON FORM 10-K, hereby constitutes and appoints SAMUEL B. DAVIS, C. WILLIAM MCBEE
and PAUL J. MAYNARD his/her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him/her and in his/her name,
place and stead, in any and all capacities, to sign such Report and any or all
amendments or documents related thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and
substitute or substitutes, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes and he/she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his/her substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her hand and seal as of
this 13th day of March, 2000.
/S/ Samuel N. Davis
-------------------------------
Samuel N. Davis
Director
63
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LIQUI-BOX CORPORATION, an Ohio corporation, which is about to file
with the Securities and Exchange Commission, Washington, D. C., under the
provisions of the Securities Exchange Act of 1934, as amended, an ANNUAL REPORT
ON FORM 10-K, hereby constitutes and appoints SAMUEL B. DAVIS, C. WILLIAM MCBEE
and PAUL J. MAYNARD his/her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him/her and in his/her name,
place and stead, in any and all capacities, to sign such Report and any or all
amendments or documents related thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and
substitute or substitutes, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes and he/she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his/her substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her hand and seal as of
this 14th day of March, 2000.
/s/ Robert S. Hamilton
---------------------------------------
Robert S. Hamilton
Director
64
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LIQUI-BOX CORPORATION, an Ohio corporation, which is about to file
with the Securities and Exchange Commission, Washington, D. C., under the
provisions of the Securities Exchange Act of 1934, as amended, an ANNUAL REPORT
ON FORM 10-K, hereby constitutes and appoints SAMUEL B. DAVIS, C. WILLIAM MCBEE
and PAUL J. MAYNARD his/her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him/her and in his/her name,
place and stead, in any and all capacities, to sign such Report and any or all
amendments or documents related thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and
substitute or substitutes, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes and he/she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his/her substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her hand and seal as of
this 16th day of March, 2000.
/s/ Charles R. Coate
-----------------------------------
Charles R. Coate
Director
65
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LIQUI-BOX CORPORATION, an Ohio corporation, which is about to file
with the Securities and Exchange Commission, Washington, D. C., under the
provisions of the Securities Exchange Act of 1934, as amended, an ANNUAL REPORT
ON FORM 10-K, hereby constitutes and appoints SAMUEL B. DAVIS and PAUL J.
MAYNARD his/her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him/her and in his/her name, place and
stead, in any and all capacities, to sign such Report and any or all amendments
or documents related thereto, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and substitute or
substitutes, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes and he/she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them or their or his/her substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her hand and seal as of
this 14th day of March, 2000.
/s/ C. William McBee
------------------------------------
C. William McBee
President, Chief Operating Officer
Secretary and Director
66
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LIQUI-BOX CORPORATION, an Ohio corporation, which is about to file
with the Securities and Exchange Commission, Washington, D. C., under the
provisions of the Securities Exchange Act of 1934, as amended, an ANNUAL REPORT
ON FORM 10-K, hereby constitutes and appoints SAMUEL B. DAVIS, C. WILLIAM MCBEE
and PAUL J. MAYNARD his/her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him/her and in his/her name,
place and stead, in any and all capacities, to sign such Report and any or all
amendments or documents related thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and
substitute or substitutes, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes and he/she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his/her substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her hand and seal as of
this 14th day of March, 2000.
/s/ Carl J. Aschinger, Jr.
----------------------------------
Carl J. Aschinger, Jr.
Director
67
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LIQUI-BOX CORPORATION, an Ohio corporation, which is about to file
with the Securities and Exchange Commission, Washington, D. C., under the
provisions of the Securities Exchange Act of 1934, as amended, an ANNUAL REPORT
ON FORM 10-K, hereby constitutes and appoints SAMUEL B. DAVIS, C. WILLIAM MCBEE
and PAUL J. MAYNARD his/her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him/her and in his/her name,
place and stead, in any and all capacities, to sign such Report and any or all
amendments or documents related thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and
substitute or substitutes, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes and he/she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his/her substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her hand and seal as of
this 15th day of March, 2000.
/s/ Russell M. Gertmenian
-----------------------------------
Russell M. Gertmenian
Director
68
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of LIQUI-BOX CORPORATION, an Ohio corporation, which is about to file
with the Securities and Exchange Commission, Washington, D. C., under the
provisions of the Securities Exchange Act of 1934, as amended, an ANNUAL REPORT
ON FORM 10-K, hereby constitutes and appoints SAMUEL B. DAVIS, C. AND WILLIAM
MCBEE his/her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him/her and in his/her name, place and
stead, in any and all capacities, to sign such Report and any or all amendments
or documents related thereto, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and substitute or
substitutes, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes and he/she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them or their or his/her substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her hand and seal as of
this 17th day of March, 2000.
/s/ Paul J. Maynard
-----------------------------
Paul J. Maynard
Director of Finance
69
<TABLE> <S> <C>
<PAGE>
<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> YEAR
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> JAN-01-2000
<CASH> 11,635
<SECURITIES> 0
<RECEIVABLES> 20,025
<ALLOWANCES> 730
<INVENTORY> 14,050
<CURRENT-ASSETS> 49,120
<PP&E> 111,677
<DEPRECIATION> 78,448
<TOTAL-ASSETS> 94,890
<CURRENT-LIABILITIES> 19,878
<BONDS> 0
0
0
<COMMON> 1,210
<OTHER-SE> 72,334
<TOTAL-LIABILITY-AND-EQUITY> 94,890
<SALES> 165,227
<TOTAL-REVENUES> 165,227
<CGS> 103,693
<TOTAL-COSTS> 133,601
<OTHER-EXPENSES> 43
<LOSS-PROVISION> 186
<INTEREST-EXPENSE> 315
<INCOME-PRETAX> 31,649
<INCOME-TAX> 12,515
<INCOME-CONTINUING> 19,134
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,134
<EPS-BASIC> 4.20
<EPS-DILUTED> 4.00
</TABLE>
