FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the thirteen week period ended March 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_____________________________to___________________
Commission File Number 0-8514
LIQUI-BOX CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 31-062803
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
6950 Worthington-Galena Road, Worthington, Ohio 43085
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(614) 888-9280
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May, 1996
Common Stock, no par value 6,077,815 shares
Exhibit Index at Page 9
Page 1 of 12
LIQUI-BOX CORPORATION
INDEX
Page No.
Part I - Financial Information: --------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 30, 1996 and December 30, 1995 ............ 3-4
Condensed Consolidated Statements of Income
For the thirteen week periods ended
March 30, 1996 and April 1, 1995 ................ 5
Condensed Consolidated Statements of Cash Flows
For the thirteen week periods ended
March 30, 1996 and April 1, 1995 ................ 6
Notes to Condensed Consolidated Financial Statements ... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ... 8-9
Part II - Other Information - Items 1-6 ............................... 9
Signatures ............................................. 10
Exhibit 11 - Statement Re Computation of
Earnings Per Share ........................ 11
Exhibit 27 - Financial Data Schedule ................... 12
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Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
UNAUDITED
---------------------------------
March 29, 1992 December 29, 1991
-------------- -----------------
Assets
Current Assets:
Cash and cash equivalents ................ $ 13,237,000 $ 9,424,000
Accounts receivable:
Trade, net of allowance for
doubtful accounts of $821,000
and $679,000 at respective dates .. 16,902,000 16,788,000
Other ............................... 1,778,000 1,511,000
------------- ------------
18,680,000 18,299,000
Inventories:
Raw materials and supplies .......... 11,218,000 9,003,000
Work in process ..................... 6,752,000 5,534,000
Finished goods ...................... 5,152,000 4,035,000
------------- ------------
23,122,000 18,572,000
Other current assets ..................... 2,455,000 2,404,000
------------- ------------
Total Current Assets ........... 57,494,000 48,699,000
Property, plant and equipment, at cost:
Buildings and leasehold improvements ..... 9,388,000 9,243,000
Equipment and vehicles ................... 57,193,000 56,355,000
Equipment leased to customers ............ 18,436,000 17,548,000
Less accumulated depreciation ....... (58,717,000) (57,140,000)
------------- ------------
26,300,000 26,006,000
Construction in process ............. 2,848,000 1,965,000
Land ................................ 468,000 468,000
------------- ------------
29,616,000 28,439,000
Other Assets:
Loans to officers and employees .......... 70,000 70,000
Goodwill, net of amortization ............ 9,938,000 10,126,000
Deferred charges and other assets ........ 3,433,000 3,462,000
------------- ------------
13,441,000 13,658,000
------------- ------------
Total Assets ................... $ 100,551,000 $ 90,796,000
============= ============
The accompanying notes are an integral part of the financial statements.
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Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
UNAUDITED
-----------------------------------
March 29, 1992 December 29, 1991
-------------- -----------------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable ......................... 10,757,000 4,888,000
Dividends payable ........................ 668,000 673,000
Salaries, wages and related liabilities .. 2,926,000 1,295,000
Federal, state and local taxes ........... 561,000 329,000
Other accrued liabilities ................ 3,414,000 2,590,000
------------- ------------
Total Current Liabilities ... 18,326,000 9,775,000
Other noncurrent liabilities:
Deferred income taxes .................... 1,391,000 1,366,000
Stockholders' Equity:
Preferred stock without par value
2,000,000 shares authorized;
none issued
Common stock $.1667 stated value
20,000,000 shares authorized;
7,262,598 shares issued ............. 1,210,000 1,210,000
Additional paid in capital ............... 5,304,000 5,178,000
Cumulative translation adjustment ........ 445,000 618,000
Unrealized Gains on Marketable Securities ..... 498,000 460,000
Retained earnings ........................ 99,967,000 97,494,000
Less:
Treasury stock, at cost--1,186,424
and 1,144,992 shares at respective
dates ............................... (26,590,000) (25,305,000)
------------- ------------
Total Stockholders' Equity ... 80,834,000 79,655,000
------------- ------------
Total Liabilities and Stockholders'
Equity ........................... $ 100,551,000 $ 90,796,000
============= ============
The accompanying notes are an integral part of the financial statements.
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Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Statements of Income
UNAUDITED
----------------------------------
Thirteen Weeks Ended
----------------------------------
March 30, April 1,
1996 1995
--------------- ---------------
Net Sales ................................ $ 34,183,000 $ 33,646,000
Cost of Sales ............................ 22,883,000 24,606,000
------------ ------------
11,300,000 9,040,000
Selling, administrative and
development expenses ................ 6,056,000 5,099,000
------------ ------------
5,244,000 3,941,000
Interest and dividend income ............. 89,000 27,000
Interest expense ......................... (1,000) (40,000)
Other income (expense) ................... (31,000) 5,000
------------ ------------
5,301,000 3,933,000
Taxes on income .......................... 2,160,000 1,577,000
------------ ------------
Net Income .......................... $ 3,141,000 $ 2,356,000
============ ============
Earnings per common and common
equivalent share
Primary .................................. $ 0.50 $ 0.37
============ ============
Fully Diluted ............................ $ 0.50 $ 0.37
============ ============
Cash dividends per
common share ........................ $ 0.11 $ 0.10
============ ============
Weighted average number of
common and common
equivalent shares used in
computing earnings per share
Primary .................................. 6,297,238 6,399,320
============ ============
Fully Diluted ............................ 6,297,238 6,403,676
============ ============
The accompanying notes are an integral part of the financial statements.
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Liqui-Box Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
UNAUDITED
----------------------------------------------
Thirteen Weeks Ended
----------------------------------------------
March 30, April 1,
1996 1995
--------------------- ---------------------
Operating Activities:
Net income $3,141,000 $2,356,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,644,000 1,513,000
Provision for loss on accounts receivable 256,000 37,000
Amortization of other noncurrent assets 268,000 282,000
Loss (gain) on disposal of property, plant and equipment (7,000) 0
Deferred Compensation 118,000 176,000
Changes in deferred income tax accounts 25,000 0
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (731,000) 816,000
(Increase) decrease in inventories (4,619,000) (1,854,000)
(Increase) decrease in other current assets (54,000) (532,000)
Increase (decrease) in accounts payable 5,922,000 (154,000)
Increase (decrease) in salaries, wages and related liabilities 1,631,000 873,000
Increase (decrease) in other accrued liabilities 1,045,000 395,000
--------------------- ---------------------
Net Cash Provided by Operating Activities 8,639,000 3,908,000
Investing Activities:
Purchases of property, plant and equipment (3,095,000) (2,187,000)
Proceeds from sale of property, plant and equipment 223,000 0
Other asset changes, net (61,000) 5,000
--------------------- ---------------------
Net Cash Used in Investing Activities (2,933,000) (2,182,000)
Financing Activities:
Acquisition of treasury shares (1,328,000) (757,000)
Sale of treasury shares 51,000 165,000
Cash dividends (668,000) (625,000)
Changes in loans to officers and employees
Proceeds of short-term borrowings 0 2,000,000
Repayment of short and long-term borrowings
--------------------- ---------------------
Net Cash Provided by (Used in) Financing Activities (1,945,000) 783,000
Effect of exchange rate changes on Cash 52,000 77,000
--------------------- ---------------------
Increase in Cash and Cash Equivalents 3,813,000 2,586,000
Cash and cash equivalents at beginning of year 9,424,000 4,341,000
--------------------- ---------------------
Cash and Cash Equivalents at End of First Quarter $13,237,000 $6,927,000
===================== =====================
The accompanying notes are an integral part of the financial statements.
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LIQUI-BOX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. The accompanying financial statements include the accounts of Liqui-Box
Corporation (the "Company") and its subsidiaries.
The information furnished reflects all adjustments (all of which
were of a normal recurring nature) which are, in the opinion of
management, necessary to fairly present the consolidated financial
position, results of operations, and changes in cash flows on a
consistent basis.
Certain amounts in the prior year's financial statements have been
reclassified to conform with the 1996 presentation.
2. In the First Quarter 1996 the Company adopted Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets To Be Disposed Of". This standard provides guidance on reviewing
long- lived assets and certain intangibles for impairment. In addition,
the standard requires that long-lived assets and certain intangibles to
be disposed of be reported at the lower of carrying amount or fair value
less cost of disposal. The adoption of this standard has not had a
significant impact on the Company's financial statements.
3. In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting
for Stock-Based Compensation" which became effective for the Company in
the First Quarter 1996. SFAS No. 123 requires expanded disclosures of
stock-based compensation agreements with employees and encourages (but
does not require) compensation cost to be measured based on the fair
value of the equity instrument awarded. Companies are permitted, however,
to continue to apply APB Opinion No. 25, which recognizes compensation
cost based on the intrinsic value of the equity instrument awarded. The
Company will continue to apply APB Opinion No. 25 to its stock-based
compensation awards to employees and will disclose the required pro forma
effect on net income and earnings per share in the Company's Annual
Report for the fiscal year ended December 28, 1996.
4. The accompanying unaudited consolidated financial statements are
presented in accordance with the requirements for Form 10-Q and
consequently do not include all the disclosures normally required by
generally accepted accounting principles or those which are normally made
in the Company's annual Form 10-K filing. Reference should be made to the
Company's aforementioned Form 10-K for additional disclosures including a
summary of the Company's accounting policies, which have not
significantly changed.
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
During the First Quarter 1996, Liqui-Box (the "Company") experienced a 2%
increase in sales compared to the First Quarter 1995. This increase is
primarily attributable to a 9% increase in unit sales which is partially
offset by lower sales prices on most of the Company's products. The decrease
in prices is due to a decline in the cost of the Company's primary raw
material, plastic resin. The cost of most of the resins the Company uses in
the manufacture of its products rose dramatically in late 1994 and early 1995.
The cost of many of these resins began to decline from their peaks in Spring
1995; however, as of the end of the First Quarter 1996, they had not returned
to the beginning of 1994 levels.
Gross profit, as a percentage of net sales, was 33.1% in the First Quarter
1996 and 26.9% in the First Quarter 1995. The increase in gross profit as a
percent of net sales is primarily the result of reduced costs due to previous
plant consolidations and improved plant operating efficiencies. To a lesser
extent, decreases in raw material costs, partly offset by decreased selling
prices, also contributed to the increase in the gross profit as a percent of
net sales.
For the First Quarter of 1996, selling, administrative, and development
expenses were 17.7% of sales as compared to 15.2% in the First Quarter of
1995. The increase is primarily the result of increased compensation costs due
to the Company's profit sharing plan which includes virtually all United
States employees. The increase also reflects an increase in the Company's
research and development costs, as well as continued costs associated with the
statistical quality improvement project begun by the Company in 1995.
Income before taxes as a percentage of net sales was 15.5% in the First
Quarter 1996 and 11.7% in the First Quarter 1995. This increase is a result of
increased gross profits which have been partially offset by the increase in
selling, administrative, and development expenses for the First Quarter 1996.
The provision for income taxes was 40.7% of before tax income for the First
Quarter of 1996 and 40.1% for the First Quarter 1995. The effective tax rate
for the First Quarter 1996 is based on the Company's anticipated tax rate for
the 1996 fiscal year.
At the end of the First Quarter of 1996 and 1995, the Company had no
significant backlog of orders, which is industry typical.
Liquidity and Capital Resources
Total working capital at March 30, 1996, was $39,168,000 compared to
$38,924,000 at December 30, 1995. The ratio of current assets to current
liabilities was 3.1 to 1 at the end of the First Quarter 1996 and 5.0 to 1 at
year end 1995. Net cash provided from operations was $8,639,000 for the three
months ended March 30, 1996 compared to $3,908,000 for the three months ended
April 1, 1995. The increase in cash provided from operations was primarily due
to an increase in accounts payable and accrued liabilities, as well as the
improved profitability in the First Quarter 1996 compared to 1995. Net cash
used in investing activities was $2,933,000 for the three months ended March
30, 1996 compared to $2,182,000 for the three months ended April 1, 1995. The
cash was used primarily for purchases of new plant equipment and improvements
to existing property and plant equipment. Cash used in financing activities
was $1,945,000 for the three months ended March 30, 1996, compared to cash
provided of $783,000 for the three months ended April 1, 1995. The cash
used in financing activities was primarily for the acquisition of treasury
stock and payment of cash dividends
-8-
The Company's major commitments for capital expenditures as of March 30, 1996
were, as they have been in the past, primarily for increased capacity at
existing locations, building filler machines for lease and tooling for new
projects. Funds required to fulfill these commitments will be provided
principally from operations with any additional funding needed coming from an
outstanding line of credit with The Huntington National Bank.
Longer-term cash requirements, other than normal operating expenses, are
needed for financing anticipated growth; increasing capacity at existing
plants; development of new products and enhancement of existing products;
dividend payments; and possible continued repurchases of the Company's common
shares. The Company believes that its existing cash and cash equivalents,
available credit facilities, and anticipated cash generated from operations
will be sufficient to satisfy its currently anticipated cash requirements for
the fiscal year 1996.
There have been no significant changes in capitalization during the first
three months of 1996, except for the repurchase of treasury shares in the
aggregate amount of $1,328,000 which were acquired throughout the First
Quarter 1996. The common shares were bought at a price considered fair by
management and there was cash available for these purchases. The Company felt
the purchases represented a good investment and would secure common shares for
issuance under the Company's employee benefit plans. The Company has not
entered into any significant financing arrangements not reflected in the
financial statements.
PART II. OTHER INFORMATION
Item 1-5. Inapplicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
Exhibit 11. Statement Re Computation of Earnings Per Share
(page 10)
Exhibit 27. Financial Data Schedule (page 11)
(b) No reports on Form 8-K were filed during the quarter ended March
30, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIQUI-BOX CORPORATION (Registrant)
Date May 10, 1996
By /s/ Juan Jose Perez
__________________________
Juan Jose Perez
Vice President -
Administration
(Duly Authorized Officer)
Date May 10, 1996
By /s/ James B. Holloway
____________________________
James B. Holloway
Controller
(Principal Accounting Officer)
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