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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 (FEE REQUIRED)
For the fiscal year (fifty-two weeks) ended December 30, 1995.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from N / A to N / A .
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Commission File Number 0-8514
LIQUI-BOX CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 31-0628033
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6950 Worthington-Galena Road, Worthington, Ohio 43085
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 888-9280
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, No Par Value (6,117,606 outstanding at February 26, 1996)
(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 ___
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. [ ]
Based upon the closing price reported on the NASDAQ National Market
System on February 26, 1996, the aggregate market value of the voting
stock held by non-affiliates of the Registrant was $141,110,000.
Documents Incorporated by Reference:
(1) Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended December 30, 1995 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 Shareholders to be held on April 24, 1996
are incorporated by reference into Part III of this Annual Report
on Form 10-K.
Exhibit Index on Page 12
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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, detergent,
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 13 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
(less than 2% 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 1995, the Company maintained its position in its principal markets of
beverage, processed foods and specialty industrial products. In addition, the
two premium drinking water products under the Alaskan Falls label, introduced in
1991, showed improvement in sales and continue to be introduced onto retail
shelves in selected Midwestern states. Sales from our European subsidiary showed
increased unit growth during the year.
COMPETITION - The plastic packaging market is large and highly fragmented. There
are numerous competitors and the major markets in which the Company sells its
products are 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 10 year supply agreement between the Company and The Perrier
Group of America. Sales to this customer constituted 17%, 15% and 13% of total
sales in 1995, 1994 and 1993, 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.
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R & D expenditures in 1995, 1994 and 1993 were $1,265,000, $2,151,000 and
$1,954,000, 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 14 and 15
[Management's Discussion and Analysis] and on Page 22 [Note 1, Accounting
Policies, of the Notes to Consolidated Financial Statements] of the 1995 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 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 certain 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 809 individuals in its operations throughout the
United States and in Europe on December 30, 1995. Approximately 11% 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 10% of consolidated income before taxes and
24% of consolidated identifiable assets as of and for the year ended December
30, 1995. European operations constituted 12% of net sales, less than 10% of
consolidated income before taxes and 18% of identifiable assets as of and for
the year ended December 31, 1994. Further information can be found on page 29
[Note 10 of the Notes to Consolidated Financial Statements] of the 1995 Annual
Report and is incorporated herein by reference.
Item 2. Properties:
At December 30, 1995, the Company owned or leased property at eighteen (18)
locations for manufacturing, warehousing, and offices with a total of
approximately 685,000 square feet of floor space. The following table summarizes
the properties owned or leased.
Approximate Owned Expiration
Floor Space or Date of
Use and Location: (Sq. Ft.) Leased Lease
- ----------------- --------- ------ -----
Executive offices, research and
manufacturing:
Worthington, Ohio 63,000 Owned N/A
Manufacturing:
Ashland, Ohio 26,000 Leased Less than 1 year
Ashland, Ohio 22,000 Owned N/A
Houston, Texas 33,000 Leased 1999
Elk Grove, California 36,000 Leased 1997
Elkton, Maryland 40,000 Leased 2001
Auburn, Massachusetts 30,000 Leased 1998
New Albany, Indiana 61,000 Owned N/A
Ontario, California 61,000 Leased 2003
Upper Sandusky, Ohio 40,000 Leased 1996
Lake Wales, Florida 8,000 Leased Less than 1 year
Lake Wales, Florida 4,000 Leased Less than 1 year
Sacramento, California 74,000 Leased 2002
Sacramento, California 24,000 Leased Less than 1 year
Nazareth, Pennsylvania 32,000 Leased 1996
Romiley, England 53,000 Leased 2006
Romiley, England 12,000 Leased Less than 1 year
Warehouse and other:
Columbus, Ohio (storage) 32,000 Owned N/A
LaMirada, California 34,000 Leased 1999
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:
Not applicable
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 26, 1996, 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.
Name Age Title
---- --- -----
Samuel B. Davis (1) 54 Chairman of the Board, Chief Executive
Officer, President, Treasurer and Director
Robert S. Hamilton (2) 67 Vice Chairman of the Board and Director
Peter J. Linn (3) 54 Secretary and Director
C. William McBee (4) 53 Vice President, Manufacturing and Director
Juan Jose Perez (5) 40 Vice President, Administration and
General Counsel
(1) Samuel B. Davis has been Chairman of the Board, Chief Executive Officer
and Treasurer since August, 1982. Mr. Davis became President in
September, 1991 upon the retirement of Robert S. Hamilton.
(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) Peter J. Linn has been Secretary since April 1990. Mr. Linn was Senior
Vice President from February, 1994 until April 1995. From January, 1983
to February, 1994, he held the position of Executive Vice President.
(4) C. William McBee became a director in April, 1995. Mr. McBee became Vice
President, Manufacturing in October, 1994. From February, 1994 to
October, 1995, Mr. McBee was Vice President of Administration. Prior to
February, 1994, Mr. McBee was a General Manager for Stone Container
Corporation, Columbus, Indiana, a manufacturer of corrugated cardboard
containers.
(5) Juan Jose Perez became Vice President, Administration and an executive
officer in October, 1995. Since October, 1994, Mr. Perez has held the
position of General Counsel. Prior to October, 1994, Mr. Perez was a
partner in the law firm of Schwartz, Kelm, Warren & Rameriez.
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PART II
Pages
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The following items are incorporated herein by reference from the indicated
pages of the 1995 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 14-15
Item 8. Financial Statements and Supplementary Data 16-30
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure No response required
PART III
The following items are incorporated herein by reference from the indicated
pages of the Registrant's definitive Proxy Statement for its 1996 Annual Meeting
filed pursuant to Regulation 14A of the Securities Exchange Act of 1934.
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 7 - 11
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 1996 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 and 11
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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 1995 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 1995 Annual
Report.
Consolidated Balance Sheets
--December 30, 1995 and December 31, 1994 16-17
Consolidated Statements of Income
--Fifty-two weeks ended December 30, 1995,
Fifty-two weeks ended December 31, 1994 and
Fifty-two weeks ended January 1, 1994 18
Consolidated Statements of Cash Flows
--Fifty-two weeks ended December 30, 1995,
Fifty-two weeks ended December 31, 1994 and
Fifty-two weeks ended January 1, 1994 19
Consolidated Statements of Stockholders' Equity
--Fifty-two weeks ended December 30, 1995,
Fifty-two weeks ended December 31, 1994 and
Fifty-two weeks ended January 1, 1994 20-21
Notes to Consolidated Financial Statements 22-29
Report of Independent Auditors 30
Report of Independent Auditors. The page number indicates the
location in this Form 10-K 11
(a)(2) The following consolidated financial statement schedules of
Liqui-Box Corporation and Subsidiaries are included in Item 14(d). The
page number indicates the location in this Form 10-K.
II - Valuation and Qualifying Accounts 9
Schedules other than those listed above are omitted because they are not
required or are not applicable.
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Item 14. (continued)
(a) (3) 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.
Exhibit No. Description Pages
- -----------------------------------------------------------------------------------------------------------------------------
3A Amended Articles of Incorporation of the Registrant as filed with the Ohio Secretary of
State on December 14, 1995.
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-B 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
11 Computation of Per Share Earnings
13 Annual Report to Shareholders for the fiscal year ended December 30, 1995
21 Subsidiaries of the Registrant
23A Independent Auditors Consent and Report on Schedule (Deloitte & Touche LLP)
23B Consent of Independent Auditors (Ernst & Young LLP)
24 Powers of Attorney
27 Financial Data Schedule
(b) No report on Form 8-K was filed during the fourteen weeks ended
December 30, 1995. N/A
(c) Exhibits filed with this Annual Report on Form 10-K are attached
hereto. See Index to Exhibits at page 12.
(d) Financial Statement Schedules -- See Item 14.(a)(2)
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(amounts rounded to the nearest thousand dollars)
LIQUI-BOX CORPORATION AND SUBSIDIARIES
Column A Column B Column C Column D Column E
Additions
--------------------------
Balance at Charged to Charged Balance at
Beginning Costs and to Other End of
Description of Period Expenses Accounts Deductions (1) Period
- -------------------------------- ---------- -------------------------- -------------- ----------
Reserves deducted from assets:
Fifty-two weeks ended
December 30, 1995:
Allowance for
doubtful accounts $594,000 $723,000 $ 638,000 $679,000
Fifty-two weeks ended
December 31, 1994:
Allowance for
doubtful accounts $635,000 $580,000 $ 621,000 $594,000
Fifty-two weeks ended
January 1, 1994:
Allowance for
doubtful accounts $566,000 $231,000 $ 162,000 $635,000
(1) Uncollectible accounts written off, net of recoveries.
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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
3/28/96 * Samuel B. Davis
Date: ________________________ By: _________________________________
Samuel B. Davis
Chairman of the Board, Chief Executive
Officer, President, 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.
3/28/96 * Samuel B. Davis
Date: ________________________ By: _________________________________
Samuel B. Davis
Chairman of the Board, Chief Executive
Officer, President, Treasurer and Director
(Principal Executive and Financial
Officer)
3/28/96 * Jeanette A. Davis
Date: ________________________ By: _________________________________
Jeanette A. Davis
Director
3/28/96 * Robert S. Hamilton
Date: ________________________ By: _________________________________
Robert S. Hamilton
Vice Chairman and Director
3/28/96 * Peter J. Linn
Date: ________________________ By: _________________________________
Peter J. Linn
Secretary and Director
3/28/96 * C. William McBee
Date: ________________________ By: _________________________________
C. William McBee
Director
3/28/96 * Carl J. Aschinger, Jr.
Date: ________________________ By: _________________________________
Carl J. Aschinger, Jr.
Director
3/28/96
Date: ________________________ By: _________________________________
Russell M. Gertmenian
Director
3/28/96 * James B Holloway
Date: ________________________ By: _________________________________
James B Holloway
Controller
- -----------------------
/S/ Juan Jose Perez
3/28/96
Date: ________________________ *By: _________________________________
Juan Jose Perez
Attorney in Fact
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REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Liqui-Box Corporation
Worthington, Ohio
We have audited the accompanying consolidated balance sheet of Liqui-Box
Corporation and subsidiaries as of December 31, 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for
each of the two years in the periods ended December 31, 1994 and January
1, 1994. Our audits also included the financial statement schedule listed in
the index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule 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, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Liqui-Box
Corporation and subsidiaries at December 31, 1994, and the consolidated results
of their operations and their cash flows for each of the two years in the
periods ended December 31, 1994 and January 1, 1994, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
/s/ Ernst & Young LLP
Columbus, Ohio
March 2, 1995
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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.
Exhibit No. Description Pages
- -----------------------------------------------------------------------------------------------------------------------------
3A Amended Articles of Incorporation of the Registrant as filed with the Ohio Secretary of
State on December 14, 1995.
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).
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).
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).
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).
11 Computation of Per Share Earnings
13 Annual Report to Shareholders for the fiscal year ended December 30, 1995
21 Subsidiaries of the Registrant
23A Independent Auditors Consent and Report on Schedule (Deloitte & Touche LLP)
23B Consent of Independent Auditors (Ernst & Young LLP)
24 Powers of Attorney
27 Financial Data Schedule
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