-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SaB4ktGQvU0IzpuSwNek0kTfJFfBWL9j4w2Wj5UC7vK0X5w7wCWCay3cNDbOPW3F zkPPW8+JpMzNK1DcMAP5pA== 0000912057-00-015631.txt : 20000403 0000912057-00-015631.hdr.sgml : 20000403 ACCESSION NUMBER: 0000912057-00-015631 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000101 FILED AS OF DATE: 20000331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIQUI BOX CORP CENTRAL INDEX KEY: 0000216430 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 310628033 STATE OF INCORPORATION: OH FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-08514 FILM NUMBER: 591155 BUSINESS ADDRESS: STREET 1: 6950 WORTHINGTON GALENA RD CITY: WORTHINGTON STATE: OH ZIP: 43085 BUSINESS PHONE: 6148889280 MAIL ADDRESS: STREET 1: 6950 WORTHINGTON GALENA ROAD CITY: WORTHINGTON STATE: OH ZIP: 43085 10-K405 1 10-K405 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 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer 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 ---------------------------- 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 --------------------------- (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. /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 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 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. 3 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.
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 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
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 4 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.
NAME AGE TITLE ------------------------------------------------------------------- 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
(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 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.
Pages ----- 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
6 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. 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
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. 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
7 Item 14. (continued) 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
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.
EXHIBIT NO. DESCRIPTION PAGES - ----------------------------------------------------------------------------------------------- 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
(b) No report on Form 8-K was filed during the fourteen weeks ended January 1, 2000. 8 (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 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 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
(1) Uncollectible accounts written off, net of recoveries and other adjustments. 10 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 ---------------------------------- --------------------------------- Samuel B. Davis Chairman of the Board, Chief Executive Officer, Treasurer and Director Date: 3/29/00 By: *Samuel N. Davis ---------------------------------- --------------------------------- Samuel N. Davis Director Date: 3/29/00 By: *Robert S. Hamilton ---------------------------------- --------------------------------- Robert S. Hamilton Director Date: 3/29/00 By: *Charles R. Coate ---------------------------------- --------------------------------- Charles R. Coate Director Date: 3/29/00 By: *C. William McBee ---------------------------------- --------------------------------- C. William McBee President, Chief Operating Officer, Director and Secretary Date: 3/29/00 By: *Carl J. Aschinger, Jr. ---------------------------------- --------------------------------- Carl J. Aschinger, Jr. Director Date: 3/29/00 By: *Russell M. Gertmenian ---------------------------------- --------------------------------- Russell M. Gertmenian Director Date: 3/29/00 By: *Paul J. Maynard ---------------------------------- --------------------------------- Paul J. Maynard Director of Finance 11 Date: 3/29/00 By: /s/ Paul J. Maynard ---------------------------------- --------------------------------- Paul J. Maynard Attorney in Fact 12 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 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
13 EX-10.C 2 EXHIBIT 10.C LIQUI-BOX CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN EFFECTIVE: DECEMBER 1, 1999 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; (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. 2 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. 3 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. 4 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. 5 (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 6 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: 7 (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. 8 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 9 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:
YEARS OF SERVICE VESTED PERCENTAGE ---------------- ----------------- Fewer than 3 0 percent 3 20 percent 4 40 percent 10 5 60 percent 6 80 percent 7 or more 100 percent
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 11 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 12 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 13 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. 14 (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 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 (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 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 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 EX-13 3 EXHIBIT 13 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. 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:
1999 1998 Cash Cash Dividends Dividends Low High Per Share Low High Per Share 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
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. FINANCIAL HIGHLIGHTS For the Five Fiscal Years Ended January 1, 2000 (In thousands of dollars, except for per share data)
SELECTED INCOME STATEMENT DATA 1999 1998 1997 (1) 1996 1995 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
(1) Includes 53 weeks 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. 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 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 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 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. CONSOLIDATED BALANCE SHEETS
ASSETS January 1, 2000 January 2, 1999 - ------------------------------------------------------------------------------------------------------------ CURRENT ASSETS - ------------------------------------------------------------------------------------------------------------ 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 =============== ===============
See notes to consolidated financial statements. CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY January 1, 2000 January 2, 1999 - ------------------------------------------------------------------------------------------------------- CURRENT LIABILITIES - ------------------------------------------------------------------------------------------------------- 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 =============== ===============
See notes to consolidated financial statements.
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 -------------- -------------- -------------- 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
See notes to consolidated financial statements.
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 - ---------------------------------------------------------------------------------------------------------------------- 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
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - ----------------------------------------------------------------------------------------------------------------------------------- Additional Other Shares Common Paid-in Comprehensive Treasury Retained Outstanding Stock Capital Income Stock Earnings 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. - -----------------------------------------------------------------------------------------------------------------------------------
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 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. 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. 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:
AS OF FISCAL YEAR END January 1, January 2, 2000 1999 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 ========== ==========
Significant components of the provision for income taxes are as follows:
1999 1998 1997 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 =========== =========== ============
The following table summarizes the difference between income taxes computed at the expected Federal statutory rate and actual amounts:
1999 1998 1997 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 %
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 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:
1999 1998 1997 ---- ---- ---- 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
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 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:
1999 1998 1997 ------------------------- ------------------------- ---------------------------- Shares Weighted-Average Shares Weighted-Average Shares Weighted-Average (000) Exercise Price (000) Exercise Price (000) Exercise Price ----- -------------- ----- -------------- ----- -------------- 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
The following table summarizes information about stock options outstanding at January 1, 2000:
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 ----- ---------------- -------------- ----- -------------- $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 ================================================== ======================================
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. 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 $54,000 in 1999, 1998 and 1997, respectively. ESOP allocated and unallocated shares were 187,000 and 5,000 at January 1, 2000 and 163,000 and 24,000 at January 2, 1999, respectively. In 1999, the Company adopted an Executive Deferred Compensation Plan. Under the plan, eligible participants can defer up to 100% of their cash compensation as well as realized gains from the exercise of non-qualified stock options. The plan was inactive in 1999. NOTE 8 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) ($ in thousands, except per share data)
Earnings per share Net Gross Net -------------------- 1999 Sales Margin Income Basic Diluted 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 ======== ======== ======== ======== ======= Earnings per share Net Gross Net -------------------- 1998 Sales Margin Income Basic Diluted 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 ======== ======== ======== ======== =======
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:
United 1999 States Europe Total 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 ============= ============= =============
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. 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 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 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 EX-21 4 EXHIBIT 21 Exhibit (21) SUBSIDIARIES OF THE REGISTRANT LIQUI-BOX CORPORATION AND SUBSIDIARIES FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 1, 2000
Percentage of Voting Securities Jurisdiction of Owned by Subsidiaries Incorporation the Registrant - ---------------------------------- ---------------------- ---------------------- 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%
60 EX-23 5 EXHIBIT 23 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 EX-24 6 EXHIBIT 24 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 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 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 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 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 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 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 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 EX-27 7 EXHIBIT 27
5 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. 1,000 YEAR JAN-01-2000 JAN-01-2000 11,635 0 20,025 730 14,050 49,120 111,677 78,448 94,890 19,878 0 0 0 1,210 72,334 94,890 165,227 165,227 103,693 133,601 43 186 315 31,649 12,515 19,134 0 0 0 19,134 4.20 4.00
-----END PRIVACY-ENHANCED MESSAGE-----