<PAGE>   1
 
EXHIBIT (13) 1997 ANNUAL REPORT TO STOCKHOLDERS
 
                                       12
<PAGE>   2
 
                              FINANCIAL HIGHLIGHTS
 
     For the Five Fiscal Years Ended January 3, 1998 (In thousands of dollars,
except per share data)
 
<TABLE>
<CAPTION>
SELECTED INCOME STATEMENT DATA                 1997              1996              1995              1994              1993
<S>                                          <C>               <C>               <C>               <C>               <C>
Net Sales                                    $154,145          $152,368          $156,373          $147,772          $130,081
Income Before Taxes                            26,115            24,109            20,038            22,246            21,594
Net Income                                     15,646            14,519            12,085            13,327            12,937
Net Income as a % of Net Sales                  10.2%              9.5%              7.7%              9.0%              9.9%
Return on Stockholders' Equity                  19.9%             17.7%             15.8%             19.2%             21.4%
Earnings Per Share                      
     Basic                                   $   2.77          $   2.44          $   1.94          $   2.11          $   2.04
     Diluted                                 $   2.72          $   2.41          $   1.92          $   2.10          $   2.03
Selected Balance Sheet Data
  Total Assets                                 97,442           100,016            90,796            89,185            86,072
Long-term Obligations                              --                --                --                --                55
Cash Dividends Per Share                     $   0.52          $   0.48          $   0.42          $   0.40          $   0.39
Book Value Per Share                         $  14.06          $  14.47          $  13.02          $  11.76          $  10.25
Market Price at Fiscal Year-end              $  39.06          $  32.75          $  29.63          $  33.25          $  38.00
</TABLE>
 
                             DATA PER COMMON SHARE
 
     The reported low and high closing prices on the NASDAQ National Market as
reported by the National Quotation Bureau, Inc. and cash dividends per share
were as follows:
 
<TABLE>
<CAPTION>

                                                              1997                                  1996
                                                                      CASH                                 CASH      
                                                                      DIVIDENDS                            DIVIDENDS  
                                                  LOW       HIGH      PER SHARE         LOW       HIGH     PER SHARE  
                                                                                           
<S>                                             <C>        <C>        <C>             <C>        <C>       <C>
First Quarter                                   28 3/4     34 1/2       $0.13         29 1/4     33 1/2      $0.11
Second Quarter                                  32 1/2     34 3/4       $0.13         28 1/2     33 1/2      $0.11
Third Quarter                                   32 3/4     38 3/4       $0.13         26 1/2     33          $0.13
Fourth Quarter                                  36 1/8     40 1/4       $0.13         29 1/4     33          $0.13
</TABLE>
 
     As of January 3, 1998, there were 750 holders of record of common shares.
 
                            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 1997 and 1996, the
Company felt that its common stock was undervalued by the market and as a result
the Company began an aggressive campaign to repurchase its common shares
outstanding. During 1997 and 1996 Liqui-Box repurchased 696,801 common shares at
an aggregate cost of $25,250,000 and 407,137 common shares at an aggregate cost
of $12,160,000, respectively. The Company purchased an additional 435,900 common
shares from January 4, 1998 through March 12, 1998 at an aggregate cost of
$16,558,000. The grand total of the above purchases was $53,968,000 at an
average cost of $35.05. These would have had a total market value of $65,828,000
based on a closing price of $42.75 on March 12, 1998, an excess over cost of
$11,860,000.
 
                                       13
<PAGE>   3





                              LIQUI-BOX WORLDWIDE


WORLD HEADQUARTERS  Worthington, Ohio

<TABLE>
<S>                 <C>            <C>            <C>            <C>
                    Afghanistan    Cyprus         Israel         Saudi Arabia
                    Argentina      Denmark        Italy          South Africa
                    Australia      Ecuador        Japan          Spain
                    Austria        Finland        Kenya          Sri Lanka
                    Bahamas        France         Mexico         Sweden
                    Bahrain        Germany        Nepal          Switzerland
                    Bangladesh     Greece         New Zealand    Taiwan
                    Belgium        Hong Kong      Norway         The Netherlands
                    Bhutan         Hungary        Pakistan       Turkey
                    Brazil         Iceland        Panama         U.A.E.
                    Canada         India          Philippines    United Kingdom
                    Chile          Indonesia      Poland
                    China          Iran           Portugal
</TABLE>

<TABLE>
<S>                           <C>
MANUFACTURING FACILITIES      Allentown, Pennsylvania
                              Ashland, Ohio
                              Auburn, Massachusetts
                              Elkton, Maryland
                              Houston, Texas
                              Lake Wales, Florida
                              Ontario, California
                              Sacremento, California
                              Upper Sandusky, Ohio
                              Worthington, Ohio
                              Romiley, England
</TABLE>


                             CORPORATE INFORMATION

<TABLE>
     <S>                      <C>
     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 held at
                              the Columbus Marriott North, 6500 Doubletree Ave.,
                              Columbus, Ohio on April 22, 1998 at 9:00 a.m.
</TABLE>

                                       14
<PAGE>   4
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
 
                             RESULTS OF OPERATIONS
 
1997 COMPARED TO 1996
 
     During 1997, Liqui-Box Corporation (the "Company") experienced a 1.1%
increase in net sales dollars on a .7% increase in unit sales compared to 1996.
The increase in net sales can be primarily attributed to a comparable increase
in unit sales. Selling prices on most products remained relatively stable in
1997, as did the cost of the Company's prime raw material, plastic resin. Fiscal
year 1997 consisted of fifty-three weeks while fiscal year 1996 consisted of
fifty-two weeks. The Company does not believe the additional week had a material
impact on the results of operations because the additional week occurred at the
end of the fiscal year when the sales and related activities of the Company are
historically lower.
 
     Gross profit, as a percentage of net sales, was 32.2% in 1997 and 31.2% in
1996. This increase is primarily the result of improvements in plant
efficiencies, including the positive impact of previous plant consolidations.
 
     Selling, administrative and development expenses in 1997 were $24,619,000,
compared to $23,447,000 in 1996, an increase of $1,172,000. This increase is
primarily due to two factors of similar magnitude: an increase in compensation-
related costs and an increase in depreciation and amortization expense. The
increase in compensation-related costs in 1997 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
amortization expense is the result of the significant investment the Company has
made in the past two years in expansion and improvements to existing plants, as
well as purchases of new, and improvements to existing, plant equipment.
 
     Research and development costs were $1,371,000 in 1997 and $1,856,000 in
1996, a decrease of $485,000. The 1996 costs included significant costs
associated with development of the Company's new clear PET Handi-Tap. It should
be noted that the above amounts only include direct costs associated with
research and development. The Company and all of its employees share a
commitment to continually improving existing products and processes, as well as
developing new products.
 
     Net income increased by 7.8% to $15,646,000 in 1997, compared to
$14,519,000 in 1996. This increase is a result of the increase in gross profit,
partially offset by the increase in selling, administrative and development
costs and income taxes. The provisions for income taxes were 40.1% and 39.8% of
before tax income in 1997 and 1996, respectively.
 
     At the end of 1997 and 1996, Liqui-Box had no significant backlog of
orders, which is industry typical.
 
1996 COMPARED TO 1995
 
     During 1996, the Company experienced a 4.4% increase in unit sales and a
2.6% decrease in net sales dollars compared to 1995. The decrease in net sales
was primarily attributable to decreased
 
                                        15
<PAGE>   5
 
selling prices on most products due to a decrease in 1996 in the cost of the
Company's prime raw material, plastic resin, partially offset by the increase in
unit sales for the year. The cost of most of the resins the Company uses in the
manufacture of its products began to rise dramatically in 1994 and the increases
continued into 1995. The cost of many of these resins began to decline from
their peaks in Spring 1995; however, as of the end of 1996, they had not
returned to beginning 1994 levels.
 
     Gross profit, as a percentage of net sales, was 31.2% in 1996 and 27.3% in
1995. This increase was primarily the result of improvements in plant
efficiencies and the positive impact of previous plant consolidations. To a
lesser extent, decreased resin costs, partially offset by decreased selling
prices, also contributed to the increase in gross profit as a percentage of net
sales.
 
     Selling, administrative and development expenses in 1996 were $23,447,000
as compared to $22,712,000 in 1995, an increase of $735,000. This increase was
primarily due to an increase in compensation-related costs in 1996 as a result
of the Company's compensation program, which bases a significant portion of
employees' total compensation on Company profitability, as well as, to a lesser
extent, an increase in the Company's research and development costs. The
increases in compensation, research and development costs were partially offset
by overall decreases in the Company's other selling, administrative and
development costs.
 
     Research and development costs were $1,856,000 in 1996 and $1,265,000 in
1995, an increase of $591,000. Significant costs were incurred in continued
development of the Company's new clear PET Handi-Tap, as well as improvements to
existing products.
 
     Net income increased by 20.1% to $14,519,000, compared to $12,085,000 in
1995. This increase was a result of the increase in gross profit, partially
offset by the increase in selling, administrative and development costs and
income taxes.
 
                        LIQUIDITY AND CAPITAL RESOURCES
 
     Total working capital at year-end was $23,521,000, $37,468,000 and
$38,924,000 in 1997, 1996 and 1995, respectively. The ratio of current assets to
current liabilities was 2.0 to 1 for 1997, 3.6 to 1 in 1996 and 5.0 to 1 in
1995. Net cash provided from operations was $30,177,000 for 1997 compared to
$29,762,000 in 1996 and $21,159,000 in 1995. The increase in cash provided was
the result of improved profitability of the Company, coupled with better asset
and liability management. Net cash used in investing activities was $9,628,000
for 1997 compared to $13,659,000 in 1996 and $8,066,000 in 1995. 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 $17,615,000 for 1997 compared to $11,759,000 in 1996 and
$8,111,000 in 1995. The cash used in financing activities was primarily for the
acquisition of treasury stock and payment of cash dividends, offset by
borrowings on the Company's revolving line of credit.
 
     Liqui-Box's major commitments for capital expenditures as of January 3,
1998 were, as they have been in the past, primarily for increasing capacity at
existing locations, building filling machines for lease or sale and tooling for
new products. Funds required to fulfill these commitments are expected to be
provided by operations.

                                       16
<PAGE>   6
     There have been no significant changes in the Company's capitalization
during the past three years except for the repurchase and the issuance of
treasury shares. The common shares have been bought 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. The Company purchased an
additional 435,900 common shares from January 4, 1998 through March 12, 1998 at
an aggregate cost of $16,558,000.
 
     Financing arrangements with The Huntington National Bank ("Bank") provide
various credit facilities with a total commitment of $30,000,000. There was
$10,000,000 outstanding under these commitments as of January 3, 1998. A portion
of these credit facilities expired on March 1, 1998; however, management has a
commitment from the Bank to renew these facilities on terms comparable to the
existing facilities. The remaining portion of these facilities expire on April
30, 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 possible continued repurchases of the Company's common
shares. The Company believes that its existing cash and cash equivalents,
available credit facilities and anticipated cash generated from operations will
be sufficient to satisfy its currently anticipated cash requirements for the
1998 fiscal year.
 
     During 1996 and 1995, the Company experienced dramatic fluctuations in the
costs of plastic resin; however, the Company was able to obtain an adequate
supply for its needs. In 1998, it is uncertain what will happen to plastic resin
prices. The Company anticipates that during 1998, 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 1997; however, management feels that inflation did have a
material effect on the Company during 1996 and 1995 due to fluctuations in the
cost of resin. The Company has the ability to adjust prices as the cost of resin
changes; however, there is 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
 
     In prior years, certain computer programs were written using two digits,
rather than four, to define the applicable year. These programs were written
without considering the impact of the upcoming century and may experience
problems handling dates beyond the year 1999. This could cause computer
applications to fail or to create erroneous results unless corrective measures
are taken. Incomplete or untimely resolution of the Year 2000 issue could have a
material impact on the Company's business, operations or financial condition in
the future.
 
     The Company has been assessing the impact that the Year 2000 issue will
have on its computer systems since 1995. In response to these assessments, which
are ongoing, the Company developed a plan to replace all critical systems.
Project plans call for the implementation of an integrated
 
                                       17
<PAGE>   7
 
application software package purchased from a software vendor. This application
software has received ITAA*2000 certification from the Information Technology
Association of America as Year 2000 compliant. In addition, the Company is in
the process of replacing all critical computer hardware and PC software with
Year 2000 compliant products. The current project plan calls for the
implementation to be completed in the second quarter of 1998 at an approximate
cost of $1,000,000. The Company is also in the process of surveying critical
suppliers and customers to determine the status of their Year 2000 compliance
programs.
 
     Based on the work to date, and assuming the Company's project plans can be
implemented as planned, the Company believes future costs relating to the Year
2000 issue will not have a material impact on the Company's consolidated
financial position, results of operations or cash flows.
 
                            NEW ACCOUNTING STANDARD
 
     In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information". The
statement is effective for periods beginning after December 15, 1997. The
Company has not completed the process of evaluating the impact on its financial
statements when such statement is adopted.
 
                           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, capacity, efficiency and supply constraints, weather conditions, and
other risks detailed in the Company's press releases, shareholder communications
and Security and Exchange Commission filings. Actual events affecting the
Company and the impact of such events on the Company's operations may vary from
those currently anticipated.
 
                                       18
<PAGE>   8
 
LIQUI-BOX CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS,
JANUARY 3, 1998 AND DECEMBER 28, 1996
------------------------------------------------------------------------------- 
<TABLE>
<CAPTION>

ASSETS                                                          1997                  1996
<S>                                                          <C>                  <C>   
Current Assets:
  Cash and cash equivalents                                 $17,425,000           $15,248,000
  Accounts receivable:
    Trade, net of allowance for doubtful accounts
      of $933,000 and $742,000, respectively                 14,155,000            16,265,000
    Other                                                       657,000             1,141,000
                                                            -----------          ------------
      Total receivables                                      14,812,000            17,406,000
                                                            -----------          ------------
  Inventories:
    Raw materials and supplies                                7,165,000             8,869,000
    Work in process                                           3,027,000             4,194,000
    Finished goods                                            3,563,000             4,491,000
                                                            -----------          ------------
      Total inventories                                      13,755,000            17,554,000
                                                            -----------          ------------
  Other current assets                                        1,388,000             1,517,000
                                                            -----------          ------------
      Total Current Assets                                   47,380,000            51,725,000
                                                            -----------          ------------
Property, Plant and Equipment -- At cost:
  Land, buildings and leasehold improvements                 14,784,000            10,530,000
  Equipment and vehicles                                     68,375,000            62,469,000
  Equipment leased to customers                              18,331,000            18,940,000
  Construction in process                                     2,359,000             5,584,000
                                                            -----------          ------------
      Total                                                 103,849,000            97,523,000
  Less accumulated depreciation and amortization            (66,295,000)          (62,494,000)
                                                            -----------          ------------
      Property, plant and equipment -- net                   37,554,000            35,029,000
                                                            -----------          ------------

OTHER ASSETS:
  Goodwill, net of amortization                               9,137,000             9,857,000
  Deferred charges and other assets, net                      3,371,000             3,405,000
                                                            -----------          ------------
      Total other assets                                     12,508,000            13,262,000
                                                            -----------          ------------
TOTAL ASSETS                                                $97,442,000          $100,016,000
                                                            ===========          ============

</TABLE>
 
See notes to consolidated financial statements.
 
                                       19
<PAGE>   9
 
LIQUI-BOX CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS,
JANUARY 3, 1998 AND DECEMBER 28, 1996
------------------------------------------------------------------------------- 

<TABLE>
<CAPTION>

LIABILITIES AND STOCKHOLDERS' EQUITY                                1997          1996
<S>                                                         <C>            <C>
Current Liabilities:
  Accounts payable                                          $  6,962,000   $  6,640,000
  Short-term borrowings                                       10,000,000         --
  Dividends payable                                              624,000        758,000
  Salaries, wages and related liabilities                      1,962,000      1,696,000
  Federal, state and local taxes                                 684,000      1,059,000
  Other accrued liabilities                                    3,627,000      4,104,000
                                                            ------------   ------------
      Total Current Liabilities                               23,859,000     14,257,000
                                                            ------------   ------------
Deferred Income Taxes                                          1,069,000      1,379,000
                                                            ------------   ------------

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                                   7,234,000      6,615,000
  Cumulative translation adjustment                            1,242,000      1,986,000
  Unrealized gain on marketable securities                       872,000        605,000
  Retained earnings                                          121,979,000    109,175,000
  Less treasury stock, at cost -- 2,105,553 and 1,432,203
    shares, respectively                                     (60,023,000)   (35,211,000)
                                                            ------------   ------------
      Total Stockholders' Equity                              72,514,000     84,380,000
                                                            ------------   ------------
Total Liabilities and Stockholders' Equity                  $ 97,442,000   $100,016,000
                                                            ============   ============
</TABLE>

See notes to consolidated financial statements.

                                       20
<PAGE>   10
 
LIQUI-BOX CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF INCOME
 
FOR THE YEARS ENDED JANUARY 3, 1998, DECEMBER 28, 1996 AND DECEMBER 30, 1995
----------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                             53 weeks      52 weeks      52 weeks

                                               1997          1996          1995
<S>                                        <C>           <C>           <C>
Net Sales                                  $154,145,000  $152,368,000  $156,373,000
Cost of Sales                               104,516,000   104,848,000   113,723,000
                                           ------------  ------------  ------------

    Gross Margin                             49,629,000    47,520,000    42,650,000

Selling, administrative and development
  expenses                                   24,619,000    23,447,000    22,712,000
                                           ------------  ------------  ------------

    Operating Income                         25,010,000    24,073,000    19,938,000

Other Income (Expense):
    Interest and dividend income                923,000       541,000       221,000
    Interest expense                            (59,000)       (5,000)     (222,000)
    Other, net                                  241,000      (500,000)      101,000
                                           ------------  ------------  ------------

Income Before Income Taxes                   26,115,000    24,109,000    20,038,000

Taxes on Income                              10,469,000     9,590,000     7,953,000
                                           ------------  ------------  ------------

Net Income                                 $ 15,646,000  $ 14,519,000  $ 12,085,000
                                           ============  ============  ============

Earnings per Share:
  Basic                                    $       2.77   $      2.44   $      1.94
  Diluted                                  $       2.72   $      2.41   $      1.92

Cash dividends per common share            $       0.52   $      0.48   $      0.42

Weighted average number of shares used in
computing earnings per share:
  Basic                                       5,643,479     5,959,962     6,223,395
  Diluted                                     5,760,163     6,022,755     6,284,771
</TABLE>
 
See notes to consolidated financial statements.
 
                                       21
<PAGE>   11
 
LIQUI-BOX CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JANUARY 3, 1998, DECEMBER 28, 1996 AND DECEMBER 30, 1995
<TABLE>
<CAPTION>
                                                                                        UNREALIZED
                                                            ADDITIONAL   CUMULATIVE      GAIN ON
                                    SHARES       COMMON      PAID-IN     TRANSLATION    MARKETABLE    TREASURY       RETAINED
                                 OUTSTANDING     STOCK       CAPITAL      ADJUSTMENT    SECURITIES      STOCK        EARNINGS
<S>                              <C>           <C>          <C>          <C>           <C>          <C>            <C>
Balance at December 31, 1994..... 6,267,666    $1,210,000   $4,478,000     $ 729,000                $(20,751,000)  $ 88,017,000

Net income.......................                                                                                    12,085,000
Cash dividends...................                                                                                    (2,608,000)
Purchase of treasury shares......  (164,279)                                                          (4,837,000)
Proceeds from exercise of
  stock options..................    14,219                     49,000                                   283,000
Tax benefit on stock 
  options exercised..............                               51,000
 Deferred compensation...........                              600,000
Translation loss.................                                           (111,000)
Unrealized gain on 
  marketable securities..........                                                       $ 460,000
                                  ---------     ----------   ----------    ----------   ---------   ------------    -----------
Balance at December 30, 1995..... 6,117,606      1,210,000    5,178,000       618,000     460,000    (25,305,000)    97,494,000

Net income.......................                                                                                    14,519,000
Cash dividends...................                                                                                    (2,838,000)
Purchase of treasury shares......  (407,137)                                                         (12,160,000)
Sale of treasury shares..........   111,923                     949,000                                2,101,000
Proceeds from exercise of
  stock options..................     8,003                      11,000                                  153,000
Tax benefit on stock options 
  exercised......................                                25,000
 Deferred compensation...........                               452,000
Translation gain.................                                           1,368,000
Unrealized gain on 
  marketable securities..........                                                         145,000
                                  ---------     ----------    ---------    ----------   ---------   ------------   ------------

Balance at December 28, 1996..... 5,830,395      1,210,000    6,615,000     1,986,000     605,000    (35,211,000    109,175,000

Net income.......................                                                                                    15,646,000
Cash dividends...................                                                                                    (2,842,000)
Purchase of treasury shares......  (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    $1,242,000  $  872,000   $(60,023,000)  $121,979,000  
</TABLE>
 
See notes to consolidated financial statements.
 
                                       22
<PAGE>   12
 
LIQUI-BOX CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JANUARY 3, 1998, DECEMBER 28, 1996 AND DECEMBER 30, 1995
------------------------------------------------------------------------------- 

<TABLE>
<CAPTION>
                                                               53 weeks              52 weeks              52 weeks
                                                                                  
                                                                 1997                  1996                  1995
<S>                                                           <C>                   <C>                   <C>
Operating Activities:
  Net income                                                 $15,646,000           $14,519,000           $12,085,000
  Adjustments to reconcile net income to net cash
  provided by operating activities:
    Depreciation and amortization                              7,142,000             6,643,000             6,275,000
    Provision for loss on accounts receivable                    428,000               747,000               723,000
    Amortization of other noncurrent assets                    1,052,000             1,147,000             1,091,000
    Loss(gain) on disposal of property, plant and
      equipment                                                  (56,000)              (45,000)              619,000
    Deferred compensation                                        446,000               452,000               600,000
    Changes in deferred income tax accounts                     (236,000)              (76,000)              (32,000)
    Changes in operating assets and liabilities:
    Accounts receivable                                        2,167,000             1,063,000            (3,760,000)
    Inventories                                                3,799,000               938,000             5,783,000
    Other current assets                                          54,000                19,000             1,593,000
    Accounts payable                                             321,000             1,688,000            (2,316,000)
    Salaries, wages and related liabilities                      266,000               401,000              (344,000)
    Other accrued liabilities                                   (852,000)            2,266,000            (1,158,000)
                                                            ------------          ------------           -----------
Net cash provided by operating activities                     30,177,000            29,762,000            21,159,000
                                                            ------------          ------------           -----------
Cash Flows From Investing Activities:
  Purchase of property, plant and equipment                  (11,467,000)          (15,116,000)           (9,646,000)
  Proceeds from sale of property, plant and
    equipment                                                  1,863,000             2,055,000             1,467,000
  Other changes, net                                             (24,000)             (598,000)              113,000
                                                            ------------          ------------           -----------
Net cash used in investing activities                         (9,628,000)          (13,659,000)           (8,066,000)
                                                            ------------          ------------           -----------
Cash Flows From Financing Activities:
   Acquisition of treasury shares                            (25,250,000)          (12,160,000)           (4,837,000)
   Sale of treasury shares                                            --             3,050,000                    --
   Exercise of stock options, including tax benefit              611,000               189,000               383,000
   Cash dividends                                             (2,976,000)           (2,838,000)           (2,608,000)
   Proceeds from short-term borrowings                        10,000,000                    --                    --
   Repayment of short-term borrowings                                 --                    --            (1,000,000)
   Other                                                                                                     (49,000)
                                                            ------------          ------------           -----------

Net cash used in financing activities                        (17,615,000)          (11,759,000)           (8,111,000)
Effect of exchange rate changes on cash                         (757,000)            1,480,000               101,000
Increase in cash and cash equivalents                          2,177,000             5,824,000             5,083,000
Cash and cash equivalents, Beginning of year                  15,248,000             9,424,000             4,341,000
                                                            ------------          ------------           -----------
Cash and cash equivalents, End of year                      $ 17,425,000          $ 15,248,000           $ 9,424,000
                                                            ============          ============           ===========
</TABLE>
 
See notes to consolidated financial statements.
 
                                       23
<PAGE>   13
 
LIQUI-BOX CORPORATION AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 3, 1998, DECEMBER 28,1996 AND DECEMBER 30, 1995
--------------------------------------------------------------------------------

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, 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 and 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 two
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 19%, 18%, and 17% of the Company's revenues in 1997, 1996,
and 1995, respectively, were derived from sales to one major customer. Trade
receivables due from this customer were $734,000 and $1,677,000 at January 3,
1998 and December 28, 1996, respectively.
 
     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 $2,269,000 and $2,535,000 at
January 3, 1998 and December 28, 1996, respectively. The impact of partial
inventory liquidations in certain LIFO pools reduced the LIFO provision by
approximately $956,000 in 1995. 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 $7,067,000 and $8,077,000 at January 3,
1998 and December 28, 1996, 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 20 to 25 years. Other intangibles resulting from
 
                                       24
<PAGE>   14
 
business acquisitions, comprised mainly of costs related to sales agreements,
patents and non-compete agreements, are being amortized using the straight-line
method over 3 to 17 years. Accumulated amortization of goodwill and other
intangibles as of January 3, 1998 and December 28, 1996 approximated $6,710,000
and $5,625,000, 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 a separate component of stockholders' equity. The fair market value, cost and
unrealized gains, net of tax, were $1,513,000, $59,000 and $872,000,
respectively, at January 3, 1998 and $1,067,000, $59,000 and $605,000,
respectively, at December 28, 1996. The unrealized gain, net of tax, is a
supplemental non-cash transaction for the statement of cash flows.
 
     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 $1,371,000, $1,856,000 and $1,265,000 in
1997, 1996 and 1995, 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 $686,000, $456,000 and $328,000 in 1997, 1996
and 1995, respectively.
 
     Earnings Per Share -- In 1997, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings Per Share" which required
retroactive adoption. 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 stockholders' equity.
 
     Foreign currency exchange gains (losses) arise primarily from transactions
denominated in foreign currencies and from forward exchange contracts and are
included in other (expense) in the amount of approximately $(236,000),$(4,000)
and $(200,000) in 1997, 1996, and 1995, respectively. The Company enters into
forward exchange contracts to hedge against foreign currency fluctuations on
certain transactions. Transactions hedged with forward exchange contracts will
come due at the approximate time that forward exchange contracts held expire.
Realized and unrealized gains and losses on these contracts are included in net
income. At January 3, 1998, the Company had contracts of approximately
$1,621,000 maturing from January 5, 1998 through May 15, 1998 to exchange
various currencies to pounds sterling.
 
     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, other current liabilities and forward exchange
contracts are estimated to approximate fair value because of the short-term
maturity of these items.
 
                                       25
<PAGE>   15
 
     New Accounting Standard -- In June 1997, the Financial Accounting Standards
Board issued SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information". The statement is effective for periods beginning after
December 15, 1997. The Company has not completed the process of evaluating the
impact that will result on its financial statements when such statement is
adopted.
 
NOTE 2 TAXES ON INCOME
 
     Deferred income taxes are provided for the temporary differences between
the carrying amounts of assets and liabilities for financial reporting and
income tax purposes by applying enacted statutory tax rates applicable to future
years to the basis differences. The effect on deferred income taxes of a change
in tax rates is recognized in income in the period that includes the enactment
date.
 
     Significant components of the Company's deferred tax liabilities and assets
are as follows:
 
<TABLE>
<CAPTION>
                                                                                           
                                                                                      
                                                                                      
                                                                JANUARY 3,             DECEMBER 28,
                                                                   1998                    1996
<S>                                                             <C>                    <C>
Current deferred tax assets:
     Accounts receivable....................................      $  338,000           $  382,000
     Reserves, accruals and other...........................         585,000              615,000
                                                                  ----------           ----------
Net current deferred tax assets.............................      $  923,000           $  997,000
                                                                  ==========           ==========
Long-term deferred tax liabilities:
     Tax over book depreciation.............................      $1,400,000           $1,164,000
     Marketable securities..................................         582,000              403,000
                                                                  ----------           ----------
          Total long-term deferred tax liabilities..........       1,982,000            1,567,000
                                                                  ==========           ==========
Long-term deferred tax assets:
     Intangibles............................................         271,000              188,000
     Deferred Compensation and other........................         642,000                   --
                                                                  ----------           ----------
          Total long-term deferred tax assets...............         913,000              188,000
Net long-term deferred tax liabilities......................      $1,069,000           $1,379,000
                                                                  ==========           ==========
</TABLE>
 
     Significant components of the provision for income taxes are as follows:
 
<TABLE>
<CAPTION>
                                                                  1997                1996                1995
<S>                                                           <C>                 <C>                  <C>
Current:
     Federal......................................            $8,874,000           $7,783,000           $6,553,000
     Foreign......................................                83,000              145,000               --
     State........................................             1,927,000            1,841,000            1,432,000
                                                             -----------           ----------           ----------
          Total current taxes.....................            10,884,000            9,769,000            7,985,000
Deferred:
     Federal and State............................              (415,000)            (179,000)             (32,000)
                                                             -----------           ----------           ----------
          Total taxes.............................           $10,469,000           $9,590,000           $7,953,000
                                                             ===========           ==========           ==========
</TABLE>
 
                                       26
<PAGE>   16
 
     The following table summarizes the difference between income taxes computed
at the expected Federal statutory rate and actual amounts:
 
<TABLE>
<CAPTION>
                                                              1997                   1996              1995
                                                          -----------             ----------        ----------
<S>                                                        <C>                    <C>               <C>
Expense at Federal statutory rates.......................  $9,140,000             $8,438,000        $7,013,000
Foreign income taxes.....................................     118,000                145,000            --
State income taxes, net of Federal tax benefit...........   1,271,000              1,175,000           911,000
Other -- net.............................................     (60,000)              (168,000)           29,000
                                                          -----------             ----------        ----------
    Total................................................ $10,469,000             $9,590,000        $7,953,000
                                                          ===========             ==========        ==========
Effective income tax rate................................      40.1 %                 39.8 %            39.7 %
                                                          ===========             ==========        ==========
</TABLE>
 
     The Company made income tax payments, net of refunds, of approximately
$11,259,000, $8,699,000 and $9,972,000 in 1997, 1996 and 1995, 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 3, 1998 are: $1,314,000, $1,071,000, $1,019,000, $978,000
and $909,000. Lease payments under non-cancelable operating leases subsequent to
the year 2002 aggregate $3,493,000.
 
     Total rent expense including other cancelable and short-term leases was
$2,023,000, $2,354,000 and $2,312,000 in 1997, 1996 and 1995, 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. Legal counsel has advised the Company that it
has various defenses and remedies available and the Company intends to pursue
all available avenues in the post-trial and appellate review processes. The
ultimate liability related to this matter is presently not determinable. No
amount has been accrued for this matter in the accompanying financial
statements. 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 and its legal counsel believe the
resolution of such litigation will not have a material effect on the Company's
financial statements. 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 $2,800,000 as of January 3, 1998.
 
NOTE 4 STOCK OPTIONS
 
     At January 3, 1998, 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 1997, 1996 and 1995 was $446,000, $452,000 and
$600,000, respectively. Had the compensation costs for the
 
                                       27
<PAGE>   17
 
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 123, the Company's net income and earnings per share would have been
as indicated in the pro forma amounts below:
 
<TABLE>
<CAPTION>
                                                                            1997         1996         1995
                                                                            ----         ----         ----
<S>                                                      <C>              <C>          <C>          <C>       
Net income.............................................  As Reported      $15,646      $14,519      $12,085
                                                         Pro forma        $15,506      $14,359      $12,020
Basic earnings per share...............................  As Reported      $  2.77      $  2.44      $  1.94
                                                         Pro forma        $  2.75      $  2.41      $  1.93
Diluted earnings per share.............................  As Reported      $  2.72      $  2.41      $  1.92
                                                         Pro forma        $  2.69      $  2.38      $  1.91
</TABLE>
 
     The pro forma amounts are not representative of the effects on reported net
income for future years.
 
     The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used for grants in 1997, 1996 and 1995: 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
stockbased 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 non-executive 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 may also grant shares to Company executives under terms
similar to the LBShares Program discussed above.
 
     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.
 
                                       28
<PAGE>   18
 
     A summary of the status of the Company's stock option plan as of January 3,
1998 and for the three years then ended is presented below:
 
<TABLE>
<CAPTION>
                                                   1997                        1996                        1995
                                        -------------------------   -------------------------   -------------------------
                                        SHARES   WEIGHTED-AVERAGE   SHARES   WEIGHTED-AVERAGE   SHARES   WEIGHTED-AVERAGE
                                         (000)    EXERCISE PRICE     (000)    EXERCISE PRICE     (000)    EXERCISE PRICE
                                        ------   ----------------   ------   ----------------   ------   ----------------
<S>                                     <C>      <C>                <C>      <C>                <C>      <C>
Outstanding at beginning of year         758           $25           763           $24           391           $22
    Granted                               42           $36            48           $31           424           $27
    Exercised                            (23)          $26            (8)          $24           (14)          $23
    Forfeited                            (56)          $29           (45)          $29           (38)          $30
                                         ---                         ---                         ---
Outstanding at end of year               721           $25           758           $25           763           $24
                                         ===                         ===                         ===

Options Exercisable at year-end          307           $27           224           $26           109           $25

                                                       1997                        1996                        1995
                                                       ----                        ----                        ----
Weighted-average fair value of
  options granted during the year
   where market price at date of grant:
   -- is below exercise price                                                                                  $10
   -- is at exercise price                             $15                         $12                         $11
   -- is above exercise price                                                                                  $16
</TABLE>
 
     The following table summarizes information about stock options outstanding
at January 3, 1998:
 
<TABLE>
<CAPTION>
                                    OPTIONS OUTSTANDING                       OPTIONS OUTSTANDING
                     -------------------------------------------------   ------------------------------
                       NUMBER     WEIGHTED-AVERAGE                        NUMBER        
      RANGE OF       OUTSTANDING      REMAINING       WEIGHTED-AVERAGE   OUTSTANDING   WEIGHTED-AVERAGE 
  EXCERCISE PRICES      (000)      CONTRACTUAL LIFE    EXERCISE PRICE       (000)       EXERCISE RICE
  ----------------      -----     -----------------   ----------------      -----      ----------------
  <S>                <C>          <C>                 <C>                <C>           <C> 
  12.50 to $18.50            226         7.2                $14                   45         $13
  22.50 to $24.65             38         4.3                $24                   39         $24
  27.25 to $30.75            345         6.6                $28                  163         $28
  31.50 to $37.00            112         4.6                $36                   60         $36
                     -----------                                         -----------                     

                             721         6.8                $25                  307         $27
                     -----------                                         -----------                     
</TABLE>
 
     The Company receives tax deductions for the difference between fair market
value and the exercise price of common shares at the time non-incentive options
are exercised. In addition, common shares obtained through the exercise of stock
options which are sold by the optionee within two years of grant or one year of
exercise result in a tax deduction for the Company equivalent to the taxable
gain recognized by the optionee. The tax benefit of this deduction is reflected
in additional paid-in capital and totaled $66,000, $25,000 and $51,000 in 1997,
1996 and 1995, 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 3, 1998 and December 28, 1996 approximated
$14,477,000 and $13,632,000, respectively. Total lease income including other
cancelable and short-term leases was $651,000, $554,000 and $662,000 in 1997,
1996 and 1995,
 
                                       18
<PAGE>   19
respectively. The future minimum rentals on noncancelable operating leases for
the five fiscal years subsequent to January 3, 1998 and thereafter are:
$484,000, $387,000, $297,000, $199,000, $96,000 and $8,000.
 
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, 2000, 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 this facility at January
3, 1998. The remaining portion of the credit facilities of $20,000,000 is a line
of credit that expired March 1, 1998; however, the Company has a commitment from
the Bank to renew this facility on terms comparable to the existing facility.
$10,000,000 was outstanding under this facility at January 3, 1998. At the
Company's option, the credit facilities bear interest at either the prime rate,
the London Interbank Offered Rate plus .50% or a negotiated rate, as defined
(6.125% at January 3, 1998). The facilities require the maintenance of certain
financial ratios and restrict future common stock dividends to 50% of
consolidated net income. Interest paid in 1997, 1996 and 1995 was $36,000,
$5,000 and $223,000, 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 $597,000, $106,000 and $229,000 in 1997, 1996 and 1995,
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. 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 $54,000, $28,000 and $17,000 in 1997, 1996 and 1995, respectively.
 
     The Company contributes to various retirement plans. Contributions and
expenses related to these plans were $4,000, $37,000 and $91,000 in 1997, 1996
and 1995, respectively.
 
                                       30
<PAGE>   20
 
NOTE 8 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

($ IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                             EARNINGS PER SHARE
                              NET              GROSS            NET          ------------------  
1997                         SALES            PROFIT          INCOME         BASIC      DILUTED

<S>                         <C>               <C>             <C>            <C>         <C>
First quarter               $ 33,958          $10,622         $ 3,191        $0.55       $0.54
Second quarter                42,979           15,307           4,760         0.83        0.81
Third quarter                 44,239           15,060           5,108         0.90        0.88
Fourth quarter                32,969            8,640           2,587         0.48        0.46
                            --------          -------         -------        -----       -----
Total                       $154,145          $49,629         $15,646        $2.77       $2.72
                            ========          =======         =======        =====       =====
1996

First quarter               $ 34,183          $11,300         $ 3,141        $0.51       $0.51
Second quarter                42,159           14,321           4,529         0.76        0.75
Third quarter                 44,549           13,971           4,738         0.80        0.80
Fourth quarter                31,477            7,928           2,111         0.36        0.36
                            --------          -------         -------        -----       -----
Total                       $152,368          $47,520         $14,519        $2.44       $2.41
                            ========          =======         =======        =====       =====
</TABLE>
 
                                       31
<PAGE>   21
 
NOTE 9 GEOGRAPHIC SEGMENTS
 
     Financial information by geographic area for each of the three years in the
period ended January 3, 1998, is summarized as follows:

<TABLE>
<CAPTION>
                                      UNITED                          GENERAL        INTER-AREA
                                      STATES           EUROPE        CORPORATE      ELIMINATIONS        TOTAL
<S>                                <C>              <C>             <C>              <C>             <C>
1997
Trade sales -- net................ $133,779,000     $20,366,000     $                                $154,145,000
Inter-area sales..................      481,000                                      $(481,000)
                                   ------------     -----------     -----------      ---------       ------------
Net sales......................... $134,260,000     $20,366,000     $                $(481,000)      $154,145,000
                                   ============     ===========     ===========      =========       ============
Operating income (loss)........... $ 33,508,000     $   622,000     $(9,120,000)     $               $ 25,010,000
                                   ============     ===========     ===========      =========       ============
Identifiable assets............... $ 74,986,000     $19,270,000     $ 3,186,000      $               $ 97,442,000
                                   ============     ===========     ===========      =========       ============

1996
Trade sales -- net................ $134,021,000     $18,347,000     $                                $152,368,000
Inter-area sales..................      242,000                                      $(242,000)
                                   ------------     -----------     -----------      ---------       ------------
Net sales......................... $134,263,000     $18,347,000     $                $(242,000)      $152,368,000
                                   ============     ===========     ===========      =========       ============
Operating income (loss)........... $ 31,235,000     $ 1,191,000     $(8,353,000)     $               $ 24,073,000
                                   ============     ===========     ===========      =========       ============
Identifiable assets............... $ 75,700,000     $21,957,000     $ 2,359,000      $               $100,016,000
                                   ============     ===========     ===========      =========       ============

1995
Trade sales -- net................ $135,654,000     $20,719,000     $                                $156,373,000
Inter-area sales..................      195,000                                      $(195,000)
                                   ------------     -----------     -----------      ---------       ------------
Net sales......................... $135,849,000     $20,719,000     $                $(195,000)      $156,373,000
                                   ============     ===========     ===========      =========       ============
Operating income (loss)........... $ 26,982,000     $   709,000     $(7,753,000)     $               $ 19,938,000
                                   ============     ===========     ===========      =========       ============
Identifiable assets............... $ 67,044,000     $21,666,000     $ 2,086,000      $               $ 90,796,000
                                   ============     ===========     ===========      =========       ============
</TABLE>
 
     Inter-area transactions are accounted for on the same basis as sales to
unaffiliated parties. Identifiable assets are those assets associated with a
specific geographic area. General corporate assets consist primarily of the
corporate headquarters facility and various other investments and assets that
are not specific to a geographic area. Goodwill and related amortization have
been allocated by geographic area as applicable.
 
NOTE 10 SUBSEQUENT EVENT
 
     Subsequent to January 3, 1998, the Company purchased 435,900 shares of
common stock at an aggregate cost of $16,558,000.
 
                                       32
<PAGE>   22
 
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 3, 1998 and December 28, 1996, and
the related consolidated statements of income, stockholders' equity and cash
flows for each of the three fiscal years in the period ended January 3, 1998.
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 3, 1998 and December 28, 1996, and the results of their
operations and their cash flows for each of the three fiscal years in the period
ended January 3, 1998 in conformity with generally accepted accounting
principles.
 
Deloitte & Touche LLP

Columbus, Ohio
March 12, 1998
 
                                       33