Form 10-Q |
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Lancaster Colony Corporation | ||
(Exact name of registrant as specified in its charter) | ||
Ohio | 13-1955943 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
380 Polaris Parkway, Suite 400 Westerville, Ohio | 43082 | |
(Address of principal executive offices) | (Zip Code) |
614-224-7141 |
(Registrant’s telephone number, including area code) |
Large accelerated filer | ý | Accelerated filer | ¨ | ||
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | ||
Emerging growth company | ¨ |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
(Amounts in thousands, except share data) | March 31, 2017 | June 30, 2016 | |||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and equivalents | $ | 124,751 | $ | 118,080 | |||
Receivables (less allowance for doubtful accounts, March-$32; June-$125) | 75,056 | 66,006 | |||||
Inventories: | |||||||
Raw materials | 30,467 | 26,153 | |||||
Finished goods | 49,167 | 49,944 | |||||
Total inventories | 79,634 | 76,097 | |||||
Other current assets | 15,881 | 7,644 | |||||
Total current assets | 295,322 | 267,827 | |||||
Property, Plant and Equipment: | |||||||
Land, buildings and improvements | 123,330 | 116,858 | |||||
Machinery and equipment | 271,362 | 263,336 | |||||
Total cost | 394,692 | 380,194 | |||||
Less accumulated depreciation | 214,253 | 210,599 | |||||
Property, plant and equipment-net | 180,439 | 169,595 | |||||
Other Assets: | |||||||
Goodwill | 164,908 | 143,788 | |||||
Other intangible assets-net | 63,819 | 44,866 | |||||
Other noncurrent assets | 7,521 | 8,656 | |||||
Total | $ | 712,009 | $ | 634,732 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 41,840 | $ | 39,931 | |||
Accrued liabilities | 50,470 | 33,072 | |||||
Total current liabilities | 92,310 | 73,003 | |||||
Other Noncurrent Liabilities | 43,345 | 26,698 | |||||
Deferred Income Taxes | 17,174 | 21,433 | |||||
Commitments and Contingencies | |||||||
Shareholders’ Equity: | |||||||
Preferred stock-authorized 3,050,000 shares; outstanding-none | |||||||
Common stock-authorized 75,000,000 shares; outstanding-March-27,442,693 shares; June-27,423,550 shares | 113,950 | 110,677 | |||||
Retained earnings | 1,193,278 | 1,150,337 | |||||
Accumulated other comprehensive loss | (11,116 | ) | (11,350 | ) | |||
Common stock in treasury, at cost | (736,932 | ) | (736,066 | ) | |||
Total shareholders’ equity | 559,180 | 513,598 | |||||
Total | $ | 712,009 | $ | 634,732 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
(Amounts in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net Sales | $ | 293,834 | $ | 287,765 | $ | 911,968 | $ | 906,619 | |||||||
Cost of Sales | 221,929 | 214,841 | 665,690 | 682,134 | |||||||||||
Gross Profit | 71,905 | 72,924 | 246,278 | 224,485 | |||||||||||
Selling, General and Administrative Expenses | 32,253 | 28,980 | 96,514 | 86,538 | |||||||||||
Multiemployer Pension Settlement and Related Costs | 17,639 | — | 17,639 | — | |||||||||||
Operating Income | 22,013 | 43,944 | 132,125 | 137,947 | |||||||||||
Other, Net | 144 | 125 | 437 | 42 | |||||||||||
Income Before Income Taxes | 22,157 | 44,069 | 132,562 | 137,989 | |||||||||||
Taxes Based on Income | 7,686 | 15,058 | 45,735 | 46,839 | |||||||||||
Net Income | $ | 14,471 | $ | 29,011 | $ | 86,827 | $ | 91,150 | |||||||
Net Income Per Common Share: | |||||||||||||||
Basic | $ | 0.53 | $ | 1.06 | $ | 3.17 | $ | 3.33 | |||||||
Diluted | $ | 0.53 | $ | 1.06 | $ | 3.16 | $ | 3.32 | |||||||
Cash Dividends Per Common Share | $ | 0.55 | $ | 0.50 | $ | 1.60 | $ | 6.46 | |||||||
Weighted Average Common Shares Outstanding: | |||||||||||||||
Basic | 27,379 | 27,338 | 27,369 | 27,329 | |||||||||||
Diluted | 27,442 | 27,376 | 27,438 | 27,365 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
(Amounts in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net Income | $ | 14,471 | $ | 29,011 | $ | 86,827 | $ | 91,150 | |||||||
Other Comprehensive Income: | |||||||||||||||
Defined Benefit Pension and Postretirement Benefit Plans: | |||||||||||||||
Prior service credit arising during the period, before tax | — | — | — | 2,038 | |||||||||||
Amortization of loss, before tax | 170 | 124 | 508 | 382 | |||||||||||
Amortization of prior service credit, before tax | (46 | ) | (47 | ) | (136 | ) | (79 | ) | |||||||
Total Other Comprehensive Income, Before Tax | 124 | 77 | 372 | 2,341 | |||||||||||
Tax Attributes of Items in Other Comprehensive Income: | |||||||||||||||
Prior service credit arising during the period, tax | — | — | — | (753 | ) | ||||||||||
Amortization of loss, tax | (63 | ) | (45 | ) | (188 | ) | (142 | ) | |||||||
Amortization of prior service credit, tax | 17 | 17 | 50 | 29 | |||||||||||
Total Tax Expense | (46 | ) | (28 | ) | (138 | ) | (866 | ) | |||||||
Other Comprehensive Income, Net of Tax | 78 | 49 | 234 | 1,475 | |||||||||||
Comprehensive Income | $ | 14,549 | $ | 29,060 | $ | 87,061 | $ | 92,625 |
Nine Months Ended March 31, | |||||||
(Amounts in thousands) | 2017 | 2016 | |||||
Cash Flows From Operating Activities: | |||||||
Net income | $ | 86,827 | $ | 91,150 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Impacts of noncash items: | |||||||
Depreciation and amortization | 18,350 | 18,118 | |||||
Change in acquisition-related contingent consideration | 682 | — | |||||
Deferred income taxes and other changes | (3,576 | ) | 926 | ||||
Stock-based compensation expense | 3,110 | 2,140 | |||||
Excess tax benefit from stock-based compensation | (957 | ) | (737 | ) | |||
Pension plan activity | (183 | ) | (222 | ) | |||
Changes in operating assets and liabilities: | |||||||
Receivables | (6,934 | ) | (7,749 | ) | |||
Inventories | (3,107 | ) | 2,049 | ||||
Other current assets | (6,527 | ) | (1,131 | ) | |||
Accounts payable and accrued liabilities | 17,749 | (3,973 | ) | ||||
Net cash provided by operating activities | 105,434 | 100,571 | |||||
Cash Flows From Investing Activities: | |||||||
Cash paid for acquisitions, net of cash acquired | (34,997 | ) | (12 | ) | |||
Payments for property additions | (20,059 | ) | (11,607 | ) | |||
Other-net | 88 | (472 | ) | ||||
Net cash used in investing activities | (54,968 | ) | (12,091 | ) | |||
Cash Flows From Financing Activities: | |||||||
Payment of dividends (including special dividend payment, 2017-$0; 2016-$136,677) | (43,886 | ) | (176,837 | ) | |||
Purchase of treasury stock | (866 | ) | (155 | ) | |||
Excess tax benefit from stock-based compensation | 957 | 737 | |||||
Net cash used in financing activities | (43,795 | ) | (176,255 | ) | |||
Net change in cash and equivalents | 6,671 | (87,775 | ) | ||||
Cash and equivalents at beginning of year | 118,080 | 182,202 | |||||
Cash and equivalents at end of period | $ | 124,751 | $ | 94,427 | |||
Supplemental Disclosure of Operating Cash Flows: | |||||||
Cash paid during the period for income taxes | $ | 55,913 | $ | 48,514 |
March 31, | |||||||
2017 | 2016 | ||||||
Construction in progress in Accounts Payable | $ | 1,887 | $ | 185 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 14,471 | $ | 29,011 | $ | 86,827 | $ | 91,150 | |||||||
Net income available to participating securities | (23 | ) | (54 | ) | (149 | ) | (216 | ) | |||||||
Net income available to common shareholders | $ | 14,448 | $ | 28,957 | $ | 86,678 | $ | 90,934 | |||||||
Weighted average common shares outstanding – basic | 27,379 | 27,338 | 27,369 | 27,329 | |||||||||||
Incremental share effect from: | |||||||||||||||
Nonparticipating restricted stock | 1 | 2 | 3 | 3 | |||||||||||
Stock-settled stock appreciation rights | 62 | 36 | 66 | 33 | |||||||||||
Weighted average common shares outstanding – diluted | 27,442 | 27,376 | 27,438 | 27,365 | |||||||||||
Net income per common share – basic | $ | 0.53 | $ | 1.06 | $ | 3.17 | $ | 3.33 | |||||||
Net income per common share – diluted | $ | 0.53 | $ | 1.06 | $ | 3.16 | $ | 3.32 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Accumulated other comprehensive loss at beginning of period | $ | (11,194 | ) | $ | (8,631 | ) | $ | (11,350 | ) | $ | (10,057 | ) | |||
Defined Benefit Pension Plan Items: | |||||||||||||||
Amortization of unrecognized net loss | 179 | 135 | 536 | 405 | |||||||||||
Postretirement Benefit Plan Items: | |||||||||||||||
Prior service credit arising during the period | — | — | — | 2,038 | |||||||||||
Amortization of unrecognized net gain | (9 | ) | (11 | ) | (28 | ) | (23 | ) | |||||||
Amortization of prior service credit | (46 | ) | (47 | ) | (136 | ) | (79 | ) | |||||||
Total other comprehensive income, before tax | 124 | 77 | 372 | 2,341 | |||||||||||
Total tax expense | (46 | ) | (28 | ) | (138 | ) | (866 | ) | |||||||
Other comprehensive income, net of tax | 78 | 49 | 234 | 1,475 | |||||||||||
Accumulated other comprehensive loss at end of period | $ | (11,116 | ) | $ | (8,582 | ) | $ | (11,116 | ) | $ | (8,582 | ) |
Consideration | |||
Cash paid for acquisition | $ | 34,997 | |
Contingent consideration - fair value of earn-out at date of closing | 13,872 | ||
Working capital adjustment receivable | (63 | ) | |
Fair value of total consideration | $ | 48,806 | |
Preliminary Purchase Price Allocation | |||
Trade receivables | $ | 831 | |
Other receivables | 550 | ||
Inventories | 430 | ||
Other current assets | 19 | ||
Property, plant and equipment | 5,083 | ||
Goodwill (tax deductible) | 21,120 | ||
Other intangible assets | 21,491 | ||
Current liabilities | (718 | ) | |
Net assets acquired | $ | 48,806 |
Fair Value Measurements at March 31, 2017 | ||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||
Acquisition-related contingent consideration | $ | — | $ | — | $ | 14,554 | $ | 14,554 |
Three Months Ended March 31, 2017 | Nine Months Ended March 31, 2017 | ||||||
Acquisition-related contingent consideration at beginning of period | $ | 14,096 | $ | — | |||
Additions | — | 13,872 | |||||
Changes in fair value included in Selling, General and Administrative Expenses | 458 | 682 | |||||
Acquisition-related contingent consideration at end of period | $ | 14,554 | $ | 14,554 |
Carrying Value | |||
Goodwill at beginning of year | $ | 143,788 | |
Goodwill acquired during the period | 21,120 | ||
Goodwill at end of period | $ | 164,908 |
March 31, 2017 | June 30, 2016 | ||||||
Tradenames (20 to 30-year life) | |||||||
Gross carrying value | $ | 53,063 | $ | 34,500 | |||
Accumulated amortization | (2,696 | ) | (1,485 | ) | |||
Net carrying value | $ | 50,367 | $ | 33,015 | |||
Trademarks (40-year life) | |||||||
Gross carrying value | $ | 370 | $ | 370 | |||
Accumulated amortization | (239 | ) | (232 | ) | |||
Net carrying value | $ | 131 | $ | 138 | |||
Customer Relationships (10 to 15-year life) | |||||||
Gross carrying value | $ | 14,207 | $ | 13,920 | |||
Accumulated amortization | (6,879 | ) | (6,048 | ) | |||
Net carrying value | $ | 7,328 | $ | 7,872 | |||
Technology / Know-how (10-year life) | |||||||
Gross carrying value | $ | 6,350 | $ | 3,900 | |||
Accumulated amortization | (888 | ) | (504 | ) | |||
Net carrying value | $ | 5,462 | $ | 3,396 | |||
Non-compete Agreements (5-year life) | |||||||
Gross carrying value | $ | 791 | $ | 600 | |||
Accumulated amortization | (260 | ) | (155 | ) | |||
Net carrying value | $ | 531 | $ | 445 | |||
Total net carrying value | $ | 63,819 | $ | 44,866 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Amortization expense | $ | 1,001 | $ | 691 | $ | 2,538 | $ | 2,214 |
2018 | $ | 4,004 | |
2019 | $ | 4,004 | |
2020 | $ | 3,969 | |
2021 | $ | 3,884 | |
2022 | $ | 3,811 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net Sales | $ | 293,834 | $ | 287,765 | $ | 911,968 | $ | 906,619 | |||||||
Operating Income | |||||||||||||||
Specialty Foods | $ | 25,080 | $ | 46,476 | $ | 141,957 | $ | 146,866 | |||||||
Corporate Expenses | (3,067 | ) | (2,532 | ) | (9,832 | ) | (8,919 | ) | |||||||
Total | $ | 22,013 | $ | 43,944 | $ | 132,125 | $ | 137,947 |
• | leading retail market positions in several product categories with a high-quality perception; |
• | recognized innovation in retail products; |
• | a broad customer base in both retail and foodservice accounts; |
• | well-regarded culinary expertise among foodservice customers; |
• | recognized leadership in foodservice product development; |
• | experience in integrating complementary business acquisitions; and |
• | historically strong cash flow generation that supports growth opportunities. |
• | leveraging the strength of our retail brands to increase current product sales; |
• | introducing new retail products and expanding distribution; |
• | continuing to rely upon the strength of our reputation in foodservice product development and quality; and |
• | pursuing acquisitions that meet our strategic criteria. |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Net Sales | $ | 293,834 | $ | 287,765 | $ | 6,069 | 2 | % | $ | 911,968 | $ | 906,619 | $ | 5,349 | 1 | % | |||||||||||||
Gross Profit | $ | 71,905 | $ | 72,924 | $ | (1,019 | ) | (1 | )% | $ | 246,278 | $ | 224,485 | $ | 21,793 | 10 | % | ||||||||||||
Gross Margin | 24.5 | % | 25.3 | % | 27.0 | % | 24.8 | % |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
SG&A Expenses | $ | 32,253 | $ | 28,980 | $ | 3,273 | 11 | % | $ | 96,514 | $ | 86,538 | $ | 9,976 | 12 | % | |||||||||||||
SG&A Expenses as a Percentage of Net Sales | 11.0 | % | 10.1 | % | 10.6 | % | 9.5 | % |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
Operating Income | |||||||||||||||||||||||||||||
Specialty Foods | $ | 25,080 | $ | 46,476 | $ | (21,396 | ) | (46 | )% | $ | 141,957 | $ | 146,866 | $ | (4,909 | ) | (3 | )% | |||||||||||
Corporate Expenses | (3,067 | ) | (2,532 | ) | (535 | ) | 21 | % | (9,832 | ) | (8,919 | ) | (913 | ) | 10 | % | |||||||||||||
Total | $ | 22,013 | $ | 43,944 | $ | (21,931 | ) | (50 | )% | $ | 132,125 | $ | 137,947 | $ | (5,822 | ) | (4 | )% | |||||||||||
Operating Income as a Percentage of Net Sales | |||||||||||||||||||||||||||||
Specialty Foods | 8.5 | % | 16.2 | % | 15.6 | % | 16.2 | % | |||||||||||||||||||||
Total | 7.5 | % | 15.3 | % | 14.5 | % | 15.2 | % |
• | the ability to successfully integrate the acquisition of Angelic and subsequently grow the business; |
• | price and product competition; |
• | fluctuations in the cost and availability of ingredients and packaging; |
• | the reaction of customers or consumers to the effect of price increases we may implement; |
• | the impact of any regulatory matters affecting our food business, including any required labeling changes and their impact on consumer demand; |
• | the potential for loss of larger programs or key customer relationships; |
• | the impact of customer store brands on our branded retail volumes; |
• | the effect of consolidation of customers within key market channels; |
• | the success and cost of new product development efforts; |
• | the lack of market acceptance of new products; |
• | the possible occurrence of product recalls or other defective or mislabeled product costs; |
• | changes in demand for our products, which may result from loss of brand reputation or customer goodwill; |
• | maintenance of competitive position with respect to other manufacturers; |
• | adverse changes in freight, energy or other costs of producing, distributing or transporting our products; |
• | capacity constraints that may affect our ability to meet demand or may increase our costs; |
• | dependence on contract manufacturers; |
• | efficiencies in plant operations; |
• | stability of labor relations; |
• | the outcome of any litigation or arbitration; |
• | the impact, if any, of certain contingent liabilities associated with our withdrawal from a multiemployer pension plan; |
• | the impact of fluctuations in our pension plan asset values on funding levels, contributions required and benefit costs; |
• | the extent to which future business acquisitions are completed and acceptably integrated; |
• | dependence on key personnel and changes in key personnel; |
• | changes in estimates in critical accounting judgments; and |
• | certain other factors, including the information disclosed in our discussion of risk factors under Item 1A of our 2016 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the period ended December 31, 2016. |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans | Maximum Number of Shares that May Yet be Purchased Under the Plans | ||||||||
January 1-31, 2017 | — | $ | — | — | 1,418,088 | |||||||
February 1-28, 2017 (1) | 6,408 | $ | 133.86 | 6,408 | 1,411,680 | |||||||
March 1-31, 2017 | — | $ | — | — | 1,411,680 | |||||||
Total | 6,408 | $ | 133.86 | 6,408 | 1,411,680 |
LANCASTER COLONY CORPORATION | |||||
(Registrant) | |||||
Date: | May 2, 2017 | By: | /s/ JOHN B. GERLACH, JR. | ||
John B. Gerlach, Jr. | |||||
Chairman, Chief Executive Officer | |||||
and Director | |||||
(Principal Executive Officer) | |||||
Date: | May 2, 2017 | By: | /s/ DOUGLAS A. FELL | ||
Douglas A. Fell | |||||
Treasurer, Vice President, | |||||
Assistant Secretary and | |||||
Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) |
Exhibit Number | Description | Located at | ||
101.INS | XBRL Instance Document | Filed herewith | ||
101.SCH | XBRL Taxonomy Extension Schema Document | Filed herewith | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Filed herewith | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith |
1. | I have reviewed this quarterly report on Form 10-Q of Lancaster Colony Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 2, 2017 | By: | /s/ JOHN B. GERLACH, JR. | ||
John B. Gerlach, Jr. | |||||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Lancaster Colony Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 2, 2017 | By: | /s/ DOUGLAS A. FELL | ||
Douglas A. Fell | |||||
Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ JOHN B. GERLACH, JR. | |
John B. Gerlach, Jr. | ||
Chief Executive Officer | ||
May 2, 2017 | ||
By: | /s/ DOUGLAS A. FELL | |
Douglas A. Fell | ||
Chief Financial Officer | ||
May 2, 2017 |
Document And Entity Information - shares |
9 Months Ended | |
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Mar. 31, 2017 |
Apr. 20, 2017 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000057515 | |
Entity Registrant Name | LANCASTER COLONY CORP | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 27,443,091 | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Current Fiscal Year End Date | --06-30 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Jun. 30, 2016 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 32 | $ 125 |
Preferred stock, shares authorized (in shares) | 3,050,000 | 3,050,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares outstanding (in shares) | 27,442,693 | 27,423,550 |
Condensed Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
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Income Statement [Abstract] | ||||
Net Sales | $ 293,834 | $ 287,765 | $ 911,968 | $ 906,619 |
Cost of Sales | 221,929 | 214,841 | 665,690 | 682,134 |
Gross Profit | 71,905 | 72,924 | 246,278 | 224,485 |
Selling, General and Administrative Expenses | 32,253 | 28,980 | 96,514 | 86,538 |
Multiemployer Pension Settlement and Related Costs | 17,639 | 0 | 17,639 | 0 |
Operating Income | 22,013 | 43,944 | 132,125 | 137,947 |
Other, Net | 144 | 125 | 437 | 42 |
Income Before Income Taxes | 22,157 | 44,069 | 132,562 | 137,989 |
Taxes Based on Income | 7,686 | 15,058 | 45,735 | 46,839 |
Net Income | $ 14,471 | $ 29,011 | $ 86,827 | $ 91,150 |
Net Income Per Common Share: | ||||
Basic (in dollars per share) | $ 0.53 | $ 1.06 | $ 3.17 | $ 3.33 |
Diluted (in dollars per share) | 0.53 | 1.06 | 3.16 | 3.32 |
Cash Dividends Per Common Share (in dollars per share) | $ 0.55 | $ 0.50 | $ 1.60 | $ 6.46 |
Weighted Average Common Shares Outstanding: | ||||
Basic (in shares) | 27,379 | 27,338 | 27,369 | 27,329 |
Diluted (in shares) | 27,442 | 27,376 | 27,438 | 27,365 |
Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
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Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 14,471 | $ 29,011 | $ 86,827 | $ 91,150 |
Defined Benefit Pension and Postretirement Benefit Plans: | ||||
Prior service credit arising during the period, before tax | 0 | 0 | 0 | 2,038 |
Amortization of loss, before tax | 170 | 124 | 508 | 382 |
Amortization of prior service credit, before tax | (46) | (47) | (136) | (79) |
Total Other Comprehensive Income, Before Tax | 124 | 77 | 372 | 2,341 |
Tax Attributes of Items in Other Comprehensive Income: | ||||
Prior service credit arising during the period, tax | 0 | 0 | 0 | (753) |
Amortization of loss, tax | (63) | (45) | (188) | (142) |
Amortization of prior service credit, tax | 17 | 17 | 50 | 29 |
Total Tax Expense | (46) | (28) | (138) | (866) |
Other Comprehensive Income, Net of Tax | 78 | 49 | 234 | 1,475 |
Comprehensive Income | $ 14,549 | $ 29,060 | $ 87,061 | $ 92,625 |
Condensed Consolidated Statements Of Cash Flows (Parenthetical) - USD ($) $ in Thousands |
9 Months Ended | |
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Mar. 31, 2017 |
Mar. 31, 2016 |
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Statement of Cash Flows [Abstract] | ||
Special dividend payment | $ 0 | $ 136,677 |
Summary Of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Lancaster Colony Corporation and our wholly-owned subsidiaries, collectively referred to as “we,” “us,” “our,” “registrant” or the “Company” and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and SEC Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, the interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the results of operations and financial position for such periods. All such adjustments reflected in the interim condensed consolidated financial statements are considered to be of a normal recurring nature. Intercompany transactions and accounts have been eliminated in consolidation. The results of operations for any interim period are not necessarily indicative of results for the full year. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our 2016 Annual Report on Form 10-K. Unless otherwise noted, the term “year” and references to a particular year pertain to our fiscal year, which begins on July 1 and ends on June 30; for example, 2017 refers to fiscal 2017, which is the period from July 1, 2016 to June 30, 2017. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation, except for those acquired as part of a business combination, which are stated at fair value at the time of purchase. Purchases of property, plant and equipment included in Accounts Payable and excluded from the property additions and the change in accounts payable in the Condensed Consolidated Statements of Cash Flows were as follows:
Accrued Distribution Accrued distribution costs included in Accrued Liabilities were $6.6 million and $4.5 million at March 31, 2017 and June 30, 2016, respectively. Earnings Per Share Earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock and common stock equivalents (restricted stock and stock-settled stock appreciation rights) outstanding during each period. Unvested shares of restricted stock granted to employees are considered participating securities since employees receive nonforfeitable dividends prior to vesting and, therefore, are included in the earnings allocation in computing EPS under the two-class method. Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing income available to common shareholders by the diluted weighted average number of common shares outstanding during the period, which includes the dilutive potential common shares associated with nonparticipating restricted stock and stock-settled stock appreciation rights. Basic and diluted net income per common share were calculated as follows:
Accumulated Other Comprehensive Loss The following table presents the amounts reclassified out of accumulated other comprehensive loss by component:
Significant Accounting Policies There were no changes to our Significant Accounting Policies from those disclosed in our 2016 Annual Report on Form 10-K. Recently Issued Accounting Standards In March 2016, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance to simplify the accounting for stock-based compensation. The amendments include changes to the accounting for share-based payment transactions, including: the inclusion of the tax consequences related to stock-based compensation within the computation of income tax expense versus equity; the classification of awards as either equity or liabilities; and the classification of share-based activity on the statement of cash flows. We will adopt the new guidance on July 1, 2017 and will elect to continue to estimate forfeitures. The adoption may result in increased volatility to our income tax expense in future periods dependent upon, among other variables, the price of our common stock and the timing and volume of share-based payment award activity such as employee exercises of stock-settled stock appreciation rights and vesting of restricted stock awards. The transition method that will be applied on adoption varies for each of the amendments. In March 2017, the FASB issued new accounting guidance to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost by disaggregating the service cost component from the other components of net periodic benefit cost. The amendments require an employer to present service cost in the same line item(s) as compensation costs for the pertinent employees whereas the other components of net periodic benefit cost must be reported separately from service cost and outside of income from operations. The amendments also allow only the service cost component to be eligible for capitalization. The amendments require retrospective application for the income statement presentation provisions and prospective application for the capitalization of the service cost component. However, as a result of prior years’ restructuring activities, we no longer have any active employees continuing to accrue service cost. Therefore, the service cost provisions are not applicable to us, and we expect only changes in classification on the income statement. The guidance will be effective for us in fiscal 2019 including interim periods. In May 2014, the FASB issued new accounting guidance for the recognition of revenue and issued subsequent clarifications of this new guidance in 2016 and 2017. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This model is based on a control approach rather than the current risks and rewards model. The new guidance would also require expanded disclosures. Since we do not plan to early adopt this standard, the guidance will be effective for us in fiscal 2019 including interim periods and will require either retrospective application to each prior period presented or modified retrospective application with the cumulative effect of initially applying the standard recognized at the date of adoption. We are currently evaluating the impact of this guidance. In February 2016, the FASB issued new accounting guidance to require lessees to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months. The updated guidance retains the two classifications of a lease as either an operating or finance lease (previously referred to as a capital lease). Both lease classifications require the lessee to record a right-of-use asset and a lease liability based upon the present value of the lease payments. Finance leases will reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-of-use asset. Operating leases will recognize lease expense (with no separate recognition of interest expense) on a straight-line basis over the term of the lease. The updated guidance requires expanded qualitative and quantitative disclosures, including additional information about the amounts recorded in the consolidated financial statements. The guidance will be effective for us in fiscal 2020 including interim periods using a modified retrospective approach. We are currently evaluating the impact of this guidance. Recently Adopted Accounting Standards In July 2015, the FASB issued new accounting guidance which requires entities to measure most inventory “at the lower of cost or net realizable value,” thereby simplifying current guidance. Under current guidance an entity must measure inventory at the lower of cost or market, where market is defined as one of three different measures, one of which is net realizable value. We adopted this guidance effective July 1, 2016 on a prospective basis, and it did not have a material impact on our condensed consolidated financial statements. In August 2016, the FASB issued new accounting guidance to reduce diversity in practice in how certain cash receipts and cash payments are presented in the statement of cash flows. Current guidance is either unclear or does not include specific requirements for the classification of these transactions. The majority of the new provisions are not currently applicable to us, and those that are applicable are consistent with our current practice. The guidance will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 using a retrospective transition method for all periods presented. Early adoption is permitted provided that all amendments are adopted in the same period. We adopted this guidance effective July 1, 2016, and it did not have an impact on our Condensed Consolidated Statements of Cash Flows. |
Acquisition |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition | Acquisition On November 17, 2016, we acquired substantially all of the assets of Angelic Bakehouse, Inc. (“Angelic”). Angelic, a privately owned manufacturer and marketer of premium sprouted grain bakery products, is based near Milwaukee, Wisconsin. The initial purchase price of $35.0 million was funded by cash on hand and excludes contingent consideration relating to an additional earn-out payment which is tied to performance-based conditions. In general, the terms of the acquisition specify that the sellers will receive an earn-out based upon a pre-determined multiple of the defined adjusted EBITDA of Angelic in fiscal 2021. We are unable to provide a range for the amount of this earn-out because it is based on the future adjusted EBITDA of Angelic, and the earn-out does not contain a minimum or maximum value. See further discussion of the earn-out in Note 3. Angelic is reported in our Specialty Foods segment, and its results of operations have been included in our condensed consolidated financial statements from the date of acquisition. Such results were not material. The following table summarizes the consideration related to the acquisition and the preliminary purchase price allocation based on the fair value of the net assets acquired, as adjusted for the preliminary net working capital adjustment recorded as of March 31, 2017. The initial fair value of the contingent consideration is a noncash investing activity.
Further adjustments may occur to the allocation above as certain aspects of the transaction are finalized during the measurement period. The goodwill recognized above arose because the purchase price for Angelic reflects a number of factors including the future earnings and cash flow potential of Angelic, as well as the impact of the inclusion of the initial fair value of the earn-out associated with the acquisition. Angelic is a fast growing, on-trend business with placement in the specialty deli/bakery section of the grocery store and provides innovation opportunities within and beyond our present product lines. Goodwill also resulted from the workforce acquired with Angelic. We have determined preliminary values and lives of the other intangible assets listed in the allocation above as: $18.6 million for the tradename with a 20-year life; $0.3 million for the customer relationships with a 10-year life; $2.4 million for the technology / know-how with a 10-year life and $0.2 million for the non-compete agreements with a 5-year life. Pro forma results of operations have not been presented herein as the acquisition was not material to our results of operations. |
Fair Value |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. GAAP sets forth a three-level fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels are as follows: Level 1 – defined as observable inputs, such as quoted market prices in active markets. Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable. Level 3 – defined as unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions. Our financial assets and liabilities consist principally of cash, accounts receivable, accounts payable and contingent consideration payable. The estimated fair value of cash, accounts receivable and accounts payable approximates their carrying value. Contingent consideration payable is recorded at fair value. Our contingent consideration, which is measured at fair value on a recurring basis and did not have a balance at June 30, 2016, is included in Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets. The following table summarizes our contingent consideration as of March 31, 2017:
The contingent consideration resulted from the earn-out associated with our November 17, 2016 acquisition of Angelic. The initial purchase price of $35.0 million did not include the future earn-out payment which is tied to performance-based conditions. In general, the terms of the acquisition specify that the sellers will receive an earn-out based upon a pre-determined multiple of the defined adjusted EBITDA of Angelic in fiscal 2021. The fair value of the contingent consideration was estimated using a present value approach, which incorporates factors such as business risks and projections, to estimate an expected value. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. Using this valuation technique, the fair value of the contingent consideration was determined to be $13.9 million at November 17, 2016. The following table represents our Level 3 fair value measurements using significant other unobservable inputs for acquisition-related contingent consideration:
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Long-Term Debt |
9 Months Ended |
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Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt At March 31, 2017 and June 30, 2016, we had an unsecured credit facility (“Facility”) under which we could borrow, on a revolving credit basis, up to a maximum of $150 million at any one time, with potential to expand the total credit availability to $225 million subject to us obtaining consent of the issuing banks and certain other conditions. The Facility expires on April 8, 2021, and all outstanding amounts are then due and payable. Interest is variable based upon formulas tied to LIBOR or an alternative base rate defined in the Facility, at our option. We must also pay facility fees that are tied to our then-applicable consolidated leverage ratio. Loans may be used for general corporate purposes. Due to the nature of its terms, when we have outstanding borrowings under the Facility, they will be classified as long-term debt. At March 31, 2017 and June 30, 2016, we had no borrowings outstanding under the Facility. At March 31, 2017, we had $5.1 million of standby letters of credit outstanding, which reduced the amount available for borrowing on the Facility. We paid no interest for the three and nine months ended March 31, 2017 and 2016. The Facility contains certain restrictive covenants, including limitations on indebtedness, asset sales and acquisitions. There are two principal financial covenants: an interest expense test that requires us to maintain an interest coverage ratio not less than 2.5 to 1 at the end of each fiscal quarter; and an indebtedness test that requires us to maintain a consolidated leverage ratio not greater than 3 to 1 at all times. The interest coverage ratio is calculated by dividing Consolidated EBIT by Consolidated Interest Expense, and the leverage ratio is calculated by dividing Consolidated Debt by Consolidated EBITDA. All financial terms used in the covenant calculations are defined more specifically in the Facility. |
Commitments And Contingencies |
9 Months Ended |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | Commitments and Contingencies At March 31, 2017, we were a party to various claims and litigation matters arising in the ordinary course of business. Such matters did not have a material effect on the current-year results of operations and, in our opinion, their ultimate disposition will not have a material effect on our consolidated financial statements. With our recent acquisition of Angelic, we have a contingent liability recorded for the earn-out associated with the transaction. See further discussion in Note 3. |
Goodwill And Other Intangible Assets |
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Goodwill And Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill attributable to the Specialty Foods segment was $164.9 million and $143.8 million at March 31, 2017 and June 30, 2016, respectively. The increase in goodwill is the result of the acquisition of Angelic in November 2016. See further discussion in Note 2. The following table is a rollforward of goodwill from June 30, 2016 to March 31, 2017:
The following table summarizes our identifiable other intangible assets, all included in the Specialty Foods segment. The intangible asset values and lives related to the Angelic acquisition, which are included in the table below, are preliminary and subject to further review over the measurement period. See further discussion in Note 2.
Amortization expense for our other intangible assets, which is reflected in Selling, General and Administrative Expenses, was as follows:
Total annual amortization expense for each of the next five years is estimated to be as follows:
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Income Taxes |
9 Months Ended |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Prepaid federal income taxes of $10.2 million and $4.3 million were included in Other Current Assets at March 31, 2017 and June 30, 2016, respectively. Prepaid state and local income taxes of $1.0 million and $0.5 million were included in Other Current Assets at March 31, 2017 and June 30, 2016, respectively. |
Business Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Information | Business Segment Information The March 31, 2017 identifiable assets by reportable segment are generally consistent with that of June 30, 2016. However, due to the acquisition of Angelic in November 2016, the amount of Specialty Foods assets increased as compared to June 30, 2016. The following summary of financial information is consistent with the basis of segmentation and measurement of segment profit or loss presented in our June 30, 2016 consolidated financial statements:
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Stock-Based Compensation |
9 Months Ended |
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Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation There have been no changes to our stock-based compensation plans from those disclosed in our 2016 Annual Report on Form 10-K. Our stock-settled stock appreciation rights (“SSSARs”) compensation expense was $0.4 million for the three months ended March 31, 2017 and 2016. Year-to-date SSSARs compensation expense was $1.3 million for the current-year period compared to $0.9 million for the prior-year period. At March 31, 2017, there was $4.3 million of unrecognized compensation expense related to SSSARs that we will recognize over a weighted-average period of 2 years. Our restricted stock compensation expense was $0.6 million and $0.4 million for the three months ended March 31, 2017 and 2016, respectively. Year-to-date restricted stock compensation expense was $1.8 million for the current-year period compared to $1.3 million for the prior-year period. At March 31, 2017, there was $3.8 million of unrecognized compensation expense related to restricted stock that we will recognize over a weighted-average period of 2 years. |
Defined Contribution And Other Employee Plans |
9 Months Ended |
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Mar. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
Defined Contribution And Other Employee Plans | Defined Contribution and Other Employee Plans Multiemployer Plans In the quarter ended March 31, 2017, we recorded a one-time charge of $17.6 million for our complete withdrawal from the underfunded multiemployer Cleveland Bakers and Teamsters Pension Fund and to initially fund a new union-sponsored 401(k) plan for the current union employees at our Bedford Heights, Ohio plant. This event was detailed in our Form 8-K filing, which was issued on January 24, 2017. The liability related to this charge was included in Accrued Liabilities at March 31, 2017. |
Summary Of Significant Accounting Policies (Policy) |
9 Months Ended |
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Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis Of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Lancaster Colony Corporation and our wholly-owned subsidiaries, collectively referred to as “we,” “us,” “our,” “registrant” or the “Company” and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and SEC Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, the interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the results of operations and financial position for such periods. All such adjustments reflected in the interim condensed consolidated financial statements are considered to be of a normal recurring nature. Intercompany transactions and accounts have been eliminated in consolidation. The results of operations for any interim period are not necessarily indicative of results for the full year. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our 2016 Annual Report on Form 10-K. Unless otherwise noted, the term “year” and references to a particular year pertain to our fiscal year, which begins on July 1 and ends on June 30; for example, 2017 refers to fiscal 2017, which is the period from July 1, 2016 to June 30, 2017. |
Property, Plant And Equipment | Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation, except for those acquired as part of a business combination, which are stated at fair value at the time of purchase. |
Earnings Per Share | Earnings Per Share Earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock and common stock equivalents (restricted stock and stock-settled stock appreciation rights) outstanding during each period. Unvested shares of restricted stock granted to employees are considered participating securities since employees receive nonforfeitable dividends prior to vesting and, therefore, are included in the earnings allocation in computing EPS under the two-class method. Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing income available to common shareholders by the diluted weighted average number of common shares outstanding during the period, which includes the dilutive potential common shares associated with nonparticipating restricted stock and stock-settled stock appreciation rights. |
Recently Issued And Recently Adopted Accounting Standards | Recently Issued Accounting Standards In March 2016, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance to simplify the accounting for stock-based compensation. The amendments include changes to the accounting for share-based payment transactions, including: the inclusion of the tax consequences related to stock-based compensation within the computation of income tax expense versus equity; the classification of awards as either equity or liabilities; and the classification of share-based activity on the statement of cash flows. We will adopt the new guidance on July 1, 2017 and will elect to continue to estimate forfeitures. The adoption may result in increased volatility to our income tax expense in future periods dependent upon, among other variables, the price of our common stock and the timing and volume of share-based payment award activity such as employee exercises of stock-settled stock appreciation rights and vesting of restricted stock awards. The transition method that will be applied on adoption varies for each of the amendments. In March 2017, the FASB issued new accounting guidance to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost by disaggregating the service cost component from the other components of net periodic benefit cost. The amendments require an employer to present service cost in the same line item(s) as compensation costs for the pertinent employees whereas the other components of net periodic benefit cost must be reported separately from service cost and outside of income from operations. The amendments also allow only the service cost component to be eligible for capitalization. The amendments require retrospective application for the income statement presentation provisions and prospective application for the capitalization of the service cost component. However, as a result of prior years’ restructuring activities, we no longer have any active employees continuing to accrue service cost. Therefore, the service cost provisions are not applicable to us, and we expect only changes in classification on the income statement. The guidance will be effective for us in fiscal 2019 including interim periods. In May 2014, the FASB issued new accounting guidance for the recognition of revenue and issued subsequent clarifications of this new guidance in 2016 and 2017. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This model is based on a control approach rather than the current risks and rewards model. The new guidance would also require expanded disclosures. Since we do not plan to early adopt this standard, the guidance will be effective for us in fiscal 2019 including interim periods and will require either retrospective application to each prior period presented or modified retrospective application with the cumulative effect of initially applying the standard recognized at the date of adoption. We are currently evaluating the impact of this guidance. In February 2016, the FASB issued new accounting guidance to require lessees to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months. The updated guidance retains the two classifications of a lease as either an operating or finance lease (previously referred to as a capital lease). Both lease classifications require the lessee to record a right-of-use asset and a lease liability based upon the present value of the lease payments. Finance leases will reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-of-use asset. Operating leases will recognize lease expense (with no separate recognition of interest expense) on a straight-line basis over the term of the lease. The updated guidance requires expanded qualitative and quantitative disclosures, including additional information about the amounts recorded in the consolidated financial statements. The guidance will be effective for us in fiscal 2020 including interim periods using a modified retrospective approach. We are currently evaluating the impact of this guidance. Recently Adopted Accounting Standards In July 2015, the FASB issued new accounting guidance which requires entities to measure most inventory “at the lower of cost or net realizable value,” thereby simplifying current guidance. Under current guidance an entity must measure inventory at the lower of cost or market, where market is defined as one of three different measures, one of which is net realizable value. We adopted this guidance effective July 1, 2016 on a prospective basis, and it did not have a material impact on our condensed consolidated financial statements. In August 2016, the FASB issued new accounting guidance to reduce diversity in practice in how certain cash receipts and cash payments are presented in the statement of cash flows. Current guidance is either unclear or does not include specific requirements for the classification of these transactions. The majority of the new provisions are not currently applicable to us, and those that are applicable are consistent with our current practice. The guidance will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 using a retrospective transition method for all periods presented. Early adoption is permitted provided that all amendments are adopted in the same period. We adopted this guidance effective July 1, 2016, and it did not have an impact on our Condensed Consolidated Statements of Cash Flows. |
Summary Of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Construction In Progress In Accounts Payable | Purchases of property, plant and equipment included in Accounts Payable and excluded from the property additions and the change in accounts payable in the Condensed Consolidated Statements of Cash Flows were as follows:
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Schedule Of Basic And Diluted Net Income Per Common Share Calculations | Basic and diluted net income per common share were calculated as follows:
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Schedule Of Amounts Reclassified Out Of Accumulated Other Comprehensive Loss | The following table presents the amounts reclassified out of accumulated other comprehensive loss by component:
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Acquisition (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Consideration And Purchase Price Allocation | The following table summarizes the consideration related to the acquisition and the preliminary purchase price allocation based on the fair value of the net assets acquired, as adjusted for the preliminary net working capital adjustment recorded as of March 31, 2017. The initial fair value of the contingent consideration is a noncash investing activity.
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Fair Value (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Acquisition-Related Contingent Consideration Measured At Fair Value On A Recurring Basis | Our contingent consideration, which is measured at fair value on a recurring basis and did not have a balance at June 30, 2016, is included in Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets. The following table summarizes our contingent consideration as of March 31, 2017:
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Schedule Of Level 3 Fair Value Measurements Using Significant Other Unobservable Inputs For Acquisition-Related Contingent Consideration | The following table represents our Level 3 fair value measurements using significant other unobservable inputs for acquisition-related contingent consideration:
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Goodwill And Other Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rollforward Of Goodwill | The following table is a rollforward of goodwill from June 30, 2016 to March 31, 2017:
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Summary Of Other Intangible Assets | The following table summarizes our identifiable other intangible assets, all included in the Specialty Foods segment. The intangible asset values and lives related to the Angelic acquisition, which are included in the table below, are preliminary and subject to further review over the measurement period. See further discussion in Note 2.
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Schedule Of Amortization Expense | Amortization expense for our other intangible assets, which is reflected in Selling, General and Administrative Expenses, was as follows:
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Estimated Annual Amortization Expense | Total annual amortization expense for each of the next five years is estimated to be as follows:
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Business Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Financial Information Attributable To Reportable Segments | The following summary of financial information is consistent with the basis of segmentation and measurement of segment profit or loss presented in our June 30, 2016 consolidated financial statements:
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Summary Of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
Accounting Policies [Abstract] | ||
Accrued distribution | $ 6.6 | $ 4.5 |
Summary Of Significant Accounting Policies (Schedule Of Construction In Progress In Accounts Payable) (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
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Accounting Policies [Abstract] | ||
Construction in progress in Accounts Payable | $ 1,887 | $ 185 |
Summary Of Significant Accounting Policies (Schedule Of Basic And Diluted Net Income Per Common Share Calculations) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
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Accounting Policies [Abstract] | ||||
Net income | $ 14,471 | $ 29,011 | $ 86,827 | $ 91,150 |
Net income available to participating securities | (23) | (54) | (149) | (216) |
Net income available to common shareholders | $ 14,448 | $ 28,957 | $ 86,678 | $ 90,934 |
Weighted average common shares outstanding - basic (in shares) | 27,379 | 27,338 | 27,369 | 27,329 |
Incremental share effect from: | ||||
Nonparticipating restricted stock (in shares) | 1 | 2 | 3 | 3 |
Stock-settled stock appreciation rights (in shares) | 62 | 36 | 66 | 33 |
Weighted average common shares outstanding - diluted (in shares) | 27,442 | 27,376 | 27,438 | 27,365 |
Net income per common share - basic (in dollars per share) | $ 0.53 | $ 1.06 | $ 3.17 | $ 3.33 |
Net income per common share - diluted (in dollars per share) | $ 0.53 | $ 1.06 | $ 3.16 | $ 3.32 |
Acquisition (Schedule Of Consideration And Purchase Price Allocation) (Details) - USD ($) $ in Thousands |
9 Months Ended | |
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Mar. 31, 2017 |
Jun. 30, 2016 |
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Preliminary Purchase Price Allocation | ||
Goodwill | $ 164,908 | $ 143,788 |
Angelic [Member] | ||
Consideration | ||
Cash paid for acquisition | 34,997 | |
Contingent consideration - fair value of earn-out at date of closing | 13,872 | |
Working capital adjustment receivable | (63) | |
Fair value of total consideration | 48,806 | |
Preliminary Purchase Price Allocation | ||
Trade receivables | 831 | |
Other receivables | 550 | |
Inventories | 430 | |
Other current assets | 19 | |
Property, plant and equipment | 5,083 | |
Goodwill | 21,120 | |
Other intangible assets | 21,491 | |
Current liabilities | (718) | |
Net assets acquired | $ 48,806 |
Fair Value (Narrative) (Details) - USD ($) |
9 Months Ended | |||
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Mar. 31, 2017 |
Mar. 31, 2016 |
Nov. 17, 2016 |
Jun. 30, 2016 |
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Business Acquisition [Line Items] | ||||
Cash paid for acquisitions, net of cash acquired | $ 34,997,000 | $ 12,000 | ||
Angelic [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash paid for acquisitions, net of cash acquired | 35,000,000 | |||
Fair value of contingent consideration | $ 14,554,000 | $ 13,900,000 | $ 0 |
Fair Value (Schedule Of Acquisition-Related Contingent Consideration Measured At Fair Value On A Recurring Basis) (Details) - Angelic [Member] - USD ($) |
Mar. 31, 2017 |
Nov. 17, 2016 |
Jun. 30, 2016 |
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition-related contingent consideration | $ 14,554,000 | $ 13,900,000 | $ 0 |
Level 1 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition-related contingent consideration | 0 | ||
Level 2 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition-related contingent consideration | 0 | ||
Level 3 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition-related contingent consideration | $ 14,554,000 |
Fair Value (Schedule Of Level 3 Fair Value Measurements Using Significant Other Unobservable Inputs For Acquisition-Related Contingent Consideration) (Details) - Angelic [Member] - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2017 |
|
Business Acquisition [Line Items] | ||
Acquisition-related contingent consideration at beginning of period | $ 14,096 | $ 0 |
Additions | 0 | 13,872 |
Changes in fair value included in Selling, General and Administrative Expenses | 458 | 682 |
Acquisition-related contingent consideration at end of period | $ 14,554 | $ 14,554 |
Long-Term Debt (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Jun. 30, 2016 |
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Debt Disclosure [Abstract] | |||||
Maximum borrowing capacity | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | ||
Maximum borrowing capacity on obtaining consent of the issuing bank | 225,000,000 | $ 225,000,000 | 225,000,000 | ||
Line of credit facility, expiration date | Apr. 08, 2021 | ||||
Line of credit facility, amount outstanding | 0 | $ 0 | $ 0 | ||
Standby letters of credit, amount outstanding | 5,100,000 | 5,100,000 | |||
Interest paid | $ 0 | $ 0 | $ 0 | $ 0 | |
Minimum interest coverage ratio | 250.00% | ||||
Maximum leverage ratio | 300.00% |
Goodwill And Other Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 164,908 | $ 143,788 |
Goodwill And Other Intangible Assets (Rollforward Of Goodwill) (Details) $ in Thousands |
9 Months Ended |
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Mar. 31, 2017
USD ($)
| |
Goodwill [Roll Forward] | |
Carrying Value, Goodwill at beginning of year | $ 143,788 |
Carrying Value, Goodwill acquired during the period | 21,120 |
Carrying Value, Goodwill at end of period | $ 164,908 |
Goodwill And Other Intangible Assets (Schedule Of Amortization Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 1,001 | $ 691 | $ 2,538 | $ 2,214 |
Goodwill And Other Intangible Assets (Estimated Annual Amortization Expense) (Details) $ in Thousands |
Mar. 31, 2017
USD ($)
|
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Goodwill and Intangible Assets Disclosure [Abstract] | |
2018 | $ 4,004 |
2019 | 4,004 |
2020 | 3,969 |
2021 | 3,884 |
2022 | $ 3,811 |
Income Taxes (Narrative) (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
Federal [Member] | ||
Income Tax Authority [Line Items] | ||
Prepaid income taxes | $ 10.2 | $ 4.3 |
State and Local [Member] | ||
Income Tax Authority [Line Items] | ||
Prepaid income taxes | $ 1.0 | $ 0.5 |
Business Segment Information (Summary Of Financial Information Attributable To Reportable Segments) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
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Segment Reporting Information [Line Items] | ||||
Net Sales | $ 293,834 | $ 287,765 | $ 911,968 | $ 906,619 |
Operating Income | 22,013 | 43,944 | 132,125 | 137,947 |
Specialty Foods [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 293,834 | 287,765 | 911,968 | 906,619 |
Operating Income | 25,080 | 46,476 | 141,957 | 146,866 |
Corporate [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Operating Income | $ (3,067) | $ (2,532) | $ (9,832) | $ (8,919) |
Stock-Based Compensation (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
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Stock Settled Stock Appreciation Rights SARS [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | $ 0.4 | $ 0.4 | $ 1.3 | $ 0.9 |
Unrecognized compensation expense | 4.3 | $ 4.3 | ||
Weighted-average period over which remaining compensation expense will be recognized (in years) | 2 years | |||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | 0.6 | $ 0.4 | $ 1.8 | $ 1.3 |
Unrecognized compensation expense | $ 3.8 | $ 3.8 | ||
Weighted-average period over which remaining compensation expense will be recognized (in years) | 2 years |
Defined Contribution And Other Employee Plans (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Compensation and Retirement Disclosure [Abstract] | ||||
Multiemployer pension settlement and related costs | $ 17,639 | $ 0 | $ 17,639 | $ 0 |
Liability for multiemployer pension settlement and related costs | $ 17,600 | $ 17,600 |
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