-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WlFm2NsunNsPMXhqnVXHVxALRNg/iqW92T2Nz4j1Bjv2qBJJmWxCeqOBgV4T9is3 LffR/7S+tZjLpmDTXRY4vQ== 0000950152-00-003809.txt : 20000511 0000950152-00-003809.hdr.sgml : 20000511 ACCESSION NUMBER: 0000950152-00-003809 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANCASTER COLONY CORP CENTRAL INDEX KEY: 0000057515 STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FROZEN & PRESERVED FRUIT, VEG & FOOD SPECIALTIES [2030] IRS NUMBER: 131955943 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-04065 FILM NUMBER: 624079 BUSINESS ADDRESS: STREET 1: 37 W BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6142247141 10-Q 1 LANCASTER COLONY CORPORATION FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 0-4065-1 LANCASTER COLONY CORPORATION (Exact name of registrant as specified in its charter) OHIO 13-1955943 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 37 WEST BROAD STREET, COLUMBUS, OHIO 43215 (Address of principal executive offices) (Zip Code) 614-224-7141 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- As of March 31, 2000, there were approximately 39,209,000 shares of common stock, no par value per share, outstanding. 1 of 10 2 LANCASTER COLONY CORPORATION AND SUBSIDIARIES INDEX Page No. -------- Part I. Financial Information Condensed Consolidated Balance Sheets - March 31, 2000 and June 30, 1999 3 Condensed Consolidated Statements of Income - Three Months and Nine Months Ended March 31, 2000 and 1999 4 Condensed Consolidated Statements of Cash Flows - Nine Months Ended March 31, 2000 and 1999 5 Notes to Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of the Results of Operations and Financial Condition 7-9 Part II. Other Information Item 6 - Exhibits and Reports on Form 8-K 9 Signatures 9 Exhibit 27 - Financial Data Schedule 10 2 of 10 3 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 June 30 2000 1999 ------------ ------------ (Unaudited) ASSETS Current Assets: Cash and equivalents $ 2,187,000 $ 18,860,000 Receivables - net of allowance for doubtful accounts 124,762,000 123,268,000 Inventories: Raw materials and supplies 45,413,000 41,741,000 Finished goods and work in process 121,202,000 127,680,000 ------------ ------------ Total inventories 166,615,000 169,421,000 Prepaid expenses and other current assets 22,363,000 16,830,000 ------------ ------------ Total current assets 315,927,000 328,379,000 Property, Plant and Equipment - At cost 410,109,000 394,061,000 Less Accumulated Depreciation 236,814,000 218,444,000 ------------ ------------ Property, plant and equipment - net 173,295,000 175,617,000 Goodwill - net of accumulated amortization 34,629,000 35,768,000 Other Assets 9,411,000 10,250,000 ------------ ------------ Total Assets $533,262,000 $550,014,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 535,000 $ 25,520,000 Accounts payable 44,235,000 45,742,000 Accrued liabilities 40,766,000 44,955,000 ------------ ------------ Total current liabilities 85,536,000 116,217,000 Long-Term Debt - Less current portion 3,040,000 3,575,000 Other Noncurrent Liabilities 6,859,000 7,081,000 Deferred Income Taxes 9,791,000 8,286,000 Shareholders' Equity: Preferred stock - authorized 3,050,000 shares issuable in series; Class A - $1.00 par value, authorized 750,000 shares; Class B and C - no par value, authorized 1,150,000 shares each; outstanding - none Common stock - authorized 75,000,000 shares; issued March 31, 2000 - no par value - 47,144,743 shares; June 30, 1999 no par value - 47,107,199 shares 51,951,000 50,912,000 Retained earnings 605,251,000 548,143,000 Accumulated other comprehensive income 104,000 106,000 ------------ ------------ Total 657,306,000 599,161,000 Less: Common stock in treasury, at cost March 31, 2000 - 7,935,335 shares; June 30, 1999 - 6,559,403 shares 229,270,000 184,306,000 ------------ ------------ Total shareholders' equity 428,036,000 414,855,000 ------------ ------------ Total Liabilities and Shareholders' Equity $533,262,000 $550,014,000 ============ ============
See Notes to Condensed Consolidated Financial Statements 3 of 10 4 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Nine Months Ended March 31 March 31 2000 1999 2000 1999 ------------ ------------ ------------ ------------ Net Sales $262,764,000 $247,227,000 $847,615,000 $791,897,000 Cost of Sales 184,241,000 170,708,000 588,913,000 549,827,000 ------------ ------------ ------------ ------------ Gross Margin 78,523,000 76,519,000 258,702,000 242,070,000 Selling, General and Administrative Expenses 45,913,000 40,563,000 134,640,000 126,103,000 ------------ ------------ ------------ ------------ Operating Income 32,610,000 35,956,000 124,062,000 115,967,000 Other Income (Expense): Interest expense (245,000) (600,000) (1,503,000) (2,115,000) Interest income and other - net 187,000 (140,000) (35,000) (53,000) ------------ ------------ ------------ ------------ Income Before Income Taxes 32,552,000 35,216,000 122,524,000 113,799,000 Taxes Based on Income 12,450,000 13,382,000 46,729,000 43,414,000 ------------ ------------ ------------ ------------ Net Income $ 20,102,000 $ 21,834,000 $ 75,795,000 $ 70,385,000 ============ ============ ============ ============ Net Income Per Common Share: Basic $ .51 $ .53 $ 1.90 $ 1.67 Diluted $ .51 $ .53 $ 1.90 $ 1.67 Cash Dividends Per Common Share $ .16 $ .15 $ .47 $ .44 Weighted Average Common Shares Outstanding: Basic 39,360,000 41,519,000 39,855,000 42,069,000 Diluted 39,410,000 41,541,000 39,926,000 42,103,000
See Notes to Condensed Consolidated Financial Statements 4 of 10 5 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended March 31 2000 1999 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 75,795,000 $ 70,385,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 25,589,000 26,534,000 Provision for losses on accounts receivable 5,334,000 1,233,000 Deferred income taxes and other noncash charges (2,317,000) (2,213,000) Loss (gain) on sale of property 120,000 (117,000) Changes in operating assets and liabilities: Receivables (6,828,000) (27,866,000) Inventories 2,806,000 16,496,000 Prepaid expenses and other current assets (1,933,000) (1,341,000) Accounts payable (1,507,000) 898,000 Accrued liabilities (4,189,000) 8,971,000 ------------ ------------ Net cash provided by operating activities 92,870,000 92,980,000 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for acquisitions, net of cash acquired (1,825,000) Payments on property additions (18,628,000) (26,652,000) Proceeds from sale of property 33,000 327,000 Other - net (2,814,000) (2,320,000) ------------ ------------ Net cash used in investing activities (21,409,000) (30,470,000) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (44,964,000) (49,579,000) Payment of dividends (18,687,000) (18,468,000) Payments on long-term debt (25,520,000) (510,000) Common stock issued upon exercise of stock options and related tax benefits 1,039,000 192,000 ------------ ------------ Net cash used in financing activities (88,132,000) (68,365,000) ------------ ------------ Effect of exchange rate changes on cash (2,000) 13,000 ------------ ------------ Net change in cash and equivalents (16,673,000) (5,842,000) Cash and equivalents at beginning of year 18,860,000 23,224,000 ------------ ------------ Cash and equivalents at end of period $ 2,187,000 $ 17,382,000 ============ ============ SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS: Cash paid during the period for: Interest $ 2,433,000 $ 2,690,000 ============ ============ Income taxes $ 55,682,000 $ 41,079,000 ============ ============
See Notes to Condensed Consolidated Financial Statements 5 of 10 6 LANCASTER COLONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED MARCH 31, 2000 AND 1999 (1) The interim condensed consolidated financial statements are unaudited but, in the opinion of management, 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. The results of operations for any interim period are not necessarily indicative of results for the full year. Accordingly, these financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's annual report on Form 10-K for the year ended June 30, 1999. (2) In 1999, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of an Enterprise and Related Information." Management has evaluated its operations in accordance with SFAS No. 131 and has determined that the business is separated into three distinct operating and reportable product categories: "Specialty Foods," "Glassware and Candles" and "Automotive." Comparative third quarter and year-to-date unaudited results by segment are as follows:
Three Months Ended Nine Months Ended March 31 March 31 (Dollars in Thousands) 2000 1999 2000 1999 ------------------------------------------------------------------------------------------- NET SALES Specialty Foods $117,832 $102,174 $362,912 $328,225 Glassware and Candles 74,251 83,772 291,849 291,599 Automotive 70,681 61,281 192,854 172,073 ------------------------------------------------------------------------------------------- Total $262,764 $247,227 $847,615 $791,897 =========================================================================================== OPERATING INCOME Specialty Foods $ 14,356 $ 13,532 $ 57,931 $ 48,834 Glassware and Candles 15,900 19,889 64,677 63,079 Automotive 3,686 3,879 5,770 8,022 Corporate expenses (1,332) (1,344) (4,316) (3,968) ------------------------------------------------------------------------------------------- Total $ 32,610 $ 35,956 $124,062 $115,967 ===========================================================================================
(3) In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which revised the accounting for derivative financial instruments. In June 1999, the Financial Accounting Standards Board issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133," which deferred the effective date of SFAS No. 133 to all fiscal quarters of all fiscal years beginning after June 15, 2000 (i.e., the first quarter of the Company's fiscal 2001). The Company is in the process of reviewing contracts to assess the impact of this statement on its financial statements and disclosures. While this review has not yet been completed, the Company is not aware of any contracts that would have a significant impact on its financial statements and disclosures, at this time. (4) Certain prior year amounts have been reclassed to conform to the current year presentation. 6 of 10 7 LANCASTER COLONY CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION FOR THE PERIODS ENDED MARCH 31, 2000 AND 1999 RESULTS OF OPERATIONS
Three Months Ended Nine Months Ended March 31 March 31 (Dollars in Thousands) 2000 1999 2000 1999 ------------------------------------------------------------------------------------------- NET SALES Specialty Foods $117,832 $102,174 $362,912 $328,225 Glassware and Candles 74,251 83,772 291,849 291,599 Automotive 70,681 61,281 192,854 172,073 ------------------------------------------------------------------------------------------- Total $262,764 $247,227 $847,615 $791,897 ===========================================================================================
As reflected above, consolidated net sales of $262,764,000 and $847,615,000 for the respective three and nine-month periods ended March 31, 2000 increased 6% and 7%, respectively, over the corresponding fiscal 1999 totals of $247,227,000 and $791,897,000. Net sales for the Specialty Foods segment increased 15% and 11% for the respective three and nine-month periods as a result of improved sales of foodservice and retail products. Foodservice growth was attributable to the acquisition of new accounts and expanded sales to existing customers. Leading the retail improvement were increased sales of frozen bread products and of produce dips and dressings. Net sales of the Automotive segment also increased 15% and 12% for the respective three and nine-month periods. This segment benefited from increased demand by original equipment manufacturers ("OEM") for floor mats and for aluminum truck and van accessories. Net sales of the Glassware and Candles segment for the fiscal 2000 nine-month period were essentially level with that of the prior year. However, this segment's net sales for the three months ended March 31, 2000 declined 11% from the comparable 1999 period due to lower candle sales made to various customers. This decline in candle sales is not specifically attributable to any one factor but appears to have been influenced by increased retail sales in advance of the year 2000 millennium, competitive import alternatives and less promotional activity conducted by certain customers. This trend has continued into the Company's fiscal fourth quarter. The Company's consolidated gross margins as a percentage of net sales of 29.9% and 30.5% for the respective three and nine-month periods ended March 31, 2000 compared to 31.0% and 30.6% noted for the comparable periods of fiscal 1999. Higher margins were achieved within the Specialty Foods segment during both of the current fiscal year's comparable periods. This improvement resulted from decreases in certain raw material costs, particularly soybean oil and cream, as well as a more favorable sales mix. Within the Automotive segment, a substantial decline of gross margins occurred within the floor mat operations as influenced by a less favorable sales mix, manufacturing and distribution inefficiencies, as well as increased provisions for slow-moving inventory. These inefficiencies largely resulted from the current mix and higher volume of OEM floor mats being sold. However, the adverse operating conditions did moderate in the three months ended March 31, 2000 relative to the first six months of fiscal 2000. Gross margins of the Glassware and Candles segment were also impacted by lower glassware margins as affected by a less favorable sales mix and operational performance. Consolidated selling, general and administrative costs of $45,913,000 and $134,640,000 increased 13% and 7%, respectively, over the corresponding fiscal 1999 three and nine-month totals of $40,563,000 and $126,103,000. A portion of this increase has been volume-driven. Further increase in such expenses was mitigated in the nine-month period by certain cost reduction efforts implemented within the Glassware and Candles segment during December 1998 that continued into the current fiscal year. Also included in both periods of fiscal 2000 is a provision for doubtful accounts of approximately $5 million relating to a customer of the Specialty Foods segment that was the designated distributor for a number of quick serve and casual dining restaurants using products manufactured by the segment. This customer filed for reorganization under Chapter 11 of the Bankruptcy Code on January 31, 2000. The recovery, if any, of the fully reserved pre-petition indebtedness related to this account will be recognized when received. 7 of 10 8 After the foregoing bad debt provision, a decline of 9% occurred in the Company's operating income for the three months ended March 31, 2000 compared to that of the corresponding period of 1999. Operating income for the nine months ended March 31, 2000 of $124,062,000 increased 7% from the 1999 total of $115,967,000. By segment, the Company's operating income can be summarized as follows:
Three Months Ended Nine Months Ended March 31 March 31 (Dollars in Thousands) 2000 1999 2000 1999 ------------------------------------------------------------------------------------------------ OPERATING INCOME Specialty Foods $14,356 $13,532 $ 57,931 $ 48,834 Glassware and Candles 15,900 19,889 64,677 63,079 Automotive 3,686 3,879 5,770 8,022 Corporate expenses (1,332) (1,344) (4,316) (3,968) ------------------------------------------------------------------------------------------------ Total $32,610 $35,956 $124,062 $115,967 ================================================================================================
Similar to operating income, net income for the three-month period ended March 31, 2000 declined 8% to $20,102,000 compared to the $21,834,000 reported in 1999. Net income for the nine-month period ended March 31, 2000 increased 8% to $75,795,000 from $70,385,000 reported in 1999. As further affected by the Company's share repurchase program, fully diluted earnings per share of $.51 and $1.90 for the three and nine-month periods decreased 4% and increased 14%, respectively, relative to the preceding year's comparable totals of $.53 and $1.67. On a proforma basis, excluding the effects of the bad debt provision noted above, fully diluted earnings per share would have been $.59 and $1.98 for the respective three and nine-month periods of fiscal 2000. FINANCIAL CONDITION Net cash provided by operating activities for the nine months ended March 31, 2000 totaled $92,870,000, which did not substantially differ from the $92,980,000 provided in the nine months ended March 31, 1999. The working capital provided by a higher level of net income in fiscal 2000 was essentially offset by various changes in working capital components. Net working capital increased from $212,162,000 at June 30, 1999 to $230,391,000 at March 31, 2000. Significant investment activities for the first nine months included $18,628,000 expended on property additions. The Company's most significant financing activities during the nine months ended March 31, 2000 included $44,964,000 expended for the acquisition of approximately 1,375,000 shares of Company stock. Shares remaining authorized for future buyback at March 31, 2000 totaled 1,667,000. Another significant financing activity was the reduction in the current portion of long-term debt of $24,985,000 due to payment of a $25,000,000 note due February 2000. Additionally, dividends paid during the current year of $18,687,000 increased 1% as a result of the effect of a higher stated dividend rate being paid on common shares. However, much of this effect was offset by the impact of a reduction in shares outstanding. Management anticipates that cash provided from operations and the currently available lines of credit will be adequate to meet the Company's foreseeable cash requirements over the remainder of fiscal 2000. YEAR 2000 As of the date of this report, the Company has not experienced any significant Year 2000 related issues. Mainframe applications, personal computers, telecommunications equipment and programmable logic controllers associated with certain manufacturing equipment are operating effectively. In addition, the Company is not aware of any third-party vendors or principal suppliers that are not Year 2000 compliant. Management will continue to monitor its critical systems over the remainder of the year and will utilize contingency plans, if the need arises. The costs and business implications which might be associated with the adoption of such contingency plans is not estimable, but could be significant. 8 of 10 9 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This Form 10-Q contains forward-looking statements related to future growth and earnings opportunities. Such statements are based upon certain assumptions and assessments made by management of the Company in light of its experience and perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. Actual results may differ as a result of factors over which the Company has no control including the strength of the economy, slower than anticipated sales growth, price and product competition, and increases in raw materials costs. More detailed statements regarding significant events which could affect the Company's financial results are included in the Company's Forms 10-K and 10-Q filed with the Securities and Exchange Commission. PART II. OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibit 27 - Financial Data Schedule. (b) Reports on Form 8-K - There were no reports filed on Form 8-K for the three months ended March 31, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LANCASTER COLONY CORPORATION Date: May 10, 2000 BY: /S/ John B. Gerlach, Jr. ----------------- ------------------------------ JOHN B. GERLACH, JR. Chairman, Chief Executive Officer and President Date: May 10, 2000 BY: /S/ John L. Boylan ----------------- ------------------------------ JOHN L. BOYLAN Treasurer, Vice President, Assistant Secretary and Chief Financial Officer (Principal Financial and Accounting Officer) 9 of 10 EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENT OF INCOME FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS JUN-30-2000 MAR-31-2000 2,187 0 133,512 8,750 166,615 315,927 410,109 236,814 533,262 85,536 0 0 0 51,951 376,085 533,262 847,615 847,615 588,913 588,913 0 0 1,503 122,524 46,729 75,795 0 0 0 75,795 1.90 1.90
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