-----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, GGUnTSvjAOedOmmFf7L9vtTz5c7qZLznm58mbGDnYwZ0GP54XhJVx4+wAFC6k/Qh e3J0ACjaGWwcUUoK2ABz/Q== /in/edgar/work/0000950152-00-007604/0000950152-00-007604.txt : 20001109 0000950152-00-007604.hdr.sgml : 20001109 ACCESSION NUMBER: 0000950152-00-007604 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANCASTER COLONY CORP CENTRAL INDEX KEY: 0000057515 STANDARD INDUSTRIAL CLASSIFICATION: [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: 755147 BUSINESS ADDRESS: STREET 1: 37 W BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6142247141 10-Q 1 l84668ae10-q.txt LANCASTER COLONY 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 September 30, 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 September 30, 2000, there were approximately 37,732,000 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 - September 30, 2000 and June 30, 2000 3 Condensed Consolidated Statements of Income - Three Months Ended September 30, 2000 and 1999 4 Condensed Consolidated Statements of Cash Flows - Three Months Ended September 30, 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
September 30 June 30 2000 2000 ------------ ------------ (Unaudited) ASSETS Current Assets: Cash and equivalents $ 757,000 $ 2,656,000 Receivables - net of allowance for doubtful accounts 136,575,000 118,991,000 Inventories: Raw materials and supplies 51,656,000 43,882,000 Finished goods and work in process 144,737,000 131,598,000 ------------ ------------ Total inventories 196,393,000 175,480,000 Prepaid expenses and other current assets 20,162,000 18,768,000 ------------ ------------ Total current assets 353,887,000 315,895,000 Property, Plant and Equipment - At cost 425,116,000 413,183,000 Less Accumulated Depreciation 247,648,000 240,799,000 ------------ ------------ Property, plant and equipment - net 177,468,000 172,384,000 Goodwill - net of accumulated amortization 58,595,000 34,553,000 Other Assets 8,640,000 9,012,000 ------------ ------------ Total Assets $598,590,000 $531,844,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term bank loans $ 48,000,000 $ 8,250,000 Current portion of long-term debt 535,000 535,000 Accounts payable 50,691,000 43,690,000 Accrued liabilities 52,728,000 44,000,000 ------------ ------------ Total current liabilities 151,954,000 96,475,000 Long-Term Debt - Less current portion 2,740,000 3,040,000 Other Noncurrent Liabilities 7,283,000 6,800,000 Deferred Income Taxes 11,241,000 10,046,000 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 September 30, 2000 - no par value - 47,152,852 shares; June 30, 2000 - no par value - 47,152,852 shares 52,115,000 52,115,000 Retained earnings 638,047,000 622,660,000 Accumulated other comprehensive income 107,000 115,000 ------------ ------------ Total 690,269,000 674,890,000 Less: Common stock in treasury, at cost September 30, 2000 - 9,420,435 shares; June 30, 2000 - 9,190,435 shares 264,897,000 259,407,000 ------------ ------------ Total shareholders' equity 425,372,000 415,483,000 ------------ ------------ Total Liabilities and Shareholders' Equity $598,590,000 $531,844,000 ============ ============
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 September 30 2000 1999 ------------ ------------ Net Sales $263,945,000 $260,444,000 Cost of Sales 188,666,000 181,807,000 ------------ ------------ Gross Margin 75,279,000 78,637,000 Selling, General and Administrative Expenses 39,912,000 41,523,000 ------------ ------------ Operating Income 35,367,000 37,114,000 Other Income (Expense): Interest expense (260,000) (586,000) Interest income and other - net (181,000) (36,000) ------------ ------------ Income Before Income Taxes 34,926,000 36,492,000 Taxes Based on Income 13,488,000 13,919,000 ------------ ------------ Net Income $ 21,438,000 $ 22,573,000 ============ ============ Net Income Per Common Share: Basic $ .57 $ .56 Diluted .57 .56 Cash Dividends Per Common Share $ .16 $ .15 Weighted Average Common Shares Outstanding: Basic 37,886,000 40,352,000 Diluted 37,893,000 40,437,000
See Notes to Condensed Consolidated Financial Statements 4 of 10 5 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended September 30 2000 1999 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 21,438,000 $ 22,573,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,726,000 8,508,000 Deferred income taxes and other noncash charges 1,678,000 (1,685,000) Loss (gain) on sale of property 21,000 (2,000) Changes in operating assets and liabilities: Receivables (16,743,000) (18,929,000) Inventories (19,618,000) (17,615,000) Prepaid expenses and other current assets (1,366,000) (1,364,000) Accounts payable 6,297,000 9,014,000 Accrued liabilities 8,020,000 16,532,000 ------------ ------------ Net cash provided by operating activities 8,453,000 17,032,000 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for acquisition, net of cash acquired (32,444,000) Payments on property additions (5,200,000) (6,247,000) Proceeds from sale of property 9,000 24,000 Other - net (618,000) (583,000) ------------ ------------ Net cash used in investing activities (38,253,000) (6,806,000) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (5,490,000) (18,165,000) Payment of dividends (6,051,000) (6,043,000) Net change in short-term bank loans 39,750,000 Payments on long-term debt (300,000) (300,000) Common stock issued upon exercise of stock options including related tax benefits 490,000 ------------ ------------ Net cash provided by (used in) financing activities 27,909,000 (24,018,000) ------------ ------------ Effect of exchange rate changes on cash (8,000) ------------ ------------ Net change in cash and equivalents (1,899,000) (13,792,000) Cash and equivalents at beginning of year 2,656,000 18,860,000 ------------ ------------ Cash and equivalents at end of period $ 757,000 $ 5,068,000 ============ ============ SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS: Cash paid during the period for: Interest $ 273,000 $ 1,153,000 ============ ============ Income taxes $ 959,000 $ 745,000 ============ ============
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 SEPTEMBER 30, 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, 2000. (2) Comparative first quarter unaudited results by segment are as follows:
Three Months Ended September 30 (Dollars in Thousands) 2000 1999 ----------------------------------------------------- NET SALES Specialty Foods $126,609 $115,632 Glassware and Candles 77,502 86,643 Automotive 59,834 58,169 ----------------------------------------------------- Total $263,945 $260,444 ===================================================== OPERATING INCOME Specialty Foods $ 24,344 $ 18,765 Glassware and Candles 12,094 17,866 Automotive 403 1,847 Corporate expenses (1,474) (1,364) ----------------------------------------------------- Total $ 35,367 $ 37,114 =====================================================
(3) In May 2000, the Emerging Issues Task Force ("EITF") of the Financial Accounting Standards Board reached a consensus on Issue 00-14 "Accounting for Certain Sales Incentives." The EITF concluded that certain consumer and trade sales promotion expenses should be classified as a reduction of sales rather than as marketing expenses. Similar to many consumer packaged goods companies, the Company currently classifies certain consumer and trade sales promotion expenses as marketing expenses. In September 2000, the EITF also reached a final consensus on Issue 00-10 "Accounting for Shipping and Handling Costs." The EITF concluded that these costs cannot be reported as a reduction of revenue. The Company currently classifies certain shipping costs as a reduction of sales. The Company is currently evaluating the impact of these issues, which are expected to become effective in the fourth quarter of fiscal 2001. Upon adoption, prior period amounts will be restated to conform with the new requirements. As reclassifications, these changes will not have a material effect on the Company's financial position or earnings. 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 SEPTEMBER 30, 2000 AND 1999 RESULTS OF OPERATIONS
Three Months Ended September 30 (Dollars in Thousands) 2000 1999 % Change -------------------------------------------------------------- NET SALES Specialty Foods $126,609 $115,632 9.5% Glassware and Candles 77,502 86,643 (10.6%) Automotive 59,834 58,169 2.9% -------------------------------------------------------------- Total $263,945 $260,444 1.3% ==============================================================
As reflected above, consolidated net sales for the three months ended September 30, 2000 totaled $263,945,000, a 1% increase over the $260,444,000 for the three months ended September 30, 1999. The strongest growth occurred within the Specialty Foods segment where fiscal 2001 sales of $126,609,000 increased in excess of 9% compared to that of the 1999 period. This segment had greater sales of both retail and foodservice products. Retail increases were achieved as a result of continuing growth in frozen garlic bread products as well as in such products as produce vegetable dips, apple dips and fruit dips. This segment's foodservice growth was primarily attributable to increased volumes with larger national restaurant accounts. The contribution to sales from the September 2000 acquisition of Sister Schubert's Homemade Rolls, Inc. was not material. Net sales of the Automotive segment totaled $59,834,000 for the three months ended September 30, 2000 and increased 3% as a result of greater volumes of aluminum accessory products being sold to original equipment manufacturers. Sales of this segment's automotive floormats were adversely impacted by a weaker aftermarket volume. The Company's Glassware and Candles segment had net sales of $77,502,000, which is a nearly 11% decline from the preceding year's comparable sales of $86,643,000. This decline is predominantly attributable to lower sales of candles. Consistent with a trend that began at the beginning of the calendar year, such sales have been adversely affected by several factors including general market softness, increased import competition and the effects of a significant customer of this segment restructuring its approach toward marketing candles. Management believes that certain actions have been taken, including the sourcing of selected new products from overseas, that may help mitigate, if not reverse, this trend beginning early in calendar 2001. The Company's consolidated gross margins as a percentage of sales declined between years, totaling 28.5% for the three months ended September 30, 2000 and 30.2% for the comparable period of 1999. Although food margins increased as a result of the benefits of lower food commodity costs and higher volumes, the Company's other two segments experienced a decline in such margins. The Automotive segment saw a less favorable sales mix, somewhat higher raw material prices and additional costs associated with the start-up of a new aluminum truck accessory program for an original equipment manufacturer. Lower margins within the Glassware and Candles segment were primarily attributable to the generally lower mix of candle sales within the segment as well as less favorable overhead absorption within the candle operations due to the lower sales volume. Glassware margins were also adversely affected by higher natural gas costs, start-up costs associated with a new pressed glassware product line and the effects of certain operational inefficiencies at the Sapulpa, Oklahoma consumer glassware facility. Entering the quarter ending December 31, 2000, natural gas costs continue to remain high although the start-up costs have generally dissipated and the Sapulpa operations have reflected improvement from the preceding twelve months. The benefit of this improvement, however, will not be reflected until at least the Company's fiscal third quarter, consistent with the turnover of the related inventory. Consolidated selling, general and administrative costs of $39,912,000 for the three months ended September 30, 2000 declined 4% from the $41,523,000 incurred for the three months ended September 30, 1999. Contributing 7 of 10 8 to this decrease were lower Automotive aftermarket sales, a slightly reduced mix of retail food sales and a planned reduction in promotional support required for certain retail food products. The foregoing factors contributed to consolidated operating income totaling $35,367,000 for the three months ended September 30, 2000, a decrease of nearly 5% from the corresponding fiscal 2000 total of $37,114,000. By segment, the Company's operating income can be summarized as follows:
Three Months Ended September 30 (Dollars in Thousands) 2000 1999 % Change ---------------------------------------------------------------------- OPERATING INCOME Specialty Foods $24,344 $18,765 29.7% Glassware and Candles 12,094 17,866 (32.3%) Automotive 403 1,847 (78.2%) Corporate (1,474) (1,364) 8.1% ---------------------------------------------------------------------- Total $35,367 $37,114 (4.7%) ======================================================================
With the effective income tax rate of 38.6% for the quarter ending September 30, 2000 being slightly higher than the 38.1% of the comparable period of 1999, net income of $21,438,000 declined 5% over the preceding year's quarterly net income of $22,573,000. However, as influenced by the Company's share repurchase program reducing the weighted average shares outstanding by 6%, fully diluted earnings per share increased two percent to $.57 from the preceding year's record earnings per share of $.56. FINANCIAL CONDITION Net cash provided by operating activities totaled $8,453,000 for the three months ended September 30, 2000 compared to $17,032,000 provided in the comparable period of 1999. This change in cash flows largely resulted from relative changes in working capital components as well as the decline in net income. Net working capital declined from $219,420,000 at June 30, 2000 to $201,933,000 at September 30, 2000. Affecting this change were seasonal increases in accounts receivable and inventories as offset by increases in accruals for accounts payable and accrued income taxes. Also reducing net working capital, was an increase in short-term bank loans associated with the seasonal working capital requirements as well as the funding of the September 2000 stock acquisition of Sister Schubert's Homemade Rolls, Inc. Significant investment activities undertaken during the three months ended September 30, 2000 included $32,444,000 paid for the Sister Schubert's business, net of cash acquired. This purchase price is subject to future adjustment based largely on the future level of Sister Schubert's earnings, as defined, that will be attained through calendar 2004. Financing activities for the three months ended September 30, 2000 included $5,490,000 expended for share repurchases and, as discussed above, increases in short-term bank borrowings of $39,750,000 associated with the September 2000 acquisition as well as seasonal working capital requirements. Dividends paid of $6,051,000 during the current period remained essentially unchanged from that paid in the comparable prior year period, as the share reduction resulting from share repurchases largely offset the impact of a $.01 per share increase in the effective dividend rate. Approximately 3,182,000 shares remained authorized for future buyback at September 30, 2000. Management anticipates that cash provided from operations and the currently available discretionary bank lines of credit should be adequate to meet the Company's foreseeable cash requirements over the remainder of fiscal 2001. The Company is, however, exploring the possibility of establishing a committed credit facility that would be utilized for general corporate purposes. 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. Management believes these forward-looking statements to be reasonable; however, undue reliance should not be placed on such statements, which are based on current expectations. The Company undertakes no obligation to publicly update such forward-looking statements. More detailed statements regarding significant events which could affect the Company's financial results are included in the Company's Form 10-K 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 September 30, 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: November 7, 2000 By: /S/ John B. Gerlach, Jr. ------------------- ---------------------------- JOHN B. GERLACH, JR. Chairman, Chief Executive Officer and President Date: November 7, 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 l84668aex27.txt EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENT OF INCOME FOR THE QUARTER ENDED SEPTEMBER 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-30-2001 SEP-30-2000 757 0 139,265 2,690 196,393 353,887 425,116 247,648 598,590 151,954 2,740 0 0 52,115 373,257 598,590 263,945 263,945 188,666 188,666 0 0 260 34,926 13,488 21,438 0 0 0 21,438 .57 .57
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