0000950152-01-504711.txt : 20011009
0000950152-01-504711.hdr.sgml : 20011009
ACCESSION NUMBER: 0000950152-01-504711
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 4
CONFORMED PERIOD OF REPORT: 20010630
FILED AS OF DATE: 20010927
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-K405
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-04065
FILM NUMBER: 1746016
BUSINESS ADDRESS:
STREET 1: 37 W BROAD ST
CITY: COLUMBUS
STATE: OH
ZIP: 43215
BUSINESS PHONE: 6142247141
10-K405
1
l90386ae10-k405.txt
LANCASTER COLONY FORM 10-K405
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
------- EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2001
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)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
-------------------
COMMON STOCK--NO PAR VALUE PER SHARE
(INCLUDING SERIES A PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
The aggregate market value of Common Stock held by non-affiliates on
August 31, 2001 was approximately $920,169,000, based on the closing price of
these shares on that day.
As of August 31, 2001, there were approximately 37,207,000 shares of
Common Stock, no par value per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference to
this annual report: Registrant's 2001 Annual Report to Shareholders - Parts I,
II and IV. Proxy Statement for the Annual Meeting of Shareholders to be held
November 19, 2001; to be filed - Part III. The 2001 Annual Report to
Shareholders and 2001 Proxy Statement shall be deemed to have been "filed" only
to the extent portions thereof are expressly incorporated by reference.
EXHIBIT INDEX ON PAGE 12.
-1-
2
PART I
Item 1. Business
--------
General Development of Business
-------------------------------
Lancaster Colony Corporation was reincorporated in Ohio effective
January 2, 1992. Prior to this date Lancaster Colony Corporation had been a
Delaware Corporation organized in 1961. As used herein the term "registrant,"
unless the context otherwise requires, refers to Lancaster Colony Corporation
and its subsidiaries.
Description of and Financial Information About Business Segments
----------------------------------------------------------------
The registrant operates in three business segments - "specialty foods,"
"glassware and candles" and "automotive" - which accounted for approximately
47%, 31% and 22%, respectively, of consolidated net sales for the fiscal year
ended June 30, 2001. The financial information relating to business segments for
each of the three years in the period ended June 30, 2001, appearing in Exhibit
13 of this Form 10-K Annual Report, is incorporated herein by reference. Further
description of each business segment the registrant operates within is provided
below:
Specialty Foods
---------------
The food products manufactured and sold by the registrant include salad
dressings and sauces marketed under the brand names "T. Marzetti's,"
"Cardini's," "Pfeiffer" and "Girard's"; fruit glazes, vegetable dips and fruit
dips marketed under the brand name "T. Marzetti's"; frozen unbaked pies
marketed under the brand name "Mountain Top"; frozen hearth-baked breads
marketed under the brand names "New York" and "Mamma Bella"; frozen yeast
Parker House style dinner rolls and sweet rolls marketed under the brand name
"Sister Schubert's"; premium dry egg noodles marketed under the brand names
"Inn Maid" and "Amish Kitchen"; frozen specialty noodles and pastas marketed
under the brand name "Reames"; croutons and related products marketed under the
brand names "Chatham Village" and "T. Marzetti's" and caviar marketed under the
brand name "Romanoff." A portion of the registrant's sales in this segment are
also sold under private label to retailers, distributors and restaurants
primarily in the United States.
A significant portion of this segment's product lines is manufactured
by the registrant in 13 plants located throughout the United States. Certain
individual items are manufactured and packaged by third parties located in the
United States under contractual agreements established by the registrant.
The dressings, sauces, croutons, fruit glazes, vegetable dips, fruit
dips, frozen hearth-baked breads and yeast rolls are sold primarily through
salesmen, food brokers and distributors in various metropolitan areas in the
United States with sales being made to retail, club stores and/or foodservice
markets.
The frozen unbaked pies are marketed principally in the Midwestern
United States through salesmen and food brokers to institutional distributors
and retail outlets. A small portion of this product line is directed to the
foodservice market.
The dry egg noodles and frozen specialty noodles are sold through
salesmen, food brokers and distributors to retail markets principally in the
central and Midwestern United States.
No single customer accounted for more than 10% of this segment's total
net sales in the current and prior year. Although the registrant is a leading
producer in several of its product categories, all of the markets in which the
registrant sells food products are highly competitive in the areas of price,
quality and customer service.
During fiscal year 2001, the registrant obtained adequate supplies of
raw materials for this segment.
The registrant's firm order backlog at June 30, 2001, in this business
segment, was approximately $14,194,000 as compared to a backlog of approximately
$11,349,000 as of the end of the preceding fiscal year. It is expected that all
of these orders will be filled during the current fiscal year. The operations of
this segment are not affected to any material extent by seasonal fluctuations.
The registrant does not utilize any franchises or concessions in this business
segment. The trade names under which it operates are significant to the overall
success of this segment. However, the patents and licenses under which it
operates are not essential to the overall success of this segment.
-2-
3
Glassware and Candles
---------------------
Candles and other home fragrance products of all sizes, forms and
fragrance are primarily sold to the mass merchandise markets as well as to
supermarkets, drug stores and specialty shops under the brand names
"Candle-lite" and "Lancaster Colony." A portion of the registrant's candle
business is marketed under private label.
Glass products include a broad range of machine pressed and machine
blown consumer glassware and industrial glass products such as lighting
components, cathode ray tubes and lenses.
Consumer glassware includes a diverse line of decorative and ornamental
products such as tumblers, bowls, pitchers, jars and barware. These products are
marketed under a variety of trademarks, the most important of which are "Indiana
Glass," "Colony" and "Fostoria."
Glass vases and containers are sold to both the retail and wholesale
florist markets under the brand names "Brody" and "Indiana Glass" as well as
under private label.
The registrant's glass products are sold to discount, department,
variety and drug stores, as well as to jobbers and directly to retail customers.
Commercial markets such as foodservice, hotels, hospitals and schools are also
served by this segment's products.
All the markets in which the registrant sells houseware products are
highly competitive in the areas of design, price, quality and customer service.
The aggregate sales of glassware and candles to two customers accounted for
approximately 32% and 31% of this segment's total net sales during fiscal 2001
and 2000, respectively.
During fiscal year 2001, the registrant obtained adequate supplies of
raw materials for this segment.
The registrant's firm order backlog at June 30, 2001, in this business
segment, was approximately $22,607,000 as compared to approximately $36,164,000
as of the end of the preceding fiscal year. It is expected that all of these
orders will be filled during the current fiscal year. Seasonal retail stocking
patterns cause certain of this segment's products to experience increased sales
in the first half of the fiscal year. The registrant does not use any franchises
or concessions in this segment. The patents under which it operates are not
essential to the overall success of this segment. However, certain trademarks
and licenses are important to this segment's marketing efforts.
Automotive
----------
The registrant manufactures and sells a complete line of rubber, vinyl
and carpeted floor mats to both original equipment manufacturers and aftermarket
retailers. Other products include pickup truck bed mats; running boards; tube
steps; bedliners; tool boxes and other accessories for pickup trucks, vans and
sport utility vehicles; truck and trailer splash guards and quarter fenders; and
accessories such as cup holders, litter caddies and floor consoles. The
automotive aftermarket products are marketed primarily through mass
merchandisers and automotive outlets under the brand name "Rubber Queen" and the
registrant sells bedliners under the "Protecta" trademark and running boards
under the "Dee Zee" brand name, as well as under private labels. The aggregate
sales to two customers accounted for approximately 34% and 32% of this segment's
total net sales during fiscal 2001 and 2000, respectively. No other customer
accounted for more than 10% of this segment's total net sales. Although the
registrant is a market leader in many of its product lines, all the markets in
which the registrant sells automotive products are highly competitive in the
areas of design, price, quality and customer service.
During fiscal year 2001, the registrant obtained adequate supplies of
raw materials for this segment.
The registrant's firm order backlog at June 30, 2001, in this business
segment, was approximately $3,554,000 as compared to a backlog of approximately
$5,168,000 as of the end of the preceding fiscal year. Such backlogs do not
reflect certain orders by original equipment manufacturers as, due to its
nature, such information is not readily available. It is expected that all of
these orders will be filled during the current fiscal year. The operations of
this segment are not affected to any material extent by seasonal fluctuations.
The registrant does not utilize any significant franchises or concessions in
this segment. The patents, trademarks and licenses under which it operates are
generally not essential to the overall success of this segment.
-3-
4
Net Sales by Class of Products
------------------------------
The following table sets forth business segment information with
respect to the percentage of net sales contributed by each class of similar
products which accounted for at least 10% of the registrant's consolidated net
sales in any fiscal year from 1999 through 2001:
2001 2000 1999
--------------------------------------------------------------------------------
Specialty Foods:
Retail 25% 22% 21%
Foodservice 22% 20% 19%
Glassware and Candles:
Consumer Table and Giftware 26% 29% 31%
Automotive:
Original Equipment Manufacturers 13% 14% 12%
Aftermarket 9% 10% 12%
Combined net sales from the three segments to Wal-Mart Stores, Inc.
totaled approximately 11% of consolidated fiscal 2001 net sales and 10% of
consolidated net sales for fiscals 2000 and 1999.
General Business
----------------
Research and Development
------------------------
The estimated amount spent during each of the last three fiscal years
on research and development activities determined in accordance with generally
accepted accounting principles is not considered material.
Environmental Matters
---------------------
Certain of the registrant's operations are subject to compliance with
various air emission standards promulgated under Title V of the Federal Clean
Air Act. Pursuant to this Act, with respect to certain of its facilities, the
registrant is required to submit compliance strategies to various regulatory
authorities for review and approval. Based upon available information,
compliance with the Federal Clean Air Act provisions, as well as other various
Federal, state and local environmental protection laws and regulations, is not
expected to have a material adverse effect upon the level of capital
expenditures, earnings or the competitive position of the registrant for the
remainder of the current and succeeding fiscal year.
Employees
---------
As of June 30, 2001, Lancaster Colony employed approximately 6,000
individuals. Approximately 41% of these employees are represented under various
collective bargaining agreements, which expire from September 2001 to December
2005. No employees are working under expired collective bargaining agreements.
While management believes that labor relations with unionized employees are
good, a prolonged labor dispute could have a material adverse effect on business
and results of operations.
Foreign Operations and Export Sales
-----------------------------------
Foreign operations and export sales have not been significant in the
past and are not expected to be significant in the future based upon existing
operations.
-4-
5
Item 2. Properties
----------
The registrant uses approximately 6,100,000 square feet of space for
its operations. Of this space, approximately 1,228,000 square feet are leased.
The following table summarizes facilities exceeding 75,000 square feet
of space and which are considered the principal manufacturing and warehousing
operations of the registrant:
Approximate
Location Business Segment(s) Square Feet
-------- ------------------- -----------
Bedford Heights, OH(3) Specialty Foods 81,000
Columbus, OH Specialty Foods 244,000
Coshocton, OH(3) Automotive 630,000
Des Moines, IA(2)(5) Automotive 488,000
Dunkirk, IN Glassware and Candles 729,000
Elkhart, IN Automotive 96,000
Grove City, OH Specialty Foods 195,000
Jackson, OH Automotive and Glassware and Candles 223,000
LaGrange, GA Automotive 211,000
Lancaster, OH Glassware and Candles 465,000
Leesburg, OH(1) Glassware and Candles 875,000
Milpitas, CA(5) Specialty Foods 130,000
Muncie, IN Glassware and Candles 148,000
Sapulpa, OK(4) Glassware and Candles 686,000
Wapakoneta, OH(1) Automotive 239,000
Waycross, GA(1)(3) Automotive 152,000
Wilson, NY Specialty Foods 80,000
(1) Part leased on a monthly basis.
(2) Part leased for term expiring in 2001.
(3) Part leased for term expiring in 2002.
(4) Part leased for term expiring in 2004.
(5) Part leased for term expiring in 2005.
Item 3. Legal Proceedings
-----------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
-5-
6
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3) of Form 10-K, the following list
is included as an unnumbered item in Part I of this Report in lieu of being
included in the Proxy Statement for the Annual Meeting of Shareholders to be
held November 19, 2001.
The following is a list of names and ages of all of the executive
officers of the registrant indicating all positions and offices with the
registrant held by such person and each person's principal occupation or
employment during the past five years. No person other than those listed below
has been chosen to become an executive officer of the registrant:
First
Elected
Age as of an
August 31, Offices and Executive
Name 2001 Positions Held Officer
---- ------------ -------------- ------------
John B. Gerlach, Jr. 47 Chairman, Chief Executive
Officer, President and
Director 1982
John L. Boylan 46 Treasurer, Vice President,
Assistant Secretary,
Chief Financial Officer and
Director 1990
Larry G. Noble 65 Vice President 1985
Bruce L. Rosa 52 Vice President, Development -
elected July 1, 1998; Executive
Vice President of T. Marzetti
Company (a subsidiary of
Lancaster Colony Corporation)
from 1996 to 1998; Senior
Vice President of T. Marzetti
Company from 1993 to 1996 1998
The above named officers were elected or re-elected to their present
positions at the annual meeting of the Board of Directors on November 20, 2000.
All such persons have been elected to serve until the next annual election of
officers, which shall occur on November 19, 2001 and their successors are
elected or until their earlier resignation or removal.
-6-
7
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
----------------------------------------------------------------
Matters
-------
Reference is made to the "Selected Quarterly Financial Data," appearing
in Exhibit 13 of this Form 10-K Annual Report, for information concerning market
prices and related security holder matters on the registrant's common stock
during fiscal 2001 and 2000. Such information is incorporated herein by
reference.
Item 6. Selected Financial Data
-----------------------
The presentation of selected financial data as of and for the five
years ended June 30, 2001 is included in the "Operations" and "Financial
Position" sections of the "Five Year Financial Summary" appearing in Exhibit 13
of this Form 10-K Annual Report and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Results of Operations and
-----------------------------------------------------------------
Financial Condition
-------------------
Reference is made to the "Management's Discussion and Analysis of
Results of Operations and Financial Condition" appearing in Exhibit 13 of this
Form 10-K Annual Report. Such information is incorporated herein by reference.
The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements made by or on behalf of the registrant.
All statements made by the registrant, other than statements of historical fact,
that address activities, events or developments that the registrant or
management intends, expects, projects, believes or anticipates will or may occur
in the future, are forward-looking statements. Such statements are based upon
certain assumptions and assessments made by management of the registrant in
light of its experience and its perception of historical trends, current
conditions, expected future developments and other factors it believes to be
appropriate. The forward-looking statements included in this Form 10-K Annual
Report are also subject to a number of risks and uncertainties, including but
not limited to economic, competitive, governmental and technological factors
affecting the registrant's operations, markets, customers, products, services
and prices. Specific influences relating to these forward-looking statements
include fluctuations in material costs, the continued solvency of key customers,
efficiencies in plant operations and innumerable other factors. Such
forward-looking statements are not guarantees of future performance, and the
actual results, developments and business decisions may differ from those
contemplated by such forward-looking statements. The registrant undertakes no
obligation to publicly update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
Not Applicable
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
The financial statements and supplementary financial information are
set forth in Exhibit 13 of this Form 10-K Annual Report and are incorporated
herein by reference.
Item 9. Changes In and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
None
PART III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
For information with respect to the executive officers of the
registrant, see "Executive Officers of the Registrant" at the end of Part I of
this report. For information with respect to the Directors of the registrant,
see "Nomination and Election of Directors" in the Proxy Statement for the Annual
Meeting of Shareholders to be held November 19, 2001, which is incorporated
herein by reference.
-7-
8
Item 11. Executive Compensation
----------------------
Information set forth under the caption "Executive Compensation" in the
Proxy Statement for the Annual Meeting of Shareholders to be held November 19,
2001 is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
Information set forth under the captions "Nomination and Election of
Directors" and "Security Ownership of Certain Beneficial Owners" in the Proxy
Statement for the Annual Meeting of Shareholders to be held November 19, 2001 is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
Not Applicable
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
----------------------------------------------------------------
(a) 1. Financial Statements
--------------------
The consolidated financial statements as of June 30, 2001 and 2000
and for each of the three years in the period ended June 30, 2001,
together with the report thereon of Deloitte & Touche LLP dated
August 22, 2001, appearing in Exhibit 13 of this Form 10-K Annual
Report are incorporated herein by reference.
Index to Financial Statements
-----------------------------
Consolidated Statements of Income for the years ended June 30, 2001,
2000 and 1999
Consolidated Balance Sheets as of June 30, 2001 and 2000
Consolidated Statements of Cash Flows for the years ended June 30,
2001, 2000 and 1999
Consolidated Statements of Shareholders' Equity for the years ended
June 30, 2001, 2000 and 1999
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a) 2. Financial Statement Schedules Required by Items 8 and 14(d)
-----------------------------------------------------------
Included in Part IV of this report is the following additional
financial data which should be read in conjunction with the
consolidated financial statements in the 2001 Annual Report to
Shareholders:
Independent Auditors' Report
Schedule II - Valuation and Qualifying Accounts for each of the three
years in the period ended June 30, 2001
Supplemental schedules not included with the additional
financial data have been omitted because they are not
applicable or the required information is shown in the
financial statements or notes thereto.
(a) 3. Exhibits Required by Item 601 of Regulation S-K and Item 14(c)
--------------------------------------------------------------
See Index to Exhibits attached.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the fourth quarter of the
year ended June 30, 2001.
-8-
9
SIGNATURES
Pursuant to the requirements of Section 13 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 on this 26th day of
September, 2001.
LANCASTER COLONY CORPORATION
(Registrant)
By /S/ John B. Gerlach, Jr.
-----------------------------
John B. Gerlach, Jr.
Chairman, Chief Executive
Officer, President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
/S/ John B. Gerlach, Jr. Chairman, Chief September 13, 2001
--------------------------- Executive Officer, ------------------
John B. Gerlach, Jr. President and Director
/S/ John L. Boylan Treasurer, Vice President, September 17, 2001
--------------------------- Assistant Secretary, ------------------
John L. Boylan Chief Financial Officer
(Principal Financial and
Accounting Officer) and
Director
/S/ Kerrii B. Anderson Director September 13, 2001
--------------------------- ------------------
Kerrii B. Anderson
/S/ Robert L. Fox Director September 13, 2001
--------------------------- ------------------
Robert L. Fox
/S/ Morris S. Halpern Director September 19, 2001
--------------------------- ------------------
Morris S. Halpern
/S/ Robert S. Hamilton Director September 14, 2001
--------------------------- ------------------
Robert S. Hamilton
/S/ Edward H. Jennings Director September 14, 2001
--------------------------- ------------------
Edward H. Jennings
/S/ Henry M. O'Neill, Jr. Director September 14, 2001
--------------------------- ------------------
Henry M. O'Neill, Jr.
/S/ Zuheir Sofia Director September 13, 2001
--------------------------- ------------------
Zuheir Sofia
-9-
10
INDEPENDENT AUDITORS' REPORT
To the Directors and Shareholders of
Lancaster Colony Corporation:
We have audited the consolidated financial statements of Lancaster Colony
Corporation and its subsidiaries as of June 30, 2001 and 2000, and for each of
the three years in the period ended June 30, 2001, and have issued our report
thereon dated August 22, 2001; such financial statements and report are included
in your 2001 Annual Report to Shareholders and are incorporated herein by
reference. Our audits also included the consolidated financial statement
schedule of Lancaster Colony Corporation and its subsidiaries, listed in Item
14. This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, such consolidated financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/S/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Columbus, Ohio
August 22, 2001
-10-
11
SCHEDULE II
LANCASTER COLONY CORPORATION
AND SUBSIDIARIES
============================
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED JUNE 30, 2001
----------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS OF YEAR
----------------------------------------------------------------------------------------------------------------------------
RESERVES DEDUCTED FROM ASSET TO WHICH
THEY APPLY - Allowance for doubtful accounts:
Year ended June 30, 1999.......................... $2,774,000 $1,789,000 $1,263,000(A) $3,300,000
==================================================================
Year ended June 30, 2000.......................... $3,300,000 $5,081,000 $5,986,000(A) $2,395,000
==================================================================
Year ended June 30, 2001.......................... $2,395,000 $2,038,000 $1,266,000(A) $3,167,000
==================================================================
(A) Represents uncollectible accounts written off net of recoveries.
-11-
12
LANCASTER COLONY CORPORATION
----------------------------
FORM 10-K
JUNE 30, 2001
INDEX TO EXHIBITS
Exhibit
Number Description Located at
------ ----------- ----------
3.1 Certificate of Incorporation of the registrant
approved by the shareholders November 18, 1991. (i)
.2 Certificate of Amendment to the Articles of Incorporation
approved by the shareholders November 16, 1992. (i)
.3 Certificate of Amendment to the Articles of Incorporation
approved by the shareholders November 17, 1997. (i)
.4 By-laws of the registrant as amended through November 18, 1991. (a)
.5 Certificate of Designation, Rights and Preferences of the Series A
Participating Preferred Stock of Lancaster Colony Corporation. (b)
4.1 Specimen Certificate of Common Stock. (l)
.2 Rights Agreement dated as of April 20, 2000 between Lancaster
Colony Corporation and The Huntington Trust Company, N.A. (k)
.3 Credit Agreement dated as of February 13, 2001 among Lancaster
Colony Corporation, The Lenders and Bank One, NA, as Agent. (m)
10.1 1981 Incentive Stock Option Plan. (c)
.2 Resolution by the Board of Directors to amend registrant's 1981
Incentive Stock Option Plan approved by the shareholders
November 21, 1983. (d)
.3 Resolution by the Board of Directors to amend registrant's 1981
Incentive Stock Option Plan approved by the shareholders
November 18, 1985. (e)
.4 Resolution by the Board of Directors to amend registrant's 1981
Incentive Stock Option Plan approved by the shareholders
November 19, 1990. (f)
.5 Key Employee Severance Agreement between Lancaster Colony
Corporation and John L. Boylan. (f)
.6 Consulting Agreement by and between Lancaster Colony Corporation
and Morris S. Halpern. (g)
.7 1995 Key Employee Stock Option Plan. (h)
.8 Key Employee Severance Agreement between Lancaster Colony
Corporation and Bruce L. Rosa. (j)
.9 Lancaster Colony Corporation Executive Employee Deferred
Compensation Plan. (l)
13. Annual Report to Shareholders. 2001 Form 10-K
-12-
13
21. Significant Subsidiaries of Registrant. 2001 Form 10-K
23. The consent of Deloitte & Touche LLP to the incorporation by
reference in Registration Statements No. 33-39102 and 333-01275
on Form S-8 of their reports dated August 22, 2001, appearing in
and incorporated by reference in this Annual Report on Form 10-K
of Lancaster Colony Corporation for the year ended June 30, 2001. 2001 Form 10-K
(a) Indicates the exhibit is incorporated by reference from filing
as an annex to the Proxy Statement of Lancaster Colony
Corporation for the Annual Meeting of Shareholders held November
18, 1991.
(b) Indicates the exhibit is incorporated by reference from filing
as an exhibit to the Lancaster Colony Corporation report on Form
10-Q for the quarter ended March 31, 1990.
(c) Indicates the exhibit is incorporated by reference from filing
as an exhibit to the Lancaster Colony Corporation report on Form
10-K for the year ended June 30, 1982.
(d) Indicates the exhibit is incorporated by reference from filing
as an exhibit to the Lancaster Colony Corporation report on Form
10-K for the year ended June 30, 1984.
(e) Indicates the exhibit is incorporated by reference from filing
as an exhibit to the Lancaster Colony Corporation report on Form
10-K for the year ended June 30, 1985.
(f) Indicates the exhibit is incorporated by reference from filing
as an exhibit to the Lancaster Colony Corporation report on Form
10-K for the year ended June 30, 1991.
(g) Indicates the exhibit is incorporated by reference from filing
as an exhibit to the Lancaster Colony Corporation report on Form
10-K for the year ended June 30, 1993.
(h) Indicates the exhibit is incorporated by reference from the
Lancaster Colony Corporation filing on Form S-8 of its 1995 Key
Employee Stock Option Plan (Registration Statement No.
333-01275).
(i) Indicates the exhibit is incorporated by reference from filing
as an exhibit to the Lancaster Colony Corporation report on Form
10-K for the year ended June 30, 1998.
(j) Indicates the exhibit is incorporated by reference from filing
as an exhibit to the Lancaster Colony Corporation report on Form
10-K for the year ended June 30, 1999.
(k) Indicates the exhibit is incorporated by reference from filing
as an exhibit to the Lancaster Colony Corporation report on Form
8-A filed April 20, 2000.
(l) Indicates the exhibit is incorporated by reference from filing
as an exhibit to the Lancaster Colony Corporation report on Form
10-K for the year ended June 30, 2000.
(m) Indicates the exhibit is incorporated by reference from filing
as an exhibit to the Lancaster Colony Corporation report on Form
10-Q for the quarter ended March 31, 2001.
Note (1) The registrant and certain of its subsidiaries are parties
to various long-term debt instruments. The amount of securities
authorized under such debt instruments does not, in any case,
exceed 10% of the total assets of the registrant and its
subsidiaries on a consolidated basis. The registrant agrees to
furnish a copy of any such long-term debt instrument to the
Commission upon request.
Note (2) The registrant has included in Exhibit 13 only the specific
Financial Statements and notes thereto of its 2001 Annual Report
to Shareholders which are incorporated by reference in this Form
10-K Annual Report. The registrant agrees to furnish a complete
copy of its 2001 Annual Report to Shareholders to the Commission
upon request.
-13-
EX-13
3
l90386aex13.txt
EXHIBIT 13
1
Exhibit 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
Of Results of Operations and Financial Condition
REVIEW OF CONSOLIDATED OPERATIONS
The Company's results for fiscal 2001 reflected the tenth consecutive year of
increased consolidated net sales. Total net sales for 2001 reached
$1,098,464,000 compared to $1,096,296,000 achieved in fiscal 2000. Increased
sales provided by the Specialty Foods segment in 2001 were largely offset by
declines in sales of the Company's two non-food segments. While the food growth
was primarily internally generated from both the retail and foodservice
channels, current year acquisitions within this segment also contributed
approximately $21 million of incremental net sales. The slowing economy and
increasingly competitive market conditions adversely affected sales of
automotive products, glassware and candles.
Compared to fiscal 1999 sales of $1,040,317,000, fiscal 2000 sales grew 5%. The
principal factors contributing to this increase were the internal growth of
specialty food sales and several new product lines driving Automotive segment
sales to record levels.
The relative proportion of sales and operating income contributed by each of the
Company's business segments can impact a year-to-year comparison of the
consolidated statements of income. The following table summarizes the sales mix
and related operating income percentages achieved by the business segments over
each of the last three years:
SEGMENT SALES MIX:(1) 2001 2000 1999
------------------------------------------------
Specialty Foods 47% 42% 40%
Glassware and Candles 31% 34% 36%
Automotive 22% 24% 24%
SEGMENT OPERATING INCOME %:(2)
------------------------------------------------
Specialty Foods 20% 18% 16%
Glassware and Candles 14% 21% 21%
Automotive 0% 3% 5%
(1) Expressed as a percentage of consolidated net sales
(2) Expressed as a percentage of the related segment's net sales
The Company's gross margin as a percentage of net sales was 23.8% in 2001
compared with 25.5% in 2000 and 26.2% in 1999. The most recent year's decline in
margins is attributable, in part, to the Company's non-food business segments
experiencing a generally more competitive pricing environment, a less favorable
sales mix, substantially higher energy costs, less overhead absorption on lower
production volumes and certain instances of increased material costs. The effect
of these issues was mitigated by somewhat improved margins in the Specialty
Foods segment as influenced by such factors as an improved retail sales mix and
more favorable commodity costs.
Compared to fiscal 1999, the decline in the fiscal 2000 gross margin percentage
reflected operational inefficiencies and a less favorable sales mix associated
with certain non-food operations. However, margins on specialty food products
also improved in 2000 as a result of such factors as generally lower food
commodity costs and a more favorable sales mix. The increasing proportion of
sales contributed by specialty food products over the last two years has
positively influenced gross margin percentages during this period as such
products typically carry higher average gross margins than many of the Company's
other products.
Selling, general and administrative expenses for 2001 totaled $113,858,000 and
declined 3% from the 2000 total of $117,151,000. The fiscal 2000 level of these
costs was relatively even with the fiscal 1999 total of $116,588,000. The fiscal
2000 amount includes a bad debt provision of approximately $5 million relating
to the January 2000 bankruptcy of a large national foodservice distributor.
Operating income on a consolidated basis for fiscal 2001 totaled $147,674,000, a
9% decline from the comparable 2000 total of $161,949,000. The 2000 total
increased 4% from 1999 operating income totaling $155,688,000. Overall, fiscal
2001 results reflected strong improvement in the Specialty Foods segment
exceeded by declining contributions from the two non-food segments. Compared to
fiscal 1999, fiscal 2000 had similar trends at the segment level but the
non-food decline was exceeded by the improvement in Specialty Foods.
The effective tax rate over the last three years has remained relatively steady
at 38.1% for 2001 and 38.0% in both 2000 and 1999.
Before the cumulative effect of an accounting change related to adopting the
guidance of Securities and Exchange Commission Staff Accounting Bulletin No.
101, "Revenue Recognition in Financial Statements", ("SAB 101"), fiscal 2001
fully diluted earnings per share of $2.40 reflected a decline of 4% from the
record comparable per share total of $2.51 in fiscal 2000. As adjusted for the
$998,000, or $.03 per share, after-tax cumulative effect of the SAB 101
accounting change, diluted earnings per share in 2001 totaled $2.37. Fully
diluted earnings per share for fiscal 2000 increased 10% over the 1999 total of
$2.28 per share. Earnings per share has been beneficially affected by the
Company's share repurchases which have totaled in excess of $164 million within
the three-year period ended June 30, 2001.
2
MANAGEMENT'S DISCUSSION AND ANALYSIS
In July 2001, the Financial Accounting Standards Board issued two
pronouncements, Statement of Financial Accounting Standard ("SFAS") No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets", relating to the accounting for goodwill and other intangible assets
associated with business combinations. SFAS No. 141 requires the use of the
purchase method of accounting for all business combinations initiated after June
30, 2001 and eliminates the pooling-of-interests method. SFAS No. 142 requires,
among other things, the discontinuance of goodwill amortization for goodwill or
intangibles with indefinite lives and requires at least annual assessments for
impairment. The amortization provisions apply immediately to goodwill and
intangible assets acquired after June 30, 2001 and will apply upon adoption of
SFAS No. 142 in the first quarter of fiscal 2003 for goodwill and intangible
assets recorded on the books at June 30, 2001. In the quarter of adoption, the
Company will perform the first of the required impairment tests of goodwill and
intangible assets. Any initial adjustments relating to impairment will be
accounted for as a cumulative change in accounting in the year of adoption.
Management has not yet completed its analysis of these Statements as to their
impact on the Company's financial statements and disclosures.
In early 2001, the Emerging Issues Task Force ("EITF") issued EITF Issue No.
00-25, "Vendor Income Statement Characterization of Consideration Paid to a
Reseller of the Vendor's Products". The implementation of the guidance under the
EITF is required no later than the Company's third quarter of fiscal 2002. The
adoption of this guidance may require the Company to reclassify certain costs
currently included in selling, general and administrative expense to a reduction
in net sales. Management is currently evaluating the applicability of this
guidance to the Company's practices and, while the adoption has no effect on the
level of operating income, is presently unable to reasonably estimate the
effect, if any, of its adoption.
SEGMENT REVIEW--SPECIALTY FOODS
The Specialty Foods segment again achieved record levels of both net sales and
earnings during fiscal 2001. Such sales totaled $521,615,000 in 2001, an
increase of $56,622,000, or 12%, over the prior year's total of $464,993,000.
Relative to net sales during fiscal 1999 totaling $420,816,000, fiscal 2000
sales increased $44,177,000. The percentage of retail sales to total sales for
this segment was approximately 53% in each of the last three years.
The growth in sales has been influenced during each of the last two years by
both the strength of frozen bread products and increased volumes with national
account foodservice customers. The fiscal 2001 results also benefited from the
year's two business acquisitions involving frozen bread products. These
acquisitions contributed approximately $21 million in incremental sales volume
for the year.
The Specialty Foods segment's operating income in fiscal 2001 totaled
$105,656,000, a 27% increase over the fiscal 2000 total of $83,372,000. The 2000
level was $14,822,000, or 22%, above the fiscal 1999 level of $68,550,000.
Included as a charge against fiscal 2000 income was a bad debt provision of
approximately $5,000,000 resulting from the January 2000 bankruptcy of a large
foodservice distributor that primarily serviced large national restaurant
chains. Although also impairing cash flows, this bankruptcy did not materially
affect the segment's net sales. Absent this charge, the segment's operating
income for fiscals 2001 and 2000 would have increased by approximately 20% and
29%, respectively, over the prior years' levels.
Also contributing to the increased income were the greater sales volumes, an
improving retail mix, better capacity utilization and lower raw material costs.
The latter factor was particularly influential on the fiscal 2000 improvement,
as costs of soybean oil and cream were substantially higher in the first half of
fiscal 1999.
SEGMENT REVIEW--GLASSWARE AND CANDLES
During fiscal 2001, net sales of the Glassware and Candles segment totaled
$337,287,000, a 9% decline from net sales of $368,794,000 in fiscal 2000.
Similarly, compared to net sales in fiscal 1999 totaling $374,888,000, fiscal
2000 sales declined by $6,094,000, or 2%. The decline in both years was
primarily attributable to year-over-year declines in candle sales to mass
merchants. This trend was first experienced beginning in the second half of
fiscal 2000. Contributing to the decline in the sales of candles were heightened
competition from imported product and, most notably in fiscal 2001, the
development of substantially more competitive market pricing conditions. Of
further influence throughout all segment product lines in fiscal 2001 was the
presence of significantly weaker economic conditions.
The segment's operating income during fiscal 2001 totaled $47,154,000 and
declined 39% from the prior year's total of $76,756,000. In addition to the
effects of the lower volume and competitive pricing conditions, income was
adversely affected by a less favorable sales mix, significantly higher energy
costs and the lower production levels leading to greater amounts of unabsorbed
overhead in both the candle and glassware manufacturing operations. Somewhat
mitigating these factors were improved glassware production efficiencies
compared to fiscal 2000.
Compared to fiscal 1999 operating income of $79,235,000, fiscal 2000 income
declined by 3%. This decrease resulted from a less favorable sales mix and,
within the glassware operations, substantial production inefficiencies occurring
at the Sapulpa, Oklahoma production facility.
3
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEGMENT REVIEW--AUTOMOTIVE
Net sales of the Automotive segment during fiscal 2001 totaled $239,562,000, a
9% decline from the prior year's record sales level of $262,509,000. Fiscal 2000
sales represented a 7% increase above fiscal 1999 net sales totaling
$244,613,000.
In fiscal 2001, the overall sales of aluminum truck accessories increased as a
result of a new product line developed for an original equipment manufacturer.
However, sales of many of the segment's other products to both original
equipment manufacturers ("OEMs") and aftermarket customers were adversely
affected by generally less favorable economic conditions and lower new vehicle
sales. Additionally, certain floor mat lines with OEMs were exited in 2001 based
on management's analysis that adequate contribution margin would not be provided
in the future. The sales growth achieved in fiscal 2000 resulted from internal
growth associated with the addition of several new aluminum accessory and floor
mat programs placed with OEMs, as well as the acquisition of one significant new
aftermarket customer account.
The Automotive segment's operating income for fiscal 2001 totaled $673,000. This
level represented a 91% decline from operating income of $7,452,000 in 2000. The
lower results in the current year were influenced by the decline in sales
volume, a less favorable sales mix, the impact of price reductions with certain
OEMs, somewhat higher raw material costs and the lower volume leading to less
overhead absorption. The decision to exit certain low margin floor mat lines in
fiscal 2001 also led to additional provisions for inventory obsolescence.
Compared to operating income in fiscal 1999 of $12,861,000, fiscal 2000 income
declined 42%. This decline is attributable to lower contribution from the sales
of floor mats as affected by operating inefficiencies, a less favorable sales
mix, certain raw material cost increases, reduced pricing to OEMs and more
competitive aftermarket conditions. Freight and overtime costs were also
unusually high in the first half of fiscal 2000 due to capacity constraints. The
extent of the decline in fiscal 2000 was mitigated by improved contribution from
aluminum truck accessory operations.
This segment's sales to OEMs are made both directly to the OEMs and indirectly
through third party, "Tier 1" suppliers. Such sales are sensitive to the overall
rate of new vehicle sales, the availability of competitive alternatives and the
Tier 1 supplier's ongoing ability to maintain its relationship with the OEMs.
Additionally, the extent of pricing flexibility associated with these sales
continues to be particularly limited with certain products subject to annual
price reductions. During 2001, sales to OEMs comprised 59% of this segment's
sales compared to 57% and 50% in 2000 and 1999, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital structure at June 30, 2001 remains fundamentally strong
with short and long-term indebtedness comprising less than 2% of total
capitalization. Management believes that this relatively low level of leverage
provides the Company with considerable flexibility to acquire businesses
complementary in function to that of the Company's existing operations, continue
historical levels of share repurchases and otherwise meet ongoing liquidity
requirements.
During February 2001, the Company established a revolving credit arrangement
with several commercial banks totaling $125,000,000. This facility largely
replaced discretionary commercial bank credit lines that were previously made
available. The new revolving credit arrangement allows for borrowings to occur
near or below the U.S. prime rate of interest. Management believes that
internally generated funds, the existing credit facilities and an ability to
obtain additional financing, if desired, will be sufficient to satisfy future
foreseeable capital needs.
The Company's cash flows for the fiscal years 1999 through 2001 are presented in
the Consolidated Statements of Cash Flows. For fiscal 2001, cash provided from
operating activities totaled $126,212,000, a 2% decline from the prior year's
total of $128,530,000 and essentially even with the fiscal 1999 total. Compared
to fiscal 2000, the effects on cash flows from the lower net income experienced
in fiscal 2001 was mitigated by more favorable changes in working capital
components. Cash flow generated from operations remains the primary source of
financing the Company's internal growth.
Within working capital, accounts receivable at June 30, 2001 declined from year
ago levels by approximately 9% although inventories increased approximately 5%.
Both fluctuations were influenced by the effects of adopting the provisions of
SAB 101 in fiscal 2001. Consolidated accounts receivable levels were also
reduced by the increased mix of specialty foods sales, while inventories within
the Glassware and Candles segment rose due, in part, to factory production
schedules not being adjusted timely enough in relation to the downturn in the
segment's sales.
The single largest purpose of cash flows used in investing activities during
fiscal 2001 was for business acquisitions. Two such acquisitions, both in the
Specialty Foods segment, were made that required an aggregate expenditure of
$49,831,000, net of cash acquired. The larger of the two acquisitions resulted
in the purchase of the outstanding shares of Sister Schubert's Homemade Rolls,
Inc., an Alabama manufacturer of frozen rolls marketed primarily for retail
distribution. The second acquisition related to the purchase of the operating
assets of Ausmac Inc., a California-based manufacturer of frozen breads using
the brand name Mamma Bella.
4
MANAGEMENT'S DISCUSSION AND ANALYSIS
Other uses of cash in investing activities during fiscal 2001 included capital
expenditures totaling $22,632,000. This amount remained comparable in magnitude
to fiscal 2000's total of $24,564,000 with a food warehousing project increasing
the fiscal 1999 expenditures to $33,804,000.
Financing activities of the Company used net cash totaling $49,443,000,
$116,000,000 and $91,377,000 in fiscals 2001, 2000 and 1999 respectively. Cash
utilized for share repurchases totaled $22,742,000, $75,101,000 and $66,792,000
in 2001, 2000, and 1999 respectively. In May 2000, the Company's Board of
Directors approved a share repurchase authorization of 3,000,000 shares of which
a total of approximately 2,600,000 remained authorized for future purchase as of
June 30, 2001.
Total dividend payments for 2001 were $25,176,000, which was 2% greater than the
2000 total of $24,747,000. This increase reflects the higher dividend payout
rate of $.67 present during 2001 as compared to $.63 during 2000 and $.59 in
fiscal 1999. Fiscal 2001 marks the 38th consecutive year in which the Company's
dividend rate was increased. The future levels of share repurchases and declared
dividends are subject to the periodic review of the Company's Board of Directors
and are generally determined after an assessment is made of such factors as
anticipated earnings levels, cash flow requirements and general business
conditions.
The Company's ongoing business activities continue to be subject to compliance
with various laws, rules and regulations as may be issued and enforced by
various Federal, state and local agencies. With respect to environmental
matters, costs are incurred pertaining to regulatory compliance and, upon
occasion, remediation. Such costs have not been, and are not anticipated to
become, material.
The Company is contingently liable with respect to lawsuits, taxes and various
other matters that routinely arise in the normal course of business. As is
further described in Note 12 to the accompanying financial statements, the
Company is currently addressing certain litigation and claims generally relating
to preferential payments allegedly received prior to a former customer filing
bankruptcy in January 2000. Although there can be no assurance as to the
ultimate outcome of this matter, management believes that its resolution will
not have a material impact on the Company's financial position, ongoing cash
flows or results of operations, but could have a material one-time impact on
interim or annual results of operations.
IMPACT OF INFLATION
Raw material costs were mixed in fluctuation during fiscal 2001. On balance, a
decline in food ingredient costs was present, especially in the first half of
the fiscal year. Material costs in the other segments were generally stable to
modestly higher than in fiscal 2000. Also of consequence for fiscal 2001 were
substantially higher energy costs that particularly impacted the Glassware and
Candles segment.
The most significant change in costs during fiscal 2000 compared to fiscal 1999
related to declines in soybean oil and cream costs which benefited the results
of the Specialty Foods segment. However, certain cost increases in the second
half of fiscal 2000, including those for freight and corrugated, tended to trend
above the general inflation rate. Soybean oil and cream costs rose markedly
during the first half of fiscal 1999 but returned to more comparable levels by
year-end.
The Company generally attempts to adjust its selling prices to offset the
effects of increased raw material costs. However, these adjustments have
historically been difficult to implement. If implemented, such adjustments tend
to lag the increase in costs incurred. Minimizing the exposure to such increased
costs is the Company's diversity of operations and its ongoing efforts to
achieve greater manufacturing and distribution efficiencies through the
improvement of work processes.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
All statements made by the Company in both this annual report and in other
contexts, other than statements of historical fact, that address activities,
events or developments that the Company or management intends, expects,
projects, believes or anticipates will or may occur in the future, are
forward-looking statements. Such statements are based upon certain assumptions
and assessments made by management of the Company in light of its experience and
its perception of historical trends, current conditions, expected future
developments and other factors it believes to be appropriate. The
forward-looking statements included in this report are also subject to a number
of risks and uncertainties, including but not limited to economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, customers, products, services and prices. Specific influences relating
to these forward-looking statements include fluctuations in material costs, the
continued solvency of key customers, efficiencies in plant operations and
innumerable other factors. Such forward-looking statements are not guarantees of
future performance, and the actual results, developments and business decisions
may differ materially from those contemplated by such forward-looking
statements. The Company undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new information, future
events or otherwise.
5
FIVE YEAR FINANCIAL SUMMARY
Lancaster Colony Corporation and Subsidiaries
Years Ended June 30
(Thousands Except Per Share Figures) 2001(2) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------
OPERATIONS(3)
Net Sales $1,098,464 $1,096,296 $1,040,317 $1,002,650 $925,247
Gross Margin $ 261,532 $ 279,100 $ 272,276 $ 271,818 $251,088
Percent of Sales 23.8% 25.5% 26.2% 27.1% 27.1%
Interest Expense $ 1,239 $ 1,588 $ 2,718 $ 2,626 $ 2,596
Percent of Sales 0.1% 0.1% 0.3% 0.3% 0.3%
Income Before Income Taxes $ 145,885 $ 160,189 $ 153,462 $ 155,373 $142,459
Percent of Sales 13.3% 14.6% 14.8% 15.5% 15.4%
Taxes Based on Income $ 55,649 $ 60,925 $ 58,333 $ 59,243 $ 53,753
Income Before Cumulative Effect of
Accounting Change $ 90,236 $ 99,264 $ 95,129 $ 96,130 $ 88,706
Cumulative Effect of Accounting
Change, Net of Tax $ (998)
Net Income $ 89,238 $ 99,264 $ 95,129 $ 96,130 $ 88,706
Percent of Sales 8.1% 9.1% 9.1% 9.6% 9.6%
Per Common Share:(1)
Net Income--Basic and Diluted $ 2.37 $ 2.51 $ 2.28 $ 2.22 $ 2.01
Cash Dividends $ 0.67 $ 0.63 $ 0.59 $ 0.54 $ 0.48
------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Total Assets $ 571,937 $ 531,844 $ 550,014 $ 529,367 $484,394
Working Capital $ 225,311 $ 219,420 $ 212,162 $ 235,031 $235,079
Property, Plant and Equipment--Net $ 173,169 $ 172,384 $ 175,617 $ 170,766 $151,309
Long-Term Debt $ 1,095 $ 3,040 $ 3,575 $ 29,095 $ 30,685
Property Additions $ 22,632 $ 24,564 $ 33,804 $ 44,935 $ 37,528
Depreciation and Amortization $ 35,528 $ 34,340 $ 35,569 $ 32,571 $ 26,981
Shareholders' Equity $ 459,901 $ 415,483 $ 414,855 $ 410,563 $368,000
Per Common Share(1) $ 12.35 $ 10.94 $ 10.23 $ 9.60 $ 8.45
Weighted Average Common Shares
Outstanding--Diluted(1) 37,636 39,554 41,799 43,364 44,108
------------------------------------------------------------------------------------------------------
STATISTICS
Price-Earnings Ratio at Year End 13.9 7.8 15.1 17.1 16.0
Current Ratio 3.4 3.3 2.8 4.1 4.2
Long-Term Debt as a Percent of
Shareholders' Equity 0.2% 0.7% 0.9% 7.1% 8.3%
Dividends Paid as a Percent of Net
Income 28.2% 24.9% 25.8% 24.3% 23.8%
Return on Average Equity 20.4% 23.9% 23.0% 24.7% 25.7%
------------------------------------------------------------------------------------------------------
(1) Adjusted for 3-for-2 stock split paid January 1998.
(2) Reflects, in 2001, the impact of adopting the provisions of the Securities
and Exchange Commission's Staff Accounting Bulletin ("SAB") No. 101, Revenue
Recognition in Financial Statements.
(3) Net Sales and Gross Margin reflect accounting reclassifications in
accordance with adopting the provisions of the Emerging Issues Task Force
("EITF") of the Financial Accounting Standards Board Issue Nos. 00-10,
Accounting for Shipping and Handling Fees and Costs, 00-14, Accounting for
Certain Sales Incentives and 00-22 (Issue #3), Accounting for Points and
Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers
for Free Products or Services to Be Delivered in the Future.
6
BUSINESS SEGMENTS
Lancaster Colony Corporation and Subsidiaries
For the Years Ended June 30, 2001, 2000 and 1999
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."
SPECIALTY FOODS-includes the production and marketing of a family of pourable
and refrigerated produce salad dressings; croutons; sauces; refrigerated produce
vegetable and fruit dips; chip dips; dry and frozen egg noodles; caviar; frozen
ready-to-bake pies; frozen hearth-baked breads; and frozen yeast rolls. Salad
dressings, sauces, frozen egg noodles, frozen bread products and frozen yeast
rolls are sold to both retail and foodservice markets. The remaining products of
this business segment are primarily directed to retail markets.
GLASSWARE AND CANDLES-includes the production and marketing of table and
giftware consisting of domestic glassware, both machine pressed and machine
blown; imported glassware; candles in all popular sizes, shapes and scents;
potpourri and related scented products; industrial glass and lighting
components; and glass floral containers. This segment's products are sold
primarily to retail markets such as mass merchandisers and department stores.
AUTOMOTIVE-includes the production and marketing for original equipment
manufacturers, importers and the auto aftermarket of rubber, vinyl and
carpet-on-rubber floor mats; truck and trailer splash guards; pickup truck bed
mats and liners; aluminum accessories for pickup trucks and vans; and a broad
line of additional automotive accessories.
Operating income represents net sales less operating expenses related to the
business segments. Expenses of a general corporate nature have not been
allocated to the business segments. All intercompany transactions have been
eliminated, and intersegment revenues are not significant. Identifiable assets
for each segment include those assets used in its operations and intangible
assets allocated to purchased businesses. Corporate assets consist principally
of cash, cash equivalents and deferred income taxes.
The 2001, 2000 and 1999 capital expenditures of the segments include property
relating to business acquisitions as follows:
SEGMENT 2001 2000 1999
------------------------------------------------------
Specialty Foods $7,814,000
Glassware and Candles $150,000
Automotive $990,000
------------------------------------------------------
7
BUSINESS SEGMENTS
Lancaster Colony Corporation and Subsidiaries
For the Years Ended June 30, 2001, 2000, and 1999
The following sets forth certain financial information attributable to the
Company's business segments for the three years ended June 30, 2001, 2000 and
1999:
(DOLLARS IN THOUSANDS) 2001 2000 1999
------------------------------------------------------------------------------------------------------
NET SALES(1)
Specialty Foods $ 521,615 $ 464,993 $ 420,816
Glassware and Candles 337,287 368,794 374,888
Automotive 239,562 262,509 244,613
------------------------------------------------------------------------------------------------------
Total $1,098,464 $1,096,296 $1,040,317
------------------------------------------------------------------------------------------------------
OPERATING INCOME
Specialty Foods $ 105,656 $ 83,372 $ 68,550
Glassware and Candles 47,154 76,756 79,235
Automotive 673 7,452 12,861
Corporate Expenses (5,809) (5,631) (4,958)
------------------------------------------------------------------------------------------------------
Total $ 147,674 $ 161,949 $ 155,688
------------------------------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
Specialty Foods $ 186,968 $ 131,657 $ 133,100
Glassware and Candles 253,498 253,659 260,359
Automotive 108,878 126,819 122,373
Corporate 22,593 19,709 34,182
------------------------------------------------------------------------------------------------------
Total $ 571,937 $ 531,844 $ 550,014
------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Specialty Foods $ 13,451 $ 5,753 $ 13,721
Glassware and Candles 12,363 11,301 10,998
Automotive 4,502 7,544 9,804
Corporate 130 116 271
------------------------------------------------------------------------------------------------------
Total $ 30,446 $ 24,714 $ 34,794
------------------------------------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION
Specialty Foods $ 9,698 $ 7,927 $ 7,601
Glassware and Candles 16,432 16,939 18,601
Automotive 9,207 9,327 9,242
Corporate 191 147 125
------------------------------------------------------------------------------------------------------
Total $ 35,528 $ 34,340 $ 35,569
------------------------------------------------------------------------------------------------------
(1) As is further discussed in Note 1 to the Consolidated Financial Statements,
segment net sales have been restated in accordance with SAB 101 for fiscal
2001 and EITF Nos. 00-10, 00-14 and 00-22 (Issue #3) for all years
presented.
Substantially all net sales and all long-lived assets are domestic.
Combined net sales from the three segments to one customer totaled approximately
$124,000,000 or 11% of consolidated fiscal 2001 net sales and $112,000,000 and
$109,000,000 or 10% of consolidated net sales in fiscal 2000 and 1999,
respectively.
8
CONSOLIDATED STATEMENTS OF INCOME
Lancaster Colony Corporation and Subsidiaries
For the Years Ended June 30, 2001, 2000 and 1999
Years Ended June 30
2001 2000 1999
-------------------------------------------------------------------------------------------------------
NET SALES $1,098,464,000 $1,096,296,000 $1,040,317,000
COST OF SALES 836,932,000 817,196,000 768,041,000
-------------------------------------------------------------------------------------------------------
GROSS MARGIN 261,532,000 279,100,000 272,276,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 113,858,000 117,151,000 116,588,000
-------------------------------------------------------------------------------------------------------
OPERATING INCOME 147,674,000 161,949,000 155,688,000
OTHER INCOME (EXPENSE):
Interest expense (1,239,000) (1,588,000) (2,718,000)
Interest income and other--net (550,000) (172,000) 492,000
-------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 145,885,000 160,189,000 153,462,000
TAXES BASED ON INCOME 55,649,000 60,925,000 58,333,000
-------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGE 90,236,000 99,264,000 95,129,000
CUMULATIVE EFFECT OF ACCOUNTING CHANGE,
NET OF TAX BENEFIT OF $619,000 (998,000)
-------------------------------------------------------------------------------------------------------
NET INCOME $ 89,238,000 $ 99,264,000 $ 95,129,000
-------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE:
Before Cumulative Effect of Accounting Change:
Basic and Diluted $2.40 $2.51 $2.28
Cumulative Effect of Accounting Change:
Basic and Diluted (.03)
After Cumulative Effect of Accounting Change:
Basic and Diluted $2.37 $2.51 $2.28
-------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 37,618,000 39,498,000 41,759,000
Diluted 37,636,000 39,554,000 41,799,000
-------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements
9
CONSOLIDATED BALANCE SHEETS
Lancaster Colony Corporation and Subsidiaries
As of June 30, 2001 and 2000
June 30
ASSETS 2001 2000
------------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and equivalents $ 4,873,000 $ 2,656,000
Receivables (less allowance for doubtful accounts,
2001--$3,167,000; 2000--$2,395,000) 107,895,000 118,991,000
Inventories:
Raw materials and supplies 48,435,000 43,882,000
Finished goods and work in process 135,952,000 131,598,000
------------------------------------------------------------------------------------------------
Total inventories 184,387,000 175,480,000
Prepaid expenses and other current assets 20,450,000 18,768,000
------------------------------------------------------------------------------------------------
Total current assets 317,605,000 315,895,000
PROPERTY, PLANT AND EQUIPMENT:
Land, buildings and improvements 116,661,000 113,959,000
Machinery and equipment 320,477,000 299,224,000
------------------------------------------------------------------------------------------------
Total cost 437,138,000 413,183,000
Less accumulated depreciation 263,969,000 240,799,000
------------------------------------------------------------------------------------------------
Property, plant and equipment--net 173,169,000 172,384,000
OTHER ASSETS:
Goodwill (net of accumulated amortization,
2001--$12,456,000; 2000--$10,354,000) 73,397,000 34,553,000
Other 7,766,000 9,012,000
------------------------------------------------------------------------------------------------
TOTAL $571,937,000 $531,844,000
------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Short-term bank loans $ 4,500,000 $ 8,250,000
Current portion of long-term debt 1,945,000 535,000
Accounts payable 41,565,000 43,690,000
Accrued liabilities 44,284,000 44,000,000
------------------------------------------------------------------------------------------------
Total current liabilities 92,294,000 96,475,000
LONG-TERM DEBT--less current portion 1,095,000 3,040,000
OTHER NONCURRENT LIABILITIES 7,346,000 6,800,000
DEFERRED INCOME TAXES 11,301,000 10,046,000
SHAREHOLDERS' EQUITY:
Preferred stock--authorized 3,050,000 shares;
Outstanding--none
Common stock--authorized 75,000,000 shares;
Outstanding, 2001--37,253,216; 2000--37,962,417 55,229,000 52,115,000
Retained earnings 686,722,000 622,660,000
Accumulated other comprehensive income 99,000 115,000
------------------------------------------------------------------------------------------------
Total 742,050,000 674,890,000
Less common stock in treasury, at cost 282,149,000 259,407,000
------------------------------------------------------------------------------------------------
Total shareholders' equity 459,901,000 415,483,000
------------------------------------------------------------------------------------------------
TOTAL $571,937,000 $531,844,000
------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements
10
CONSOLIDATED STATEMENTS OF CASH FLOWS
Lancaster Colony Corporation and Subsidiaries
For the Years Ended June 30, 2001, 2000 and 1999
Years Ended June 30
2001 2000 1999
-----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 89,238,000 $ 99,264,000 $ 95,129,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 35,528,000 34,340,000 35,569,000
Provision for losses on accounts
receivable 2,038,000 5,081,000 1,789,000
Deferred income taxes and other noncash
charges 160,000 (121,000) (1,225,000)
(Gain) loss on sale of property (420,000) 89,000 (229,000)
Changes in operating assets and liabilities:
Receivables 10,653,000 (804,000) (25,252,000)
Inventories (7,232,000) (6,059,000) 6,426,000
Prepaid expenses and other current
assets 307,000 (338,000) (173,000)
Accounts payable and accrued
liabilities (4,060,000) (2,922,000) 14,472,000
-----------------------------------------------------------------------------------------------------
Net cash provided by operating
activities 126,212,000 128,530,000 126,506,000
-----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments on property additions (22,632,000) (24,564,000) (33,804,000)
Acquisitions net of cash acquired (49,831,000) (400,000) (2,075,000)
Proceeds from sale of property 766,000 78,000 647,000
Other--net (2,839,000) (3,857,000) (4,269,000)
-----------------------------------------------------------------------------------------------------
Net cash used in investing
activities (74,536,000) (28,743,000) (39,501,000)
-----------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in short-term bank loans (3,750,000) 8,250,000
Payment of dividends (25,176,000) (24,747,000) (24,573,000)
Purchase of treasury stock (22,742,000) (75,101,000) (66,792,000)
Payments on long-term debt, including
acquisition debt payoff (836,000) (25,520,000) (510,000)
Common stock issued, including stock issued
upon exercise of stock options 3,061,000 1,118,000 498,000
-----------------------------------------------------------------------------------------------------
Net cash used in financing
activities (49,443,000) (116,000,000) (91,377,000)
-----------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (16,000) 9,000 8,000
-----------------------------------------------------------------------------------------------------
Net change in cash and equivalents 2,217,000 (16,204,000) (4,364,000)
Cash and equivalents at beginning of year 2,656,000 18,860,000 23,224,000
-----------------------------------------------------------------------------------------------------
Cash and equivalents at end of year $ 4,873,000 $ 2,656,000 $ 18,860,000
-----------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements
11
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Lancaster Colony Corporation and Subsidiaries
For the Years Ended June 30, 2001, 2000 and 1999
Accumulated
Common Stock Other
Outstanding Retained Comprehensive Treasury
Shares Amount Earnings Income Stock
------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1998 42,753,488 $50,392,000 $477,587,000 $ 98,000 $117,514,000
------------------------------------------------------------------------------------------------------
Net income 95,129,000
Cash dividends--common stock
($.59 per share) (24,573,000)
Purchase of treasury shares (2,226,800) 66,792,000
Shares issued upon exercise
of stock options
including related tax
benefits 21,108 520,000
Translation adjustment 8,000
------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1999 40,547,796 50,912,000 548,143,000 106,000 184,306,000
------------------------------------------------------------------------------------------------------
Net income 99,264,000
Cash dividends--common stock
($.63 per share) (24,747,000)
Purchase of treasury shares (2,631,032) 75,101,000
Shares issued upon exercise
of stock options
including related tax
benefits 45,653 1,203,000
Translation adjustment 9,000
------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 2000 37,962,417 52,115,000 622,660,000 115,000 259,407,000
------------------------------------------------------------------------------------------------------
Net income 89,238,000
Cash dividends--common stock
($.67 per share) (25,176,000)
Purchase of treasury shares (826,379) 22,742,000
Shares issued upon exercise
of stock options
including related tax
benefits 117,178 3,114,000
Translation adjustment (16,000)
------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 2001 37,253,216 $55,229,000 $686,722,000 $ 99,000 $282,149,000
------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements
12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Lancaster Colony Corporation and Subsidiaries
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Lancaster Colony Corporation and its wholly-owned subsidiaries, collectively
referred to as the "Company." All significant intercompany transactions have
been eliminated.
USE OF ESTIMATES
The preparation of the consolidated financial statements of the Company in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, as well as their related
disclosures. Such estimates and assumptions also affect the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with maturities of
three months or less to be cash equivalents. As a result of the Company's cash
management system, checks issued but not presented to the banks for payment may
create negative book cash balances. Such negative balances are included in other
accrued liabilities and totaled $4,969,000 and $3,621,000 as of June 30, 2001
and 2000, respectively.
PROPERTY, PLANT AND EQUIPMENT
The Company uses the straight-line method of computing depreciation for
financial reporting purposes based on the estimated useful lives of the
corresponding assets. Estimated useful lives for buildings and improvements
range from three to forty-five years while machinery and equipment range from
three to twenty years. For tax purposes, the Company generally computes
depreciation using accelerated methods.
GOODWILL
For financial reporting purposes goodwill is being amortized on a straight-line
basis over ten to forty years, with the exception of $2,243,000 which relates to
a company acquired prior to November 1, 1970. Such amount is not being amortized
as, in the opinion of management, there has been no diminution in value.
Management periodically evaluates the future economic benefit of its recorded
goodwill and other long-term assets when events or circumstances indicate
potential recoverability concerns. This evaluation is based on consideration of
expected future undiscounted cash flows and other operating factors. Carrying
amounts are adjusted appropriately when determined to have been impaired.
REVENUE RECOGNITION
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements", which
effectively summarizes certain of the staff's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
As a result, the Company adopted a change in the method of accounting for
shipments to customers and cumulatively applied this change as if it had
occurred on July 1, 2000. Historically, net sales and related cost of sales were
recognized upon shipment of the products. Under the new accounting method, the
Company recognizes net sales and related cost of sales at the time of shipment
of the products, or at the time when all substantial risks of ownership change,
if later. The effect of the change was a one-time charge of $998,000 (net of tax
benefit of $619,000), or approximately $.03 per share, which is reflected as a
cumulative effect of an accounting change in the fiscal 2001 income statement.
Net sales are recorded net of estimated sales discounts and returns.
SALES INCENTIVES
In May 2000, the Emerging Issues Task Force ("EITF") of the Financial Accounting
Standards Board ("FASB") reached a consensus on EITF Issue No. 00-14 "Accounting
for Certain Sales Incentives" ("EITF 00-14"). 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 has historically classified
13
such expenses as marketing expenses within selling, general and administrative
expenses. The new EITF guidance was effective and adopted during the Company's
fourth quarter of fiscal 2001.
In September 2000, the EITF issued EITF Issue No. 00-22, "Accounting for Points
and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers
for Free Products or Services to Be Delivered in the Future"
("EITF 00-22"). EITF 00-22 addresses, among other issues, how a vendor should
account for an offer to a customer to rebate or refund a specified amount of
cash that is redeemable only if a customer completes a specified cumulative
level of revenue transactions or remains a customer for a specified time period.
At the January 2001 meeting, the EITF reached a consensus on this Issue (Issue
#3) that a vendor should recognize a cash rebate or refund obligation as a
reduction of revenue. This guidance was effective and adopted during the
Company's third quarter of fiscal 2001.
The adoption of EITF 00-14 and 00-22 (Issue #3) had no impact on the Company's
net income and all applicable expenses have been reclassified from selling to
net sales for all years presented to conform with the new presentation
requirements.
SHIPPING AND HANDLING COSTS
In September 2000, the EITF reached a final consensus on EITF Issue No. 00-10
"Accounting for Shipping and Handling Fees and Costs" ("EITF 00-10"). EITF 00-10
addresses the accounting for shipping and handling costs billed to customers and
prohibits the netting of such costs against related revenue. This guidance was
effective and adopted during the Company's fourth quarter of fiscal 2001. The
adoption of EITF 00-10 had no impact on the Company's net income and all
applicable expenses have been reclassified from net sales to cost of sales for
all years presented to conform with the new presentation requirements.
PER SHARE INFORMATION
Net income per common share is computed based on the weighted average number of
shares of common stock and common stock equivalents (stock options) outstanding
during each period.
Basic earnings per share 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 earnings per share 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 outstanding stock options.
There are no adjustments to net income necessary in the calculation of basic and
diluted earnings per share.
CREDIT RISK
Financial instruments which potentially subject the Company to concentrations of
credit risk consist primarily of cash equivalents, trade accounts receivable and
debt. The carrying amounts of these financial instruments approximates fair
value. The Company places its cash equivalents with high-quality institutions
and, by policy, limits the amount of credit exposure to any one institution.
Concentration of credit risk with respect to trade accounts receivable is
limited by the Company having a large and diverse customer base.
BUSINESS SEGMENTS
The business segments information for 2001, 2000 and 1999 included on pages 14
and 15 of this Annual Report is an integral part of these financial statements.
COMPREHENSIVE INCOME
The only component of other comprehensive income for the Company is foreign
currency translation adjustments for which there is no related income tax
effect. The difference from net income is immaterial in relation to the
Company's financial statements for the fiscal years ended June 30, 2001, 2000
and 1999.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the current
year presentation.
RECENTLY ISSUED ACCOUNTING STANDARDS
In July 2001, the FASB issued two pronouncements, Statement of Financial
Accounting Standard ("SFAS") No. 141, "Business Combinations" and SFAS No. 142,
"Goodwill and Other Intangible Assets", relating to the accounting for goodwill
and other intangible assets associated with business combinations. SFAS No. 141
requires the use of the purchase method of accounting for all business
combinations initiated after June 30, 2001 and eliminates the
14
pooling-of-interests method. SFAS No. 142 requires, among other things, the
discontinuance of goodwill amortization for goodwill or intangibles with
indefinite lives and requires at least annual assessments for impairment. The
amortization provisions apply immediately to goodwill and intangible assets
acquired after June 30, 2001 and will apply upon adoption of SFAS No. 142 in the
first quarter of fiscal 2003 for goodwill and intangible assets recorded on the
books at June 30, 2001. In the quarter of adoption, the Company will perform the
first of the required impairment tests of goodwill and intangible assets. Any
initial adjustments relating to impairment will be accounted for as a cumulative
change in accounting in the year of adoption. Management has not yet completed
its analysis of these Statements as to their impact on the Company's financial
statements and disclosures.
In early 2001, the EITF issued EITF Issue No. 00-25, "Vendor Income Statement
Characterization of Consideration Paid to a Reseller of the Vendor's Products".
The implementation of the guidance under the EITF is required no later than the
Company's third quarter of fiscal 2002. The adoption of this guidance may
require the Company to reclassify certain costs currently included in selling,
general and administrative expense to a reduction in net sales. Management is
currently evaluating the applicability of this guidance to the Company's
practices and, while the adoption has no effect on net income, is presently
unable to reasonably estimate the effect, if any, of its adoption.
2. ACQUISITIONS
During March 2001, the Company acquired the operating assets of Ausmac Inc.,
producer of Mamma Bella brand specialty frozen breads, for cash of $15,257,000,
net of cash acquired. During September 2000, the Company acquired all of the
outstanding stock of Sister Schubert's Homemade Rolls, Inc., a manufacturer and
marketer of frozen, partially baked yeast rolls and related products. The
Company paid cash of $34,574,000, net of cash acquired, for this acquisition and
such purchase price is subject to additional adjustment based largely on the
future annual level of Sister Schubert's earnings, as defined, that will be
attained through calendar 2003. During January 2000, the Company acquired
certain assets of a glass container distributor for cash of approximately
$400,000. During October 1998, the Company acquired certain assets of an
automobile floor mat manufacturer, for cash of approximately $2,075,000.
These acquisitions were accounted for under the purchase method of accounting
and the non-cash aspects have been excluded from the accompanying Consolidated
Statements of Cash Flows. The results of operations of these entities have been
included in the consolidated financial statements from the dates of acquisition
and are immaterial in relation to the consolidated totals.
3. INVENTORIES
Inventories are valued at the lower of cost or market. Inventories which
comprise approximately 21% and 22% of total inventories at June 30, 2001 and
2000, respectively, are costed on a last-in, first-out ("LIFO") basis.
Inventories which are costed by various other methods approximate actual cost on
a first-in, first-out ("FIFO") basis. If the FIFO method (which approximates
current cost) of inventory accounting had been used for inventories costed on a
LIFO basis, these inventories would have been $17,976,000 and $17,315,000 higher
than reported at June 30, 2001 and 2000, respectively.
It is not practicable to segregate work in process from finished goods
inventories. Management estimates, however, that work in process inventories
amount to approximately 9% and 10% of the combined total of finished goods and
work in process inventories at June 30, 2001 and 2000, respectively.
4. SHORT-TERM BORROWINGS
The Company has the ability to borrow up to $125,000,000 under the terms of an
unsecured revolving credit facility. The facility expires in February 2004 and
contains certain representations, warranties, covenants and conditions customary
to credit facilities of this nature. Under terms of the agreement, certain
financial ratios influence the extent of the Company's all-in borrowing costs,
including interest and ongoing facility fees. This facility largely replaced
discretionary commercial bank credit lines that were previously made available.
At June 30, 2001, the Company was in compliance with all provisions of the
facility and there were no amounts outstanding under the facility. At June 30,
2000, the Company had outstanding borrowings totaling $8,250,000 against a
$20,000,000 revolving credit facility which expired in fiscal 2001. The weighted
average interest rate on these borrowings was 6.8%.
As of June 30, 2001, 2000 and 1999, the Company had lines of credit for
short-term borrowings from various banks of $25,000,000, $70,000,000 and
$95,000,000, respectively. The lines of credit have been granted at the
discretion of the lending banks and, generally, are subject to periodic review.
As of June 30, 2001, the Company had short-
15
term borrowings outstanding of $4,500,000 under such an arrangement with a
weighted average interest rate of 4.2%.
5. ACCRUED LIABILITIES
Accrued liabilities at June 30, 2001 and 2000 are composed of:
(DOLLARS IN THOUSANDS) 2001 2000
--------------------------------------------------------------------------------------
Accrued compensation and employee benefits $28,640 $29,902
Accrued marketing and distribution 7,480 7,208
Income and other taxes 2,035 890
Other 6,129 6,000
--------------------------------------------------------------------------------------
Total accrued liabilities $44,284 $44,000
--------------------------------------------------------------------------------------
6. LONG-TERM DEBT
Long-term debt (including current portion) at June 30, 2001 and 2000 consists
of:
(DOLLARS IN THOUSANDS) 2001 2000
-------------------------------------------------------------------------------------
Obligations with various industrial development
authorities--collateralized by real estate and
equipment--floating rate due in installments to December
1, 2005 $3,040 $3,575
-------------------------------------------------------------------------------------
Total 3,040 3,575
Less current portion 1,945 535
-------------------------------------------------------------------------------------
Long-term debt $1,095 $3,040
-------------------------------------------------------------------------------------
No material debt was assumed for the purchase of property additions in 2001,
2000 and 1999. Cash payments for interest (including interest paid on short-term
borrowings) were $1,248,000, $2,511,000 and $2,722,000 for 2001, 2000 and 1999,
respectively. At June 30, 2001, the Company met or exceeded various covenant
requirements related to the outstanding debt.
Long-term debt matures as follows:
(DOLLARS IN THOUSANDS)
----------------------------------------------------------------------------
Year ending June 30:
2002 $1,945
2003 255
2004 265
2005 280
2006 295
----------------------------------------------------------------------------
Total $3,040
----------------------------------------------------------------------------
7. INCOME TAXES
The Company and its domestic subsidiaries file a consolidated Federal income tax
return. Taxes based on income for the years ended June 30, 2001, 2000 and 1999,
have been provided as follows:
(DOLLARS IN THOUSANDS) 2001 2000 1999
-----------------------------------------------------------------------------------------------------
Currently payable:
Federal $48,646 $53,623 $53,245
State and local 6,755 7,142 6,420
-----------------------------------------------------------------------------------------------------
Total current provision 55,401 60,765 59,665
Deferred Federal, state and local (credit) provision (371) 160 (1,332)
-----------------------------------------------------------------------------------------------------
Total taxes based on income $55,030 $60,925 $58,333
-----------------------------------------------------------------------------------------------------
16
Tax expense resulting from allocating certain tax benefits directly to common
stock totaled $53,000, $85,000 and $22,000 for 2001, 2000 and 1999,
respectively. The Company's effective tax rate varies from the statutory Federal
income tax rate as a result of the following factors:
2001 2000 1999
-------------------------------------------------------------------------------------------------
Statutory rate 35.0% 35.0% 35.0%
State and local income taxes 3.0% 2.9% 2.9%
Other 0.1% 0.1% 0.1%
-------------------------------------------------------------------------------------------------
Effective rate 38.1% 38.0% 38.0%
-------------------------------------------------------------------------------------------------
Deferred income taxes recorded in the Consolidated Balance Sheets at June 30,
2001 and 2000 consist of the following:
(DOLLARS IN THOUSANDS) 2001 2000
--------------------------------------------------------------------------------------
Deferred tax assets (liabilities):
Inventories $ 6,928 $ 6,389
Employee medical and other benefits 7,890 7,336
Receivable and other valuation allowances 3,878 3,468
Other accrued liabilities 3,218 3,606
--------------------------------------------------------------------------------------
Total deferred tax assets 21,914 20,799
--------------------------------------------------------------------------------------
Total deferred tax liabilities--property and other (16,215) (14,845)
--------------------------------------------------------------------------------------
Net deferred tax asset $ 5,699 $ 5,954
--------------------------------------------------------------------------------------
Net current deferred tax assets totaled approximately $17,000,000 and
$16,000,000 for 2001 and 2000, respectively, and were included in prepaid
expenses and other current assets. Cash payments for income taxes were
$54,008,000, $63,862,000 and $51,119,000 for 2001, 2000 and 1999, respectively.
8. SHAREHOLDERS' EQUITY
The Company is authorized to issue 3,050,000 shares of preferred stock
consisting of 750,000 shares of Class A Participating Preferred Stock with $1.00
par value, 1,150,000 shares of Class B Voting Preferred Stock without par value
and 1,150,000 shares of Class C Nonvoting Preferred Stock without par value.
As authorized by the Company's Board of Directors in February 2000, each share
of the Company's outstanding common stock includes a nondetachable stock
purchase right that provides, upon becoming exercisable, for the purchase of
one-hundredth of a share of Series A Participating Preferred Shares at an
exercise price of $185, subject to certain adjustments. Alternatively, once
exercisable, each right will also entitle the holder to buy shares of the
Company's common stock having a market value of twice the exercise price. The
rights may be exercised on or after the time when a person or group of persons
without the approval of the Board of Directors acquire beneficial ownership of
15 percent or more of the Company's common stock or announce the initiation of a
tender or exchange offer which, if successful, would cause such person or group
to beneficially own 30 percent or more of the common stock. The person or group
effecting such 15 percent acquisition or undertaking such tender offer will not
be entitled to exercise any rights. If the Company is acquired in a merger or
other business combination, each right will entitle the holder, other than the
acquiring person, to purchase securities of the surviving company having a
market value equal to twice the exercise price of the rights. Until the rights
become exercisable, they may be redeemed by the Company at a price of one cent
per right. These rights expire in April 2010 unless earlier redeemed by the
Company under circumstances permitted by the Rights Agreement.
In May 2000, the Company's Board of Directors approved a share repurchase
authorization of 3,000,000 shares of which approximately 2,600,000 remained
authorized for future purchase as of June 30, 2001.
9. STOCK OPTIONS
Under the terms of the 1995 Key Employee Stock Option Plan ("Plan") approved by
the shareholders in November 1995, the Company has reserved 3,000,000 common
shares for issuance to qualified key employees. All options granted under the
Plan are exercisable at prices not less than fair market value as of the date of
grant. At June 30, 2001, 2,238,092 shares were available for future grants under
the Plan. In general, options granted under the Plan vest immediately and have a
maximum term of 10 years. Both reserved common shares and shares available for
future grants have been restated to reflect the stock split in January 1998.
As permitted by SFAS No. 123, the Company has elected to follow Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations, in accounting for its stock-based
17
compensation. Under APB Opinion No. 25, because the exercise price of the
Company's stock options was at least equal to the market price of the underlying
stock on the date of grant, no compensation expense was recognized.
The following summarizes for each of the three years in the period ended June
30, 2001 the activity relating to stock options granted under the 1995 Plan
mentioned above as well as those granted under a separate plan that expired in
May 1995:
2001 2000 1999
----------------------------------------------------------------------------------------------------
WEIGHTED WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE
OF EXERCISE OF EXERCISE OF EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
----------------------------------------------------------------------------------------------------
Outstanding at beginning of period 380,946 $26.98 430,149 $26.75 277,986 $27.78
Exercised (117,178) 26.12 (45,653) 24.54 (21,108) 23.62
Granted 370,250 29.52 293,350 27.15
Forfeited (155,688) 28.08 (3,550) 27.13 (120,079) 30.85
----------------------------------------------------------------------------------------------------
Outstanding at end of the period 478,330 $28.80 380,946 $26.98 430,149 $26.75
----------------------------------------------------------------------------------------------------
Exercisable at end of period 417,569 $29.29 294,437 $27.46 318,449 $27.32
----------------------------------------------------------------------------------------------------
The weighted average fair value of options granted during fiscal years 2001 and
1999 were $6.96 and $5.27 per share, respectively.
The following table summarizes information about the options outstanding at June
30, 2001:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------------------------------------- ------------------------------
WEIGHTED AVERAGE
------------------------
REMAINING
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER WEIGHTED AVERAGE
GRANT YEARS EXERCISE PRICES OUTSTANDING LIFE IN YEARS PRICE EXERCISABLE EXERCISE PRICE
------------------------------------------------------------------------------- ------------------------------
1993 and 1995 $17.06-$22.25 36,330 3.47 $22.03 9,366 $21.41
1997 $30.75 37,500 .59 $30.75 37,500 $30.75
1999 and 2001 $27.13-$32.45 404,500 4.57 $29.22 370,703 $29.34
----------------------------------------------------------------------------------------------------------------
The fair value of the options presented above was estimated at the date of grant
using the Black-Scholes option pricing model with the following assumptions for
options granted in 2001 and 1999, respectively: risk free interest rate of 5.52%
and 5.77%; dividend yield of 2.03% and 1.7%; volatility factor of the expected
market price of the Company's common stock of 33.71% and 27.39%; and a weighted
average expected option life of 2.59 and 2.71 years.
Had compensation cost for the Plan been determined based on the fair value at
the grant dates for awards under the Plan consistent with the method of SFAS No.
123, the Company's net income and earnings per share would have been reduced to
the pro forma amounts indicated below for the years ended June 30:
(DOLLARS IN THOUSANDS EXCEPT PER SHARE FIGURES) 2001 2000 1999
-----------------------------------------------------------------------------------------------------
Net income As reported $89,238 $99,264 $95,129
Pro forma $88,434 $99,078 $94,555
Earnings per Share:
Basic and Diluted As reported $ 2.37 $ 2.51 $ 2.28
Basic Pro forma $ 2.35 $ 2.51 $ 2.26
Diluted Pro forma $ 2.35 $ 2.50 $ 2.26
-----------------------------------------------------------------------------------------------------
10. PENSION AND OTHER POSTRETIREMENT BENEFITS
The Company and certain of its operating subsidiaries provide multiple defined
benefit pension and postretirement medical and life insurance benefit plans.
Benefits under the defined benefit pension plans are primarily based on
negotiated rates and years of service and cover the union workers at such
locations. The Company contributes to these pension plans at least the minimum
amount required by regulation or contract. The Company recognizes the
18
cost of postretirement medical and life insurance benefits as the employees
render service. Benefits are funded as incurred.
Relevant information with respect to these defined benefit pension and
postretirement medical and life insurance benefits as of June 30, can be
summarized as follows:
OTHER
PENSION BENEFITS POSTRETIREMENT BENEFITS
(DOLLARS IN THOUSANDS) 2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $27,975 $28,273 $ 2,657 $ 2,757
Service cost 610 625 128 111
Interest cost 2,009 1,954 193 199
Amendments 756
Actuarial loss (gain) 296 (804) (63) (125)
Prior service cost (104)
Benefits paid (2,241) (2,073) (165) (285)
----------------------------------------------------------------------------------------------------------
Benefit obligation at end of year 29,405 27,975 2,646 2,657
----------------------------------------------------------------------------------------------------------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year 32,881 35,066
Actual return on plan assets 975 (177)
Employer contribution 518 65 165 286
Benefits paid (2,241) (2,073) (165) (286)
----------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year 32,133 32,881
----------------------------------------------------------------------------------------------------------
Funded status 2,728 4,906 (2,646) (2,657)
Unrecognized net actuarial (gain) (1,541) (3,788) (774) (743)
Unrecognized prior service cost (asset) 3,114 2,598 (104)
Unrecognized net transition obligation 114 146
----------------------------------------------------------------------------------------------------------
Prepaid (accrued) benefit cost $ 4,415 $ 3,862 $(3,524) $(3,400)
----------------------------------------------------------------------------------------------------------
WEIGHTED-AVERAGE ASSUMPTIONS AS OF JUNE 30
----------------------------------------------------------------------------------------------------------
Discount rate 7.25% 7.60% 7.25% 7.60%
Expected return on plan assets 9.00% 9.00%
----------------------------------------------------------------------------------------------------------
For measurement purposes, annual increases in medical costs for fiscal 2001 are
assumed to total approximately 6% per year and gradually decline to 5% by
approximately the year 2003 and remain level thereafter. Annual increases in
medical costs for fiscal 2000 were assumed to total approximately 6.5% per year
and gradually decline to 5% by approximately the year 2003 and remain level
thereafter.
OTHER
PENSION BENEFITS POSTRETIREMENT BENEFITS
(DOLLARS IN THOUSANDS) 2001 2000 1999 2001 2000 1999
--------------------------------------------------------------------------------------------------------
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost $ 610 $ 625 $ 491 $128 $111 $109
Interest cost 2,009 1,954 1,851 193 199 192
Expected return on plan assets (2,871) (3,072) (3,056)
Amortization of unrecognized net gain (54) (203) (202) (31) (25) (11)
Amortization of prior service cost 240 199 200
Amortization of unrecognized net obligation
existing at transition 31 32 31
--------------------------------------------------------------------------------------------------------
Net periodic benefit cost (benefit) $ (35) $ (465) $ (685) $290 $285 $290
--------------------------------------------------------------------------------------------------------
The majority of the pension plan assets are invested in bonds, short-term
investments and common stock including shares of the Company's common stock with
a market value of $4,601,000 and $2,721,000 as of June 30, 2001 and 2000,
respectively.
19
Assumed health care cost rates can have a significant effect on the amounts
reported for the health care plans. A one-percentage-point change in assumed
health care cost trend rates would have the following effect:
1-PERCENTAGE-POINT 1-PERCENTAGE-POINT
(DOLLARS IN THOUSANDS) INCREASE DECREASE
--------------------------------------------------------------------------------------------------------
Effect on total of service and interest cost components $ 30 $ (26)
Effect on postretirement benefit obligation as of June 30,
2001 $150 $(132)
--------------------------------------------------------------------------------------------------------
The Company and certain of its subsidiaries also participate in multiemployer
plans that provide pension and postretirement health and welfare benefits to the
union workers at such locations. The Company's contributions required by its
participation in the multiemployer plans totaled $3,277,000, $2,920,000 and
$2,904,000 in 2001, 2000 and 1999, respectively.
During fiscal 1998, the Company adopted the Lancaster Colony Corporation 401(k)
Profit Sharing Plan and Trust ("401(k) Plan"). In general, the 401(k) Plan
extends participation to all domestic employees, except those covered by a
collective bargaining agreement. The Company's contribution is 40% of the
participant's contribution up to a maximum of 4% of the participant's annual
compensation and is funded annually at the end of the 401(k) Plan year, December
31. The funds are invested in mutual funds with the exception of the Company
contribution which is invested in Company stock. The Company's 401(k) Plan
contributions totaled approximately $815,000, $811,000 and $800,000 for the
years ended June 30, 2001, 2000 and 1999, respectively.
The Company also sponsors an Employee Stock Ownership Plan ("ESOP"). Effective
January 1, 1998, the ESOP was frozen and all benefit accruals under and further
contributions to the ESOP ceased. All participants in the ESOP at that time were
immediately 100% vested. The Company has no further obligation to the ESOP.
11. COMMITMENTS
The Company has operating leases with initial noncancelable lease terms in
excess of one year, covering the rental of various facilities and equipment,
which expire at various dates through fiscal 2011. Certain of these leases
contain renewal options, some provide options to purchase during the lease term
and some require contingent rentals based on usage. The future minimum rental
commitments due under these leases are summarized as follows (in thousands):
2002--$4,728; 2003--$3,924; 2004--$3,010; 2005--$1,907; 2006--$1,016;
thereafter--$2,142.
Total rent expense, including short-term cancelable leases, during fiscal years
ended June 30, 2001, 2000 and 1999 is summarized as follows:
(DOLLARS IN THOUSANDS) 2001 2000 1999
----------------------------------------------------------------------------------------------------
Operating leases:
Minimum rentals $4,866 $4,427 $4,745
Contingent rentals 340 452 328
Short-term cancelable leases 3,256 2,696 2,271
----------------------------------------------------------------------------------------------------
Total $8,462 $7,575 $7,344
----------------------------------------------------------------------------------------------------
12. CONTINGENCIES AND ENVIRONMENTAL MATTERS
At June 30, 2001, the Company is a party to various legal and environmental
matters which have arisen in the ordinary course of business. Such matters did
not have a material adverse effect on the current year results of operations
and, in the opinion of management, their ultimate disposition will not have a
material adverse effect on the Company's Consolidated Financial Statements.
A lawsuit was filed against a subsidiary of the Company in late June 2001
asserting that the subsidiary received approximately $16 million in preferential
payments prior to the January 2000 bankruptcy of a former customer. An answer to
this claim was filed in July 2001 denying liability. The Company is also in
receipt of informal notice regarding certain other, but less significant, claims
from the same former customer including those involving two other subsidiaries
of the Company. Management believes that it has substantial and meritorious
defenses with respect to these matters and that the ultimate liability for this
claim, while difficult to predict, will be significantly less than the
originally asserted amount. Based upon management's best estimate of the range
of potential exposure, approximately $1,000,000 has been accrued at June 30,
2001. Although there can be no assurance as to the outcome of these matters,
management believes that its resolution will not have a material impact on the
Company's financial position, but could have a material impact on interim or
annual results of operations.
20
INDEPENDENT AUDITORS' REPORT
To the Directors and Shareholders of Lancaster Colony Corporation
We have audited the accompanying consolidated balance sheets of Lancaster Colony
Corporation and its subsidiaries as of June 30, 2001 and 2000, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended June 30, 2001. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Lancaster Colony Corporation and
its subsidiaries as of June 30, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 2001 in conformity with accounting principles generally accepted in the
United States of America.
Deloitte & Touche LLP
Columbus, Ohio
August 22, 2001
SELECTED QUARTERLY FINANCIAL DATA
Lancaster Colony Corporation and Subsidiaries
For the Years Ended June 30, 2001 and 2000
Diluted
Earnings
Income Per Share
Before Before
Cumulative Cumulative
Effect of Effect of Diluted Dividends
(Thousands Except Net Gross Accounting Net Accounting Earnings Stock Prices Paid
Per Share Figures) Sales(2) Margin(2) Change Income Change Per Share High Low Per Share
------------------------------------------------------------------------------------------------------------------------
2001(1)
FIRST QUARTER $ 262,045 $ 61,900 $21,247 $20,249 $ .56 $ .53 $26.25 $20.63 $.16
SECOND QUARTER 312,569 78,708 29,853 29,853 .79 .79 28.38 22.88 .17
THIRD QUARTER 268,139 60,802 19,070 19,070 .51 .51 31.88 26.25 .17
FOURTH QUARTER 255,711 60,122 20,066 20,066 .54 .54 34.48 27.44 .17
------------------------------------------------------------------------------------------------------------------------
YEAR $1,098,464 $261,532 $90,236 $89,238 $2.40 $2.37 $34.48 $20.63 $.67
------------------------------------------------------------------------------------------------------------------------
2000
First quarter $ 258,582 $ 64,693 $22,573 $22,573 $ .56 $ .56 $36.94 $29.00 $.15
Second quarter 320,216 85,558 33,120 33,120 .83 .83 37.00 29.50 .16
Third quarter 261,451 64,603 20,102 20,102 .51 .51 34.75 26.56 .16
Fourth quarter 256,047 64,246 23,469 23,469 .61 .61 32.00 18.50 .16
------------------------------------------------------------------------------------------------------------------------
Year $1,096,296 $279,100 $99,264 $99,264 $2.51 $2.51 $37.00 $18.50 $.63
------------------------------------------------------------------------------------------------------------------------
(1) Reflects, in 2001, the impact of adopting the provisions of the Securities
and Exchange Commission's Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements.
(2) Net Sales and Gross Margin reflect accounting reclassifications in
accordance with adopting the provisions of the Emerging Issues Task Force of
the Financial Accounting Standards Board Issue Nos. 00-10, Accounting for
Shipping and Handling Fees and Costs, 00-14, Accounting for Certain Sales
Incentives and 00-22 (Issue #3), Accounting for Points and Certain Other
Time-Based or Volume-Based Sales Incentive Offers, and Offers for Free
Products or Services to Be Delivered in the Future.
Lancaster Colony common stock trades on The Nasdaq Stock Market(R) under the
symbol LANC. Stock prices were provided by The Nasdaq Stock Market(R). The
number of shareholders as of September 17, 2001 was approximately 9,000. The
highest and lowest prices for the Company's common stock from July 1, 2001 to
September 17, 2001 were $34.96 and $29.28.
EX-21
4
l90386aex21.txt
EXHIBIT 21
1
Exhibit 21
LANCASTER COLONY CORPORATION
SIGNIFICANT SUBSIDIARIES OF REGISTRANT
======================================
State Percent of
Name of Incorporation Ownership
---- ---------------- ---------
Colony Printing & Labeling, Inc. Indiana 100%
Dee Zee, Inc. Ohio 100%
E. O. Brody Company Ohio 100%
Fostoria Glass, LLC Ohio 100%
Indiana Glass Company Indiana 100%
Jackson Plastics Operations, Inc. Ohio 100%
LRV Acquisition Corp. Ohio 100%
LaGrange Molded Products, Inc. Delaware 100%
Lancaster Colony Commercial
Products, Inc. Ohio 100%
Lancaster Glass Corporation Ohio 100%
New York Frozen Foods, Inc. Ohio 100%
Pretty Products, Inc. Ohio 100%
Sister Schubert's Homemade Rolls, Inc. Alabama 100%
T. Marzetti Company Ohio 100%
The Quality Bakery Company, Inc. Ohio 100%
Reames Foods, Inc. Iowa 100%
Waycross Molded Products, Inc. Ohio 100%
All subsidiaries conduct their business under the names shown.
EX-23
5
l90386aex23.txt
EXHIBIT 23
1
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in Registration Statements No.
33-39102 and 333-01275 of Lancaster Colony Corporation on Form S-8 of our
reports dated August 22, 2001, appearing in and incorporated by reference in
this Annual Report on Form 10-K of Lancaster Colony Corporation for the year
ended June 30, 2001.
/S/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Columbus, Ohio
September 21, 2001