EX-99.1 2 l31361aexv99w1.htm EX-99.1 exv99w1
 

Exhibit 99.1
     
FOR IMMEDIATE RELEASE   SYMBOL: LANC
Thursday, May 1, 2008   TRADED: Nasdaq
LANCASTER COLONY REPORTS HIGHER THIRD QUARTER SALES;
ESCALATING COMMODITY COSTS IMPACT NET INCOME
     COLUMBUS, Ohio, May 1 — Lancaster Colony Corporation (Nasdaq: LANC) today reported higher sales for the company’s third fiscal quarter ended March 31, 2008, compared with the corresponding quarter a year ago. Highlights of the quarter include the following:
•   Net sales increased two percent to $270 million versus $266 million in the third quarter last year. The increase was limited by the divestiture and closing of glass manufacturing operations over the past year.
•   Income from continuing operations totaled $8,785,000 compared with $13,595,000 for the corresponding quarter a year ago. Prior year third quarter results from continuing operations included pretax restructuring and impairment charges of approximately $2.4 million (five cents per share after taxes), including $1.4 million recorded in cost of sales for the write-down of inventories. These charges related to the closing of the company’s industrial glass operations.
•   Third quarter Specialty Foods sales increased 11 percent in the quarter to $197 million, benefiting from stronger sales of both retail and foodservice products as well as from pricing actions taken this year. Operating income totaled $14.4 million compared to $22.0 million in the prior year, reflecting record high costs of key commodities during the third quarter. Compared to the prior year quarter, the adverse impact of material costs exceeded $18 million.
•   Nonfood operations again had mixed results. Automotive sales grew six percent to $39.5 million in the third quarter, led by improved sales to original equipment manufacturers despite some curtailment of customer production schedules late in the quarter. Automotive operating income totaled $1.3 million compared to $0.4 million in the third quarter a year ago. Third quarter Glassware and Candles sales decreased 33 percent to $33.6 million, primarily reflecting the divestiture and closing of glass operations. Off-season candle sales were down slightly from a year ago. Segment operating income was essentially breakeven compared to operating income of $1.0 million in the third quarter last year.
•   Net income amounted to $8,626,000 including a $159,000 loss from discontinued operations. In the third quarter last year, net income was $13,499,000, including a $96,000 loss from discontinued operations. Net income per diluted share reached 30 cents versus 43 cents in the year-ago quarter.
•   The company’s balance sheet remained strong, with debt at March 31, 2008 representing less than 17 percent of total capitalization.
     Nine-month net sales were $861 million compared to $820 million last year. Net income was $40,194,000, or $1.35 per diluted share, including a net loss from discontinued operations of $159,000 or one cent per diluted share. Net income for the nine months a year ago totaled $45,109,000, or $1.42
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PAGE 2 / LANCASTER COLONY REPORTS HIGHER THIRD QUARTER SALES
per diluted share, after reflecting a net loss from discontinued operations of $3,336,000, or $.11 per diluted share. Income from continuing operations for the nine months was $40,353,000, or $1.35 per diluted share, compared to $48,445,000, or $1.53 per diluted share earned in the first nine months last year.
     Current year-to-date income from continuing operations included pretax income of $2.5 million (five cents per share after taxes) associated with a second quarter distribution under the Continued Dumping and Subsidy Offset Act (CDSOA), a pretax loss on the November 2007 sale of consumer and floral glass operations totaling $5.9 million (13 cents per share after taxes) and a noncash pension settlement charge of $3.0 million (six cents per share after taxes). In the prior year, the pretax CDSOA distribution was $0.7 million (one cent per share after taxes).
     John B. Gerlach, Jr., chairman and CEO, said, “While generally pleased with our Specialty Foods sales growth and our Automotive progress, substantially higher food commodity costs were far more than our pricing initiatives could overcome. Throughout the current fiscal year, we continued to utilize our cash flow to support shareholder value, investing over $13 million in Specialty Foods capital projects, paying $24.6 million in cash dividends and spending $76.8 million on repurchases of Lancaster Colony common shares.”
     Looking ahead, Mr. Gerlach said, “In our food group, a recently implemented second round of pricing actions should benefit our fiscal fourth quarter, and we anticipate further initiatives becoming effective just after the fiscal year ends. The fourth quarter is a seasonally slow quarter for our candle operations, and the current fiscal year’s lower candle production levels will have a near-term adverse impact on operating results despite leading to better-balanced inventory levels. Our automotive operations will likely be challenged by expected production curtailments among original equipment customers.”
     Mr. Gerlach added, “As we continue to explore strategic alternatives for our remaining nonfood operations, we also continue to look for good-fitting food acquisitions.”
     The company’s third quarter conference call is scheduled for this morning, May 1, at 10:00 a.m. ET. You may access the call through a live webcast by using the link provided on the company’s Internet home page at www.lancastercolony.com. Replays of the webcast will be made available on the company website.
Forward-Looking Statements
     We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). This news release contains various “forward–looking statements” within the meaning of the PSLRA and other applicable securities laws. Such statements can be identified by the use of the forward-looking words “anticipate,” “estimate,” “project,” “believe,” “intend,” “plan,” “expect,” “hope” or similar words. These statements discuss future expectations; contain projections regarding future developments, operations or financial conditions; or state other forward-looking information. Such statements are based upon assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. These forward-looking statements involve various important risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed in the forward-looking statements.
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PAGE 3 / LANCASTER COLONY REPORTS HIGHER THIRD QUARTER SALES
Actual results may differ as a result of factors over which we have no, or limited, control including, without limitation: the overall strength of the economy; changes in financial markets; slower than anticipated sales growth; the extent of operational efficiencies achieved; the success of new product introductions; price and product competition; increases in energy and raw-material costs; the reaction of customers or consumers to price increases we may implement; our ability to consummate good-fitting acquisitions; and the uncertainty regarding the effect or outcome of our decision to explore strategic alternatives among our nonfood operations. Management believes these forward-looking statements to be reasonable; however, you should not place undue reliance on such statements that are based on current expectations. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update such forward-looking statements. More detailed statements regarding significant events that could affect our financial results are included in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as filed with the Securities and Exchange Commission.
####
     
FOR FURTHER INFORMATION:
  John B. Gerlach, Jr., Chairman and CEO, or
 
  John L. Boylan, Vice President, Treasurer and CFO
 
  Lancaster Colony Corporation
 
  Phone: 614/224-7141
 
  -or-
 
  Investor Relations Consultants, Inc.
 
  Phone: 727/781-5577 or E-mail: lanc@mindspring.com

 

 

PAGE 4 / LANCASTER COLONY REPORTS HIGHER THIRD QUARTER SALES
LANCASTER COLONY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (b)
(In thousands except per-share amounts)
                                 
    Three Months Ended     Nine Months Ended  
    March 31,     March 31,  
    2008     2007     2008     2007  
     
Net sales
   $ 270,276     $ 265,692     $ 861,458     $ 820,088  
Cost of sales
     234,045       219,991       728,467       674,811  
 
                        
Gross margin
     36,231       45,701       132,991       145,277  
Selling, general & administrative expenses
     22,615       23,463       70,635       69,324  
Restructuring and impairment charge
     –       1,004       182       1,004  
 
                        
Operating income
     13,616       21,234       62,174       74,949  
Interest expense
     (621 )     –       (2,545 )     (13 )
Interest income and other – net
     290       263       3,240       1,515  
 
                        
Income from continuing operations before income taxes
     13,285       21,497       62,869       76,451  
Taxes based on income
     4,500       7,902       22,516       28,006  
 
                        
Income from continuing operations
     8,785       13,595       40,353       48,445  
Loss from discontinued operations
     –       (835 )     –       (4,075 )
(Loss) gain on sale of discontinued operations
     (159 )     739       (159 )     739  
 
                        
Total discontinued operations, net of tax
     (159 )     (96 )     (159 )     (3,336 )
 
                        
Net income
   $ 8,626     $ 13,499     $ 40,194     $ 45,109  
 
                        
 
                                
Net income (loss) per common share:(a)
 
 
Continuing operations – basic and diluted
   $ .30     $ .43     $ 1.35     $ 1.53  
 
                                
Discontinued operations – basic and diluted
   $ (.01 )   $ —     $ (.01 )   $ (.11 )
 
                                
Net income – basic and diluted
   $ .30     $ .43     $ 1.35     $ 1.42  
 
                                
Cash dividends per common share
   $ .28     $ .27     $ .83     $ .80  
 
                                
Weighted average common shares outstanding:
                                
Basic
     29,115       31,531       29,794       31,728  
Diluted
     29,128       31,560       29,799       31,755  
 
(a)   Based on the weighted average number of shares outstanding during each period.
 
(b)   Certain automotive operations sold in the year ended June 30, 2007 have been reflected as discontinued operations.
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PAGE 5 / LANCASTER COLONY REPORTS HIGHER THIRD QUARTER SALES
LANCASTER COLONY CORPORATION
BUSINESS SEGMENT INFORMATION (Unaudited) (b)
(In thousands)
                                 
    Three Months Ended     Nine Months Ended  
    March 31,     March 31,  
    2008     2007     2008     2007  
     
NET SALES
                                
Specialty Foods
   $ 197,249     $ 178,212     $ 597,188     $ 543,093  
Glassware and Candles
     33,577       50,238       147,043       175,325  
Automotive
     39,450       37,242       117,227       101,670  
 
                        
 
   $ 270,276     $ 265,692     $ 861,458     $ 820,088  
 
                        
OPERATING INCOME
                                
Specialty Foods
   $ 14,361     $ 22,046     $ 66,444     $ 76,997  
Glassware and Candles
     (38 )     987       1,595       4,109  
Automotive
     1,339       441       3,896       (425 )
Corporate expenses
     (2,046 )     (2,240 )     (9,761 )     (5,732 )
 
                        
 
   $ 13,616     $ 21,234     $ 62,174     $ 74,949  
 
                        
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
                 
    March 31,     June 30,  
    2008     2007  
     
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 12,252     $ 8,318  
Receivables – net of allowance for doubtful accounts
     89,831       92,635  
Total inventories
     130,191       149,717  
Deferred income taxes and other current assets
     31,255       28,241  
 
            
Total current assets
     263,529       278,911  
Net property, plant and equipment
     193,991       208,431  
Other assets
     109,393       111,155  
 
            
Total assets
   $ 566,913     $ 598,497  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities:
                
Short-term bank loans
   $ —     $ 42,500  
Accounts payable
     46,463       48,423  
Accrued liabilities
     42,312       50,867  
 
            
Total current liabilities
     88,775       141,790  
Long-term debt
     77,500       —  
Other noncurrent liabilities and deferred income taxes
     16,966       12,398  
Shareholders’ equity
     383,672       444,309  
 
            
Total liabilities and shareholders’ equity
   $ 566,913     $ 598,497  
 
            
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